AIB’s 24% Share Price Plunge Mystifies Despite Virus, Davy Says

(Bloomberg) -- AIB Group Plc lost about a quarter of its market value on Thursday, in moves reminiscent of the worst of the 2008 financial crisis. The precise reasons behind the decline remain shrouded in mystery.

The lender, still majority owned by the Irish state, plunged 24%. By contrast, the Bloomberg Europe Banks and Financial Services Index rose 3%. Rival Bank of Ireland Group Plc dropped, but only by 5.7%.

“While sharp negative price action is not particularly unusual in the current environment, and especially for banks, yesterday’s weak relative move seems unjustified,” Davy analysts Stephen Lyons and Diarmaid Sheridan said in a research note on Friday, pointing out that the rest of the European banking sector was “buoyed” by exceptional ECB action to combat the impact of the coronavirus outbreak.

While AIB has about 12% of its customer loans exposed to the more ‘at-risk’ commercial sectors such as retail, hotels and transport, it’s well-positioned to weather the coming economic storm, according to the Davy analysts. On Friday, investors seem to agree to an extend, with the shares rising 18%.

Nonetheless, AIB shares have are trading at about a fifth of its IPO price of June 2017.

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