Whatever the reasons for his departure to run Clydesdale Bank from Glasgow, David Duffy has timed his exit from AIB nicely. After a little more than three years at the helm he has guided the bank back to profit, assembled a new leadership team, cuts its costs by €350 million a year, and put it back on the path to lending growth.

The wheels have also been put into motion for it to return to private ownership and to get the bank out from under the skirt of the State.

Its net interest margin is within an “ace” of the desired 2 per cent-plus level, provisions are being written back, and the bank is getting to grips with its substantial mortgage arrears problem.

Its level of mortgage arrears in Ireland reduced by 18 per cent last year and by 22 per cent for owner occupiers. Separately, the proportion of its residential mortgage portfolio in negative equity fell from 51 per cent to 34 per cent in 2014.

Good news

This is good news although only 58 per cent of those in mortgage arrears of 90 days or more had concluded solutions with the bank by the year-end, while 13 per cent are not meeting the terms of their new payment arrangements.

Lending drawdowns rose 50 per cent last year to €5.9 billion with a 34 per cent rise in the value of mortgage lending in the Republic.

These things are all relative of course. AIB issued 6,060 new mortgages in the Republic last year. That was up 7.3 per cent on 2013, but is well shy of the 36,222 written at the peak of the property bubble in 2006. It also remains to be seen what impact tougher Central Bank rules on mortgage deposits will have on demand this year.

Chairman Richard Pym noted at the media briefing yesterday that his only disappointment since taking on the role last October was Duffy's unexpected resignation in January.

The search is on for a replacement and both internal and external candidates are being considered. Pym was adamant that a “first-rate CEO” would be secured under the Government’s €500,000 salary cap.

Bernard Byrne, head of retail and business banking at AIB, is considered the favourite to land the role. Appointing an internal candidate would allow for a speedy replacement of Duffy and Byrne's executive roles within the bank over the past few years has given him a broad knowledge of the business.

His many years with State electricity group ESB means he is also attuned to dealing with the public service, which is important given that the Department of Finance will decide the timing of any IPO of the bank and the redemption or conversion of the preference shares and convertible contingent capital notes.

When Duffy joined in 2011, his job was to stabilise a bank that was in disarray at board level and at loggerheads with the Government, its key shareholder. It had also lost the trust of customers while staff morale was shot. His successor will face a different challenge. After years of downsizing, the bank needs to grow again.

AIB is on a slow road to privatisation, with the State keen to get its €20.8 billion bailout money back.

Whether it is Byrne or someone else at the helm, this process will take several years. Duffy has started the ball rolling – a decent legacy from his short time in charge.