Connect to share and comment

Rescued Irish bank AIB posts soaring annual losses

PlacardEnlarge
(Globalpost/GlobalPost)

State-rescued Allied Irish Banks on Tuesday announced soaring annual net losses, despite massively scaling down its provisions for bad loans.

The bank's after-tax loss jumped to 3.6 billion euros ($4.6 billion) in 2012, compared with a shortfall of 2.3 billion euros in 2011, AIB said in a statement.

Allied Irish Banks, once one of Ireland's biggest banks, is almost fully state owned after receiving enormous taxpayer funds following Ireland's own financial rescue by the EU and IMF.

"While 2012 was another very challenging year for the group, a number of important steps were taken to position the bank for recovery over the longer term, AIB chief executive David Duffy said in the results statement.

"AIB has now largely completed the restructuring phase of its strategic plan as the bank targets a return to sustainable profitability and growth during 2014," he added.

The bank's operating loss before exceptional items was 2.8 billion euros in 2012, down from 8.1 billion euros in 2011 owing to a massive reduction in provisions for bad loans.

Written-off loans tumbled from 8.2 billion euros in 2011 to 2.5 billion euros last year.

The bank also reduced its reliance on European Central Bank funding by nine billion euros to 22 billion euros last year, a reduction of 29 percent.

AIB is one of two main "pillar" banks created in an overhaul of the Irish banking system, comprising Bank of Ireland and a merged AIB and the Educational Building Society (EBS).

The government has injected a total of 20.8 billion euros into AIB and its EBS subsidiary, taking a stake of more than 99.8 percent in the group.

Of the bank's 22 billion euros commercial property portfolio, approximately 62 percent of the loans were impaired at the end of last year.

AIB re-entered the public funding markets in 2012 for the first time since 2007, and successfully raised a further 500 million euros in a three bond in January this year.

cob/bcp/wai

on Friday said it slumped into a massive net loss during the first half as one-off gains from the same stage last year were not repeated.

AIB said in a results statement that it suffered a loss after tax of 1.21 billion euros ($1.49 billion) in the six months to June.

That contrasted with a net profit of 2.24 billion euros in the same part of 2011, which reflected large gains from asset disposals and buying back of its own junior debt.

At the same time, however, the Dublin-based group slashed its bad debt provision to 973 million euros in the reporting period, compared with 3.049 billion euros last time around.

Allied Irish Banks, once one of Ireland's biggest banks, vowed on Friday to return to profit by 2014.

The lender, which merged with the Educational Building Society last year, is almost fully state-owned after receiving enormous government bailouts.

"A renewed focus on income growth coupled with cost management measures will help AIB to achieve the goal of sustainable profitability by 2014," it said in Friday's earnings release.

The company has been slashing costs and selling assets as part of a restructuring plan to cover record losses from bad property loans.

During the first half of last year, AIB had sold its 70-percent stake in Poland's Bank Zachodni WBK and its 50-percent holding in BZ AIB Asset Management, to Spanish bank Santander for 3.1 billion euros.

Back in April 2011, Ireland's central bank ordered a drastic overhaul of the eurozone nation's stricken banking sector, including the AIB-EBS merger.

The shake-up was aimed at creating two main "pillar" banks comprising Bank of Ireland and the combined AIB/EBS group.

Ireland's economy was ravaged by a domestic banking crisis and massive debts, forcing the eurozone nation to seek an 85-billion-euro EU-IMF rescue package in November 2010.

elm-rfj/bcp/wai

http://www.globalpost.com/dispatch/news/afp/130327/rescued-irish-bank-aib-posts-soaring-annual-losses