Wednesday, July 30 09:14:08
AIB returned to profit in the first half of the year after its bad debts on loans fell sharply, marking a major milestone as it moves towards repaying a state bailout next year.
State-owned AIB made a pretax profit of 437 million euros compared with a 838 million euro loss a year ago.
The bank flagged its return to profitability in a trading update in May, saying it was driven by a significant reduction in impairment charges. Provisions for soured loans fell to 92 million euros from 738 million in the first half of 2013.
The level of bad loans in Ireland - where almost one in five home loans are in arrears - had made a return to profitability elusive for its banks. AIB said the total number of arrears fell by 6 percent in the period.
The bank's proportion of owner-occupiers in arrears for more than 90 days stood at 10.5 percent at the end of June, while 25.7 percent of all buy-to-let mortgage holders were behind on payments.
AIB's core Tier 1 capital ratio, a measure of financial strength, was 16.1 percent at the end of June, and 10.5 percent complying with Basel III rules. Its net interest margin - gauging the profitability of its lending - rose to 1.60 percent.
AIB, which announced a review of its capital structure earlier this year to prepare the bank for sale in 2015, said it expected to remain profitable for 2014 but challenges remained including a still shrinking net loan book. (Reuters)
For more visit: www.businessworld.ie