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AIB reports losses of €2.3 billion for last year

The bank’s annual financial report has been released this morning, revealing a growing number of bad mortgage debts.

Image: Laura Hutton/Photocall Ireland

THE STATE-OWNED Allied Irish Banks (AIB) has reported losses after tax of €2.3 billion for 2011 in its annual report released today.

The figure is an improvement on 2010 losses of €10.2 billion and follows the setting aside of €7.9 billion to provide for expected losses on loans including €1.6 billion on residential mortgages.

Around €1.7 billion of the figure is related to the bank’s land and development portfolio, €2 billion to its property investment portfolio, €1. 6 billion for Small and Medium Enterprises (SME) loans and €500 million each for corporate and other personal loans.

Operating profit before provisions was €68 million which compares to €658 million for 2010. The reduction was attributed to lower levels of income which was down by over €500 million or 22 per cent and a rise in costs of €71 million.

“Our plan is to return to sustainable profitability by 2014. Achieving this will be key to our ambition to provide an opportunity to attract private investment and return value to our principal shareholder,” chief executive David Duffy said today in a statement.

The number of customers with the bank who are in mortgage arrears of more than 90 days rose to 10.9 per cent by the end of December, up from just under three per cent a year earlier.

Mortgage loans classified as impaired stood at €1.6 billion and a further €897 million were categorised as past due. These figures represent a rise from impairments of €470 million and loans past due of €651 million in 2010.

The banks operating expenses of €1.7 billion were 4 per cent higher than in 2010 although half of this was attributed to the inclusion of €42 million of costs for staff from EBS building society.

Under the government’s recapitalisation programme, AIB is one of the main pillar banks which has taken over the building society. AIB is currently 99.8 per cent owned by the State.

Earlier this month the bank said it was seeking 2,500 redundancies in a bid to cut costs. It is thought to be the biggest redundancy programme announced by a bank in the history of the State.

AIB also recently announced that it will reintroduce transaction fees in May, charging customers for transactions unless they have cash balances of at least €2,500 in their account for an entire three-month period.

Duffy added: “We are confident that as a pillar bank we will be able to provide the support required by the Irish economy and our customers over the coming years.”

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Hugh O'Connell

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