Allied Irish Banks posted its first ever full-year net loss today after being burnt by exposure to Ireland's property market crash, saying the outlook and environment remained extremely challenging.
Allied Irish's net loss of €2.3 billion (£2.1 billion), its first time in the red since its foundation in 1966, better than the loss of €2.9 billion expected by analysts, and an €890 million profit in 2008. In the UK it also swung to a loss of £15 million, from a profit of £152 million in 2008.
Ireland's second biggest bank by market value said its 2009 operating profit before provisions increased slightly from the previous year to almost €3 billion, but it swung into the red after taking provisions mainly on loans to the construction and property sector.
Allied Irish, in which the government last year acquired a 25% indirect stake, will transfer property loans worth up to €23 billion to the National Asset Management Agency (NAMA), Ireland's "bad bank," it said, slightly below an earlier estimate of €24 billion.
"In 2010 AIB will prioritise restructuring and restoring its businesses to underpin viability, and renewing the group's credibility amongst all its stakeholders," it said in a statement.
AIB reported that 29.4% of it's loans are described as "critiscised" while 13.5% are "impaired". The bulk of these loans are in the Irish Republic, though in the UK critiscised loans total over €3 billion, while impaired loans are €522 million of that. AIB Bank UK accounts for 15% of the increase in criticised loans in the period, influenced by continuing low levels of activity and weak asset prices in the property and construction portfolio and the deteriorating trend in the leisure sector, particularly in the licensed trade sub-sector.
AIB Group impaired loans as a percentage of total customer loans increased significantly to 13.5%, up from 2.3% at 31 December 2008.This increase reflects the considerable and continued deterioration in the markets in which the Group operates, primarily the ROI property market and to a lesser extent the UK, with contagion into other sectors also evident. Property & construction impaired loans constitute 77% of total AIB Group impaired loans.
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