AIB returns 5% profits increase to June

Ireland’s AIB banking group returned a 5% profits increase in the six months to June, their interim results showed today.

AIB, Ireland’s biggest bank, reported a pre-tax profit of €703m in the first half of the year.

But the surplus was recorded at the company’s operations in the Republic of Ireland, Britain and Poland, and the profit from their United States arm, the Allfirst Corporation in Baltimore, Maryland, where bond trader John Rusnak has been accused of the fraud, went down by 25%.

Chairman Lochlann Quinn said the six months had been ‘‘challenging’’ for AIB, but maintained: ‘‘We are recovering well since the shock of the Allfirst fraud.

‘‘Once it was uncovered, we set out to deal with it speedily, transparently and comprehensively.’’

He said the bank had already implemented key elements of recommendations made in a report on the Allfirst affair carried out by leading American banking world figure Eugene Ludwig, adding: ‘‘We have not been neglecting our business.’’

Mr Quinn told of a pre-tax profits rise of 5%, with the figure attributable to ordinary shareholders up by 8%, and a declared interim dividend of 17.25 cent, an increase of 12% on the opening half of 2001.

Chief executive Michael Buckley, whose position came under intense pressure following the Allfirst disclosures, said the AIB performance had been strong, with the profit delivered against a backdrop of uncertain and volatile markets, compounded by the Allfirst fraud.

He said: ‘‘This event and its aftermath created significant challenges for our company but these were met without losing our focus on growing the business.

‘‘There is still more to do, but we are well-positioned to enjoy continued growth for the rest of this year and into the future.

Mr Buckley commented: ‘‘We had a very broadly-based good performance across the board.’’

Of the bank’s future in the United States, he repeated a pledge to shareholders that: ‘‘We are going to review the whole strategic position.’’

On a divisional basis, AIB reported profits up 8%, to €307m at its Republic of Ireland operations, 14%, to €116m in the United Kingdom and Northern Ireland, and 18% in Poland, to €31m.

Capital market came in with a €117m surplus, up 14%.

Mr Buckley said: ‘‘The half-year results from our banking operations in the Republic of Ireland, Northern Ireland and Britain were very good.

‘‘The performance in Poland was pleasing as it was achieved in a weak macroeconomic environment. It is directly linked to our success in reshaping the business model in that market.’’

During the first half of the year, AIB increased its bad debt provision to €96 million from €67 million, due to the ‘‘far from benign’’ economic climate.

The chief executive concluded: ‘‘AIB is recovering well from the damage inflicted by the Allfirst fraud.

There is a continuing downturn in global markets and the group is protecting itself against these conditions by making prudent provisions for non-performing loans and investments where appropriate.’’