Allied Irish Banks (AIB) said today that
challenging economic and market conditions are reducing operating profits
overall, and in each of the divisions, relative to the same period in 2009.
There has been an outflow of €13bn worth of
of deposits in 2010.
AIB said in
interim management statement, customer accounts remain the largest source of
funding and comprise 50% of overall funding at the end of September. Excluding
Poland, the loan to deposit ratio at 30th September was 159% compared
to 151% at 30th June.
The bank said customer accounts have been affected by current adverse
international sentiment towards the Irish sovereign and banking sector and are
down by c.€13bn
from the beginning of 2010 to the close of business on 16 November. This
reduction was primarily due to lower institutional and corporate balances.
Operating income has declined year on year to 30th September 2010,
mainly due to lower business volumes, an increase in Government guarantee costs
of c.€190m and a lower net interest margin. The bank said factors reducing its
net interest margin this year include lower capital income, lower treasury
income, lower income on loans pending transfer to NAMA and higher wholesale
funding costs. AIB said it is continuing to improve margins across non-NAMA loan
portfolios and deposit margins, particularly in the Irish market, have
stabilised in recent months.
domestic mortgage book arrears continued to increase in the three months to the
end of September. However, the rate of increase was lower than in the previous
quarter. Owner occupier mortgages (c.65% of the total mortgage book) in arrears
for over 90 days, including impaired loans, accounted for c.2.6% by value of
owner occupier mortgages. This compared with c.2.1% at the end of June. The
overall market figure for the same arrears published by the Central Bank of
Ireland was c.6.6% at the end of September. AIB said the future trajectory of
arrears will be strongly influenced by the rate of unemployment in Ireland.
that AIB is incurring continue to reduce capital. The Central Bank's requirement
for AIB to raise €10.4bn capital will significantly improve the capital position
says significant components of this capital raising have already been achieved,
including the sale of US bank M&T and the agreed sale of Polish interests which
is subject to shareholder and regulatory approval. These sales generate a
combined total of c.€3.4bn of equivalent equity capital.
The bank noted
the decision tohalt the current sales process of
AIB Group (UK) p.l.c. AIB intends to increase the size of its planned capital
raising from €5.4bn to €6.6bn. AIB said the capital raising will
be structured as an open offer and placing at a fixed price of €0.50 per new
ordinary share with existing qualifying shareholders invited to subscribe for
all or part of their pro rata entitlements. New institutional shareholders may
also be permitted to subscribe for new shares under the offer. The National
Pensions Reserve Fund Commission has agreed to underwrite the total transaction
size of €6.6bn.