The Central Bank said today that its top priority since last year was working on a resolution of the Irish banking crisis. It reported a profit for the year to December 31, 2010 of €840.9m compared with a corresponding amount of €933.8m in 2009. €671m of the 2010 profit will be paid to the Exchequer.

The Bank said in a continued low interest rate environment, both the interest income and interest expense decreased in 2010. Interest income dipped by €147.5m to €2.1bn while interest expense decreased by €188.3m to €1.1bn. As a result, in 2010, the net interest income of the Bank increased by €40.8m to €1.0bn.

The Bank said in its performance statement issued with its Annual Report today: "Our priority during 2010 and 2011 has been and continues to be to work towards the resolution of the financial crisis and respond to the problems of under-capitalisation in the banking system. In March 2010, the Bank carried out the first round of the Prudential Capital Assessment Review (PCAR) exercise to determine the forward-looking prudential capital requirements of the Irish credit institutions covered by the Government Guarantee.

The Bank required the banks to meet the higher of a base case PCAR standard of 8% core Tier 1 and 7% equity or stress case 4% core Tier 1 by the end of 2010, taking account of both losses arising from portfolios transferred to NAMA and of projected expected losses on non-NAMA portfolios, including mortgage portfolios up to 2012. The capital requirements were revised in September to take account of the more severe NAMA haircuts and the announcement of increased capital requirements under the Basel II protocol.

The total capital requirements amounted to €24.98bn in respect of AIB, Bank of Ireland, Irish Life and Permanent, EBS, Irish Nationwide and Anglo Irish Bank as set out in Table 1 below."