FOR IMMEDIATE RELEASE 19th February 2009
Allied Irish Banks, p.l.c.
Trading Update
Allied Irish Banks, p.l.c. ("AIB") [NYSE:AIB] is issuing this update
ahead of the announcement on 2nd March 2009 of Group results for the
year ended 31st December 2008. The figures quoted in this statement
are preliminary estimates and unaudited.
In our Interim Management Statement (IMS) of 5th November 2008 we
said that our 2008 earnings per share target was around Eur 120c. We
also said that we expected to incur a bad debt charge of c.75 basis
points (bps) of average loans in 2008. Since issuing the IMS key
trends have changed. These trends and their likely effect on our 2008
results can be summarised as follows:
* There have been both income and cost benefits due to
management focus and cheaper funding conditions. Sustained income
growth and a reduction in costs will create a materially positive
gap between their respective rates of change.
* Asset quality has further deteriorated as economic
conditions have worsened. Consequently the bad debt provision
requirement has materially increased. We have taken two distinct
steps in assessing that requirement
(i) A charge of c. 100 bps of average loans has been determined.
This comprises c. 63 bps of a specific charge and c. 37 bps of an
incurred but not reported (IBNR) charge. This increased charge is
relative to the c. 75 bps (c. 45 bps specific, c. 30 bps IBNR)
previously guided and this increase, partly offset by the already
mentioned better operating performance, would have resulted in 2008
earnings per share of around Eur 114c.
(ii) We have also taken a further IBNR charge of ¤500m, c. 37 bps
of average loans. This charge is directly related to a portfolio of
identified cases, of which c. 75% relates to our Irish property
development loan book. Although not currently impaired, this
portfolio is showing significant and growing signs of stress as a
result of the adverse conditions at the end of 2008. Accordingly, we
deem it likely that some of these cases will emerge as requiring
specific provisions in 2009 and this further IBNR charge has been
created for them and taken in our 2008 accounts.
* The bad debt charge for 2008 will therefore total c. 137 bps
of average loans. Earnings per share for that year are now expected
to be around Eur 66c.
* Core tier one capital ratio at the end of 2008 is now
estimated at c. 5.7%. This figure reflects our prudent decision to
incur the aforementioned additional IBNR of ¤500m which reduces the
ratio by around 30 bps or from 6%. The recently announced
Government recapitalisation of ¤3.5bn increases the ratio, on a pro
forma basis at the end of 2008, to c. 8.2%
Further details of our 2008 performance and outlook will be provided
at our results announcement on 2nd March.
-ENDS-
For further information please contact:
Alan Kelly Catherine Burke
General Manager, Group Finance Head of Corporate Relations
AIB Group AIB Group
Dublin 4 Dublin 4
Tel: +353-1-6600311 ext. 12162 Tel: +353-1-6600311 ext. 13894
Forward-looking statements
This document contains certain forward-looking statements within the
meaning of the United States Private Securities Litigation Reform Act
of 1995 with respect to the financial condition, results of
operations and business of the Group and certain of the plans and
objectives of the Group. In particular, certain statements with
regard to management objectives, trends in results of operations,
margins, risk management, competition and the impact of changes in
Financial Reporting Standards are forward-looking in nature. These
forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. Forward looking
statements sometimes use words such as 'aim', 'anticipate', 'target',
'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', or other
words of similar meaning. Examples of forward-looking statements
include among others, statements regarding the Group's future
financial position, income growth, business strategy, projected
costs, capital position, estimates of capital expenditures, and plans
and objectives for future operations. Because such statements are
inherently subject to risks and uncertainties, actual results may
differ materially from those expressed or implied by such
forward-looking information. By their nature, forward-looking
statements involve risk and uncertainty because they relate to events
and depend on circumstances that will occur in the future. There are
a number of additional factors that could cause actual results and
developments to differ materially from those expressed or implied.
These factors include, but are not limited to, changes in economic
conditions globally and in the regions in which the Group conducts
its business, changes in fiscal or other policies adopted by various
governments and regulatory authorities, the effects of competition in
the geographic and business areas in which the Group conducts its
operations, the ability to increase market share and control
expenses, the effects of changes in taxation or accounting standards
and practices, acquisitions, future exchange and interest rates and
the success of the Group in managing these events. Any
forward-looking statements made by or on behalf of the Group speak
only as of the date they are made.
The Group cautions that the foregoing list of important factors is
not exhaustive. Investors and others should carefully consider the
foregoing factors and other uncertainties and events when making an
investment decision based on any forward-looking statement. In light
of these risks, uncertainties and assumptions, the forward-looking
events discussed in this Report may not occur. The Group does not
undertake to release publicly any revision to these forward-looking
statements to reflect events, circumstances or unanticipated events
occurring after the date hereof
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
