AIB lost €1.1bn in first six months, new results reveal
The largest of the state-owned banks, AIB, made a loss of €1.1bn in the first six months of the year, according to interim financial results published yesterday.
Despite the loss, management said AIB was on course to return to profit in 2014.
Efforts to attract new investment into the lender are already under way, but a deal to actually sell any stake in AIB is not expected before 2014, chief executive David Duffy said.
Even that time frame is based on hopes of a wider European recovery, the bank chief said.
Yesterday the bank said its balance of costs and income is out of line as it pays too much to bring in cash and receives too little to lend it out, threatening its long-term viability if action to close the gap is not taken.
As a result, AIB has announced a hike in the interest rates it charges for some loans and cuts in the rate of interest paid to take in deposits, to help close the gap.
The results published yesterday show some significant improvements for the bank, though coming from a dire starting point.
Losses booked in the first half of 2012 are well down on the €2.6bn loss in the same period last year.
The bank set aside €890m to cope with losses on outstanding loans in the first half of this year, down 70pc from the same time last year.
It means the rate of deterioration in the quality of loans is slowing. However, though slowing, the bank is still seeing rising levels of arrears in mortgages and other lending as households and businesses struggle to cope with the fallout from the financial crisis.
Despite this, Mr Duffy said he believed total impairment charges "peaked" in 2011.
AIB's acting finance chief Paul Stanley said the slower rate of decline was after "work done last year in terms of aggressively going at the book in terms of provisioning levels".
AIB has set a target to lend €3.5bn to businesses this year, up from a target of €3bn in 2011.
The bank said activity was running 17pc ahead of target so far this year.
However, the bulk of business lending involves a roll-over of loans already drawn down over extended periods, with just €400m of wholly new loans made, Mr Duffy said.