AIB cuts loss by 65pc but deficit still €3.8bn in 2012
STATE-OWNED AIB suffered a pre-tax loss of €3.8bn last year but its chief executive David Duffy remains confident that it can return to profitability next year.
The bailed-out lender, which received more than €20bn from taxpayers, had an operating loss before exceptionals of €2.8bn – down 65pc from €8.1bn the previous year.
At the end of December, 9.1pc of its residential mortgage accounts were in arrears and 17.7pc of its buy-to-lets, according to the bank's 2012 results.
Mr Duffy – who was paid €546,000 before he took a pay cut last year – described 2012 as a challenging year.
But he added: "Our ambition is to return to sustainable profitability in 2014 and, based on the results, we still maintain that as a viable target.
"While 2012 was another very challenging year for the group, a number of important steps were taken to position the bank for recovery over the longer term.
"We continued to make progress on restructuring our balance sheet and undertook a number of strategic initiatives which will reduce the bank's cost base over time."
Key points from the 2012 annual results include:
• A pre-tax loss of €3.8bn.
• Operating loss before exceptionals of €2.8bn.
• Group provision charge of €2.5bn – down 70pc from 2011.
• A drop of €9bn in reliance on ECB funding to €22bn – down from €31bn in December 2011.
• €2.9bn growth, or 5pc, in customer accounts.
• 89pc of the year-end deleveraging target of €20.5bn was hit by the end of last year.
• Loan-to-deposit ratio of 115pc at the end of last year – a 23pc reduction from December 2011.
• Core tier 1 capital ratio of 15.1pc in December – above the Central Bank's minimum target of 10.5pc.
• Percentage of residential mortgages in arrears of 90 days or more was 9.1pc and 17.7pc for buy-to-lets.
• €4.8bn of SME lending was approved last year – 37pc ahead of target.
• €1.5bn in new mortgages was approved – 50pc ahead of target.
• The fee paid for using the Government's guarantee scheme was reduced by 20pc last year
• Total gross loans are at €89.9bn, 47pc of which accounted for residential mortgages.
Mr Duffy also said the bank intended to meet or exceed the recently announced Central Bank's targets of coming up with sustainable solutions with 20pc of borrowers by the end of July, 30pc by the end of the third quarter and 50pc by the end of the year. "We are confident that we will meet or exceed the Central Bank restructuring targets," Mr Duffy said.
The bank said it had offered 3,000 advanced forbearance solutions to distressed customers, 1,400 of which are split loans.
It said impaired loans increased by €4.6bn from December 2011 to €29.4bn at the end of last year, while so-called watch and vulnerable loans fell by €1.8bn.
Mr Duffy said the bank did not expect any fallout from developments in Cyprus, where deposit holders face a hefty levy as part of the Cypriot government's EU bailout deal.
The chief executive said that helping both SMEs and distressed mortgage customers would continue to be a major priority this year.
The bank said that the process for 2,500 voluntary redundancies had been agreed, with 1,744 staff leaving at the end of 2012.
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