AIB into red with pre-tax losses
AIB reported that it is in the red for the first time with pre-tax losses of more than €2.65bn.
The bank's annual report revealed that provisions for bad loans soared to €5.4bn in 2009 - with €3.4bn to be transferred to the Government's National Asset Management Agency (NAMA).
AIB said 2009 had been a very challenging year and the operating environment continued to be difficult.
"Difficult economic conditions in Ireland and globally and significant asset impairments resulted in a material level of credit losses," it stated.
In the Republic of Ireland the bank recorded a loss of €3,594m.
Over the last four decades AIB grew to become one of the country's biggest banks but it suffered when the property market crashed.
It estimates up to €23bn worth of land and impaired development loans could eventually be transferred to NAMA, which was approved by the European Commission last week.
AIB group managing director Colm Doherty warned that customers and homeowners face price rises across its financial products.
"The current retail banking model that we have in Ireland is quite dysfunctional," he said.
"We are currently paying more for the money that we borrow than we are charging our customers and ultimately that's unsustainable.
"I think it is inevitable, unfortunately, that pricing right across the product range, including mortgages, will have to go up in Ireland in 2010."
Mr Doherty said the AIB Group would also have to dispose of some assets to generate capital or attract investment.
The annual report revealed that the group's total criticised loans stand at €38.2bn - 29.4pc of total customer loans - up from €15.5bn at the end of 2008.
AIB Bank ROI represents 77pc of the increase in criticised loans and while heavily influenced by the downgrade of cases in the property and construction sector, there were also significant increases in the hotels, licensed trade and motor trade sub-sectors in the period, it said.
Total operating income was down 11pc while costs were cut by 15pc, which included how pensions were determined.
The bank said the outlook and environment remain extremely challenging.
"In 2010 AIB will prioritise restructuring and restoring its businesses to underpin viability, and renewing the Group's credibility amongst all its stakeholders," it said.
Fine Gael's Richard Bruton said there would be more pain for taxpayers and borrowers after AIB published its worst ever results.
The party's finance spokesman said: "AIB's results paint a very worrying picture for taxpayers and for the economy. There is little comfort for borrowers, or for businesses, as the bank's commitment to restart lending is fragile at best.
"The open threat of rising costs for borrowers, including mortgage holders, also points to further trouble in store for the Irish economy."
Mr Bruton said the results should send a stark message to Finance Minister Brian Lenihan and his Government that their banking policy is not working.
"We are now 18 months into the banking crisis, but credit is still not flowing, no dividends are being paid on taxpayers' investment in the banks, and no one is being held to account for disastrous errors," said Mr Bruton.
"Even though huge sums are being paid over by Irish taxpayers through NAMA, this is simply nursing along the toxic loans of the past, in the forlorn hope that these loans will end up paying their way."