Allied Irish Banks, p.l.c. Interim Results for the half-year ended 30 June 2001.
Business Editors
DUBLIN, Ireland--(BUSINESS WIRE)--August 1, 2001--
Highlights - AIB Group interim results 2001
Attributable profit up 12% to Euro 463m
(1) Adjusted earnings per share EUR 55.4c - up 11%
Basic earnings per share EUR 53.8c - up 11%
AIB Bank profit up 15%
Capital Markets profit up 13%
Allfirst - Good second quarter results
- Stronger asset quality
Other Income up 13%(2)
Return on equity 20.4%
Interim dividend up 14%
AIB Group Chief Executive Michael Buckley said:
`Attributable profit growth of 12% demonstrates AIB's capability
to generate revenue growth in slower economic conditions. It also
reflects AIB's strong competitive position in its chosen markets.
Asset quality remains strong and AIB continues to make substantial
investment in its business, particularly in Poland and Allied Irish
America.'
(1) Before goodwill amortisation
(2) Adjusted for the impact of currency movements
Other key points
-- Substantial investment in the development of AIB franchises.
-- Allied Irish America expansion with Community Counselling Service
acquisition and new offices.
-- Asset quality in Allfirst in US improving - margins increasing.
-- WBK and Bank Zachodni merger completed in Poland - development of
branch network and new technology platform on schedule.
-- Sale of interest in Keppel Capital Holdings to realise
approximately U 93 million.
-- Group credit quality robust.
-- Focus on efficiency and the seizing of new marketplace
opportunities.
-- Preparations continue for switchover to euro notes and coins in
Ireland.
-- Low double digit annual growth in adjusted earnings per share
remains AIB goal.
Allied Irish Banks, p.l.c. (AIB Group) today announced its results
for the half-year ended 30 June 2001.
Profit attributable to ordinary shareholders amounted to E 463
million, a 12% increase over the half-year ended 30 June 2000. Basic
earnings per share for the half-year amounted to EUR 53.8c, an
increase of 11%. Adjusted earnings per share which excludes goodwill
amortisation also increased by 11% to EUR 55.4c.
Dividend
The Board has declared an interim dividend payable on 28 September
2001 of EUR 15.4c per share to shareholders on the Company's register
of members at the close of business on 10 August 2001.
This results announcement and a detailed informative presentation
can be viewed on our internet site at
www.aibgroup.com/investorrelations/home
Financial highlights (unaudited)
for the half-year ended 30 June 2001
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
E m E m E m
Results
Total operating income 1,787 1,596 3,326(1)
Group profit before taxation 667 609 1,251(1)
Profit attributable 463 414 762
Profit retained 296 268 357
Per E0.32 ordinary share
Earnings - basic 53.8c 48.5c 89.0c
Earnings - adjusted 55.4c 49.9c 104.0c
Earnings - diluted 52.5c 47.9c 88.1c
Dividend 15.40c 13.50c 38.75c
Net assets 559c 467c 492c
Performance measures
Return on average total assets 1.25% 1.26% 1.25%(1)
Return on average ordinary
shareholders' equity 20.4% 21.7% 21.6%(1)
Balance sheet
Total assets 87,895 74,687 79,688
Shareholders' funds: equity
interests 4,914 4,061 4,296
Loans etc 54,944 47,818 50,239
Deposits etc 71,989 61,563 65,210
Capital ratios
Tier 1 capital 7.4% 6.5% 6.3%
Total capital 11.8% 11.3% 10.8%
(1) Adjusted to exclude the impact of the deposit interest
retention tax settlement.
Consolidated profit and loss account (unaudited)
for the half-year ended 30 June 2001
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
Notes E m E m E m
Interest receivable:
Interest receivable
and similar income arising from
debt securities and other
fixed income securities 617 511 1,140
Other interest receivable and
similar income 3 2,089 1,963 3,987
Less: interest payable 4 (1,639) (1,489) (3,105)
Deposit interest
retention tax 5 - - (113)
Net interest income 1,067 985 1,909
Other income 6 720 611 1,304
Total operating income 1,787 1,596 3,213
Before exceptional item 3,326
Deposit interest retention
tax 5 (113)
Total operating expenses 8 1,060 924 1,949
Group operating profit before
provisions 727 672 1,264
Before exceptional item 1,377
Deposit interest retention
tax 5 (113)
Provisions for bad and doubtful
debts 12 67 70 133
Provisions for contingent
liabilities and
commitments (3) (2) 2
Amounts written off/(written back)
fixed asset investments 1 1 (1)
Group operating profit -
continuing activities 662 603 1,130
Before exceptional item 1,243
Deposit interest retention
tax 5 (113)
Income from associated
undertakings 2 4 3
Profit on disposal of property 3 2 5
Group profit on ordinary
activities before taxation 667 609 1,138
Before exceptional item 1,251
Deposit interest retention
tax 5 (113)
Taxation on ordinary activities9 165 167 318
Group profit on ordinary
activities after taxation 502 442 820
Equity and non-equity minority
interests in subsidiaries 15 19 38
Dividends on non-equity shares 24 9 20
39 28 58
Group profit attributable to the
ordinary shareholders
of Allied Irish Banks, p.l.c. 463 414 762
Dividends on equity shares 132 116 335
Transfer to reserves 35 30 70
167 146 405
Profit retained 296 268 357
Earnings per(pound)0.32
ordinary share - basic 10(a) 53.8c 48.5c 89.0c
Earnings per(pound)0.32
ordinary share -
adjusted 10(b) 55.4c 49.9c 104.0c
Earnings per(pound)0.32
ordinary share -
diluted 10(c) 52.5c 47.9c 88.1c
Consolidated balance sheet (unaudited)
30 June 2001
30 June 30 June 31 December
2001 2000 2000
Notes E m E m E m
Assets
Cash and balances at
central banks 854 796 938
Items in course of collection 1,443 1,260 1,116
Central government bills and other
eligible bills 459 476 297
Loans and advances to banks 5,101 4,865 4,193
Loans and advances to
customers 11 49,636 42,825 45,880
Securitised assets - net 207 128 166
Debt securities 14 20,995 17,141 18,986
Equity shares 433 339 412
Interests in associated
undertakings 10 25 8
Intangible fixed assets 495 458 466
Tangible fixed assets 1,302 1,046 1,127
Own shares 193 127 177
Other assets 2,478 1,712 1,708
Prepayments and accrued income 1,709 1,314 1,835
Long-term assurance business
attributable to
shareholders 15 276 197 238
85,591 72,709 77,547
Long-term assurance assets
attributable to
policyholders 15 2,304 1,978 2,141
87,895 74,687 79,688
Liabilities
Deposits by banks 15,724 11,302 12,478
Customer accounts 16 52,479 46,499 48,437
Debt securities in issue 3,786 3,762 4,295
Other liabilities 3,014 2,712 3,079
Accruals and deferred income 1,614 1,267 1,665
Provisions for liabilities and
charges 166 128 155
Deferred taxation 388 270 357
Subordinated liabilities 2,401 2,206 2,249
Equity and non-equity minority
interests in subsidiaries 319 245 272
Called up share capital 291 286 288
Share premium account 1,932 1,866 1,877
Reserves 933 361 401
Profit and loss account 2,544 1,805 1,994
Shareholders' funds 5,700 4,318 4,560
85,591 72,709 77,547
Long-term assurance liabilities
to policyholders 15 2,304 1,978 2,141
87,895 74,687 79,688
Consolidated cash flow statement (unaudited)
for the half-year ended 30 June 2001
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
Notes E m E m E m
Net cash inflow from operating
activities 292 414 2,433
Returns on investments and
servicing of finance (90) (80) (184)
Equity dividends paid (198) (135) (228)
Taxation (127) (163) (199)
Capital expenditure and financial
investment (31) (1,416) (3,004)
Acquisitions and disposals (39) 2 2
Financing 513 160 164
Increase/(decrease) in cash 18(a) 320 (1,218) (1,016)
Reconciliation of Group
operating profit to net
cash inflow from operating
activities
Group operating profit 662 603 1,130
Provisions for bad and doubtful
debts 67 70 133
Provisions for contingent
liabilities and
commitments (3) (2) 2
Depreciation and amortisation 91 80 171
Interest on subordinated liabilities 75 72 155
Profit on disposal of debt securities
and equity shares (8) (3) (23)
Amounts written off/(written back)
fixed asset investments 1 1 (1)
Increase in long-term assurance
business (38) (31) (72)
Other movements - net 61 (149) (263)
Net cash inflow from trading
activities 908 641 1,232
Net increase in deposits by banks 2,750 2,565 3,621
Net increase in customer accounts 1,697 3,686 4,854
Net increase in loans and advances
to customers (1,799) (3,240) (5,812)
Net increase in loans and advances
to banks (292) (1,847) (1,015)
Net increase in debt securities
and equity shares
held for trading purposes (1,081) (535) (710)
Net decrease in debt securities in
issue (866) (705) (266)
Effect of exchange translation and
other adjustments 46 112 142
Other movements - net (1,071) (263) 387
(616) (227) 1,201
Net cash inflow from operating
activities 292 414 2,433
Statement of total recognised gains and losses (unaudited)
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
E m E m E m
Group profit attributable to
the ordinary shareholders 463 414 762
Currency translation differences
on foreign currency net
investments 234 36 113
Total recognised gains relating
to the period 697 450 875
Reconciliation of movements in shareholders' funds
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
Notes E m E m E m
Group profit attributable
to the ordinary
shareholders 463 414 762
Dividends on equity shares (132) (116) (335)
331 298 427
Other recognised gains
relating to the period 260 48 132
New ordinary share capital subscribed 31 23 27
Ordinary shares issued in lieu of cash
dividend 23 53 78
Issue of reserve capital
instruments 17 495 - -
Net addition to shareholders'
funds 1,140 422 664
Opening shareholders' funds 4,560 3,896 3,896
Closing shareholders' funds 5,700 4,318 4,560
Shareholders' funds:
Equity interests 4,914 4,061 4,296
Non-equity interests 786 257 264
5,700 4,318 4,560
Note of historical cost profits and losses
Reported profits on ordinary activities before taxation would not
be materially different if presented on an unmodified historical cost
basis.
Commentary on results
Summary profit and loss account
Half-year Half-year
June 2001 June 2000 %
E m E m Change
Net interest income 1,067 985 8
Other income 720 611 18
Total operating income 1,787 1,596 12
Staff costs 631 545 16
Other costs 338 299 13
Depreciation and amortisation 91 80 13
Total operating expenses 1,060 924 15
Group operating profit before
provisions 727 672 8
Provisions for bad and doubtful
debts 67 70 -5
Other provisions (2) (1) -
Total provisions 65 69 -7
Group operating profit
- continuing activities 662 603 10
Income from associated undertakings 2 4 -
Profit on disposal of property 3 2 -
Group profit on ordinary
activities before taxation 667 609 9
Taxation 165 167 -2
Group profit on ordinary
activities after taxation 502 442 14
Minority interests and non-equity
dividends 39 28 37
Group profit attributable 463 414 12
Group profit attributable to ordinary shareholders at E 463
million was up 12%. Adjusted earnings per share at EUR 55.4c per share
which excludes goodwill amortisation (E 13 million), and basic
earnings per share of EUR 53.8c both increased by 11%.
Group operating profit - continuing activities was up 10% to E 662
million for the half-year to June 2001. Group profit on ordinary
activities before taxation was up 9% to E 667 million and Group profit
on ordinary activities after taxation was higher by 14% at E 502
million.
Commentary on results
The following commentary on the profit and loss account and
balance sheet headings is based on underlying percentage growth
adjusting for the impact of currency movements.
Net interest income
Net interest income increased by 5% to E 1,067 million compared
with the half-year to June 2000. Loans to customers and customer
accounts increased by 4% and 3% respectively since December 2000.
Loans to customers and customer accounts (excluding money market
funds and currency factors)
Loans to Customer
customers accounts
% change June 2001 v December 2000 % Change % Change
Republic of Ireland 6 4
Northern Ireland 4 3
Britain 8 10
USA -3 1
Poland 7 4
AIB Group 4 3
The divisional commentary contains additional comments on the key
business trends in relation to loans to customers and customer
accounts.
Net interest margin
Half-year Half-year Basis Half-year Half-year Basis
June 2001 Dec 2000 Points June 2001 Dec 2000 Points
% % Change % % Change
2.67 2.76 -9 Domestic 2.67 2.73 -6
3.16 3.08 +8 Foreign 3.16 3.40 -24
2.93 2.94 -1 Total 2.93 3.10 -17
Average interest earning assets
Half-year Half-year Half-year Half-year
June 2001 Dec 2000 %s June 2001 Dec 2000 %
% % Change % % Change
33,258 31,420 6 Domestic 33,258 28,201 18
40,042 38,824 3 Foreign 40,042 35,572 13
73,300 70,244 4 Total 73,300 63,773 15
The net interest margin was 2.93%, a decrease of 17 basis points
on the half-year to June 2000 and a decrease of 1 basis point on the
half-year to December 2000. The margin in Allfirst increased due to
higher loan margins and positioning for lower interest rates. This
increase was more than offset by a reduction in the AIB Bank and
Poland margins. In AIB Bank the decline reflected a change in the mix
of loans and deposits whereas in Poland lower interest rates reduced
deposit margins. The domestic margin benefited by 3 basis points from
interest earned on the E 500 million of Tier 1 capital raised in
February 2001 through the issue of Reserve Capital Instruments.
Commentary on results
Other income
Other income at E 720 million increased by 13% since the half-year
to June 2000. This represented 40.2% of total income compared with
38.3% in 2000.
-- Banking fees and commissions up 16%
-- Contribution of life assurance company up 12%
Half-year Half-year Underlying
June 2001 June 2000 % Change
Other income E m E m 2001 v 2000
Dividend income 2 2 -
Banking fees and commissions 461 385 16
Asset management fees 94 91 -
Investment banking fees 45 56 -20
Fees and commissions receivable 600 532 9
Less: fees and commissions
payable (60) (57) -3
Dealing profits 79 49 43
Contribution of life assurance
company 47 42 12
Other 52 43 16
Other operating income
(see note 7 of this release) 99 85 10
Total other income 720 611 13
The increase in banking fees and commissions reflects higher
business volumes with strong growth in retail banking, corporate
banking and credit card revenues. Asset management fees and investment
banking fees were affected by the decline in equity markets in the
current half-year which resulted in a fall in asset values and client
volumes in the asset management and stockbroking businesses. Dealing
profits increased due to higher profit from trading activities.
Dealing profits reflects trading income and exclude interest payable
and receivable arising from these activities. Ark Life profit was up
12% reflecting strong growth in new regular premium business including
substantial growth in new regular pensions.
Total operating expenses
Operating expenses at E 1,060 million were up 11% compared with
2000.
Half-year Half-year Underlying
June 2001 June 2000 % Change
Operating expenses E m E m 2001 v 2000
Staff costs 631 545 12
Other costs 338 299 9
Depreciation and amortisation 91 80 9
Total operating expenses 1,060 924 11
The costs relating to the merger of WBK and BZ in Poland are
included in operating expenses. Excluding these expenses, costs
increased by 10%. The increase was mainly attributable to increased
business activity, the installation of a new branch technology
platform in Poland, branch network expansion in Poland and investment
costs in Allied Irish America to increase the number of representative
offices and `e-enable' the business. In the Republic of Ireland there
were significant salary increases reflecting the Programme for
Prosperity and Fairness and a one-off realignment of banking salaries.
Commentary on results
Asset quality
The provision for bad and doubtful debts in the half-year to June
2001 was E 67 million compared with E 70 million in 2000. The charge
for the half-year represented 0.28% of average loans compared with a
0.34% charge for June 2000. Excluding Poland, the specific charge for
the Group was 0.16% of average loans and the non-specific charge was
0.12% of average loans.
In Ireland asset quality remained strong with non-performing loans
in AIB Bank Republic of Ireland amounting to 0.9% of loans.
In Allfirst provisions were lower and non-performing assets
declined from US$ 108 million at 31 December 2000 to US$ 87 million at
30 June 2001, with coverage for non-performing loans increasing to
223%. Over 90% of Allfirst's balance sheet provisions, on a US GAAP*
basis, were in non-specific categories.
In Poland, while actual provisions increased in the period, the
overall charge at Group level was lower due to the partial use of
provisions created on acquisition. Non-performing loans at 18% as a
percentage of total loans remained at the same level as 31 December
2000.
Group non-performing loans as a percentage of total loans amounted
to 1.9% or 0.8% excluding Poland, and coverage for non-performing
loans remained strong at 99% (165% excluding Poland).
*United States Generally Accepted Accounting Principles
Taxation
The taxation charge was E 165 million compared with E 167 million
in 2000. The effective tax rate for the half-year was 24.7%, down from
27.5% in 2000. The reduction was due to the decline in the standard
rate of Irish corporation tax from 24% in 2000 to 20% in 2001, a lower
effective tax rate in Allfirst and other effects of the geographic and
business mix of profits.
Return on equity and return on assets
The return on equity was 20.4% compared with 21.7% in 2000. The
return on assets was 1.25% and the return on risk weighted assets, a
measure of the efficient use of capital, was 1.61%. The equity base
has increased by 14% since December 2000 due principally to profit
retentions and translation of foreign currency reserves.
Balance sheet
Total assets at E 88 billion at 30 June 2001 were up E 8 billion
since 31 December 2000, an increase of 5% on an underlying basis while
loans to customers increased by 4% and customer accounts by 3%. The
Polish zloty, US dollar and sterling strengthened against the Euro by
14%, 10% and 3% respectively resulting in reported balance sheet
growth of 10%. Risk weighted assets increased by 10% to E 66 billion,
5% excluding currency factors.
Assets under management/administration and custody
Assets under management in the Group amounted to E 39 billion at
30 June 2001. Assets under administration and custody increased from E
214 billion at 31 December 2000 to E 260 billion at 30 June 2001. This
strong growth of 21% reflects principally the success of the AIB joint
venture with the Bank of New York which was established in 1997.
Capital ratios
The Group's capital ratios remained strong with the Tier 1 ratio
at 7.4% up from 6.3% at 31 December 2000 and the total capital ratio
at 11.8%. Tier 1 capital increased by E 1.1 billion to E 4.9 billion
reflecting the issue of E 500 million 7.5% Step-up Callable Perpetual
Reserve Capital Instruments on 5 February 2001, retained profit for
the half-year of E 296 million and the impact of stronger US dollar,
Polish zloty and sterling exchange rates. Tier 2 capital increased by
E 203 million since December 2000 reflecting currency movements.
Cash flow
As reflected in the consolidated cash flow statement, there was a
net increase in cash of E 320 million during the half-year ended 30
June 2001. Net cash inflow from operating activities was E 292
million. This cash inflow was offset by outflows of E 127 million for
taxation, equity dividends of E 198 million and capital expenditure
and financial investment of E 31 million. Financing, primarily the
issue of the reserve capital instruments, generated a net cash inflow
of E 513 million.
Euro
Significant investment has been made over a number of years in
preparation for the introduction of euro notes and coins. Expenditure
this year has amounted to E 5 million with total spend to date at E 21
million, principally related to systems development, communications
and education programmes. It is estimated that further expenditure of
E 35 million will be required to cover a range of incremental costs
and to complete systems and other changes required.
Keppel Capital Holdings Ltd.
On 14 July 2001, AIB announced that it would support
Oversea-Chinese Banking Corporation Limited in its offer to purchase
Keppel Capital Holdings Ltd. (`KCH'). On completion of the
transaction, the estimated financial impact for AIB from the sale of
its interests in KCH would amount to a profit of E 93 million. In
addition, the 1999 Singapore $351 million three year senior bonds with
warrants will be fully redeemed at par on completion.
Outlook
Looking forward to the second half of 2001, the Group is confident
in its ability to perform strongly due to our competitive advantages
in our chosen markets and remains committed to a target of low
double-digit earnings growth. Asset quality remained strong in
Ireland, Britain and the USA in the first half. Underlying
productivity continues to improve and the return on equity remains
very satisfactory.
The economic environment in Poland has deteriorated and as a
consequence profit levels there will be lower in 2001 compared to
2000. The Group's ability to earn double-digit profit growth in less
buoyant economic conditions is underpined by the strength of its
operations in Ireland, Britain and Northern Ireland.
Divisional commentary
On a divisional basis profit is measured in euro and consequently
includes the impact of currency movements.
AIB Bank Retail and commercial banking operations in Republic of
Ireland, Northern Ireland, Britain, Channel Islands and Isle of Man;
AIB Finance and Leasing; Card Services; and AIB's life and pensions
subsidiary Ark Life Assurance Company.
AIB Bank profit increased by 15% to E 372 million reflecting a
strong performance in all key business units in the Republic of
Ireland, Northern Ireland and Britain. Despite an 8% increase in
costs, the divisional cost income ratio further improved from 52.8% to
51.5% reflecting higher levels of productivity.
Half-year Half-year
June 2001 June 2000 % change
AIB Bank profit and loss account E m E m 2001 v 2000
Net interest income 569 502 13
Other income 259 243 7
Total operating income 828 745 11
Total operating expenses 426 394 8
Operating profit before
provisions 402 351 15
Provisions 32 28 14
Operating profit - continuing
activities 370 323 15
Profit on disposal of property 2 - -
Profit on ordinary activities
before taxation 372 323 15
Banking operations in the Republic of Ireland produced a strong
performance despite a reduction in GDP levels and the impact of the
foot and mouth disease. Profit benefited from the strong growth in
business volumes particularly in the second half of 2000 with growth
in loans of 17% and customer accounts of 16% since June 2000. Loans
increased by 7% since December 2000 with growth well spread across all
economic sectors. There was a 9% increase in Home Mortgage lending
since December. The asset quality of this book remains strong
reflecting our prudent criteria for loan approval. Finance and leasing
performed particularly well benefiting from higher margins and good
growth in other income.
Costs increased as a result of growth in business activity levels,
some one-off euro costs and salary increases reflecting the Programme
for Prosperity and Fairness and a once-off realignment of banking
salaries. Notwithstanding the increase in costs, productivity levels
improved once again resulting in a reduction in the cost income ratio
from 52% to less than 51% in the period.
Ark Life profit increased by 12% to E 47 million for the half-year
to June 2001. This market was influenced by the introduction of
Special Savings Incentive Accounts by the Irish Government on 1 May
2001 which affected savings trends in the period prior to 1 May 2001.
New regular premium business was very strong with growth of 26% to E
72 million including particularly strong growth of 30% in new pensions
business. Single premium product sales were up 9% to U 310 million for
the half-year to June 2001. Annual Premium Equivalent (APE) sales were
up 20% to E 103 million.
Britain and Northern Ireland experienced strong profit growth of
13% reflecting higher business volumes and cost containment. Deposit
growth was particularly strong showing growth of 18% since June 2000
with loans up 11% in the same period. Continued higher efficiency was
reflected in a reduction in the cost income ratio from 55% to 53% in
the current half-year.
Divisional commentary
USA includes Allfirst's banking operations in Maryland,
Pennsylvania, Virginia, Washington DC, and AIB's own brand retail and
corporate operations in New York, Philadelphia, Los Angeles, Chicago,
San Francisco and Atlanta.
USA profit was E 170 million, up 4% on the half-year to June 2000.
Half-year Half-year
June 2001 June 2000 % change
USA profit and loss account E m E m 2001 v 2000
Net interest income 287 261 10
Other income 209 171 23
Total operating income 496 432 15
Total operating expenses 306 253 21
Operating profit before
provisions 190 179 6
Provisions 20 18 9
Operating profit -
continuing activities 170 161 6
Income from associated
undertakings - 3 -
Profit on ordinary activities
before taxation 170 164 4
Allfirst - In Group terms profit in US dollars was unchanged
compared with 2000. Allfirst has separately reported, under US GAAP*,
growth of 6% in net income to common shareholders.
Total revenue was up 5% including a 15 basis point increase in the
net interest margin from 3.39% to 3.54%. Other income was up 10%
reflecting growth of 18% in electronic banking income and an 11%
increase in deposit service charges. Loan volumes reduced due to large
corporate repayments, however there was a good increase in SME and
mid-market lending. Costs were up 7% due to higher pension, healthcare
and salary costs. Non-staff operating costs were maintained at the
same level as last year. Asset quality remained strong with a decline
of US$ 21 million in non-performing assets since 31 December 2000. The
provision cover for non-performing loans improved to 223% from 191% at
December.
Allied Irish America continued its investment programme to expand
the number of representative offices and `e-enable' the business to
further develop the national franchise in the charity and church
sectors commonly known as the not-for-profit sector. Excluding these
costs there was a substantial increase in underlying profit growth.
The San Francisco and Atlanta offices opened this year and are now
part of a network of established offices including those in New York,
Philadelphia, Los Angeles and Chicago. Risk weighted assets increased
by 12% since December 2000 and 34% since June 2000 due to the strong
growth in business volumes which was also reflected in a 59% increase
in underlying fee income.
The New York based Community Counselling Service Co., Inc. (`CCS')
was acquired by the Group on 17 May 2001. CCS is the largest
consulting firm to the not-for-profit sector worldwide. CCS is engaged
primarily in the design and direction of fundraising initiatives for
national and international charities, religious organisations and
educational institutions.
*United States Generally Accepted Accounting Principles
Divisional commentary
Capital Markets Corporate Banking, Investment Banking and Treasury
& International
Capital Markets profit at E 101 million was up 13%.
Half-year Half-year
June 2001 June 2000 % change
Capital Markets profit and loss
account E m E m 2001 v 2000
Net interest income 55 79 -31
Other income 186 145 29
Total operating income 241 224 8
Total operating expenses 134 124 8
Operating profit before
provisions 107 100 7
Provisions 8 11 -32
Operating profit -
continuing activities 99 89 12
Income from associated
undertakings 2 1 -
Profit on ordinary activities
before taxation 101 90 13
Corporate Banking had a strong half-year with a substantial
increase in profit. Loans were up 14% since December 2000 and fee
income was particularly strong. Good growth was achieved in the
domestic and international businesses through the proactive delivery
of financing solutions and consulting services. In Britain the
business continued to perform well, building on its success in the
provision of arranging and underwriting services. The recently opened
New York office is developing a presence in the structured corporate
credit market.
Investment Banking profit was lower due to the decline in equity
markets which resulted in a fall in asset values and client volumes in
the Asset Management and Stockbroking businesses. New business volumes
were buoyant in the International Financial Services and Custody/Funds
Administration businesses.
Treasury & International - Corporate Treasury and bond trading
activities performed well and achieved good profit growth, offset by a
lower performance in interest rate management activities.
Divisional commentary
Poland Bank Zachodni WBK (`BZWBK'), in which AIB has a 70.46%
shareholding, together with its subsidiaries and associates.
Poland profit was lower at E 26 million for the period.
Half-year Half-year
June 2001 June 2000 % change
Poland profit and loss account E m E m 2001 v 2000
Net interest income 134 122 10
Other income 73 69 6
Total operating income 207 191 8
Total operating expenses 177 136 30
Operating profit before
provisions 30 55 -46
Provisions 5 12 -59
Operating profit - continuing
activities 25 43 -42
Profit on disposal of property 1 2 -
Profit on ordinary activities
before taxation 26 45 -42
The merger of WBK and BZ took effect on 13 June 2001. The new
entity has adopted the name Bank Zachodni WBK (`BZWBK') and is
Poland's fifth largest bank.
Revenue growth of 8% was below expectations due to the slowdown in
the Polish economy. At the beginning of 2001 GDP growth in Poland was
forecast at 4%, this is now been revised to approximately 2%.
Consequently, loan growth at 7% since December 2000 is lower than
anticipated and the level of non-earning loans has not reduced. Both
of these factors have negatively affected net interest income. On a
constant currency basis costs increased by 18%. This increase included
costs associated with the expansion of the franchise and merger costs.
Investment has continued with 35 new branches opened and 43 new ATMs
installed since December with further progress achieved in developing
our new branch technology platform.
Provisions increased in the current half-year in BZWBK due to the
combined impact on customers of high real interest rates and a slower
economy. However, at Group level, the charge reduced to U 5 million
because of the partial use of provisions which were created on
acquisition.
Divisional commentary
Group includes interest income earned on capital not allocated to
divisions, the funding cost of the BZ acquisition, hedging costs in
relation to the translation of foreign currency profits and central
services costs.
Half-year Half-year
June 2001 June 2000
Group profit and loss account E m E m
Net interest income 22 21
Other income (7) (17)
Total operating income 15 4
Total operating expenses 17 17
Operating profit before provisions (2) (13)
Provisions - -
Profit on ordinary activities
before taxation (2) (13)
Group reported a loss of E 2 million in the half-year to June
2001, compared with a loss of E 13 million in 2000. The reduced loss
was primarily due to lower hedging costs.
Notes
1 Accounting policies and presentation of financial information
There are no changes to the accounting policies as set out on
pages 39 to 41 of the Annual Report and Accounts for the year ended 31
December 2000.
The currency used in these accounts is the euro which is denoted
by `EUR' or the symbol Euro.
Half-year
30 June
2001
AIB Bank USA Capital Poland Group Total
division division Markets division
division
2 Segmental
information E m E m E m E m E m E m
Operations by
business
segments(1)
Net interest
income 569 287 55 134 22 1,067
Other income 259 209 186 73 (7) 720
Total
operating
income 828 496 241 207 15 1,787
Total
operating
expenses 426 306 134 177 17 1,060
Provisions 32 20 8 5 - 65
Group
operating
profit 370 170 99 25 (2) 662
Income from
associated
undertakings - - 2 - - 2
Profit on
disposal of
property 2 - - 1 - 3
Group profit
on ordinary
activities
before
taxation 372 170 101 26 (2) 667
Balance sheet
Total loans 24,868 14,093 11,591 4,280 112 54,944
Total
deposits 26,731 17,024 22,198 5,945 91 71,989
Total
assets 31,926 21,953 26,283 7,317 416 87,895
Total risk
weighted
assets 22,728 22,188 16,747 4,164 284 66,111
Net
assets(2) 1,689 1,649 1,245 310 21 4,914
Notes
Half-year
30 June
2000
AIB Bank USA Capital Poland Group Total
division division Markets division
division
2 Segmental
information
(continued) E m E m E m E m E m E m
Operations
by business
segments(1)
Net interest
income 502 261 79 122 21 985
Other income 243 171 145 69 (17) 611
Total
operating
income 745 432 224 191 4 1,596
Total
operating
expenses 394 253 124 136 17 924
Provisions 28 18 11 12 - 69
Group
operating
profit 323 161 89 43 (13) 603
Income from
associated
undertakings - 3 1 - - 4
Profit on
disposal of
property - - - 2 - 2
Group profit
on ordinary
activities
before
taxation 323 164 90 45 (13) 609
Balance
sheet
Total
loans 21,314 12,805 10,232 3,195 272 47,818
Total
deposits 23,072 15,716 18,226 4,397 152 61,563
Total
assets 27,297 19,515 21,779 5,536 560 74,687
Total risk
weighted
assets 20,015 19,117 12,696 3,063 277 55,168
Net
assets (2) 1,473 1,407 935 225 21 4,061
Year
31 December
2000
AIB Bank USA Capital Poland Group Total
division division Markets division
division
E m E m E mm E m E m E m
Operations
by business
segments(1)
Net interest
income
before
exceptional
item 1,056 537 127 252 50 2,022
Other
income 508 381 304 153 (42) 1,304
Total
operating
income
before
exceptional
item 1,564 918 431 405 8 3,326
Total
operating
expenses 816 543 260 295 35 1,949
Provisions 56 38 18 23 (1) 134
Group
operating
profit
before
exceptional
item 692 337 153 87 (26) 1,243
Income from
associated
undertakings - - 3 - - 3
Profit on
disposal of
property 4 - - 1 - 5
Group profit
on ordinary
activities
before
exceptional
item 696 337 156 88 (26) 1,251
Deposit
interest
retention
tax (113)
Group profit
on ordinary
activities
before
taxation 1,138
Balance
sheet
Total
loans 23,112 12,995 10,386 3,645 101 50,239
Total
deposits 25,019 15,941 19,271 4,897 82 65,210
Total
assets 29,607 20,458 23,218 6,054 351 79,688
Total risk
weighted
assets 21,133 20,318 14,837 3,655 279 60,222
Net
assets (2) 1,508 1,449 1,058 261 20 4,296
Notes
Half-year
30 June
2001
Republic of United United Poland Rest of Total
Ireland States of Kingdom the world
America
2 Segmental
information
(continued) E m E m E m E m E m E m
Operations
by geographical
segments(3)
Net interest
income 423 308 194 141 1 1,067
Other
income 300 205 139 75 1 720
Total
operating
income 723 513 333 216 2 1,787
Total
operating
expenses 401 314 169 175 1 1,060
Provisions 26 23 11 5 - 65
Group
operating
profit 296 176 153 36 1 662
Income from
associated
undertakings 2 - - - - 2
Profit on
disposal of
property 1 1 - 1 - 3
Group profit
on ordinary
activities
before
taxation 299 177 153 37 1 667
Balance
sheet
Total
loans 25,296 14,140 11,225 4,280 3 54,944
Total
deposits 30,784 19,398 15,862 5,945 - 71,989
Total
assets 39,492 22,843 17,986 7,315 259 87,895
Net
assets(2) 1,958 1,688 939 310 19 4,914
Half-year
30 June
2000
Republic of United United Poland Rest of Total
Ireland States of Kingdom the world
America
E m E m E m E m E m E m
Operations
by
geographical
segments(3)
Net interest
income 381 277 198 128 1 985
Other
income 265 158 116 68 4 611
Total
operating
income 646 435 314 196 5 1,596
Total
operating
expenses 365 258 165 134 2 924
Provisions 28 19 11 11 - 69
Group
operating
profit 253 158 138 51 3 603
Income from
associated
undertakings 1 3 - - - 4
Profit on
disposal
of property - - - 2 - 2
Group profit
on ordinary
activities
before
taxation 254 161 138 53 3 609
Balance
sheet
Total
loans 22,407 12,853 9,351 3,200 7 47,818
Total
deposits 26,677 17,235 13,254 4,397 - 61,563
Total
assets 34,801 18,765 15,333 5,541 247 74,687
Net
assets(2) 1,653 1,418 747 226 17 4,061
Notes
Republic of United United
Ireland States of Kingdom
America
E m E m E m
2 Segmental information
(continued)
Operations by geographical
segments(3)
Net interest income before
exceptional item 791 568 392
Other income 570 336 243
Total operating income before
exceptional item 1,361 904 635
Total operating expenses 770 557 327
Provisions 51 38 23
Group operating profit before
exceptional item 540 309 285
Income from associated undertakings 3 -- --
Profit on disposal of property 3 -- 1
Group profit on ordinary activities
before exceptional item 546 309 286
Deposit interest retention tax
Group profit on ordinary activities
before taxation
Balance sheet
Total loans 24,027 13,018 9,545
Total deposits 29,055 17,585 13,672
Total assets 37,502 19,716 16,162
Net assets(2) 1,746 1,477 794
Half-year
31 December
Poland Rest of Total
the world
E m E m E m
Operations by geographical
segments(3)
Net interest income before
exceptional item 269 2 2,022
Other income 151 4 1,304
Total operating income before
exceptional item 420 6 3,326
Total operating expenses 292 3 1,949
Provisions 23 (1) 134
Group operating profit before
exceptional item 105 4 1,243
Income from associated undertakings -- -- 3
Profit on disposal of property 1 -- 5
Group profit on ordinary activities
before exceptional item 106 4 1,251
Deposit interest retention tax (113)
Group profit on ordinary activities
before taxation 1,138
Balance sheet
Total loans 3,645 4 50,239
Total deposits 4,897 1 65,210
Total assets 6,060 248 79,688
Net assets(2) 261 18 4,296
(1) The business segment information is based on management accounts
information. Income on capital is allocated to the divisions on
the basis of the capital required to support the level of risk
weighted assets. Interest income earned on capital not allocated
to divisions, the funding cost of the Bank Zachodni acquisition,
hedging costs in relation to the translation of foreign currency
profits and central services costs are reported in Group.
(2) The fungible nature of liabilities within the banking industry
inevitably leads to allocations of liabilities to segments, some
of which are necessarily subjective. Accordingly, the directors
believe that the analysis of total assets is more meaningful than
the analysis of net assets.
(3) The geographical distribution of profit before taxation is based
primarily on the location of the office recording the transaction.
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
3 Other interest receivable and
similar income E m E m E m
Interest on loans and advances to
banks 119 113 238
Interest on loans and advances to
customers 1,864 1,752 3,544
Income from leasing and hire purchase
contracts 106 98 205
2,089 1,963 3,987
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
4 Interest payable E m E m E m
Interest on deposits by banks and
customer accounts 1,464 1,308 2,701
Interest on debt securities in issue 100 109 249
Interest on subordinated liabilities 75 72 155
1,639 1,489 3,105
5 Deposit interest retention tax ('DIRT')
On 3 October 2000, AIB announced that it had reached a full and
final settlement with the Irish Revenue Commissioners of IR Pounds
90.04m (E4 114.33m) in relation to DIRT, interest and penalties in
Ireland for the period April 1986 to April 1999. The settlement
included IR Pounds 1.08m (E4 1.37m) paid in prior years. Although AIB
believe that it had an agreement with the Revenue Commissioners in
1991 in relation to DIRT, the Board considered that concluding this
settlement was in the best interests of shareholders, customers and
staff. As a result an exceptional charge of IR Pounds 88.96m
(E112.96m) was reflected in the accounts for the year ended 31
December 2000.
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
6 Other income E m E m E m
Dividend income 2 2 6
Fees and commissions receivable 600 532 1,101
Less: fees and commissions payable (60) (57) (108)
Dealing profits 79 49 103
Other operating income (note 7) 99 85 202
720 611 1,304
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
7 Other operating income E m E m E m
Profit/(loss) on disposal of debt
securities held for investment
purposes 12 (2) (1)
Profit on disposal of investments
in associated undertakings - 2 5
(Loss)/profit on disposal of equity
shares (4) 5 24
Contribution of life assurance company 47 42 95
Contribution from securitised assets 3 2 4
Miscellaneous operating income 41 36 75
99 85 202
Notes
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
8 Total operating expenses E m E m E m
Staff costs 631 545 1,144
Other administration expenses 338 299 634
Depreciation of tangible
fixed assets 78 68 145
Amortisation of intangible
assets 13 12 26
1,060 924 1,949
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
9 Taxation E m E m E m
Allied Irish Banks, p.l.c.
and subsidiaries
Corporation tax in
Republic of Ireland
Current tax on income
for the period 41 41 69
Adjustments in respect
of prior periods (3) - (1)
38 41 68
Double taxation relief (8) (12) (15)
30 29 53
Foreign tax
Current tax on income
for the period 126 113 146
Adjustments in respect
of prior periods 1 1 (5)
127 114 141
157 143 194
Deferred taxation 8 24 124
165 167 318
Effective tax rate 24.7% 27.5% 26.3%(1)
(1)The effective tax rate for the year ended 31 December 2000 has been
adjusted to eliminate the effect of the deposit interest retention tax
settlement (note 5).
Half-year Half-year Year
10 Earnings per E 0.32 30 June 30 June 31 December
ordinary share 2001 2000 2000
(a) Basic
Group profit attributable
to the ordinary
shareholders(1) E 463m E 414m E 762m
Weighted average number of
shares in issue during
the period(1) 860.4m 853.7m 856.1m
Earnings per share EUR 53.8c EUR 48.5c EUR 89.0c
(1)In accordance with FRS 14 - `Earnings Per Share', dividends arising
on shares held by the employee share trusts are excluded in arriving
at profit before taxation and deducted from the aggregate of dividends
paid and proposed. The shares held by the trusts are excluded from the
calculation of weighted average number of shares in issue.
Notes
10 Earnings per E 0.32
ordinary share (continued)
Earnings per E 0.32 ordinary share
Half-year Half-year Year
30 June 30 June 31 December
(b) Adjusted 2001 2000 2000
cent per E 0.32 share
As reported 53.8 48.5 89.0
Adjustments
Goodwill amortisation 1.6 1.4 3.0
Deposit interest retention tax - - 12.0
55.4 49.9 104.0
The adjusted earnings per share figure has been presented to eliminate
the effect of the amortisation of goodwill in June 2001, June 2000 and
December 2000 and the deposit interest retention tax settlement in
December 2000.
Half-year Half-year Year
30 June 30 June 31 December
(c) Diluted 2001 2000 2000
Number of shares (millions)
Weighted average number
of shares in issue
during the period 860.4 853.7 856.1
Dilutive effect of
options outstanding 20.6 9.2 8.8
Diluted 881.0 862.9 864.9
The weighted average number of ordinary shares reflects the dilutive
effect of options outstanding under the employee share trusts, the
Executive Share Option Scheme and the Allfirst Stock Option Plan.
30 June 30 June 31 December
11 Loans and advances 2001 2000 2000
to customers E m E m E m
Loans and advances to
customers 45,674 39,137 42,159
Amounts receivable
under finance leases 2,524 2,443 2,446
Amounts receivable under hire
purchase contracts 906 828 846
Money market funds 532 417 429
49,636 42,825 45,880
Notes
30 June 30 June 31 December
12 Provisions for bad 2001 2000 2000
and doubtful debts E m E m E m
At beginning of period 872 771 771
Exchange translation
adjustments 65 6 33
Acquisition of Group
undertakings - - 35
Charge against profit
and loss account 67 70 133
Amounts written off (49) (46) (132)
Recoveries of amounts written
off in previous years 8 9 32
At end of period 963 810 872
At end of period
Specific 518 414 452
General 445 396 420
963 810 872
Amounts include:
Loans and advances to banks 2 3 3
Loans and advances to customers 961 807 869
963 810 872
13 Risk elements in lending
Outside of the United States of America, the Group's loan control and
review procedures generally do not include the classification of loans
as non-accrual, accruing past due, restructured and potential problem
loans, as defined by the US Securities and Exchange Commission
(`SEC'). Management has, however, set out below the amount of loans,
without giving effect to available security and before deduction of
provisions, which would have been so classified had the SEC's
classification been used.
30 June 30 June 31 December
2001 2000 2000
E m E m E m
Loans accounted for on
a non-accrual basis
(including loans where
interest is accrued but
provisions have been
made against it) (1)
Republic of Ireland 178 146 162
United Kingdom 99 108 98
United States of America 80 62 85
Poland 609 480 523
Rest of the World 3 24 3
969 820 871
Accruing loans which are
contractually past due
90 days or more as to
principal or interest (2)
Republic of Ireland 75 59 79
United Kingdom 38 18 38
United States of America 36 36 36
149 113 153
Other real estate and
other assets owned 21 34 30
(1)Total interest income that would have been recorded during the
half-year ended 30 June 2001, had interest on non-accrual loans been
included in income, amounted to E 6m for Republic of Ireland (31
December 2000:E 12m; 30 June 2000:E 5m), E 4m for United Kingdom (31
December 2000:E 8m; 30 June 2000:E 4m), E 4m for United States of
America (31 December 2000:E 7m; 30 June 2000:E 3m), E 58m for Poland
(31 December 2000:E 95m; 30 June 2000:E 44m) and zero for Rest of the
World (31 December 2000: zero; 30 June 2000:E 1m).
Notes
13 Risk elements in lending (continued)
Interest on non-accrual loans included in income for the half-year
ended 30 June 2001 totalled E 25m (31 December 2000:E 42m; 30 June
2000:E 13m).
(2) Overdrafts generally have no fixed repayment schedule and,
consequently, are not included in this category.
AIB Group generally expects that loans where known information about
possible credit problems causes management to have serious doubts as
to the ability of borrowers to comply with loan repayment terms would
be included under its definition of non-performing and would therefore
have been reported in the above table. However, management's best
estimate of loans, not included above, that are current as to payment
of principal and interest but concerning which AIB Group has serious
doubts as to the ability of the borrower to comply with loan repayment
terms totalled approximately E 145m at 30 June 2001 (31 December 2000:
E 127m; 30 June 2000: E 85m).
30 June 2001 31 December 2000
Book Market Book Market
amount value amount value
14 Debt securities E m E m E m E m
Held as financial
fixed assets
Issued by public bodies:
Government securities 5,966 5,968 6,113 6,102
Other public sector
securities 4,152 4,165 4,001 3,995
Issued by other issuers:
Bank and building society
certificates of deposit 184 184 395 396
Other debt securities 6,709 6,756 6,136 6,168
17,011 17,073 16,645 16,661
Held for trading purposes
Issued by public bodies:
Government securities 446 431
Other public sector
securities 1,555 904
Issued by other issuers:
Bank and building society
certificates of deposit 48 46
Other debt securities 1,935 960
3,984 2,341
20,995 18,986
Notes
15 Long-term assurance business
The assets and liabilities of Ark Life Assurance Company Limited (Ark
Life) representing the value of the assurance business together with
the policyholders' funds are:
30 June 30 June 31 December
2001 2000 2000
E m E m E m
Investments 2,211 1,963 2,150
Value of investment in
business 166 101 138
Other assets - net 203 111 91
2,580 2,175 2,379
Long-term assurance
liabilities to policyholders (2,304) (1,978) (2,141)
Long-term assurance business
attributable to shareholders 276 197 238
Represented by:
Shares at cost 19 19 19
Reserves 254 179 218
Profit and loss account 3 (1) 1
276 197 238
The increase in the value to the Group of Ark Life's long-term
assurance and pensions business in force credited to the profit and
loss account and included in other operating income amounted to E 47m
after grossing-up for taxation (half-year ended 30 June 2000: E 42m;
year ended 31 December 2000: E 95m).
30 June 30 June 31 December
2001 2000 2000
16 Customer accounts E m E m E m
Current accounts 13,935 10,579 12,701
Deposits:
Demand deposits 10,731 10,685 10,297
Time deposits 23,130 21,114 21,094
Money market funds 4,683 4,121 4,345
52,479 46,499 48,437
17 Issue of reserve capital instruments
On 5 February 2001, the Group issued E 500 million 7.5% Step-up
Callable Perpetual Reserve Capital Instruments (RCIs).
30 June 30 June 31 December
18 Consolidated cash 2001 2000 2000
flow statement E m E m E m
(a) Analysis of changes in cash
At beginning of period 2,222 3,130 3,130
Net cash inflow/(outflow)
before the effect of
exchange translation
adjustments 320 (1,218) (1,016)
Effect of exchange
translation adjustments 84 46 108
At end of period 2,626 1,958 2,222
Notes
30 June 30 June 31 December
18 Consolidated cash 2001 2000 2000
flow statement (continued) E m E m E m
(b) Analysis of cash
Cash and balances at
central banks 854 796 938
Loans and advances to banks
(repayable on demand) 1,772 1,162 1,284
2,626 1,958 2,222
19 Group financial information for US investors
For convenience purposes this note contains translations of certain
euro amounts into US dollars at the rate of f 1.00 to US$ 0.8480, the
period end translation rate used in the preparation of the Group's
financial statements. These translations should not be construed as
representations that the euro amounts actually represent such US
dollar amounts or could be converted into US dollars at the rate
indicated.
Half-year Half-year Half-year Year
June 30 June 30 June 30 December 31
Summary of consolidated 2001 2001 2000 2000
statement of income US $ m E m E m E m
Amounts in accordance
with IR GAAP
Net interest income before
exceptional item 905 1,067 985 2,022
Deposit interest
retention tax - - - (113)
Net interest income after
exceptional item 905 1,067 985 1,909
Other income 610 720 611 1,304
Total operating income 1,515 1,787 1,596 3,213
Total operating expenses 899 1,060 924 1,949
Group operating profit
before provisions 616 727 672 1,264
Provisions 55 65 69 134
Group operating profit -
continuing activities 561 662 603 1,130
Income from associated
undertakings 2 2 4 3
Profit on disposal
of property 3 3 2 5
Group profit on ordinary
activities before taxation 566 667 609 1,138
Taxation on ordinary activities 140 165 167 318
Group profit on ordinary
activities after taxation 426 502 442 820
Group profit attributable
to the ordinary
stockholders of
Allied Irish Banks, p.l.c. 392 463 414 762
Notes
Half-year Half-year Half-year Year
19 Group financial June 30 June 30 June 30 December 31
information for US 2001 2001 2000 2000
investors (continued) US $ E E E
Per American
Depositary Share (`ADS')
Net income 0.91 1.08 0.97 1.78(1)
Dividend (2) 0.27 0.32 0.27 0.79
Net assets 9.47 11.17 9.33 9.84
Amounts in accordance
with US GAAP
Net income 345m 407m 382m 712m(3)
Net income attributable
to ordinary stockholders 337m 398m 373m 692m(4)
Net income per ADS 0.78 0.92 0.87 1.62(5)
Net assets per ADS 11.42 13.46 11.18 11.99
(1) U 2.02 when adjusted to exclude the impact of the deposit interest
retention tax settlement.
(2) The actual dividend payable to US stockholders will depend on the
E/US $ exchange rate prevailing.
(3) E 815m when adjusted to exclude the impact of the deposit interest
retention tax settlement.
(4) E 795m when adjusted to exclude the impact of the deposit interest
retention tax settlement.
(5) E 1.86 when adjusted to exclude the impact of the deposit interest
retention tax settlement.
Summary of consolidated
balance sheet US $ m E m E m E m
Amounts in accordance
with IR GAAP
Total assets 74,536 87,895 74,687 79,688
Ordinary stockholders'
equity 4,167 4,914 4,061 4,296
Deposits etc 61,046 71,989 61,563 65,210
Loans etc 46,592 54,944 47,818 50,239
Amounts in accordance
with USGAAP
Total assets 73,231 86,357 73,383 78,198
Ordinary stockholders'
equity 5,023 5,923 4,864 5,237
Notes
19 Group financial information for US investors (continued)
Adjustments to financial statements
The Group financial statements conform with accounting principles
generally accepted in Ireland. The following tables provide the
significant adjustments to the consolidated net income (Group profit
attributable to the stockholders of AIB) and consolidated ordinary
stockholders' equity, which would be required if accounting principles
generally accepted in the United States (US GAAP) had been applied
instead of those generally accepted in Ireland (IR GAAP).
Half-year Half-year Year
June 30 June 30 December 31
Consolidated net income 2001 2000 2000
(millions except per share amounts)
Net income (Group profit
attributable to the
stockholders of AIB)
as in the consolidated
profit and loss account E 463 E 414 E 762
Adjustments in respect of:
Long-term assurance policies (29) (35) (70)
Goodwill (67) (38) (78)
Premium on core deposit
intangibles (4) (5) (9)
Pension cost 60 52 122
Preference dividends 9 9 20
Securities held for hedging
purposes (19) (20) (25)
Derivatives hedging
available-for-sale securities - - (9)
Internal derivative trades 15 - (6)
Post-retirement benefits - - (1)
Internal use computer software 5 4 11
Derivatives FAS 133 transition
adjustment(1) 122 - -
Derivatives FAS 133 adjustment (145) - -
Deferred tax effect of the above
adjustments (3) 1 (5)
Net income in accordance
with US GAAP E 407 E 382 E 712
Net income attributable
to ordinary stockholders
of AIB in accordance
with US GAAP E 398 E 373 E 692
Equivalent to US $ 337
Income per American
Depositary Share (ADS*)
in accordance with US GAAP E 0.92 E 0.87 E 1.62
Equivalent to US $0.78
Period-end exchange rate
o/US $ 0.8480
*An American Depositary Share represents two ordinary shares of E 0.32
each.
Half-year Half-year Year
June 30 June 30 December 31
Comprehensive income 2001 2000 2000
(millions)
Net income in accordance
with US GAAP E 407 E 382 E 712
Net movement in unrealized
holding gain on investment
securities arising
during the period 30 38 110
Derivatives FAS 133 translation
adjustment(1) 41 - -
Exchange translation adjustments 389 104 220
Comprehensive income E 867 E 524 E 1,042
(1) Cumulative effect of the change in accounting principle for
derivatives and hedging activities.
Notes
19 Group financial information
for US investors (continued)
Adjustments to financial
statements (continued)
Consolidated ordinary June 30 June 30 December 31
stockholders' equity 2001 2000 2000
(millions except per share amounts)
Ordinary stockholders' equity
as in the consolidated
balance sheet E 4,914 E 4,061 E 4,296
Revaluation of property (210) (210) (210)
Depreciation of freehold
and long leasehold property (27) (27) (27)
Goodwill 1,171 1,097 1,097
Core deposit intangibles 24 30 26
Dividends payable on
ordinary shares 136 116 221
Preference dividend declared (1) - -
Long-term assurance policies (173) (123) (150)
Unrealised (losses)/gains not
yet recognised on:
Available-for-sale
debt securities 62 (168) 16
Available-for-sale
equity securities (1) - (6)
Derivatives hedging
available-for-sale securities - 8 (63)
Securities held for hedging
purposes 7 31 26
Internal derivative trades 5 (3) (10)
Derivatives FAS 133 adjustment (32) - -
Pension cost 318 187 256
Post-retirement benefits (5) (5) (5)
Internal use computer software 17 4 11
Own shares (193) (127) (177)
Deferred tax effect of the
above adjustments (89) (7) (64)
Ordinary stockholders' equity
in accordance with US GAAP E 5,923 E 4,864 E 5,237
Equivalent to US $ 5,023
Ordinary stockholders'
equity per ADS in
accordance with US GAAP E 13.46 E 11.18 E 11.99
Equivalent to US $ 11.42
Ordinary stockholders' equity
per ADS in accordance with
IR GAAP E 11.17 E 9.33 E 9.84
Equivalent to US $ 9.47
Notes
Contract amount
30 June 30 June 31 December
2001 2000 2000
20 Memorandum items:
contingent liabilities
and commitments E m E m E m
Contingent liabilities:
Acceptances and endorsements 130 195 147
Guarantees and assets pledged
as collateral security 4,642 3,250 4,027
Other contingent liabilities 1,160 999 1,089
5,932 4,444 5,263
Commitments:
Commitments arising out of
sale and option to resell
transactions 337 220 257
Other commitments 17,453 14,363 15,855
17,790 14,583 16,112
23,722 19,027 21,375
The Group's maximum exposure to credit loss under contingent
liabilities and commitments to extend credit, in the event of
non-performance by the other party where all counterclaims, collateral
or security prove valueless, is represented by the contractual amounts
of those instruments.
The following table presents the notional principal amount and
gross replacement cost of interest rate, exchange rate and equity
contracts.
30 June 2001
Notional Gross
principal replacement
amount cost
E m E m
Interest rate contracts (1) 124,716 1,036
Exchange rate contracts (1) 25,675 556
Equity contracts(1) 3,036 219
30 June 2000
Notional Gross
principal replacement
amount cost
E m E m
Interest rate contracts (1) 149,150 768
Exchange rate contracts (1) 27,478 580
Equity contracts(1) 2,313 306
31 December 2000
Notional Gross
principal replacement
amount cost
E m E m
Interest rate contracts (1) 130,945 875
Exchange rate contracts (1) 26,877 901
Equity contracts(1) 2,938 297
(1) Interest rate, exchange rate and equity contracts have been
entered into for both hedging and trading purposes.
In respect of interest rate and exchange rate contracts, notional
principal amounts are used to express the volume of these
transactions. However, the amounts subject to risk are much lower in
accordance with the terms of the contracts. Credit risk arises when
market movements are such that the deal has positive value to the
Group so that a cost would be incurred if the contract had to be
replaced in the event of counterparty default. The sum of these
positive values is known as gross replacement cost and does not
reflect the netting of offsetting positions.
21 Strategic alliance with Keppel Capital Holdings Ltd.
On 14 July 2001, AIB Group announced that it supported the revised
offer by Oversea-Chinese Banking Corporation Limited (`OCBC Bank') to
purchase Keppel Capital Holdings Ltd. (`KCH'). On completion of the
transaction, the estimated financial impact for AIB from the sale of
its interests in KCH would amount to a profit of ? 93m. In addition,
the 1999 Singapore $ 351m 3 year senior bonds with warrants will be
fully redeemed at par on completion.
Notes
22 Average balance sheets and interest rates
The following tables show the average balances and interest rates
of interest earning assets and interest bearing liabilities for the
half-year ended 30 June 2001 and the year ended 31 December 2000. The
calculation of average balances include daily and monthly averages for
reporting units. The average balances used are considered to be
representative of the operations of the Group.
Half year ended Year ended
30 June 2001 31 December 2000
Average Interest Average Average Interest Average
balance rate balance rate
Assets E m E m % E m E m %
Placings with banks
Domestic offices 2,706 55 4.1 2,410 114 4.7
Foreign offices 1,892 64 6.8 1,897 123 6.5
Loans to customers (1)
Domestic offices 20,478 697 6.9 18,570 1,239 6.7
Foreign offices 24,688 1,061 8.7 22,772 2,056 9.0
Placings with banks
and loans to
customers (1)
Domestic offices 23,184 752 6.5 20,980 1,353 6.4
Foreign offices 26,580 1,125 8.5 24,669 2,179 8.8
Funds sold
Domestic offices - - - - - -
Foreign offices 27 1 4.7 75 5 6.4
Debt securities and
government bills
Domestic offices 8,206 219 5.4 7,100 398 5.6
Foreign offices 11,956 415 7.0 11,014 775 7.0
Instalment credit and
finance lease
receivables
Domestic offices 1,868 59 6.4 1,739 109 6.3
Foreign offices 1,479 47 6.4 1,449 96 6.6
Total interest
earning assets
Domestic offices 33,258 1,030 6.3 29,819 1,860 6.2
Foreign offices 40,042 1,588 8.0 37,207 3,055 8.2
73,300 2,618 7.2 67,026 4,915 7.3
Allowance for loan
losses (920) (828)
Non-interest earning
assets 8,466 7,392
Total assets 80,846 2,618 6.5 73,590 4,915 6.7
Percentage of assets
applicable to foreign
activities 55.8 56.0
(1) Loans to customers include money market funds. Non-accrual
loans and loans classified as problem loans are also included within
this caption.
Notes
22 Average balance sheets and interest rates (continued)
Half year ended Year ended
30 June 2001 31 December 2000
Average Interest Average Average Interest Average
balance rate balance rate
Liabilities and
stockholders' equity E m E m % E m E m %
Interest bearing
deposits and other
short-term borrowings
Domestic offices 25,529 544 4.3 22,797 944(1) 4.1(1)
Foreign offices 31,791 891 5.7 30,058 1,701 5.7
Funds purchased
Domestic offices - - - - - -
Foreign offices 1,721 41 4.8 1,522 93 6.1
Subordinated
liabilities
Domestic offices 1,529 47 6.2 1,478 97 6.6
Foreign offices 778 28 7.2 750 58 7.7
Total interest bearing
liabilities
Domestic offices 27,058 591 4.4 24,275 1,041(1) 4.3(1)
Foreign offices 34,290 960 5.6 32,330 1,852 5.7
61,348 1,551 5.1 56,605 2,893(1) 5.1(1)
Interest-free
liabilities
Current accounts 9,428 8,503
Other liabilities 4,561 3,941
Minority equity and
non-equity interests 294 246
Preference share
capital 247 266
Reserve capital
instruments 401 -
Ordinary stockholders'
equity 4,567 4,029
Total liabilities and
stockholders' equity 80,846 1,551 3.9 73,590 2,893(1) 3.9(1)
Percentage of
liabilities applicable
to foreign activities 54.8 55.7
(1)The interest amount and the average rate have been presented to
eliminate the effect of the deposit interest retention tax settlement
(note 5).
23 Review report
The interim accounts (unaudited) have been reviewed by the Group's
auditors, PricewaterhouseCoopers, and their review report is set out
on page 37. The profit retained for the half-year ended 30 June 2001
has been included in Tier 1 capital at 30 June 2001.
24 Approval of accounts
The interim accounts (unaudited) were approved by the board of
directors on 31 July 2001.
Financial and other information
Half-year Half-year Year
30 June 30 June 31 December
2001 2000 2000
Operating ratios
Operating expenses/
operating income 59.4% 57.9% 58.6% (1)
Tangible operating expenses
(2) /operating income 58.6% 57.1% 57.8% (1)
Other income/operating income 40.2% 38.3% 39.2% (1)
Net interest margin
Group 2.93% 3.10% 3.02% (3)
Domestic 2.67% 2.73% 2.75% (3)
Foreign 3.16% 3.40% 3.23%
Rates of exchange
E/US $
Closing 0.8480 0.9556 0.9305
Average 0.8931 0.9578 0.9259
E/Stg (pound)
Closing 0.6031 0.6323 0.6241
Average 0.6198 0.6104 0.6091
E/PLN
Closing 3.3696 4.1835 3.8498
Average 3.6111 4.0861 4.0121
(1)Adjusted to exclude the impact of the deposit interest
retention tax settlement ('DIRT'). Including DIRT, operating expenses/
operating income was 60.7%, tangible operating expenses/operating
income was 59.8% and other income/operating income was 40.6%.
(2)Excludes amortisation of goodwill of E 13.4m (half-year 30 June
2000: E 12.4m; year 31 December 2000: E 26.3m).
(3)The Group and domestic net interest margins have been adjusted
to exclude the impact of the deposit interest retention tax
settlement.
Capital adequacy information E m E m E m
Total risk weighted assets 66,111 55,168 60,222
Capital
Tier 1 4,918 3,569 3,814
Tier 2 3,129 2,824 2,926
8,047 6,393 6,740
Supervisory deductions 255 178 214
Total 7,792 6,215 6,526
Review report of PricewaterhouseCoopers to Allied Irish Banks,
p.l.c.
Introduction
We have been instructed by the Company to review the financial
information set out on pages 5 to 8 and pages 19 to 35 and we have
read the other information contained in the interim report for any
apparent misstatements or material inconsistencies with the financial
information.
Directors' responsibilities
The interim report, including the financial information contained
therein, is the responsibility of, and has been approved by the board
of directors. The Listing Rules of the Irish Stock Exchange require
that the accounting policies and presentation applied to the interim
figures should be consistent with those applied in preparing the
preceding annual accounts except where any changes, and the reasons
for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in
Bulletin 1999/4 issued by the Auditing Practices Board. A review
consists principally of making enquiries of Group management and
applying analytical procedures to the financial information and
underlying financial data, and based thereon, assessing whether the
accounting policies and presentation have been consistently applied
unless otherwise disclosed. A review excludes audit procedures such as
tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit
performed in accordance with Auditing Standards and, therefore,
provides a lower level of assurance than an audit. Accordingly, we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review, we are not aware of any material
modifications that should be made to the financial information as
presented for the six months ended 30 June 2001.
PricewaterhouseCoopers
Chartered Accountants
Dublin
31 July 2001
--30--emb/ny* rc/rlg/ac/ah/ny
CONTACT: For further information please contact:
Declan Mc Sweeney
Chief Financial Officer
Bankcentre
Dublin
353-1-660-0311
Ext. 14954
or
Alan Kelly
Head of Capital & Group Investor Relations
Bankcentre
Dublin
353-1-660-0311
Ext. 12162
or
Catherine Burke
Head of Corporate Relations
Bankcentre
Dublin
COPYRIGHT 2001 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.
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