Irish bank AIB 2008 profits tumble 62 percent
2009-03-02

Category Earnings Banks Nations Ireland Category Regions Regions Europe Event Global Financial Crisis Source (AFP)

DUBLIN (AFP) - Ireland's biggest lender Allied Irish Bank said Monday its pre-tax profit sank 62 percent last year to about 1.0 billion euros (1.3 billion dollars) amid "unprecedented" trading conditions.

AIB chief executive Eugene Sheehy described the results as "disappointing" and said it was a "very challenging" year for the group.

Profit before tax fell to 1.03 billion euros from 2.51 billion euros in 2007.

"Market and economic conditions were unprecedented and it was a year in which shareholder value was significantly diminished," Sheehy said.

Irish banks have been badly hit by the international financial turmoil and the collapse of a domestic property bubble. AIB's share price declined 90 percent in 2008.

Sheehy said the drop in profits and erosion of shareholder value was "not all down to factors outside our control.

"Decisions made under our sole control, particularly in relation to our exposure to the property and construction sectors, negatively impacted on our business.

"I regret some of the lending decisions we made," he said, adding: "There was a significant deterioration in asset quality, most notably in property portfolios."

The outlook for 2009 remained "extremely difficult" given deteriorating economic conditions in recession-hit Ireland and "uncertainty as to the depth of the slowdown in the global economy, interest rate environments, currency exchange rates, unemployment and the direction of the property and housing market."

Anglo Irish, Ireland's third biggest bank, was nationalised in January amid a series of governance scandals, while its HQ was raided by the police fraud squad and a special anti-white collar crime unit last week.

AIB and the second biggest lender, Bank of Ireland, are set to receive a 3.5-billion-euro capital injection from the government.