AIB has reported that its pre-tax profits fell by more than 60% last year. Pre-tax profits were just over €1 billion, compared with €2.5 billion in 2007. Earnings per share fell by 68% to 66.5 cent.
Results for 2008 show there was a significant fall in the value of AIB's property portfolios and loan growth was slower. The banks says it expects its business environment to remain extremely difficult this year.
In a statement accompanying its results this morning, the bank takes some responsibility for its fall in profitability. It says that some decisions, particularly in relation to lending to the property and construction sectors, had a negative impact on its business.
Chief executive Eugene Sheehy said he regretted some of the lending decisions the bank made. But asked about his own position on RTÉ radio, he said he wanted to continue to lead the bank in the coming years to see it recover.
Mr Sheehy said that the past year had been very challenging for AIB. He said market and economic conditions were unprecedented and it was a year in which shareholder value was significantly diminished. AIB shares have lost more than 90% of their value in the last year.
As it signalled in a trading statement last month, AIB set aside €1.8 billion to cover bad debts, up from just €106m in 2007.
A breakdown showed that AIB's retail banking business in the Republic of Ireland made a loss of €52m, hit by a €1.3 billion hit from bad loans. The property and construction sector accounted for 80% of the bd debt provision. Excluding this, profits were flat at just under €1.2 billion. Loans to customers were up 5%, with mortgages up 10%, but non-mortgage lending up 2%.
Pre-tax profits at AIB Capital Markets grew by 13% to €585m, but within this, investment banking profits dropped 72% due to downturn in the financial markets.
UK profits fell by 61% to €190m, again hit by provisions for bad debts. Profits in central and Eastern Europe were down 9% to €263m.
AIB shares closed seven cent higher at 46 cent in Dublin this evening - up 18%.
