CRH PROFITS AND REVENUES FALL AS CONSTRUCTION REMAINS WEAK - Building materials group CRH has reported pre-tax profits of €732m for the year ending December 2009, down 55% from the previous year. Revenues fell by 17% to €17.4 billion and the company said it is expecting demand to remain weak for much of 2010. The start of the year was not helped by the prolonged cold snap in Europe and North America in January and February. In terms of size CRH is worth €12 billion, against AIB's €870m, and it employs 93,000 staff, against AIB's 25,000.
CRH's chief executive Myles Lee says that residential and non-residential markets fell last year in both Europe and the US, with government-funded infrastructure investment only partially compensating.
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AIB'S IRISH LOSSES RISE TO €3.5 BILLION ON IMPAIRED LOANS - AIB Group has reported an overall loss for 2009 of €2.3 billion euro, while losses in its Republic of Ireland operations were €3.5 billion last year. The bank says 2009 was a very challenging year, and that significant asset impairments resulted in a material level of credit losses.
AIB's group managing director Colm Doherty says he has prepared a capital development plan, which has been approved by the board of AIB, and that the plan is being implemented. 'We clearly have a number of extremely valuable and divisible assets which we will be able to optimise value from. After we have done that we could go to our shareholders for a rights issue,' he stated. Mr Doherty also says that the bank has been approached by a number of other financial institutions with regard to a strategic investment in the bank, but he declined to say who those were.
He says that once the bank had exhausted all of the other options in relation to raising capital, only then would he see the bank going back to the State, though he could not rule it out. Mr Doherty says AIB will emerge as a smaller bank. He says that talks with the European Union on restructuring were not over, so AIB has not yet heard what it is required to do with the shape of the institution.
The bank's managing director says there would be further writedowns in its property portfolio, but adds that the bank is pro-actively recognising all of the levels of impairment within its balance sheet.
AIB estimates it will hand over €23 billion in loans to NAMA, though this figure may fall. Mr Doherty says it was difficult to predict what the discount will be on the loans, but the Government's guidance in respect of the average "haircut" is 32%.
Mr Doherty says the current retail banking environment in Ireland is 'quite dysfunctional'. He says the bank is beng charged more for the money it borrows than it is charging its customers. He states that this situation is unsustainable. He says it was inevitable that pricing, right across AIB's product range, including mortgages, will have to go up in Ireland in 2010.
He says AIB is in a very difficult position on foot of its exposure to land and property development in Ireland. He says that while the NAMA transfers will assist in terms of helping the bank's liquidity, it is going to have to generate more capital for itself. He says that hopefully by doing that AIB will be able to minimise the call on the Irish taxpayer for further support.
