Allied Irish Banks first-half profits almost triple as the lender cut costs and clawed back money set aside for bad loans, raising the prospect of it paying back a state bailout. Grace Pascoe reports.
Earnings almost treble at Allied Irish Bank. First half pretax profits at Ireland's largest state-owned lender were 1.24 billion euros in the six months to June. A hefty rise considering in 2014 it made 1.1 billion in the whole year. Cost-cutting, increased interest margins and freeing up money put aside for bad loans all helped. Jeremy Stretch is from CIBC. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "We are seeing a recovery in key elements of the lending portfolio which are contingent to AIB's profitability. I think that does suggest that the government are and should be reasonably confident of being able to drip feed that asset back into the market on a gradual basis in order to re-coop the costs of that bailout." AIB was rescued by the Irish government back in 2008 following the financial crisis, at a cost to taxpayers of 21 billion euros. Now, with profits up, the government hopes to get its money back. Beginning with the sale of a 25 per cent stake, which could start as soon as the end of the year. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "Clearly governments were forced to write some very large cheques, effectively to sustain the integrity of the banking system through the 08 period. Over the longer term I think there is still a reasonable degree of confidence that those cheques will be repaid." Before any sale goes ahead, the bank must finish talks with regulators and the government on reorganising its capital structure.