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Allied Irish Banks, p.l.c., Annual General Meeting, 22 April, 2008. Mr. Dermot Gleeson, Chairman. Performance highlights. Basic adjusted earnings per share up 13%. Increased operating profit in all divisions. 57% of profit generated outside Republic of Ireland.
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Allied Irish Banks, p.l.c.,Annual General Meeting,22 April, 2008 Mr. Dermot Gleeson, Chairman
Performance highlights Basic adjusted earnings per share up 13% Increased operating profit in all divisions 57% of profit generated outside Republic of Ireland Continued investment in quality and efficiency Selective acquisitions in Central Europe
+10% +10% +10% +10% +10% Progressive dividend policy • 2007 total dividend per share up 10% to 79c • Compound growth of 10% per annum over 5 years • Dividend per share up over 60% in 5 years
Financial Markets turmoil • Origins in U.S. sub-prime mortgages • emerged with weakening of U.S. economy and housing market • led to higher default rates on sub-prime and other mortages • Decline in value of assets led to large write-downs by manyfinancial institutions • resulted in severe tightening of liquidity in wholesale funding markets • critical source of funding for banks and their capacity to lend • Uncertainty damaged confidence in stock markets • sharp fall in share prices
AIB’s solid capital position AIB Regulatory min. AIB Regulatory min. No requirement for recourse to shareholders
AIB’s strong funding diversity Stable Customer deposits – 48% Capital – 9% At 31 December, 2007, the combined value of our customer accounts (c. 2m customers) and funding maturing after H1, 2008 equated to 94% of customer loans Wholesale funding – 43%
AIB’s robust asset quality Dec 2006 Dec 2007 0.9 Impaired loans % 0.8 4.9 Criticised loans / total loans % 5.3 0.44 Gross new impaired loans % 0.45 76 Total provisions / impaired loans % 71 12 Bad debt charge bps 9 • Resilient and diverse property & construction portfolios • Low level exposure to assets affected by global market dislocation • 2008 guidance – bad debt charge of c. 20 bps
Irish economy • Slower level of growth in 2008 • Adjustment in housing market to more sustainable levels a major contributor to slow down • seen by most economists as a necessary adjustment • most predicting return to higher and better balanced growth levels from 2009 • Adjustment has led to concerns over Irish banks exposure to mortgage / property & construction sectors
AIB’s solid / resilient residential mortgage portfolio • Primary emphasis on repayment capacity • all applications stress tested at higher interest rates • policy on loan to value remains conservative • Arrears in portfolio remain low • 0.36% of portfolio in 2007
Group ROI* Commercial Investment 41% 34% Residential Investment 9% 7% Commercial Development 18% 22% Residential Development 29% 34% Contractors 3% 3% Total 100% 100% Balances €m €46.4bn €27.8bn AIB’s property & construction portfolio is well diversified *AIB Bank ROI Division
Northern Ireland – 9% Great Britain – 27% Republic of Ireland – 55% U.S.A. – 3% Poland – 3% Other – 3% AIB’s property & construction assets well spread geographically 45% of exposure relates to assets located outside Republic of Ireland