AIB has announced a pretax loss of €3.5 billion for its Irish operations in 2009 and said the operating environment continues to be difficult.
Ireland's biggest bank, reported an overall pretax loss of €2.65 billion for the year, its first ever full- year loss.
Operating profits, before provisions for fiscal 2009, totalled €3 billion compared to €2.7 billion a year earlier. Profit included a gain of €623 million from the capital exchange offering completed last June with a further €159 million coming from an amendment to retirement benefits.
At 4.30pm shares in AIB were trading at €1.02, a gain of 2.5 per cent with just under 1.8 million shares traded.
Total operating income was down 11 per cent from €5 billion to €4.8 billion.
In what was described as "a very challenging year", AIB said it had made a provision of €5.4 billion in bad loans, €3.4 billion of which has been identified for transfer to the National Asset Management Agency (Nama).
Following the transfer of loans to Nama, loans extended by AIB’s Irish operations total about €58 billion which is equivalent to approximately 55 per cent of the group's loan portfolio.
The group said total criticised loans were €38.2 billion or 29.4per cent of total customer loans at the end of its financial year.
This compares with €15.5billion, or 11.7pc of total loans a year earlier, with its Irish operations accounting for 77pc of the rise in criticised loans.
During last year, AIB’s capital position benefited from €3.5 billion of core tier 1 capital from the Government and €1.2 billion from the capital exchange offering completed in June.
AIB said that the operating environment continued to be very difficult with both the increased costs of deposits and higher funding costs evident.
"In 2010 AIB will prioritise restructuring and restoring its businesses to underpin viability, and renewing the group's credibility amongst all its stakeholders," it said in a statement.
Speaking on RTÉ's Morning Ireland today, AIB Group managing director, Colm Doherty, said the bank had a number of extremely valuable and separately divisible assets which it would be able to optimise value from and generate capital.
Adding that the current banking model in Ireland was quite dysfunctional, Mr Doherty said: “We’re currently paying more for the money we borrow than we’re charging our customers. Ultimately that is unsustainable".
Mr Doherty added: "It is inevitable unfortunately that price right across the product range including mortgages will have to go up in Ireland in 2010”.
He also said that AIB was in a very difficult position on foot of its exposure to land and property development in Ireland.
Speaking in the Dáil today, Mr Cowen said: “AIB results show that Nama is forcing the banks to face up to the reality of their bad loans. Everybody knows the banks lent far too much to speculative property development. Nama is making the banks take the losses on these property loans upfront. That’s what’s reflected in the large losses that AIB is reporting”.
“Were there not a Nama vehicle involved, banks would be seeking to protect their interest by spreading the loss over a longer period in order to protect shareholder interest only,” he added.
Eamon Gilmore told the Taoiseach: "The banks are not lending, your policy on banks is not working and because it’s not working, people in this country are not working”.