AIB Group Preliminary announcement of 2001 results.

AIB Group

Preliminary announcement of 2001 results

A number of statements we will be making in our presentation and in the accompanying slides will not be based on historical fact, but will be “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected in the forward looking statements. Factors that could cause actual results to differ materially from those in the forward looking statements include, but are not limited to, global, national and regional economic conditions, levels of market interest rates, credit or other risks of lending and investment activities, competitive and regulatory factors and technology change.

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Forward looking statement

Michael Buckley

Group Chief Executive

Allfirst suspected fraud update

6 Feb 07.00 Stock exchange announcement, $750m loss indicated

7 Feb 20.00 Independent investigation endorsed by AIB board

AIB treasury management activities to be centralised

10 Feb 13.00 Announcement of Eugene A.Ludwig to lead investigation

Allfirst suspected fraud update

20 Feb Once-off charge of $691m in 2001 annual results

Suspected fraud perpetrated over 5 years

9 Mar Target date for investigation report

Mid Mar Target date for announcement of findings and actions

Pre-tax €789m

After-tax €513m

Impact

Profit Attributable

€484m-38%

Dividend per Share

43.8c+13%

Underlying Earnings per

Share* +8%

Adjusted Earnings per

Share119.4c+12%

Profit before Taxation€612m

2001 reported results

* excludes Allfirst suspected fraud, KCH profit, Poland restructuring costs, additional unallocated provision, FRS 17, goodwill amortisation

Profit before Taxation Pre Suspected Fraud

€1,401m

Adjusted Return on

Equity

21%

Revenue growth +8%*

Loans Deposits Banking fees and commissions

+10% +17%+11% +1bp

Net interest margin

* excludes the Allfirst suspected fraud and the impact of currency movements

Costs +12%

Other +8%

Once-off +4%

Once-off costs include integration in Poland, euro conversion and development costs in USA

Other costs include:

special salary adjustments in Rep. Ire & USA

Investment in USA and Poland

Cost / income ratio 58.5%

Significant reduction in cost growth rate this year

Robust asset quality / strong provisioning

Non-performing loans 2% (1.9% in 2000)

Prudent provision cover across the group

Additional unallocated credit provision, €50m, in a turbulent economic environment

General provision (€454m) 3 times current provision charge

to become the standard for 21st century community banking

Our strategic goal …..

• Different markets, one approach

• Transferable core competencies

• Common IT architecture and streamlined support infrastructure

• World class CRM tools

Other Relationship

Business

Retail & Commercial

Banking

Rep. Ire., GB + NI, USA, Poland

AIB wherever we operate ...

the standard for 21st century community banking

AIB Bank Republic of Ireland - profit +9%

Most productive bank in Ireland - cost / income reduced again to 51%

Promoting home ownership home mortgages +20%, gaining market share

Ark life - 15% of profit, no 3rd party fees

Post office agreement enhances customer choice (60% increase in available service transaction time)

1,000 extra customer portfolio managers within 1 year

AIB - 21st century community bank

Source:OECD

GDP 3.7 6.4

GNP 2.9 6.3

Unemployment rate 5.3 5.3

Growth % 2002 (f) 2003 (f)

Favourable Irish economic outlook

4000045000

500005500060000

6500070000

7500080000

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

No

of

Bir

ths

10001100120013001400150016001700180019002000

'00

0's

Births Labour Force

Demographics underpin demand

2006

0

200

400

600

800

1000

1200

1400

0-14 15-19 20-24 25-44 45-54 55-59 60-64 65+

Tho

usan

ds

1996 (Based on Census) 2006 (Based on CSO Projections)

Population by age group

AIB Bank Great Britain + Northern Ireland - profit +8%

G.B. Bank of choice for chosen business segments New relationship managers being recruited 2 new business development centres opened,

additional 5 this year

N.I. Realigning the network to customer needs

7 new business development centres opened £10m investment programme in branch network

Centralising administration - 30% more business development staff this year


USA - loss €434m (underlying profit +8%)

Allfirst

Alignment to community banking model

Generating momentum in Direct Retail & SME markets 4% growth in targeted loan portfolios Strong new business growth in Wealth Management

Favourable demographics Family incomes 9% above US average Market shares 10-19% No. 1, 2, or 3 in all key counties


Cont…/

USA /...cont.

Building not for profit business

Risk assets up 27%, fee income up 41%

New locations - Atlanta, San Francisco

Complementary businesses acquired - CCS, Ketchum


Allfirst focus

Repair damage in Allfirst

Rebuild retail and commercial momentum

Next 6/9 months

Thereafter

Revalidation of strategic focus

Poland - profit (16%*)

Transferring core competencies to build top tier position

New branch banking model ($100m spend) - implemented for 75% of our business in 6 months

Cost agenda on target (€50m p.a. saving by 2003)

Branch network ideally positioned


* excludes integration costs

Capital Markets - profit +22%

Customer services driving revenue

World class corporate relationship banking model- record profit

Fostering innovation (debt management activities, joint venture with Bank of New York)

Strong treasury performance


Leveraging IT capabilities and initiatives across the Group through:

Consolidating and optimising technology infrastructure

Prioritising technology and eBusiness investments to deliver Group-wide benefits

Enterprise Networks & eBusiness

Conclusion

2001 - solid year in volatile circumstances

Allfirst suspected fraud a very serious, regrettable event

Board / management / staff focused on quickly dealing with all issues arising

minimising disruption of business momentum

revalidation that all elements of control framework meet highest standards

Powerful, resilient franchises

A strong balance sheet

Gary Kennedy

Group Director, Finance, Risk, Enterprise Networks & eBusiness

2001 underlying results

Adjusted EPS (c) PBT (€m)

Reported year 2001 612

Allfirst suspected fraud (789)

Adjusted 119.4 1,401

KCH profit 10.8 93

Poland restructuring -2.3 (38)

Additional unallocated credit provision -5.1 (50)

Net impact adjusted EPS / PBT 3.4 5

Base for 2002 comparison with 2001 116 1,396

2,997 Total operating income 3,786 11

2,284 Total operating expenses 2,284 14

Group operating profit 713 before provisions 1,502 7

204 Total provisions 204 52

509 Group operating profit 1,298 3

612 Group profit before tax 1,401 10

Reported Pre fraud Change *2001 €m 2001 on 2000 %

Profit and loss account

* excludes exceptional item in 2000

Year Year Year€m 2001 2000 1999

Profit before Tax* 1,362 1,251 1,132

FRS 17 Implementation 39 23 31

Profit before Tax* 1,401 1,274 1,163

Implementation of FRS 17

• FRS 17 benefit expected to be €40m approx. in 2002

* before Allfirst suspected fraud in 2001 and exceptional item in 2000

516 AIB Bank Rep Ire 562 9

205 AIB Bank GB & NI 223 8

330 USA 355 8

159 Capital Markets 194 22

88 Poland 36 (16)

(24) Group 31 -

1,274 Group profit before tax 1,401 10

2000 €m 2001 Change %

* excludes Allfirst suspected fraud** excludes integration costs

Performance by division

*

*

**

Underlying2000 €m 2001 Change %

2,022 Net interest income 2,293 11

71 Other finance income 67 (6)

1,304 Other income 1,426 5

3,397 Total operating income 3,786 8

40.5% Other income ratio 39.4%

Operating income *

* excludes Allfirst suspected fraud** excludes the impact of currency movements

**

411

4-1

1818

88

1614

1110

-5 0 5 10 15 20

Poland

USA

Britain

Northern Ireland

Rep of Ireland

Group

RWA Loan

Risk weighted asset / loan growth*

* excludes the impact of currency movements

Underlying 2000 €m 2001 Change %*

14,302 AIB Bank Rep Ire 15,987 12

6,789 AIB Bank GB & NI 7,542 8

20,318 USA 22,403 4

14,879 Capital Markets 18,821 27

3,655 Poland 4,105 4

279 Group -

60,222 68,858 11

Risk weighted assets


9

10

18

3

14

11

0 5 10 15 20

Poland

USA

Britain

Northern Ireland

Rep of Ireland

Group

Deposit growth

H1 2001 H2 2001 % 2001 2000

2.93 3.12 Group 3.03 3.02

2.67 2.72 Domestic 2.69 2.75

3.16 3.50 Foreign 3.34 3.23

Net interest margin

1,192 Staff costs 1,348 11

634 Other costs 703 9

171 Depreciation & amortisation 195 11

1,997 2,246 10

- Integration costs - Poland 38

1,997 Operating expenses 2,284 12

58.0% Tangible cost / income ratio 58.5%

Underlying *2000 €m 2001 Change %


Operating expenses

36 0.25 AIB Bank Rep Ire 43 0.25

20 0.29 AIB Bank GB & NI 19 0.25

34 0.27 USA 37 0.28

17 0.23 Capital Markets 14 0.17

26 0.90 Poland 16 0.47

133 0.30 129 0.26

- Additional unallocated 50

133 0.30 Total 179 0.36

2000 Average 2001 Average €m Loans % €m Loans %

Provisions for bad debts

% 2001 2000

NPLs / loans 2.0 1.9

Bad debts charge / average loans 0.26 0.30

Provisions / NPLs 97 100

• NPLs / loans ratio at 0.80% (excl. Poland)• Provisions / NPLs at 168% (excl. Poland)

Asset quality

* 0.36% including unallocated provision

*

€m Underlying *2000 Assets: 2001 change %

45,880 Loans to customers 51,216 10

48,437 Customer accounts 54,557 11

80,250 Total assets 88,837 8

Balance sheet


Capital ratios

Tier 1 6.5% 6.3%

Total 10.1% 10.8%

Good capital position to comfortably support all growth objectives

Surplus capital generated in each year of our medium term plan

2001 2000

1.661.651.781.961.741.611.630.0

1.0

2.0

3.0

1995 1996 1997 1998 1999 2000 2001

0

10

20

30

40

50

60

70

Return

Average RWA (bn)

Return on risk weighted assets

Strong start to the year……..

57% increase in Rep. Ireland mortgage activity in January

Number 1 market share of Special Savings Investment Accounts - significant increase in January

Strong business pipeline in GB & NI

Good customer revenues in Capital Markets

Operating trends continue to improve in Poland

AIB in 2002

Reduction in cost / income ratios in all divisions Zero cost growth at Allfirst in 2002 Efficiency gains in Poland. Cost reduction of €50m, >2% of group costs by 2003

4

6

8

10

12

1997 1998 1999 2000 2001 2002(F)

• Euro conversion costs

• Development costs in USA

%

Note: The above year on year cost growth percentages exclude acquisitions and currency factors

Active cost management

AIB in 2002

Robust asset quality- provision charge approx. 35bps of average loans- prudent provision cover maintained

AIB in 2002

AIB in 2002

Revenue growth from consistent, dependable and predictable customer sources

Active control of costs

Robust asset quality

Strong balance sheet

EPS target mid single digit growth

Additional information

2000 figures have been restated due to FRS 17 and new divisional structure

2000 €m 2001 Change %

738 Net interest income 843 14


357 Other income 359 1

1,141 Total income 1,245 9

593 Operating costs 641 8

548 Operating surplus 604 10

36 Provisions 44 24

512 Operating profit 560 9

4 Profit on disposal 2 (33)

516 Profit before tax 562 9

AIB Bank profit statement - Rep Ire

2000 €m 2001 Change %




473 Total income 500 6



20 Provisions 19 (7)


- Profit on disposal 1 -


AIB Bank profit statement - GB & NI

2000 €m 2001 Change %




922 Total income 1,032 12



38 Provisions 39 1


USA Division profit statement*

* excludes Allfirst suspected fraud

2000 €m 2001 Change %


8 Other finance income 8 -





18 Provisions 38 111


3 Income from associates 5 47


Capital Markets profit statement

2000 €m 2001 Change %


1 Other finance income - -




- Integration costs 38 -

110 Operating surplus 42 (27)

23 Provisions 9 (60)

87 Operating profit 33 (19)

1 Property disposal 3 -

88 Profit before tax 36 (16)

Poland Division profit statement

*

*

*

* excludes integration costs

BZWBK (legal entity Polish GAAP) 267 73

Use of provisions created on acquisition 47

BZ Goodwill amortisation -26

Merger costs -38

Other adjustments * -20

Poland division 36

2001PLN €m

* includes capital adjustment, consolidation of subsidiaries and alignment with Group

accounting policies

Poland Division relative to BZWBK

139 0.9 126 AIB Bank Rep Ire 162 0.9 123

93 1.3 122 AIB Bank GB & NI 107 1.3 119

87 0.7 205 USA - €m 87 0.6 22281 - US$m 77

29 0.4 262 Capital Markets 34 0.4 251

523 18.0 62 Poland - €m 643 18.4 552,014 - Pln m 2,249

871 1.9 100 Total 1,033 2.0 97

As at December 31, 2000 As at December 31, 2001NPLs/ Total NPLs/ TotalActual Provisions/ Actual Provisions/

NPLs Advances NPLs NPLs Advances NPLs €m % % €m % %

Non-performing loans by division

Alan Kelly [email protected] +353-1-6412162

Conor Herlihy [email protected] +353-1-6414191

Pat Clarke [email protected] +353-1-6412381

Mary Gethings [email protected] +353-1-6413469

353-1-660 0311

353-1-641 2075

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AIB Group Preliminary announcement of 2001 results.

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