Allied Irish back in black despite €5bn fall in deposits

ALLIED Irish Banks jumped out of the red yesterday, reporting a pre-tax profit of €260m (£229.6m) for the half-year ended June versus a €2.44bn loss for the same period last year.

The bank still posted an underlying loss of €2.6bn due to “continuing elevated bad debts”. Impairments rose from €12.1bn to €15.2bn.

And the bank revealed that it has seen a worrying flight of customer deposits worth €5bn over the first half of 2011, excluding the purchase of €7bn in deposits from Anglo Irish.

It put the capital flight down to “weak economic conditions, sovereign concerns about Ireland and more general uncertainty about Europe’s solution” to the debt crisis.

Even so, its overall loan-to-deposit ratio fell from 165 per cent to 143 per cent as the bank successfully ditched chunks of its non-core book, shrinking its loans from €96bn to €87bn.

The bank posted a core tier one capital ratio of 9.9 per cent at the end of June, versus just four per cent in December, in part due to its sale of a 70 per cent stake in Polish lender Bank Zachodni WBK to Banco Santander.

Its shares closed up 4.8 per cent after the results yesterday, though the bank is currently 93 per cent owned by the Irish government.