Allied Irish Banks' first half profit is a milestone in its recovery

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Allied Irish Banks' first half profit is a milestone in its recovery

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Allied Irish Banks has announced it was back in profit in the first half of the year as fewer businesses customers defaulted on their loans.

It is good news for Irish taxpayers as AIB’s rescue after reckless lending before the financial crisis cost the Dublin government close to 21 billion euros, leaving the lender 99 percent owned by the state.

A pretax profit of 437 million euros for the second quarter compares with a 838 million euro loss in the same period last year.

That means AIB could start repaying its state bailout next year.

AIB chief financial officer Mark Bourke said the bank was in a good position to attract investment but that the timing was up to the government.

Finance Minister Michael Noonan commented: “A profitable bank is a more valuable bank, which will, over time allow the state to maximise the return on its investment.”

Ireland’s economy is forecast to expand well above the eurozone average this year as employment grows strongly. Bourke said this was reflected in improvements in AIB’s small-and-medium enterprise (SME) and corporate loan books, although the mortgage market remained depressed.

Mortgages remain a challenge for all Irish banks with almost one in five of the country’s home loans in arrears.

AIB’s proportion of owner-occupiers who were in arrears for more than 90 days stood at 10.5 percent at the end ofJune.

And 25.7 percent of all buy-to-let mortgage holders were behind on payments. The bank said the total level of arrears did fall by 6.0 percent in the period.