UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the date of 19 February, 2003
ALLIED IRISH BANKS, public limited company
Bankcentre, Ballsbridge, Dublin 4, Republic of Ireland
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F..X... Form 40-F.....
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ..... No ..X...
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ________
Highlights - AIB Group Annual Results 2002
Adjusted earnings per share EUR 123.0c, up 6% over 2001 market base(1)
of EUR 116.0c
Attributable profit EUR 1,037m, up 4%(2)
Return on equity 22.4%
Tier 1 capital ratio 6.9%
Total dividend of EUR 49.06c, up 12%
Income/Costs gap + 2%(3)
Operating profit before provisions up 10%(2)
Credit provision charge equals 0.37% of average loans
Other provisions increased to EUR 57m
Divisional operating profit before provisions
-AIB Bank ROI up 5%
Banking operations up 11%
Ark Life down 32%
-USA up 4%
-AIB Bank GB & NI up 9%
-Capital Markets up 14%
-Poland up 36%(3)
AIB Group Chief Executive Michael Buckley said: '2002 was a year of slowing
economies and difficult financial markets. AIB also had to deal with the foreign
exchange trading fraud in Allfirst. The 6% growth in adjusted earnings per share
represents a strong performance in these circumstances. Strong growth in
customer revenues was combined with our longstanding prudent approach to risk
assessment.
'Business volume growth in Ireland, Britain and Northern Ireland was very
buoyant with significant market share gains. Our operating and credit risk
management performance in Poland was good in a challenging business environment.
The Allfirst business remains stable as we finalise the transition to M&T Bank.
We look forward to another strong underlying profit performance in 2003.'
Footnotes (1) to (3) are outlined overleaf
Forward-Looking Statements
A number of statements we make in this document will not be based on historical
fact, but will be 'forward-looking' statements within the meaning of the United
States 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,
regional economic conditions, levels of market interest rates, credit or other
risks of lending and investment activities, competitive and regulatory factors
and technology change.
Adjusted earnings per share
The 2001 results included the profit from the sale of AIB's interest in Keppel
Capital Holdings Ltd ('KCH'), Poland restructuring costs, an additional
unallocated credit provision. The following table shows the impact of the above
items on the 2001 adjusted earnings per share as a base for 2002 comparison with
2001.
Year Year
2002 2001
before %
Adjusted earnings per share exceptional(4) Change
As reported 123.0c 119.4c 3
Profit from the sale of AIB's interest in KCH - 10.8c
Poland restructuring costs - (2.3c)
Additional unallocated credit provision - (5.1c)
Net impact on adjusted earnings per share - 3.4c
Underlying 123.0c 116.0c 6
Footnotes (1) to (3) relate to performance highlights on the previous page
(1) 2001 adjusted to exclude the exceptional item (exceptional foreign exchange
dealing losses - see note 6(b) for further details), the profit from the sale of
AIB's interest in KCH, Poland restructuring costs and the additional unallocated
credit provision.
(2) Excluding the exceptional item in 2001.
(3) Excluding restructuring and integration costs in continuing businesses.
(4) Exceptional foreign exchange dealing losses (see note 6(b)).
Allied Irish Banks,p.l.c.
--------------------------------------------------------------------------------
Allied Irish Banks, p.l.c. (AIB Group) today announced its results for the year
ended 31 December 2002.
Profit attributable to ordinary shareholders amounted to EUR 1,037 million, a
114% increase over the year ended 31 December 2001. Profit attributable to
ordinary shareholders in 2001 was reduced by exceptional foreign exchange
dealing losses of EUR 513 million after taxation. Basic earnings per share for
the year amounted to EUR 119.4c, an increase of 112%. Adjusted earnings per
share, which excludes goodwill amortisation and the exceptional item in 2001,
increased by 3% to EUR123.0c.
Dividend
--------------------------------------------------------------------------------
The Board is recommending a final dividend payable on 25 April 2003 of EUR
31.81c per share to shareholders on the Company's register of members at the
close of business on 28 February 2003. The final dividend, together with the
interim dividend of EUR 17.25c per share, amounts to a total dividend of EUR
49.06c per share, an increase of 12% on 2001.
For further information please contact:
Declan Mc Sweeney Alan Kelly Catherine Burke
Chief Financial Officer Head of Group Investor Relations Head of Corporate Relations
Bankcentre Bankcentre Bankcentre
Dublin Dublin Dublin
353-1-660-0311 353-1-660-0311 353-1-660-0311
Ext. 14954 Ext. 12162 Ext. 13894
This results announcement and a detailed informative presentation can be viewed
on our internet site at www.aibgroup.com/investorrelations
Financial highlights
for the year ended 31 December 2002
2002 2001 2000
Restated(1)
EUR m EUR m EUR m
Results
Total operating income 3,930 3,751(2) 3,397(2)
Group profit before taxation 1,375 1,366(2) 1,274(2)
Profit attributable 1,037 484 784
Profit retained 563 41 379
Per EUR 0.32 ordinary share
Earnings - basic 119.4c 56.2c 91.6c
Earnings - adjusted (note 13) 123.0c 119.4c 106.7c
Earnings - diluted 118.2c 55.9c 91.0c
Dividend 49.06c 43.80c 38.75c
Dividend cover - times 2.4 1.3 2.3
Net assets 494c 551c 566c
Performance measures
Return on average total assets 1.24% 1.23%(2) 1.26%(2)
Return on average ordinary shareholders' equity 22.4% 19.4%(2) 18.7%(2)
Balance sheet
Total assets 86,049 89,359 80,543
Shareholders' funds: equity interests 4,408 4,851 4,944
Total loans 58,483 57,445 50,239
Total deposits 72,190 72,813 65,210
Capital ratios
Tier 1 capital 6.9% 6.5% 6.3%
Total capital 10.1% 10.1% 10.8%
(1) The results for the year ended 31 December 2001 have been restated
to reflect the implementation of UITF Abstract 33 - Obligations in Capital
Instruments.
(2) Adjusted to exclude the exceptional foreign exchange dealing losses
in 2001 (note 6(b)) and the impact of the deposit interest retention tax
settlement in 2000 (note 5).
Consolidated profit and loss account
for the year ended 31 December 2002
2002 2001 2000
Restated(1)
Notes EUR m EUR m EUR m
Interest receivable:
Interest receivable and similar income arising from
debt securities and other fixed income securities 946 1,198 1,140
Other interest receivable and similar income 3 3,807 4,148 3,987
Less:interest payable 4 (2,402) (3,088) (3,105)
Deposit interest retention tax 5 - - (113)
Net interest income 2,351 2,258 1,909
Other finance income 10 62 67 71
Dividend income 14 11 6
Fees and commissions receivable 1,301 1,258 1,101
Less:fees and commissions payable (138) (128) (108)
Dealing profits 6(a) 77 92 103
Exceptional foreign exchange dealing losses 6(b) - (789) -
Other operating income 7 263 193 202
Other income 1,517 637 1,304
Total operating income 3,930 2,962 3,284
Before exceptional items 3,930 3,751 3,397
Exceptional foreign exchange dealing losses 6(b) - (789) -
Deposit interest retention tax 5 - - (113)
Administrative expenses:
Staff and other administrative expenses 8(a) 2,098 2,051 1,826
Restructuring and integration costs in continuing businesses 8(b) 13 38 -
2,111 2,089 1,826
Depreciation and amortisation 207 195 171
Total operating expenses 2,318 2,284 1,997
Group operating profit before provisions 1,612 678 1,287
Before exceptional items 1,612 1,467 1,400
Exceptional foreign exchange dealing losses 6(b) - (789) -
Deposit interest retention tax 5 - - (113)
Provisions for bad and doubtful debts 15 194 179 133
Provisions for contingent liabilities and commitments 2 19 2
Amounts written off/(written back) fixed asset investments 9 55 6 (1)
Group operating profit - continuing activities 1,361 474 1,153
Before exceptional items 1,361 1,263 1,266
Exceptional foreign exchange dealing losses 6(b) - (789) -
Deposit interest retention tax 5 - - (113)
Income from associated undertakings 9 4 3
Profit on disposal of property 5 6 5
Profit on disposal of business 11 - 93 -
Group profit on ordinary activities before taxation (carried 1,375 577 1,161
forward)
Before exceptional items 1,375 1,366 1,274
Exceptional foreign exchange dealing losses 6(b) - (789) -
Deposit interest retention tax 5 - - (113)
Consolidated profit and loss account (continued)
for the year ended 31 December 2002
2002 2001 2000
Restated(1)
Notes EUR m EUR m EUR m
Group profit on ordinary activities before taxation (brought forward) 1,375 577 1,161
Taxation on ordinary activities 12 306 55 319
Group profit on ordinary activities after taxation 1,069 522 842
Equity and non-equity minority interests in subsidiaries 24 23 38
Dividends on non-equity shares 8 15 20
32 38 58
Group profit attributable to the ordinary shareholders
of Allied Irish Banks, p.l.c. 1,037 484 784
Dividends on equity shares 429 380 335
Transfer to reserves 45 63 70
474 443 405
Profit retained 563 41 379
Earnings per EUR 0.32 ordinary share - basic 13(a) 119.4c 56.2c 91.6c
Earnings per EUR 0.32 ordinary share - adjusted 13(b) 123.0c 119.4c 106.7c
Earnings per EUR 0.32 ordinary share - diluted 13(c) 118.2c 55.9c 91.0c
(1)The figures for 2001 have been restated to reflect the interest cost of the
Reserve Capital Instruments as interest expense rather than 'Dividends on
non-equity shares' in accordance with UITF 33.
Consolidated balance sheet
31 December 2002
2002 2001
Notes EUR m EUR m
Assets
Cash and balances at central banks 1,176 1,175
Items in course of collection 1,171 1,536
Central government bills and other eligible bills 24 49
Loans and advances to banks 4,788 6,047
Loans and advances to customers 14 53,447 51,216
Securitised assets 1,002 1,099
Less: non-returnable proceeds (754) (917)
248 182
Debt securities 16 18,204 20,082
Equity shares 246 332
Interests in associated undertakings 31 10
Intangible fixed assets 457 495
Tangible fixed assets 1,178 1,305
Own shares 176 245
Other assets 1,153 1,260
Deferred taxation 245 417
Prepayments and accrued income 927 2,080
Pension assets 10 - 372
Long-term assurance business attributable to shareholders 17 352 304
83,823 87,107
Long-term assurance assets attributable to policyholders 17 2,226 2,252
86,049 89,359
Liabilities
Deposits by banks 16,137 13,223
Customer accounts 18 52,976 54,557
Debt securities in issue 3,077 5,033
Other liabilities 2,591 3,272
Accruals and deferred income 829 2,159
Pension liabilities 10 537 117
Provisions for liabilities and charges 60 71
Deferred taxation 527 717
Subordinated liabilities 2,172 2,516
Equity and non-equity minority interests in subsidiaries 274 312
Share capital 293 291
Share premium account 1,918 1,926
Reserves 490 463
Profit and loss account 1,942 2,450
Shareholders' funds including non-equity interests 4,643 5,130
83,823 87,107
Long-term assurance liabilities to policyholders 17 2,226 2,252
86,049 89,359
Consolidated cash flow statement
for the year ended 31 December 2002
2002 2001 2000
Restated
EUR m EUR m EUR m
Net cash (outflow)/inflow from operating activities (121) 231 2,433
Dividends received from associated undertakings 1 4 -
Returns on investments and servicing of finance (138) (131) (184)
Equity dividends paid (345) (334) (228)
Taxation (280) (242) (199)
Capital expenditure and financial investment 1,379 700 (3,004)
Acquisitions and disposals (5) (59) 2
Financing (129) 208 164
Increase/(decrease) in cash 362 377 (1,016)
2002 2001 2000
Reconciliation of Group operating profit to net Restated
cash (outflow)/inflow from operating activities EUR m EUR m EUR m
Group operating profit 1,361 474 1,153
Decrease/(increase) in prepayments and accrued income 1,162 (199) (607)
(Decrease)/increase in accruals and deferred income (1,191) 429 355
Provisions for bad and doubtful debts 194 179 133
Provisions for contingent liabilities and commitments 2 19 2
Amounts written off/(written back) fixed asset investments 55 6 (1)
Increase in other provisions 16 19 11
Depreciation and amortisation 207 202 171
Amortisation of own shares - 2 1
Profit on disposal of business - 93 -
Interest on subordinated liabilities 83 133 155
Interest on Reserve Capital Instruments 38 35 -
Profit on disposal of debt securities and equity shares (117) (21) (23)
Averaged gains on debt securities held for hedging purposes (4) (24) (16)
Profit on disposal of associated undertakings (1) (1) (5)
Amortisation of discounts on debt securities held as financial fixed (15) (7) (2)
assets
Increase in long-term assurance business (48) (66) (72)
Net cash inflow from trading activities 1,742 1,273 1,255
Net increase in deposits by banks 3,975 452 3,621
Net increase in customer accounts 2,299 4,647 4,854
Net increase in loans and advances to customers (6,129) (4,281) (5,812)
Net decrease/(increase) in loans and advances to banks 982 (1,588) (1,015)
Decrease in central government bills 18 274 445
Net increase in debt securities and equity shares
held for trading purposes (1,180) (1,394) (710)
Net decrease/(increase) in items in course of collection 174 (374) (160)
Net (decrease)/increase in debt securities in issue (1,425) 533 (266)
Net (decrease)/increase in notes in circulation (3) 44 23
(Increase)/decrease in other assets (28) 460 (595)
(Decrease)/increase in other liabilities (521) 279 674
Effect of exchange translation and other adjustments (25) (94) 119
(1,863) (1,042) 1,178
Net cash (outflow)/inflow from operating activities (121) 231 2,433
Statement of total recognised gains and losses
2002 2001 2000
EUR m EUR m EUR m
Group profit attributable to the ordinary shareholders 1,037 484 784
Currency translation differences on foreign currency net investments (341) 145 130
Actuarial loss recognised in retirement benefit schemes (note 10) (823) (402) (201)
Prior year adjustment (note 10(b)) - 648 -
Total recognised (losses)/gains relating to the year (127) 875 713
Reconciliation of movements in shareholders' funds
2002 2001 2000
EUR m EUR m EUR m
Group profit attributable to the ordinary shareholders 1,037 484 784
Dividends on equity shares 429 380 335
608 104 449
Other recognised (losses)/gains relating to the year (387) 160 150
Actuarial loss recognised in retirement benefit schemes (note 10) (823) (402) (201)
New ordinary share capital subscribed 39 37 27
Ordinary shares issued in lieu of cash dividend 76 23 78
Net (deduction from)/addition to shareholders' funds (487) (78) 503
Opening shareholders' funds 5,130 5,208 4,705
Closing shareholders' funds 4,643 5,130 5,208
Shareholders' funds:
Equity interests 4,408 4,851 4,944
Non-equity interests 235 279 264
4,643 5,130 5,208
Note of historical cost profits and losses
Reported profits on ordinary activities before taxation would not be materially
different if presented on an unmodified historical cost basis.
Commentary on results
Implementation of UITF Abstract 33 - Obligations in Capital Instruments (see
note 1 of this release)
The Group has implemented UITF 33 in the accounts for the year ended 31 December
2002 and comparative periods have been restated. Implementation of the UITF
results in AIB's EUR 500 million of Reserve Capital Instruments ('RCIs') being
treated as subordinated liabilities rather than shareholders' funds. The related
interest cost (2002: EUR 38 million; 2001: EUR 35 million) is now included in
net interest income whereas previously the amount was shown as dividends on
non-equity shares. This change in accounting treatment reduces pre-tax profit
with no impact on earnings per share.
Summary profit and loss account
Year Year Exceptional Year %
2002 2001 Item(1) 2001 Change
before as excl.
exceptional restated exceptional
EUR m EUR m EUR m EUR m
Net interest income 2,351 2,258 - 2,258 4
Other finance income 62 67 - 67 -7
Other income 1,517 1,426 (789) 637 6
Total operating income 3,930 3,751 (789) 2,962 5
Staff costs 1,391 1,348 - 1,348 3
Other costs 707 703 - 703 -
Restructuring and integration costs in continuing 13 38 - 38 -
businesses
Depreciation and amortisation 207 195 - 195 6
Total operating expenses 2,318 2,284 - 2,284 1
Group operating profit before provisions 1,612 1,467 (789) 678 10
Provisions for bad and doubtful debts 194 179 - 179 9
Other provisions 57 25 - 25 -
Total provisions 251 204 - 204 23
Group operating profit - continuing activities 1,361 1,263 (789) 474 8
Income from associated undertakings 9 4 - 4 -
Profit on disposal of property 5 6 - 6 -
Profit on disposal of business - 93 - 93 -
Group profit on ordinary activities before taxation 1,375 1,366 (789) 577 1
Taxation on ordinary activities 306 331 (276) 55 -8
Group profit on ordinary activities after taxation 1,069 1,035 (513) 522 3
Minority interests and non-equity dividends 32 38 - 38 -18
Group profit attributable to ordinary shareholders 1,037 997 (513) 484 4
Basic earnings per share 119.4c - - 56.2c 112
Adjusted earnings per share 123.0c 119.4c (59.6c) 59.8c 3
Group operating profit before provisions was up 10% to EUR 1,612 million for the
year December 2002.
Group profit attributable to ordinary shareholders amounted to EUR 1,037
million, up 114% or 4% excluding the exceptional item in 2001. Adjusted earnings
per share(2) at EUR 123.0c per share showed an increase of 3% and basic earnings
per share was up 112% to EUR 119.4c per share.
(1) Exceptional foreign exchange dealing losses (see note 6(b)).
(2) Adjusted earnings per share excludes goodwill amortisation in both years and
the exceptional foreign exchange dealing losses in 2001 (see note 13(b)).
Commentary on results
Exchange Rates
The exchange rates used in the preparation of the accounts are set out on page
46 of this release. A significant proportion of the Group's earnings are
denominated in currencies other than the euro. As a result movements in exchange
rates can impact the reported value of the foreign currency earnings. The Group
may choose to hedge all or part of its projected future foreign earnings thereby
fixing a translation rate for the amount hedged. Although the US dollar,
sterling and Polish zloty accounting rates weakened by 5%, 1% and 5%
respectively, the impact on Group profit before taxation was not material when
the outcome of hedging strategies is taken into account.
The following commentary on the profit and loss account and balance sheet
headings is based on underlying percentage growth adjusting for the impact of
currency movements and acquisitions.
"Net interest income up 7%"
"Net interest margin remained stable"
"Group loans up 12%"
Net interest income
Net interest income at EUR 2,351 million increased by 7% compared with 2001 due
to strong lending growth particularly in AIB Bank Republic of Ireland and AIB
Bank GB & NI. Loans to customers increased by 12% and customer accounts
increased by 4% (details of loan and deposit growth by division are contained on
page 16 of this release).
Average interest earning assets
Half-year Half-year Year Year
Dec 2002 June 2002 % 2002 2001 %
EUR m EUR m Change EUR m EUR m Change
39,274 38,042 3 Domestic 38,663 35,417 9
38,424 40,771 -6 Foreign 39,588 40,176 -1
77,698 78,813 -1 Total 78,251 75,593 4
Net interest margin
Half-year Half-year Basis Year Year Basis
Dec 2002 June 2002 Points 2002 2001 Points
% % Change % % Change
2.69 2.78 -9 Domestic 2.73 2.59 +14
3.21 3.33 -12 Foreign 3.27 3.34 -7
2.95 3.06 -11 Total 3.00 2.99 +1
The net interest margin was 3.00%, a 1 basis point increase on 2001. A
particularly strong interest rate management performance by Global Treasury was
offset in margin terms by changes in product mix, the margin effect of lower
interest rates on deposits and non-interest bearing funds and the impact of
loans increasing at a stronger rate than deposits. All our principal markets
experienced lower interest rates, the margin impact of this trend was alleviated
by asset and liability and interest rate management activities.
Commentary on results
"15% increase in banking fees and commissions"
"Challenging year for Ark Life - operating profit down 4%"
Other income
Other income increased by 6% to EUR 1,517 million in 2002 and as a percentage of
total operating income was 40.2% compared with 39.8% in 2001.
Year Year Underlying
2002 2001 % Change
excl.
Other income EUR m EUR m exceptional
Dividend income 14 11 30
Banking fees and commissions 1,045 962 15
Asset management fees 158 185 -11
Investment banking fees 98 111 -11
Fees and commissions receivable 1,301 1,258 4
Less: fees and commissions payable (138) (128) 10
Dealing profits 77 92 -30
Contribution of life assurance company 57 84 -32
Other 206 109 106
Other operating income (see note 7 of this release) 263 193 43
Total other income 1,517 1,426 6
Exceptional growth in banking fees and commissions resulted from increased
volumes of business and significant loan growth. Corporate banking fees were
buoyant with a substantial increase in income from arrangement fees and
collateralised debt obligations. Retail banking fees were particularly strong in
Poland with good growth in credit card revenues in the Republic of Ireland. In
Allfirst, electronic banking income and deposit service charges also achieved
strong increases over 2001.
Asset management and investment banking revenues were lower due to a decline in
asset values, reduced business volumes and the general impact of difficult
equity markets. The restructuring of the AIB joint venture with Bank of New York
impacted the trend as it is now reported as income from associated undertakings.
Dealing profits were lower as a result of a more difficult trading
environment.
Ark Life profit was down 32% as difficult investment markets resulted in reduced
customer demand for investment products. Declines in equity market values caused
a EUR 32 million reduction in embedded values, which was partly offset by a
benefit of
EUR 17 million from lowering the discount rate used in the embedded value
calculation from 12% to 10%. Operating profit in Ark Life was down 4%.
Other operating income includes securities gains of US$ 80 million resulting
from a restructuring of the securities portfolio in Allfirst and a US$ 10
million provision for residual values in the auto lease portfolio.
Commentary on results
"Tight cost management reflected in 4% growth"
"Tangible cost income ratio reduces by 1.2% to 57.8%"
Total operating expenses
Operating expenses excluding restructuring and integration costs at EUR 2,305
million were higher by 4% compared with 2001.
Year Year Underlying
2002 2001 % Change
Operating expenses EUR m EUR m 2002 v 2001
Staff costs 1,391 1,348 4
Other costs 707 703 3
Depreciation and amortisation 207 195 8
Operating expenses before integration costs 2,305 2,246 4
Restructuring and integration costs in continuing businesses 13 38 -
Total operating expenses 2,318 2,284 3
Operating expense growth was lower than expectations with a 4% increase compared
with a 10% increase in 2001. While business volumes increased substantially,
tight cost management and cost saving initiatives improved productivity. In AIB
Bank Republic of Ireland normal salary increases were partly offset by a cost
savings programme in central supports, the cost income ratio remained at 51%.
The Group continued to invest in our core businesses, major items being the
opening of new offices and recruitment of experienced business and corporate
bankers in Great Britain, expansion of Corporate Banking activities in New York
and the implementation of a new technology platform in Poland. Realisation of
integration benefits from the merger of WBK and Bank Zachodni in Poland was
evident while expansion of the franchise continued. The Group's tangible cost
income ratio, excluding restructuring and integration costs was 57.8%, down 1.2%
compared with 2001,with notable reductions in Capital Markets, AIB Bank GB & NI
and Poland.
Restructuring and integration costs in continuing businesses related to the
Allfirst early retirement program in 2002 and Poland integration costs in 2001.
Commentary on results
"Downturn in the global corporate environment resulted in higher provisions but
charge remains at indicated level of 0.37% of average loans"
"Strong quantum of provisions in the balance sheet - good provision cover"
"Other provisions increased substantially to EUR 57 million"
Provisions
Total provisions were EUR 251 million compared with EUR 204 million in 2001.
Year Year
2002 2001
Provisions EUR m EUR m
Bad and doubtful debts 194 179
Contingent liabilities and commitments 2 19
Amounts written off fixed asset investments 55 6
Total provisions 251 204
The provision for bad and doubtful debts in the year to December 2002 was EUR
194 million compared with EUR 179 million in 2001. A provision of US$ 38 million
was created in Allfirst in relation to one specific case and was offset by an
identical release of EUR 40 million from the additional unallocated credit
provision of EUR 50 million created at Group level in 2001. This EUR 50 million
provision was created to provide an additional provision pool at Group level
against the potential impact that the international macroeconomic downturn might
have on asset quality.
Asset quality was strong in AIB Bank Republic of Ireland with non-performing
loans remaining at 0.9% of loans at 31 December 2002. Retail and commercial
portfolios benefited from careful positioning in the past in relation to risk
assessment and sectoral exposures. While home mortgage lending was buoyant, loan
quality was very high and prudent criteria continued to be applied. The average
loan to value ratio for new business was 68% in 2002.
In AIB Bank GB & NI, asset quality further improved with non-performing loans
reducing to 1.0% of loans, down from 1.3% in 2001. The bad debt charge reflected
mainly general provisions with a small net specific charge.
In Allfirst, profit and loss provisions increased by US$ 49 million reflecting
the above US$ 38 million provision. Non-performing loans amounted to US$ 112
million compared with US$ 77 million at 31 December 2001 reflecting
deterioration in the corporate book. Provisions as a percentage of loans in
Allfirst increased from 1.4% to 1.5% with coverage for non-performing loans
amounting to 140%.
2002 was a more difficult year in the international corporate market and Capital
Markets experienced higher provisions and non-performing loans. The provision
charge amounted to 0.37% of average loans and reflected a prudent and cautious
approach with an objective of early provision recognition. The portfolio remains
well diversified in terms of industry sector and geographic concentration.
In Poland, the gross provision charge declined in 2002 from 1.9% of loans
(before the use in 2001 of general provisions of
EUR 47 million created on the acquisition of WBK and Bank Zachodni) to
1.2%.Including the use of general provisions in 2001, headline provisions
increased by EUR 25 million in 2002. Non-performing loans as a percentage of
total loans declined to 15% from 18% at 31 December 2001 mainly due to the write
off of older non-performing loans which had been fully provided for. Excluding
this factor the underlying ratio would have shown a small reduction compared
with 2001.
The Group charge for the year represented 0.37% of average loans compared with a
0.36% charge, including the additional unallocated provision, in 2001. Group
non-performing loans as a percentage of total loans amounted to 1.8% or 1.0%
excluding Poland, and total provision coverage for non-performing loans was 87%
(123% excluding Poland). We continued to maintain prudent provision cover. Total
non-specific provisions amounted to EUR 427 million and specific provision cover
for non-performing loans was strong at 44%.
The provision for contingent liabilities and commitments in the year to December
2002 was EUR 2 million compared with EUR 19 million in 2001. The 2001 provision
was mainly in relation to one specific case.
The provision for amounts written off fixed asset investments in the year to
December 2002 was EUR 55 million compared to EUR 6 million in 2001. The general
deterioration in equity markets led to write-downs of EUR 36 million for a
number of equity investments including EUR 17 million in the technology sector,
EUR 2 million in telecoms and venture capital write-downs of EUR 12 million in
Allfirst. The provision charge also included provisions of EUR 19 million
related to debt security portfolios.
Commentary on results
"Strong ROE at 22.4%"
"Lower effective tax rate"
Year Year
Taxation 2002 2001
Tax charge EUR 306m EUR 55m
Irish corporation tax rate 16.0% 20.0%
Effective tax rate - adjusted(1) 22.3% 24.2%
Reconciliation of statutory corporation tax rate % %
Corporation tax rate in Republic of Ireland 16.0 20.0
Effective tax rate on foreign income 7.9 6.9
Tax exempted income and income at a reduced rate (0.5) (2.5)
Other items (1.1) (0.2)
Effective tax rate - adjusted(1) 22.3 24.2
(1) The adjusted effective tax rate has been presented to eliminate the effect
of the exceptional foreign exchange losses in 2001.
The taxation charge was EUR 306 million, compared with EUR 55 million, or EUR
331 million excluding the exceptional item in 2001. The effective tax rate was
22.3% compared with 24.2% in 2001. Both 2002 and 2001 benefited from one-off
items. On an underlying basis the effective tax rate was 24.1% in 2002 and 25.9%
in 2001. This underlying decrease was primarily due to the reduction in the
standard rate of Irish corporation tax and changes in the geographic and
business mix of profits.
Return on equity and return on assets
The return on equity was 22.4% benefiting from the strong attributable profit
performance and the impact of the reduced value of pension assets on the equity
base in line with FRS 17. The return on assets was 1.24% and the return on risk
weighted assets, a measure of the efficient use of capital, was 1.56%.
Statement of total recognised gains and losses ('STRGL')
When the profit attributable of EUR1,037 million is adjusted for the currency
translation differences on foreign currency net investments, and the actuarial
loss recognised in the retirement benefit schemes, the total recognised losses
relating to the year amounted to EUR 127 million compared to a recognised gain
of EUR 875 million in 2002. A recognised gain of EUR 648 million was included in
2001 relating to the first time recognition of FRS 17 in the accounts. Currency
translation differences amounted to EUR 341 million negative compared to EUR 145
million positive in 2001. The currency translation difference relates to the
change in value of the Group's net investment in foreign subsidiaries arising
from the weakening of US dollar, sterling and Polish zloty against the euro. As
outlined in the balance sheet discussion on page 16,the weakening of the
currencies also reduced the euro value of the assets designated in those
currencies. The objective of the Group's capital management activities is to
neutralise the impact of currency movements on the capital ratios. The Group's
net investment is held in the currency of those subsidiaries to protect the
Group's capital ratios from fluctuations in exchange rates.
The actuarial loss in retirement benefit schemes during 2002 charged to the
STRGL, net of deferred tax, amounted to
EUR 823 million. The decline in world-wide equity markets had a significant
impact on the value of the Group's funded retirement benefit schemes and the
actuarial loss arises mainly as a result of the difference between the actual
return and the expected return on the pension scheme assets. The actuarial loss
is determined by valuations prepared in accordance with FRS 17 which requires
retirement benefit scheme assets and liabilities to be recorded at market values
at the balance sheet date. These valuations are not indicative of the long-term
funding position of the schemes which are formally assessed by way of triennial
actuarial valuations. The actuarial loss recognised also included EUR 123
million from a reduction in the discount rates together with EUR 18 million from
experienced gains and losses. The Group has recognised a net pension liability
on funded schemes within shareholders' funds of EUR 482 million at December
2002. This compares to a net pension asset within shareholders' funds of EUR 314
million at December 2001.
The decline in value of the retirement benefit scheme assets will also impact
the profit and loss account - other finance income, during 2003. During 2002,
the value of the assets reduced by EUR 733 million, including the effect of
exchange rate and other movements. As it is not considered appropriate to
significantly adjust the assumptions on asset returns to compensate for the
decline in the market value of the assets in 2002, the reduction in asset values
will have a negative impact of approximately EUR 47 million on other finance
income in 2003.
Commentary on results
"Group risk weighted assets up 10%"
"Tier 1 ratio increases to 6.9%"
Balance sheet
Total assets amounted to EUR 86 billion at 31 December 2002 compared to EUR 89
billion at 31 December 2001. The US dollar, sterling and the Polish zloty
weakened against the euro by 16%, 6% and 13% respectively, resulting in a
decline in the reported total balance sheet since 31 December 2001. Adjusting
for the impact of currency, total assets were up 5% since 31 December 2001 while
loans to customers increased by 12% and customer accounts by 4%. Risk weighted
assets increased by 1% to EUR 69 billion, excluding currency factors there was
an increase of 10%.
Risk weighted assets, loans to customers and customer accounts (excluding money
market funds)
Risk weighted Loans to Customer
assets customers accounts
% change December 2002 v December 2001 % Change % Change % Change
AIB Bank Republic of Ireland 18 20 7
AIB Bank GB & NI 23 23 13
USA 2 -4 -3(1)
Capital Markets -1 1 -2
Poland 3 8 -7(2)
AIB Group (excluding currency factors) 10 12 4
(1) Deposits at 31 December 2001 benefited from an exceptionally high level of
short-term corporate deposits. Average core deposits for the year were
up 1%.
(2) Combined deposits and mutual funds volumes were down 2%. The decrease mainly
reflected the lower interest rate environment and the impact on the savings
market of the introduction of a withholding tax on deposits, however average
deposits were up 1%.
The divisional commentary on pages 19 to 24 contains additional comments on key
business trends in relation to loans to customers and customer accounts.
Capital ratios
Group capital ratios strengthened in the year to 31 December 2002. Attributable
profit growth resulted in positive capital generation with the Tier 1 ratio
improving from 6.5% at 31 December 2001 to 6.9% at 31 December 2002. The total
capital ratio remained strong at 10.1%. Tier 1 capital increased by EUR 0.3
billion to EUR 4.8 billion reflecting retained profits of EUR 0.6 billion partly
offset by currency movements. Tier 2 capital decreased by EUR 0.2 billion since
December 2001 largely as a result of currency movements.
Assets under management/administration and custody
Assets under management in the Group amounted to EUR 26 billion at 31 December
2002 and assets under administration and custody amounted to EUR 276 billion at
31 December 2002.
Commentary on half-year December 2002 performance
The second half-year profit on ordinary activities before taxation amounted to
EUR672 million compared with EUR 703 million in the first half. The second
half-year was negatively impacted by the Allfirst restructuring costs and the
reduction in embedded values in Ark Life. Excluding these items, profit was up
4% on a constant currency basis.
Net interest income of EUR 1,154 million was up 1% on the half-year to June
2002. The first half benefited from a very strong performance from interest rate
management activities in Global Treasury. Other income increased by 8% to EUR
772 million particularly due to securities gains in Allfirst which were partly
offset by Ark Life's performance. Operating expenses at EUR 1,173 million were
broadly in line with expectations. The Group credit provision charge as a
percentage of average loans was similar to the first half.
Commentary on results
Cash flow
As shown in the consolidated cash flow statement, there was a net increase in
cash of EUR 362 million during the year ended 31 December 2002. Net cash outflow
from operating activities was EUR 121 million. Cash outflows from financing were
EUR 129 million, primarily due to the redemption of subordinated liabilities of
EUR 247 million offset by the issue of subordinated liabilities of EUR 100
million. Cash outflows from taxation were EUR 280 million while cash outflows in
relation to equity dividends were EUR 345 million. These outflows were offset by
a cash inflow from capital expenditure, primarily due to net cash inflows from
disposals of debt and equity securities of EUR 1,516 million.
Critical accounting policies
AIB's financial statements are prepared under the historical cost convention as
modified by the revaluation of certain properties and investments and comply
with Irish statute and with Irish Generally Accepted Accounting Principles ('
Irish GAAP') as well as general practices followed by the financial services
industry in Ireland and the UK. In the preparation of its financial statements
the Group adopts the accounting policies and estimation techniques that the
Directors believe are most appropriate in the circumstances for the purpose of
giving a true and fair view of the Group's state of affairs, profit and
cashflows. However, different policies, estimation techniques and assumptions in
critical areas could lead to materially different results.
The estimation of potential bad debt losses is inherently uncertain and depends
upon many factors, including loan loss trends, portfolio grade profiles, local
and international economic climate, conditions in various industries to which
AIB Group is exposed and other external factors such as legal and regulatory
requirements. For example, should the expectation of loss within a portfolio
increase, then this may result in an increase to the required general loan loss
provision level.
In addition, the profile of the amortisation of goodwill would be different if a
useful economic life longer or shorter than the existing AIB policy of a maximum
life of 20 years was used. The application of other accounting policies, for
example, measuring shareholders' interest in the long-term assurance fund,
impairment, debt securities and equity shares, retirement benefits and
derivatives, require the use of estimation techniques that involve making
assumptions about future market conditions which could impact on the timing and
amounts recognised in the consolidated profit and loss account and the
consolidated balance sheet.
Acquisition of a strategic stake in M&T Bank Corporation. Disposal of Allfirst
Financial Inc.
It was announced on 26 September 2002 that AIB is entering into a strategic
relationship with M&T Bank Corporation ('M&T') whereby AIB's US subsidiary,
Allfirst, will be acquired by M&T. As a result of the transaction, AIB will
acquire a strategic shareholding of 26.7 million M&T shares, representing a
stake of approximately 22.5% in the enlarged M&T. AIB will also receive US$ 886m
in cash.
The transaction, which is expected to be completed by the end of the first
quarter of 2003,is subject to regulatory approvals. Shareholders of both M&T and
AIB approved the transaction in December 2002.
The transaction has no impact on the accounts of AIB for 2002.The transaction
will be accounted for in accordance with the Urgent Issue Task Force Abstract
No.31 'Exchanges of businesses or other non-monetary assets for an interest in a
subsidiary, joint venture or an associate'('UITF31').Under UITF 31 the
transaction is accounted for as an exchange of 77.5% of Allfirst for 22.5% of
the existing M&T. Under this approach, the 22.5% of Allfirst that is owned by
AIB, both directly before the transaction and indirectly thereafter, is treated
as being owned throughout the transaction. The transaction will give rise to a
gain, which will be recognised on completion.
The 2003 accounts will also reflect the income and expenses of Allfirst for the
period during which it remains a 100% subsidiary of the Group. Following
completion of the transaction, the Group will account for its investment in the
enlarged M&T as an associated undertaking. The Group will include its share of
the profits of the enlarged M&T in the Group profit and loss account within the
caption 'Income from associated undertakings'. AIB will also account for its
22.5% share of the costs associated with the merger, calculated in accordance
with Irish GAAP.
Commentary on results
"Outlook - Underlying adjusted earnings per share expected to increase
in mid single-digits"
Prospective accounting developments
International accounting standards
The European Commission has adopted a regulation on the application of
International Accounting Standards ('IASs'). This requires that the Group
accounts of all listed companies in the EU should, from January 2005,be drawn up
on the basis of adopted International Accounting Standards. The 'adoption' of
the International Accounting Standards Board (IASB) standards is the
responsibility of the Accounting Regulatory Committee of the European
Commission. Under the terms of the EU regulation, member state governments have
the option to decide whether adopted IASs should be applied more widely than in
the group accounts of listed companies. The Group is currently considering the
implications of the regulation and expects to prepare its first financial
statements in accordance with 'adopted' International Accounting Standards for
the year ended 31 December 2005.
During 2002, the IASB proposed improvements to a number of its standards, and
the Accounting Standards Board ('ASB') in the UK instituted a convergence
programme whereby six of these standards when updated would be substituted for
existing UK/Irish standards. AIB continues to monitor progress on the
convergence programme.
Share-based payment
In November 2002, the ASB issued Financial Reporting Exposure Draft 31 -
Share-based payment ('FRED 31') which would apply to all entities and all types
of share based payment transactions including all employee share option schemes.
The proposed standard would require entities to recognise an expense in the
profit and loss account in respect of share based payments over the period in
which the services are rendered by the employees. The expense will be measured
by reference to the fair value of the equity instruments granted taking into
account the terms and conditions upon which those equity instruments were
granted. The comment period for the exposure draft closes in early March 2003
and the ASB expects to publish a standard during 2003 which would come into
effect on 1 January 2004. AIB is currently examining the implications of the
FRED, however implementation of the standard will give rise to a profit and loss
account charge.
Outlook
The economic outlook internationally is uncertain at present, investment
expenditure is sluggish and corporate customers are generally inclined to
protect their balance sheets rather than expand their operations. However, AIB's
operations are positioned to generate strong revenue growth, particularly in our
high growth core banking franchises and the Group is planning for double-digit
lending growth in 2003. AIB is combining its traditional prudent and cautious
approach to risk assessment with leveraging our relationship banking approach
and maximising the benefits of our customer relationship management systems. In
2003 we will have a number of one off and significant items i.e. the transition
of our Allfirst franchise in the USA to M&T Bank (subject to regulatory
approvals), the impact of lower other finance income from our pension fund
assets due to declines in stock market valuations, and the imposition of the
Irish Government Bank Levy. Excluding these items, underlying adjusted earnings
per share in 2003 is expected to increase in mid single-digits based on
projected strong growth in business volumes.
Divisional commentary
On a divisional basis profit is measured in euro and consequently includes the
impact of currency movements.
AIB Bank Republic of Ireland profit was EUR 590 million, up 5% on the year to
December 2001
"Banking operations - operating profit up 11%"
"Challenging year for Ark Life - operating profit down 4%"
"Strong growth in loan volumes, up 20% including 31% increase in home loans"
"Cost income ratio at 51%"
AIB Bank Republic of Ireland Retail and commercial banking operations in
Republic of Ireland, Channel Islands, and Isle of Man; AIB Finance and Leasing;
Card Services; and AIB's life and pensions subsidiary Ark Life Assurance
Company.
Year Year
2002 2001 % Change
AIB Bank Republic of Ireland profit and loss account EUR m EUR m 2002 v 2001
Net interest income 921 843 9
Other finance income 40 43 -7
Other income 353 359 -2
Total operating income 1,314 1,245 6
Total operating expenses 677 641 6
Operating profit before provisions 637 604 5
Provisions 55 44 23
Operating profit - continuing activities 582 560 4
Profit on disposal of property 8 2 -
Profit on ordinary activities before taxation 590 562 5
Banking operations in the Republic of Ireland produced a strong performance with
operating profit up 11% in less buoyant economic conditions. There was strong
growth in business volumes with loans up 20% since December 2001 including
non-home loan lending up 16% and home loans up 31%. This reflected our
capability to grow revenues and significantly increase our market penetration.
Total deposits were up 7% due to a strong performance in the second half with
growth of 6% following a 1% increase in the first half which was affected by an
exceptional position at 31 December 2001 in the run up to euro conversion.
Average deposits were up 11%. AIB Card Services reported strong profit growth
benefiting from good growth in loan volumes and a lower cost income ratio. AIB
Finance and Leasing profit also increased as a result of lower costs and strong
growth in loan volumes.
Costs increased by 6% due to higher business activity levels and salary
increases relating to the National Programme for Prosperity and Fairness partly
offset by cost saving initiatives in central supports, with the cost income
ratio remaining at 51%.
Ark Life profit of EUR 57 million for the year to December 2002 was down from
EUR 84 million in 2001. Total Annual Premium Equivalent (APE) sales were EUR 179
million compared with EUR 200 million in 2001. The difficult investment market
resulted in reduced volumes of business with customers opting for more risk
averse products and the decline in world equity markets also had an adverse
impact of EUR 32 million on embedded values. The reduction from 12% to 10% in
the discount rate used in the calculation of its embedded value profit had a
favourable profit impact of EUR 17 million. The adoption of a 10% discount rate
more closely aligns Ark Life policy with industry practice.
Divisional commentary
AIB Bank GB & NI profit was EUR 240 million, up 8% on the year to December 2001
"Strong growth in business volumes"
"Investment in business development capability"
"Improved efficiency - cost income ratio down 2% to 50%"
AIB Bank GB & NI Retail and commercial banking operations in Great Britain and
Northern Ireland.
Year Year
2002 2001 % Change
AIB Bank GB & NI profit and loss account EUR m EUR m 2002 v 2001
Net interest income 363 336 8
Other finance income (1) 3 -
Other income 166 161 3
Total operating income 528 500 6
Total operating expenses 266 259 2
Operating profit before provisions 262 241 9
Provisions 22 19 18
Operating profit - continuing activities 240 222 8
Profit on disposal of property - 1 -
Profit on ordinary activities before taxation 240 223 8
Profit in AIB Bank GB & NI increased by 9% on a constant currency basis. There
was a particularly strong performance in Britain as a result of substantially
increased business volumes. Average loans increased by 15% with significant
growth in retail and professional sectors. In Northern Ireland, home loan
activity was buoyant with an increase of 17% in total home loans. Average
deposits were up 11% as a result of increased business development activity. The
Division expanded its business development capability with the opening of new
offices in Britain and recruitment of experienced business bankers.
Notwithstanding business expansion initiatives, costs were well managed with the
cost income ratio declining from 52% to 50%.
Credit quality remained strong. An achievement was a reduction of 12% in
non-performing loans and the bad debt charge was predominantly general with a
modest net specific charge.
In December, the Forum of Private Business voted AIB GB 'Britain's Best Business
Bank'. This was the fifth consecutive time the bank was awarded this biennial
title.
Divisional commentary
USA reported profit of EUR 308 million,down 13% on the year to December 2001
Allfirst: "Business stable, finalising the transition to M&T Bank"
"Profit down 10% due to higher provisions"
Allied Irish America: "Continued investment in not-for-profit
business - Ketchum Canada, Inc .acquired" "Underlying fee income up
30%,strong growth in letter of credit income"
USA includes Allfirst and Allied Irish America. Allfirst has banking operations
in Maryland, Pennsylvania, Virginia and Washington DC. Allied Irish America
includes retail and corporate operations in New York, Philadelphia, Los Angeles,
Chicago, San Francisco and Atlanta; Community Counselling Services ('CCS') and
Ketchum.
Year Year
2002 2001 % Change
USA profit and loss account EUR m EUR m 2002 v 2001
Net interest income 549 584 -6
Other finance income (2) 2 -
Other income 528 446 18
Total operating income 1,075 1,032 4
Operating expenses 655 638 3
Restructuring costs in continuing businesses 13 - -
Total operating expenses 668 638 5
Operating profit before provisions 407 394 4
Provisions 98 39 154
Operating profit - continuing activities 309 355 -13
Loss on disposal of property (1) - -
Profit on ordinary activities before taxation 308 355 -13
Allfirst - 2002 was a difficult year for Allfirst in the aftermath of the
foreign exchange trading losses. In financial terms the results benefited from
securities gains of US$ 69 million (net of lost yield) arising from a
restructuring of the portfolio in the fourth quarter. The purpose of the
restructuring was to reduce interest rate risk exposure by replacing longer
dated securities with shorter dated issues.
Provisions and writedowns were substantially higher, a credit provision of US$
38 million for one specific case, US$ 16 million writedowns of mutual fund
assets held as a hedge for incentive plan liabilities and a US$ 10 million
provision for residual values in the auto lease portfolio. The customer base was
stable and average core deposits increased by 1% in 2002. There was little
demand for borrowing by corporate customers in this subdued business climate but
direct retail and SME lending increased by 3%. Employee restructuring costs of
US$ 13 million were incurred in relation to an early retirement program at
Allfirst.
On 26 September 2002, AIB announced that it was entering into a strategic
relationship with M&T Bank Corporation ('M&T') whereby M&T would acquire AIB's
US subsidiary Allfirst with AIB obtaining a 22.5% share in the enlarged M&T and
a cash payment of US$ 886 million.
Allied Irish America - Profit increased significantly due to good growth in the
not-for-profit business, an increased revenue contribution from CCS and the
impact of reduced investment costs. There was an underlying increase of 30% in
fee income with strong growth in letter of credit income and a 17% increase in
risk weighted assets.
Ketchum Canada, Inc., a fundraising consultancy that operates across Canada with
principal offices in Toronto, Montreal, Calgary and Vancouver was acquired by
the Group in May 2002.
Divisional commentary
Capital Markets profit was EUR 209 million, up 8% on the year to December 2001
"Substantial growth in Corporate Banking profit"
"Strong performance from Treasury interest rate management activities"
"Lower Investment Banking and Asset Management revenues"
"Effective cost management across all business units"
Capital Markets Global Treasury, Corporate Banking, Investment Banking and Asset
Management.
Year Year
2002 2001 % Change
Capital Markets profit and loss account EUR m EUR m 2002 v 2001
Net interest income 271 210 29
Other finance income 7 8 -11
Other income 282 305 -8
Total operating income 560 523 7
Total operating expenses 300 296 1
Operating profit before provisions 260 227 14
Provisions 60 38 56
Operating profit - continuing activities 200 189 6
Income from associated undertakings 9 5 91
Profit on ordinary activities before taxation 209 194 8
The 8% growth in profit reflected a strong performance in 2002 with Capital
Markets activities operating in very difficult market conditions. There was good
revenue growth which together with tight cost management delivered a 14%
increase in operating profit before provisions.
Corporate Banking achieved very substantial growth in profitability in Ireland
and in its international businesses. Average loan volumes were up 13% with
particularly good performances in IFSC, UK and USA businesses. Fee income was
buoyant including a substantial increase in arrangement fees and fees from
Collateralised Debt Obligation ('CDO') funds, Including the launch of the Clare
Island CDO.
Profit was higher in Global Treasury due to an increased contribution from
interest rate management activities which anticipated and benefited from low
interest rates. Trading revenues (other income) were lower as a result of a more
difficult trading environment. Global Treasury continued to maintain a strong
liquidity position in euro, US dollar, sterling and Polish zloty operations.
Investment Banking revenues were lower due to a decline in asset values, reduced
business volumes and the general impact of difficult equity markets. Despite
difficult market conditions, strong underlying performances were achieved by
Goodbody, AIB Corporate Finance and the AIB/Bank of New York Securities Services
joint venture.
Revenues from Asset Management declined mainly due to the impact of lower
asset values, on fee income.
Operating expenses were well controlled. Excluding the restructuring of the AIB
joint venture with Bank of New York (see comment below on associated
undertakings), costs were up 3% due to normal cost inflation and expansion of
the corporate business internationally partly offset by good cost management.
The cost income ratio declined significantly by 3% to 54%.
A full discussion on provisions is contained in the provisions section of
this review (page 14).
Income from associated undertakings increased due to the restructuring of the
AIB joint venture with the Bank of New York. The AIB share of profit from
custody and trustee businesses is included in associated undertakings in 2002
whereas in 2001 the operating income and expense was included in operating
profit.
Divisional commentary
Poland profit was EUR 61 million for the year 2002
"Operating profit up 36%"
"Tight cost control - benefits from merger of Bank Zachodni and WBK"
"Gross provisions decreased in 2002"
"Slower economic conditions - significantly lower interest rate environment"
Poland Bank Zachodni WBK ('BZWBK'), in which AIB has a 70.5% shareholding,
together with its subsidiaries and associates.
Year Year
2002 2001 % Change
Poland profit and loss account EUR m EUR m 2002 v 2001
Net interest income 272 275 -1
Other finance income - - -
Other income 188 163 15
Total operating income 460 438 5
Operating expenses 351 358 -2
Integration costs in continuing businesses - 38 -
Total operating expenses 351 396 -11
Operating profit before provisions 109 42 160
Provisions 46 9 417
Operating profit - continuing activities 63 33 89
(Loss)/profit on disposal of property (2) 3 -
Profit on ordinary activities before taxation 61 36 71
Operating profit before provisions was up 36% on the 2001 level of EUR 80
million, adjusting for integration costs.
In local currency terms revenue was up 10% despite slower economic conditions.
Net interest income increased by 4% due to growth in business volumes and a
stable net interest margin. Deposit margins declined in the substantially lower
interest rate environment while lower funding costs and wider loan margins were
positive features. Loans increased by 8%, a level below historical trends, due
to management adopting a cautious approach in the more difficult economic
environment. The savings market was sluggish with combined deposits and mutual
funds volumes down 2% on December 2001,however average deposits were up 1%. The
market was affected by tougher business conditions and the introduction of a new
withholding tax on deposits.
Other income was up 21% including strong growth in card and current account fees
and branch commissions. Operating expenses were up 3% reflecting implementation
of a new branch technology platform offset by tight cost control and realisation
of integration benefits.
Including the use of general provisions in 2001 headline provisions increased
from EUR 9 million to EUR 46 million. The gross provision charge declined in
2002 from 1.9% of loans (before the use in 2001 of general provisions of EUR 47
million created on the acquisition of WBK and Bank Zachodni) to 1.2%.
Divisional commentary
Group
Group includes interest income earned on capital not allocated to divisions, the
funding cost of certain acquisitions, hedging costs in relation to the
translation of foreign currency profits, and unallocated costs of enterprise
networks and central services.
Year Year
2002 2001
Group profit and loss account EUR m EUR m
Net interest income (25) 10
Other finance income 18 11
Other income - (8)
Total operating income (7) 13
Total operating expenses 56 54
Operating loss before provisions (63) (41)
Provisions (30) 55
Operating loss - continuing activities (33) (96)
Income from associated undertakings - (1)
Profit on disposal of business - 93
Loss on ordinary activities before taxation (33) (4)
Group reported a loss of EUR 33 million for the year to December 2002, compared
with a loss of EUR 4 million in 2001. The increased loss arose mainly from lower
capital income due to the impact on capital arising from the exceptional foreign
exchange dealing losses in Allfirst in 2001 and lower investment yields. The
2001 loss included EUR 93 million profit from the sale of AIB's interest in KCH
and a EUR 50 million additional unallocated credit provision created at Group
level. The 2002 result included the release of EUR 40 million of this EUR 50
million provision offset by additional provisions in relation to unquoted
investments.
Notes
1 Accounting policies and presentation of financial information
The currency used in these accounts is the euro which is denoted by 'EUR' or the
symbol EUR.
Change in accounting policies
There are no changes to the accounting policies as set out on pages 44 to 47 of
the Annual Report and Accounts for the year ended 31 December 2001 other than
that arising from the implementation of Financial Reporting Standard19 -
Deferred Tax ('FRS 19'). FRS 19 is effective for accounting periods ending on or
after 23 January 2002. Previously it was Group policy to provide deferred tax
where there was a reasonable probability that the tax asset or liability would
crystallise in the forseeable future. Under FRS 19, deferred tax is recognised
on all timing differences. The change in policy did not have a material impact
on the results for each of the years ended 31 December 2002, 2001 and 2000.
Under FRS 19,deferred tax assets and liabilities are required to be disclosed
separately on the face of the balance sheet and comparative figures have been
restated.
Changes in presentation of financial information
The Group has implemented UITF Abstract 33 - Obligations in Capital Instruments
in the preparation of its accounts for the year ended 31 December 2002 and
comparative figures have been restated. Under the UITF, the EUR 500m 7.5%
Step-up Callable Perpetual Reserve Capital Instruments ('RCIs'), which were
issued during 2001,are treated as subordinated liabilities rather than
shareholders' funds. The related interest cost of EUR 38m (2001: EUR 35m; 2000:
nil) is included within interest expense whereas previously the amount was
included in 'Dividends on non-equity shares'.
The following table summarises the restatement of prior year numbers on key
profit and loss account captions.
Year ended 31 December 2001
As reported UITF 33 As restated
EUR m EUR m EUR m
Net interest income 2,293 (35) 2,258
Group profit before taxation and exceptional item 1,401 (35) 1,366
Dividends on non-equity shares 50 35 15
Profit attributable 484 - 484
Notes
2002 2001 2000
2 Segmental information EUR m EUR m EUR m
Operations by business segments(1)
Net interest income(2)
AIB Bank ROI 921 843 738
AIB Bank GB&NI 363 336 318
USA 549 584 537
Capital Markets 271 210 127
Poland 272 275 252
Group (25) 10 50
2,351 2,258 2,022
Deposit interest retention tax - - (113)
2,351 2,258 1,909
Other finance income
AIB Bank ROI 40 43 46
AIB Bank GB&NI (1) 3 4
USA (2) 2 4
Capital Markets 7 8 8
Poland - - 1
Group 18 11 8
62 67 71
Other income
AIB Bank ROI 353 359 357
AIB Bank GB&NI 166 161 151
USA 528 446 381
Capital Markets 282 305 304
Poland 188 163 153
Group - (8) (42)
1,517 1,426 1,304
Exceptional foreign exchange dealing losses - (789) -
1,517 637 1,304
Total operating income
AIB Bank ROI 1,314 1,245 1,141
AIB Bank GB&NI 528 500 473
USA 1,075 1,032 922
Capital Markets 560 523 439
Poland 460 438 406
Group (7) 13 16
3,930 3,751 3,397
Exceptional foreign exchange dealing losses - (789) -
Deposit interest retention tax - - (113)
3,930 2,962 3,284
Total operating expenses
AIB Bank ROI 677 641 593
AIB Bank GB&NI 266 259 248
USA 668 638 554
Capital Markets 300 296 265
Poland 351 396 296
Group 56 54 41
2,318 2,284 1,997
Notes
2002 2001 2000
2 Segmental information (continued) EUR m EUR m EUR m
Operations by business segments(1)
Provisions
AIB Bank ROI 55 44 36
AIB Bank GB&NI 22 19 20
USA 98 39 38
Capital Markets 60 38 18
Poland 46 9 23
Group (30) 55 (1)
251 204 134
Group profit on ordinary activities before taxation(2)
AIB Bank ROI 590 562 516
AIB Bank GB&NI 240 223 205
USA 308 355 330
Capital Markets 209 194 159
Poland 61 36 88
Group (33) (4) (24)
1,375 1,366 1,274
Exceptional foreign exchange dealing losses - (789) -
Deposit interest retention tax - - (113)
1,375 577 1,161
Total loans
AIB Bank ROI 21,367 17,797 15,669
AIB Bank GB&NI 8,967 7,784 7,443
USA 12,286 14,586 12,995
Capital Markets 12,247 12,535 10,386
Poland 3,473 4,646 3,645
Group 143 97 101
58,483 57,445 50,239
Total deposits
AIB Bank ROI 22,522 21,016 18,609
AIB Bank GB&NI 7,449 7,015 6,410
USA 12,823 17,226 15,941
Capital Markets 24,250 21,472 19,271
Poland 5,014 5,968 4,897
Group 132 116 82
72,190 72,813 65,210
Total assets
AIB Bank ROI 27,239 23,512 21,333
AIB Bank GB&NI 10,161 8,993 8,507
USA 17,234 22,427 20,538
Capital Markets 25,026 26,881 23,635
Poland 6,261 7,340 6,129
Group 128 206 401
86,049 89,359 80,543
Notes
2002 2001 2000
2 Segmental information (continued) EUR m EUR m EUR m
Operations by business segments(1)
Total risk weighted assets
AIB Bank ROI 18,821 15,987 14,302
AIB Bank GB&NI 8,666 7,542 6,789
USA 19,234 22,403 20,318
Capital Markets 18,599 18,821 14,879
Poland 3,662 4,105 3,655
Group 257 - 279
69,239 68,858 60,222
Net assets
AIB Bank ROI 1,198 1,126 1,174
AIB Bank GB&NI 552 532 557
USA 1,225 1,578 1,668
Capital Markets 1,184 1,326 1,222
Poland 233 289 300
Group 16 - 23
4,408 4,851 4,944
(1) The business segment information is based on management accounts
information. Income on capital is allocated to the divisions on the basis of the
capital required to support the level of risk weighted assets. Interest income
earned on capital not allocated to divisions, the funding cost of the Bank
Zachodni acquisition and central services expenses is reported in Group.
2002 2001 2000
EUR m EUR m EUR m
Operations by geographical segments(3)
Interest income
Republic of Ireland 2,020 2,089 1,951
United States of America 984 1,254 1,359
United Kingdom 1,002 1,000 1,059
Poland 747 1,001 756
Rest of the world - 2 2
4,753 5,346 5,127
Other finance income
Republic of Ireland 62 60 62
United States of America (2) 2 4
United Kingdom 2 5 5
Poland - - -
Rest of the world - - -
62 67 71
Dividend income
Republic of Ireland 4 4 1
United States of America 4 5 -
United Kingdom 1 - -
Poland 5 1 4
Rest of the world - 1 1
14 11 6
Notes
2002 2001 2000
2 Segmental information (continued) EUR m EUR m EUR m
Operations by geographical segments(3)
Fees and commissions receivable
Republic of Ireland 446 457 428
United States of America 462 433 355
United Kingdom 236 225 207
Poland 155 142 109
Rest of the world 2 1 2
1,301 1,258 1,101
Dealing profits/(losses)
Republic of Ireland 63 62 25
United States of America (11) 16 2
United Kingdom 24 12 44
Poland 1 2 32
Rest of the world - - -
77 92 103
Exceptional foreign exchange dealing losses - (789) -
77 (697) 103
Other operating income
Republic of Ireland 79 110 121
United States of America 120 13 37
United Kingdom 11 30 20
Poland 53 44 24
Rest of the world - (4) -
263 193 202
Gross income
Republic of Ireland 2,674 2,782 2,588
United States of America 1,557 1,723 1,757
United Kingdom 1,276 1,272 1,335
Poland 961 1,190 925
Rest of the world 2 - 5
6,470 6,967 6,610
Exceptional foreign exchange dealing losses - (789) -
6,470 6,178 6,610
Total operating expenses
Republic of Ireland 924 885 801
United States of America 676 653 569
United Kingdom 363 350 332
Poland 351 393 292
Rest of the world 4 3 3
2,318 2,284 1,997
Provisions
Republic of Ireland 71 132 51
United States of America 109 44 38
United Kingdom 25 19 23
Poland 47 9 23
Rest of the world (1) - (1)
251 204 134
Notes
2002 2001 2000
2 Segmental information (continued) EUR m EUR m EUR m
Operations by geographical segments(3)
Group profit on ordinary activities before taxation(2)
Republic of Ireland 675 527 577
United States of America 330 358 301
United Kingdom 303 333 286
Poland 67 55 106
Rest of the world - 93 4
1,375 1,366 1,274
Exceptional foreign exchange dealing losses - (789) -
Deposit interest retention tax - - (113)
1,375 577 1,161
Total loans
Republic of Ireland 29,899 27,224 24,027
United States of America 12,594 14,665 13,018
United Kingdom 12,516 10,899 9,545
Poland 3,473 4,646 3,645
Rest of the world 1 11 4
58,483 57,445 50,239
Total deposits
Republic of Ireland 37,944 33,062 29,055
United States of America 14,453 19,078 17,585
United Kingdom 14,779 14,705 13,672
Poland 5,014 5,968 4,897
Rest of the world - - 1
72,190 72,813 65,210
Total assets
Republic of Ireland 45,205 42,148 36,956
United States of America 17,798 22,672 21,020
United Kingdom 16,774 17,184 16,191
Poland 6,271 7,343 6,128
Rest of the world 1 12 248
86,049 89,359 80,543
Net assets
Republic of Ireland 1,975 2,245 2,009
United States of America 1,243 1,257 1,700
United Kingdom 944 1,029 914
Poland 246 320 300
Rest of the world - - 21
4,408 4,851 4,944
(2)The figures for 2001 have been restated to reflect the interest cost of the
Reserve Capital Instruments as interest expense rather than 'Dividends on
non-equity shares'.
(3)The geographical distribution of profit before taxation is based primarily on
the location of the office recording the transaction.
Assets by segment
The fungible nature of liabilities within the banking industry inevitably leads
to allocations of liabilities to segments, some of which are necessarily
subjective. Accordingly, the directors believe that the analysis of total assets
is more meaningful than the analysis of net assets.
Notes
2002 2001 2000
3 Other interest receivable and similar income EUR m EUR m EUR m
Interest on loans and advances to banks 196 255 238
Interest on loans and advances to customers 3,423 3,684 3,544
Income from leasing and hire purchase contracts 188 209 205
3,807 4,148 3,987
2002 2001 2000
Restated
4 Interest payable EUR m EUR m EUR m
Interest on deposits by banks and customer accounts 2,178 2,744 2,701
Interest on debt securities in issue 103 176 249
Interest on subordinated liabilities 83 133 155
Interest on reserve capital instruments 38 35 -
2,402 3,088 3,105
5 Deposit interest retention tax ('DIRT')
On 3 October 2000, AIB announced that it had reached a full and final settlement
with the Irish Revenue Commissioners of
EUR 114.33m in relation to DIRT, interest and penalties in Ireland for the
period April 1986 to April 1999. The settlement included
EUR 1.37m paid in prior years. Although AIB believe that it had an agreement
with the Revenue Commissioners in 1991 in relation to DIRT, the Board considered
that concluding this settlement was in the best interests of shareholders,
customers and staff. As a result an exceptional charge of EUR 112.96m was
reflected in the accounts for the year ended 31 December 2000.
6 Dealing profits
2002 2001 2000
(a) Dealing profits (before exceptional losses) EUR m EUR m EUR m
Foreign exchange contracts 78 75 69
Profits less losses from securities held for trading 10 2 42
purposes
Interest rate contracts (11) 15 (8)
77 92 103
Dealing profits is a term prescribed by the European Communities (Credit
Institutions: Accounts) Regulations, 1992. Dealing profits reflects trading
income and excludes interest payable and receivable arising from these
activities. Staff and other administrative expenses arising from trading
activities are not included here but are included under the appropriate heading
within administrative expenses (note 8(a)).
(b) Exceptional foreign exchange dealing losses
AIB accounted for the losses arising from the fraudulent foreign exchange
trading activities at Allfirst Bank ('Fraud Losses') by way of an exceptional
pre-tax charge of EUR 789m (of which EUR 341m related to prior periods) in its
accounts for the year ended 31 December 2001. The losses occurred over a number
of years as follows:- 2002: US$ 17.2m; 2001: US$ 373.3m; 2000: US$ 211.0m; 1999:
US$ 48.2m; 1998: US$ 12.4m; and 1997: US$ 29.1m.
The Group profit attributable to the ordinary shareholders of EUR 1,037m,for
the year ended 31 December 2002,would reduce to
EUR 1,019m if the Fraud Losses and associated costs which were charged in 2001
as part of the exceptional item, were taken into account.
Treatment of exceptional foreign exchange dealing losses for US reporting
purposes
For US reporting purposes, the Fraud Losses are required to be charged in the
years in which they occurred. Accordingly in Note 19 - Supplementary Group
financial information for US reporting purposes, the Group profit attributable
to stockholders of AIB is restated to reflect the Fraud Losses and associated
costs in the periods in which they occurred.
Notes
2002 2001 2000
7 Other operating income EUR m EUR m EUR m
Profit/(loss) on disposal of debt securities held for 106 24 (1)
investment purposes
Profit on disposal of investments in associated 1 1 5
undertakings
Profit/(loss) on disposal of equity shares 11 (3) 24
Contribution of life assurance company (note 17) 57 84 95
Contribution from securitised assets 4 5 4
Mortgage origination and servicing income 7 10 3
Miscellaneous operating income 77 72 72
263 193 202
8 Administrative expenses
2002 2001 2000
(a) Staff and other administrative expenses EUR m EUR m EUR m
Staff costs 1,391 1,348 1,192
Other administrative expenses 707 703 634
2,098 2,051 1,826
(b) Restructuring and integration costs in continuing businesses Allfirst
Financial Inc.
Allfirst introduced an early retirement program in August 2002 for certain
qualifying employees which provided additional service credits for those
employees who retired on 1 December 2002. The charge of EUR 13m in 2002 relates
to the cost of the enhanced benefits that were provided to the employees who
retired. This also forms part of the retirement benefits past service cost in
note 10.
Bank Zachodni WBK S.A.
On 13 June 2001, Bank Zachodni S.A. (Group interest 83.01%) merged with
Wielkopolski Bank Kredytowy S.A. (Group interest 60.14%) through a share for
share offering. The enlarged company, now called Bank Zachodni WBK S.A. (Group
interest 70.47%), is listed on the Warsaw stock exchange. The charge of EUR
38min 2001 relates to the costs of integration of the two businesses.
2002 2001 2000
9 Amounts written off/(written back) fixed asset EUR m EUR m EUR m
investments
Debt securities 19 6 (1)
Equity shares 36 (1) -
Interests in associated undertakings - 1 -
55 6 (1)
Notes
10 Retirement benefits
(a) Description of retirement benefit schemes
The Group provides pension benefits for employees in Ireland, the UK, and the
US, the majority of which are funded. Certain post-retirement benefits are also
provided for retired employees, primarily healthcare and life insurance benefits
in the US.
The Group operates a number of defined benefit schemes. The majority of staff in
the Republic of Ireland are members of the AIB Group Irish Pension Scheme (the
Irish scheme) while the majority of staff in the UK are members of the AIB Group
UK Pension Scheme (the UK scheme). Allfirst sponsors a number of defined benefit
schemes, the largest of which (the US scheme) covers substantially all employees
of Allfirst and its subsidiaries. Retirement benefits for the defined benefit
schemes are calculated by reference to service and pensionable salary at normal
retirement date.
Independent actuarial valuations, for the main Irish and UK schemes, are carried
out on a triennial basis. The last such valuation was carried out on 1 January
2001 using the Projected Unit Method. The schemes are funded and contribution
rates of 10.0% and 22.6% have been set for the Irish and UK schemes
respectively. As both these schemes are closed to new entrants, under the
Projected Unit Method, the current service cost and the standard contribution
rates will increase as members of the schemes approach retirement. Independent
actuarial valuations of the US schemes are carried out annually. The last such
valuation was carried out on 31 December 2002 using the Projected Unit Method.
The actuarial valuations are available for inspection only to the members of the
schemes.
The following table summarises the financial assumptions adopted in respect of
the main schemes. The assumptions, including the expected long-term rate of
return on assets, have been set upon advice of the Group's actuary.
as at 31 December
2002 2001 2000
Financial assumptions % % %
Irish scheme
Rate of increase in salaries 4.0 4.0 4.0
Rate of increase of pensions in payment 2.5 2.5 2.5
Discount rate 5.60 5.75 5.75
Inflation assumptions 2.5 2.5 2.5
UK scheme
Rate of increase in salaries 4.0 4.0 4.0
Rate of increase of pensions in payment 2.5 2.5 2.5
Discount rate 5.75 6.00 6.00
Inflation assumptions 2.5 2.5 2.5
US scheme
Rate of increase in salaries 4.5 4.5 4.0
Rate of increase of pensions in payment - - -
Discount rate 6.51 6.94 7.47
Inflation assumptions 3.0 3.0 3.0
The following table sets out on a combined basis for all schemes the fair value
of the assets held by the schemes together with the long term rate of return
expected for each class of assets.
as at 31 December 2002 as at 31 December 2001 as at 31 December 2000
Long-term Long-term Long-term
rate of rate of rate of
return return return
expected Value expected Value expected Value
% EUR m % EUR m % EUR m
Equities 9.0 1,490 8.6 2,138 7.4 2,280
Bonds 5.2 333 5.6 391 5.9 443
Other 6.3 346 4.9 373 5.1 407
Total market value of assets 8.0 2,169 7.7 2,902 6.9 3,130
Actuarial value of liabilities (2,879) (2,645) (2,403)
(Deficit)/surplus in the schemes (710) 257 727
Related deferred tax asset/(liability) 173 (2) (102)
Net pension (liability)/asset (537) 255 625
Notes
10 Retirement benefits (continued)
The net pension (liability)/asset is recognised on the balance sheet as
follows:-
as at 31 December
2002 2001 2000
EUR m EUR m EUR m
Funded pension schemes in surplus - 372 671
Funded pension schemes in deficit (482) (58) -
Unfunded schemes (55) (59) (46)
(537) 255 625
Included in the actuarial value of the liabilities is an amount in respect of
commitments to pay annual pensions amounting to
EUR 105,992 in aggregate to a number of former directors.
The following table sets out the components of the defined benefit cost for each
of the three years ended 31 December 2002, 2001 and 2000.
2002 2001 2000
EUR m EUR m EUR m
Other finance income
Expected return on pension scheme assets 220 213 203
Interest on pension scheme liabilities (158) (146) (132)
62 67 71
Included within administrative expenses
Current service cost 86 79 75
Past service cost 22 5 21
108 84 96
Cost of providing defined retirement benefits 46 17 25
2002 2001 2000
Analysis of the amount recognised in STRGL EUR m EUR m EUR m
Actual return less expected return on pension scheme assets (862) (438) (158)
Experience gains and losses on scheme liabilities (18) (32) (72)
Changes in demographic and financial assumptions (123) (32) (18)
Actuarial loss recognised under FRS 17 (1,003) (502) (248)
Deferred tax 180 100 47
Recognised in STRGL (823) (402) (201)
2002 2001 2000
Movement in (deficit)/surplus during the year EUR m EUR m EUR m
Surplus in scheme at beginning of year 257 727 946
Movement in year:
Current service cost (86) (79) (75)
Past service cost (22) (5) (21)
Contributions 50 50 47
Other finance income 62 67 71
Actuarial loss recognised under FRS 17 (1,003) (502) (248)
Translation adjustment 32 (1) 7
(Deficit)/surplus in scheme at end of year (710) 257 727
Notes
10 Retirement benefits (continued)
2002 2001 2000 1999
History of experience gains and losses EUR m EUR m EUR m EUR m
Difference between expected and actual return on scheme
assets:
Amount (862) (438) (158) 324
Percentage of scheme assets 40% 15% 5% 10%
Experience gains and losses on scheme liabilities:
Amount (18) (32) (72) (16)
Percentage of scheme liabilities 1% 1% 3% 1%
Total amount recognised in STRGL:
Amount (1,003) (502) (248) 662
Percentage of scheme liabilities 35% 19% 10% 31%
The Group operates a number of defined contribution schemes. The defined benefit
schemes in Ireland and the UK were closed to new members from December
1997.Employees joining after December 1997 join on a defined contribution basis.
The standard contribution rate in Ireland is 10%. The standard contribution rate
in the UK is 5% and these members are also accruing benefits under SERPS (the
State Earnings Related Pension Scheme). Allfirst provides a defined contribution
plan whereby eligible employees can contribute, subject to certain limitations,
varying percentages of their annual compensation. Allfirst matches 100% of the
first 3% and 50% of the next 3% of an employee's contribution. The total cost in
respect of defined contribution schemes for 2002 was
EUR 27m (2001: EUR 22m; 2000: EUR 17m).
(b) Implementation of FRS 17 'Retirement benefits'
The Group adopted FRS 17 in the preparation of its accounts for the year ended
31 December 2001 and comparative figures were restated. The change in accounting
policy arising from the adoption of FRS 17 gave rise to a net credit to
shareholders' funds of
EUR 648m at 1 January 2001.
11 Profit on disposal of business
In August 2001, AIB's interests in Keppel Capital Holdings Ltd. were sold to
Oversea-Chinese Banking Corporation Limited, giving rise to a profit before
taxation on disposal of EUR 93m (tax charge EUR nil).
2002 2001 2000
12 Taxation EUR m EUR m EUR m
Allied Irish Banks, p.l.c. and subsidiaries
Corporation tax in Republic of Ireland
Current tax on income for the period 81 88 69
Adjustments in respect of prior periods (7) (6) (1)
74 82 68
Double taxation relief (4) (17) (15)
70 65 53
Foreign tax
Current tax on income for the period 212 64 146
Adjustments in respect of prior periods (4) (8) (5)
208 56 141
Total current tax 278 121 194
Deferred tax
Origination and reversal of timing differences 21 (66) 125
Other 6 - -
Total deferred tax 27 (66) 125
Associated undertakings 1 - -
Taxation on ordinary activities 306 55 319
Effective tax rate - adjusted 22.3% 24.2%(1) 25.8%(1)
(1)The adjusted effective tax rate has been presented to eliminate the effect of
the exceptional foreign exchange dealing losses in 2001 (note 6(b)) and the
deposit interest retention tax settlement in 2000 (note 5).
Notes
13 Earnings per EUR 0.32 ordinary share 2002 2001 2000
(a) Basic
Group profit attributable to the ordinary shareholders(1) EUR 1,037m EUR 484m EUR 784m
Weighted average number of shares in issue during the year(1) 868.7m 861.4m 856.1m
Earnings per share EUR 119.4c EUR 56.2c EUR 91.6c
(1)In accordance with FRS 14 - 'Earnings per share', dividends arising on the
shares held by the employee share trusts are excluded in arriving at profit
before taxation and deducted from the aggregate of dividends paid and proposed.
The shares held by the trusts are excluded from the calculation of weighted
average number of shares in issue.
Earnings per EUR 0.32 ordinary share
2002 2001 2000
(b) Adjusted cent per EUR 0.32 share
As reported 119.4 56.2 91.6
Adjustments
Exceptional foreign exchange dealing losses (note 6(b)) - 59.6 -
Deposit interest retention tax (note 5) - - 12.0
Goodwill amortisation 3.6 3.6 3.1
123.0 119.4 106.7
The adjusted earnings per share figure has been presented to eliminate the
effect of the goodwill amortisation in all years, the exceptional foreign
exchange dealing losses in 2001 and the deposit interest retention tax
settlement in 2000.
(c) Diluted 2002 2001 2000
Number of shares (millions)
Weighted average number of shares in issue during the period 868.7 861.4 856.1
Dilutive effect of options outstanding 8.4 5.7 5.8
Diluted 877.1 867.1 861.9
The weighted average number of ordinary shares reflects the dilutive effect of
options outstanding under the employee share trusts,the Share option scheme and
the Allfirst Financial Inc.stock option plan.
2002 2001
14 Loans and advances to customers EUR m EUR m
Loans and advances to customers 50,244 47,674
Amounts receivable under finance leases 2,143 2,447
Amounts receivable under hire purchase contracts 834 863
Money market funds 226 232
53,447 51,216
2002 2001
EUR m EUR m
Non-performing loans - Loans accounted for on a non-accrual basis
AIB Bank ROI division 194 162
AIB Bank GB & NI division 88 107
USA division 107 87
Capital Markets division 115 34
Poland division 486 643
990 1,033
Notes
2002 2001
15 Provisions for bad and doubtful debts EUR m EUR m
At 1 January 1,009 872
Exchange translation adjustments (86) 46
Disposed loans (2) -
Charge against profit and loss account 194 179
Amounts written off (279) (113)
Recoveries of amounts written off in previous years 26 25
At 31 December 862 1,009
At 31 December
Specific 435 539
General 427 470
862 1,009
2002 2001
Book Market Book Market
amount value amount value
16 Debt securities EUR m EUR m EUR m EUR m
Held as financial fixed assets
Issued by public bodies:
Government securities 4,931 5,101 5,014 5,082
Other public sector securities 2,503 2,533 4,012 4,053
Issued by other issuers:
Bank and building society certificates of deposit 124 124 518 519
Other debt securities 5,888 5,932 6,755 6,814
13,446 13,690 16,299 16,468
Held for trading purposes
Issued by public bodies:
Government securities 833 511
Other public sector securities 73 47
Issued by other issuers:
Bank and building society certificates of deposit 45 48
Other debt securities 3,807 3,177
4,758 3,783
18,204 20,082
Notes
17 Long-term assurance business
Income from long-term assurance business included in the profit and loss account
can be divided into those items comprising the operating profit of the business
and other items as set out below.
2002 2001
Income from Ark Life's long-term assurance business EUR m EUR m
New business contribution 60 65
Contribution from existing business
- expected return 25 18
- experience variances 2 3
Investment returns 2 3
Distribution costs (20) (17)
Operating profit 69 72
Other items:
Change in value of future unit linked fees (32) (3)
Changes in economic assumptions 17 -
Exceptional items 3 15
Income from long-term assurance business before tax 57 84
Attributable tax 9 17
Income from long-term assurance business after tax 48 67
The assets and liabilities of Ark Life Assurance Company Limited ('Ark Life')
representing the value of the assurance business together with the
policyholders' funds are:
2002 2001
EUR m EUR m
Investments:
Cash and short-term placings with banks 1,250 1,019
Debt securities 223 256
Equity shares 849 1,034
Property 42 43
2,364 2,352
Embedded value adjustment 153 142
Other assets - net 61 62
2,578 2,556
Long-term assurance liabilities to policyholders (2,226) (2,252)
Long-term assurance business attributable to shareholders 352 304
Represented by:
Shares at cost 19 19
Reserves 326 281
Profit and loss account 7 4
352 304
Notes
2002 2001
18 Customer accounts EUR m EUR m
Current accounts 16,428 16,300
Demand deposits 10,333 11,165
Time deposits 21,855 22,896
48,616 50,361
Securities sold under agreements to repurchase 703 726
Other short-term borrowings 3,657 3,470
4,360 4,196
52,976 54,557
19 Supplementary Group financial information for US reporting purposes
For convenience purposes this note contains translations of certain euro amounts
into US dollars at the rate of EUR 1.00 to US$ 1.0487, the year end translation
rate used in the preparation of the Group's financial statements. These
translations should not be construed as representations that the euro amounts
actually represent such US dollar amounts or could be converted into US dollars
at the rate indicated.
2002 2002 2001 2000
Restated
US $ EUR EUR EUR
Per American Depositary Share ('ADS')
Net income for US reporting purposes 2.46 2.35 1.70 1.49
Dividend(1) 1.04 0.98 0.88 0.78
Net assets for US reporting purposes 10.37 9.88 11.06 10.84
Amounts in accordance with US GAAP
Net income 974m 929m 630m 571m
Net income attributable to ordinary stockholders 966m 921m 615m 551m
Net income per ADS 2.22 2.12 1.43 1.29
Net assets per ADS 14.02 13.37 12.98 11.56
(1)The actual dividend payable to US stockholders will depend on the EUR/US $
exchange rate prevailing.
Summary of consolidated balance sheet US $ m EUR m EUR m EUR m
Amounts in accordance with IR GAAP
Total assets 90,239 86,049 89,359 80,543
Ordinary stockholders' equity 4,623 4,408 4,851 4,944
Total loans 61,332 58,483 57,445 50,239
Total deposits 75,706 72,190 72,813 65,210
Amounts in accordance with USGAAP
Total assets 90,642 86,432 88,561 78,216
Ordinary stockholders' equity 6,254 5,963 5,716 5,050
Notes
19 Supplementary Group financial information for US reporting purposes
(continued)
Exceptional foreign exchange dealing losses
As set out in note 6,in accordance with Irish Generally Accepted Accounting
Principles (IR GAAP) the total costs arising from the fraud in Allfirst Treasury
have been reflected by way of an exceptional charge of EUR 789m (after tax EUR
513m) in the accounts for the year ended December 31,2001.
Under US reporting requirements, the filing of AIB's 2001 financial statements
by way of Annual Report on Form 20-F constituted a reissue of the financial
statements for prior years. The US Securities and Exchange Commission requires
all material errors in respect of prior years to be accounted for and reported
as prior year adjustments, in the years in which they occurred. Accordingly, in
AIB's Annual Report on Form 20-F for December 2001, the Fraud Losses were
charged in the years in which they occurred and this approach has been reflected
in the financial information provided in this note.
The following tables reflect the reconciliation of the net income attributable
to ordinary stockholders and consolidated ordinary stockholders' equity, as
reported under Irish legislation to the amounts restated to meet US reporting
purposes.
2002 2001 2000
Restated
Net income attributable to ordinary stockholders EUR m EUR m EUR m
Per Irish Legislation Accounts 1,037 484 784
Adjustments:
Exceptional foreign exchange dealing losses (18) 372 (228)
Administration expenses (10) 6 -
Taxation 10 (132) 80
For US reporting purposes 1,019 730 636
Consolidated ordinary stockholders' equity
Per Irish Legislation Accounts 4,408 4,851 4,944
Adjustments:
Cumulative impact of recognition
of losses in period they occurred - 20 (210)
For US reporting purposes 4,408 4,871 4,734
Notes
19 Supplementary Group financial information for US reporting purposes
(continued)
Reconciliation of alternative presentation to USGAAP
The Group financial statements conform with accounting principles generally
accepted in Ireland. The following tables provide the significant adjustments to
the consolidated net income (Group profit attributable to the stockholders of
AIB) and consolidated ordinary stockholders' equity, which would be required if
accounting principles generally accepted in the United States (US GAAP) had been
applied instead of those generally accepted in Ireland (IR GAAP).
Year ended December 31
2002 2001 2000
Consolidated net income Restated
(millions except per share amounts)
Net income (Group profit attributable to the stockholders of AIB)
as in the consolidated profit and loss account for
US reporting purposes (page 40) EUR 1,019 EUR 730 EUR 636
Adjustments in respect of:
Depreciation of freehold and long leasehold property 2 5 -
Long-term assurance policies (27) (48) (70)
Goodwill 4 (110) (78)
Premium on core deposit intangibles (5) (7) (9)
Retirement benefits (5) 53 94
Dividends on non-equity shares 8 15 20
Securities held for hedging purposes (3) (24) (25)
Derivatives hedging available-for-sale securities - - (9)
Internal derivative trades - - (6)
Internal use computer software 1 6 11
Derivatives FAS 133 transition adjustment(1) - 122 -
Derivatives FAS 133 adjustment (82) (107) -
Deferred tax effect of the above adjustments 17 (5) 7
Net income in accordance with US GAAP EUR 929 EUR 630 EUR 571
Net income applicable to ordinary stockholders of AIB in accordance EUR 921 EUR 615 EUR 551
with US GAAP
Equivalent to US$ 966
Income per American Depositary Share (ADS*) in accordance with US GAAP EUR 2.12 EUR 1.43 EUR 1.29
Equivalent to US$ 2.22
Year end exchange rate EUR/US $ 1.0487
*An American Depositary Share represents two ordinary shares of EUR 0.32
each.
Year ended December 31
2002 2001 2000
Comprehensive income Restated
(millions)
Net income in accordance with USGAAP EUR 929 EUR 630 EUR 571
Net movement in unrealized holding gains on investment securities
arising during the period 84 120 110
Derivatives FAS 133 transition adjustment(1) - 41 -
Exchange translation adjustments (480) 214 233
Comprehensive income EUR 533 EUR 1,005 EUR 914
(1) Cumulative effect of the change in accounting principle for derivatives
and hedging activities.
Notes
19 Supplementary Group financial information for US reporting purposes
(continued)
Reconciliation of alternative presentation to USGAAP (continued)
Consolidated ordinary stockholders' equity 2002 2001 2000
(millions except per share amounts)
Ordinary stockholders' equity as in the consolidated balance
sheet for US reporting purposes (page 40) EUR 4,408 EUR 4,871 EUR 4,734
Revaluation of property (201) (204) (210)
Depreciation of freehold and long leasehold property (27) (27) (27)
Goodwill 925 1,070 1,097
Core deposit intangibles 12 19 26
Dividends payable on ordinary shares 284 250 221
Dividends on non-equity shares 1 1 -
Long-term assurance policies (263) (236) (188)
Unrealized gains/(losses) not yet recognised on:
Available-for-sale debt securities 244 169 16
Available-for-sale equity securities 15 - (6)
Derivatives hedging available-for-sale securities - - (63)
Securities held for hedging purposes (4) (1) 26
Internal derivative trades - - (10)
Derivatives FAS 133 adjustment (79) 5 -
Retirement benefits 1,012 77 (476)
Internal use computer software 18 17 11
Own shares (176) (245) (177)
Deferred tax effect of the above adjustments (206) (50) 76
Ordinary stockholders' equity in accordance with US GAAP EUR 5,963 EUR 5,716 EUR 5,050
Equivalent to US$ 6,254
Ordinary stockholders' equity per ADS in accordance with USGAAP EUR 13.37 EUR 12.98 EUR 11.56
Equivalent to US$ 14.02
Ordinary stockholders' equity per ADS in accordance with IR GAAP EUR 9.88 EUR 11.06 EUR 10.84
Equivalent to US$ 10.37
Notes
20 Average balance sheets and interest rates
The following tables show the average balances and interest rates of interest
earning assets and interest bearing liabilities for the years ended 31 December
2002 and 2001. The calculation of average balances include daily and monthly
averages for reporting units. The average balances used are considered to be
representative of the operations of the Group.
Year ended 31 December 2002 Year ended 31 December 2001
Average Interest Average Average Interest Average
balance rate balance rate
Assets EUR m EUR m % EUR m EUR m %
Placings with banks
Domestic offices 3,388 103 3.0 3,441 138 4.0
Foreign offices 1,884 81 4.3 2,041 117 5.7
Loans to customers(1)
Domestic offices 23,530 1,360 5.8 21,210 1,390 6.6
Foreign offices 26,369 1,573 6.0 25,026 2,051 8.2
Placings with banks and loans to
customers(1)
Domestic offices 26,918 1,463 5.4 24,651 1,528 6.2
Foreign offices 28,253 1,654 5.9 27,067 2,168 7.9
Funds sold
Domestic offices - - - - - -
Foreign offices 744 12 1.6 93 2 2.7
Debt securities and government bills
Domestic offices 9,850 401 4.1 8,886 432 4.9
Foreign offices 9,311 550 5.9 11,558 784 6.8
Instalment credit and finance lease
receivables
Domestic offices 1,895 115 6.1 1,880 119 6.3
Foreign offices 1,280 73 5.7 1,458 90 6.2
Total interest earning assets
Domestic offices 38,663 1,979 5.1 35,417 2,079 5.9
Foreign offices 39,588 2,289 5.8 40,176 3,044 7.6
78,251 4,268 5.5 75,593 5,123 6.8
Allowance for loan losses (956) (939)
Non-interest earning assets 8,962 9,560
Total assets 86,257 4,268 4.9 84,214 5,123 6.1
Percentage of assets applicable to
foreign activities 51.6 53.3
(1)Loans to customers include money market funds. Non-accrual loans and loans
classified as problem loans are also included within this caption.
Notes
20 Average balance sheets and interest rates (continued)
Year ended 31 December 2002 Year ended 31 December 2001
Average Interest Average Average Interest Average
balance rate balance rate
Liabilities and stockholders' equity EUR m EUR m % EUR m EUR m %
Interest bearing deposits and
other short-term borrowings
Domestic offices 31,005 837 2.7 27,285 1,044 3.8
Foreign offices 30,326 935 3.1 32,519 1,588 4.9
Funds purchased
Domestic offices - - - - - -
Foreign offices 1,489 24 1.6 1,694 65 3.8
Subordinated liabilities
Domestic offices 1,642 85 5.2 1,906 116 6.1
Foreign offices 682 36 5.3 788 52 6.6
Total interest bearing liabilities
Domestic offices 32,647 922 2.8 29,191 1,160 4.0
Foreign offices 32,497 995 3.1 35,001 1,705 4.9
65,144 1,917 2.9 64,192 2,865 4.5
Interest-free liabilities
Current accounts 10,764 9,578
Other liabilities 5,182 4,996
Minority equity and non-equity 285 298
interests
Preference share capital 253 253
Ordinary stockholders' equity 4,629 4,897
Total liabilities and stockholders' 86,257 1,917 2.2 84,214 2,865 3.4
equity
Percentage of liabilities applicable
to foreign activities 50.0 53.7
Contract amount
2002 2001
21 Memorandum items: contingent liabilities and commitments EUR m EUR m
Contingent liabilities:
Acceptances and endorsements 72 142
Guarantees and assets pledged as collateral security 5,292 5,245
Other contingent liabilities 1,027 1,125
6,391 6,512
Commitments:
Commitments arising out of sale and option to resell transactions 2,062 402
Other commitments 17,890 18,597
19,952 18,999
26,343 25,511
Notes
21 Memorandum items: contingent liabilities and commitments (continued)
The Group's maximum exposure to credit loss under contingent liabilities and
commitments to extend credit, in the event of non-performance by the other party
where all counterclaims, collateral or security prove valueless, is represented
by the contractual
amounts of those instruments.
Except as set out below, AIBGroup is not, nor has been, involved in, nor are
there, so far as the Company is aware, pending or threatened by or against
AIBGroup any legal or arbitration proceedings which may have, or have had during
the previous twelve months, a significant effect on the financial position of
AIBGroup.
Class actions
On 5 March 2002 and on 24 April 2002, separate class action lawsuits under the
Securities Exchange Act, 1934 of the United States were filed in the United
States District Court for the Southern District of New York against AIB,
Allfirst and certain serving and past officers and directors of Allfirst and its
subsidiaries, seeking compensatory damages, legal fees and other costs and
expenses relating to alleged misrepresentations in filings of AIB and Allfirst.
On 3 May 2002, a motion to consolidate both cases and to appoint a lead
plaintiff was filed with the court. It is not practicable to predict the outcome
of the action against AIB and Allfirst and any financial impact on AIB, but on
the basis of current information, the Directors do not believe that the action
is likely to have a materially adverse effect on AIB.
On 13 May 2002,a purported shareholder derivative action was filed in the
Circuit Court for Baltimore City, Maryland. An alleged holder of AIB American
Depositary Shares purports to sue certain present and former directors and
officers of Allfirst Bank on behalf of AIB, alleging those persons are liable
for the foreign exchange trading losses. No relief is sought in the purported
derivative action against AIB, Allfirst or Allfirst Bank. On 30 December 2002,
the Court dismissed the action. On 10 January 2003, the plaintiffs have filed a
motion seeking to have the Court amend or revise the judgement, or to be granted
leave to file an amended complaint.
Certain of the individual defendants in these actions have asserted or may
possibly assert claims for indemnification against AIB and/or Allfirst, which,
if made against Allfirst following completion of the M&T transaction, might be
subject to the indemnification obligations of AIB as part of the agreement with
M&T. In the nature of any such claims, it is not possible to quantify the amount
which might be asserted in any such claim.
The following table presents the notional principal amount and gross
replacement cost of interest rate, exchange rate and equity contracts.
31 December 2002 31 December 2001
Notional Gross Notional Gross
principal replacement principal replacement
amount cost amount cost
EUR m EUR m EUR m EUR m
Interest rate contracts(1) 110,529 1,913 116,151 1,432
Exchange rate contracts(1) 21,046 546 26,505 280
Equity contracts(1) 2,037 27 2,893 195
(1)Interest rate, exchange rate and equity contracts have been entered into for
both hedging and trading purposes.
In respect of interest rate and exchange rate contracts, notional principal
amounts are used to express the volume of these transactions. However, the
amounts subject to risk are much lower in accordance with the terms of the
contracts. Credit risk arises when market movements are such that the deal has
positive value to the Group so that a cost would be incurred if the contract had
to be replaced in the event of counterparty default. The sum of these positive
values is known as gross replacement cost and does not reflect the netting of
offsetting positions.
22 Form 20-F
An annual report on Form 20-F will be filed with the Securities and Exchange
Commission, Washington D.C. and, when filed, will be available to shareholders
on application to the Company Secretary.
23 Approval of accounts
The accounts were approved by the board of directors on 18 February 2003.
Financial and other information
2002 2001
Financial and other information Restated
Operating ratios
Operating expenses(1)/operating income 58.6% 59.9%(2)
Tangible operating expenses(3)/operating income 57.8% 59.0%(2)
Other income(4)/operating income 40.2% 39.8%(2)
Net interest margin:
Group 3.00% 2.99%
Domestic 2.73% 2.59%
Foreign 3.27% 3.34%
Rates of exchange
EUR /US $
Closing 1.0487 0.8813
Average 0.9458 0.8947
EUR /Stg GBP
Closing 0.6505 0.6085
Average 0.6282 0.6198
EUR /PLN
Closing 4.0210 3.4953
Average 3.8473 3.6573
(1)Excludes restructuring costs of EUR 13.3m in 2002 and integration costs of
EUR38.2m in 2001.
(2)Adjusted to exclude the impact of the exceptional foreign exchange dealing
losses in 2001.Including the exceptional foreign exchange dealing losses,
operating expenses/operating income was 77.1%, tangible operating expenses/
operating income was 74.8% and other income/operating income was 23.8%.
(3)Excludes amortisation of goodwill of EUR 31.7m (2001: EUR 30.9m) and
restructuring/integration costs of EUR 13.3m (2001: EUR 38.2m). (4)Other income
includes other finance income.
2002 2001
Capital adequacy information EUR m EUR m
Risk weighted assets
Banking book:
On balance sheet 53,961 54,839
Off-balance sheet 11,521 10,854
65,482 65,693
Trading book:
Market risks 3,099 2,897
Counterparty and settlement risks 658 268
3,757 3,165
Total risk weighted assets 69,239 68,858
Capital
Tier 1 4,806 4,479
Tier 2 2,522 2,759
7,328 7,238
Supervisory deductions 341 294
Total 6,987 6,944
Five year financial summary
Year ended 31 December
2002 2001 2000 1999 1998
2002 Summary of consolidated Restated
US $m profit and loss account EUR m EUR m EUR m EUR m EUR m
2,466 Net interest income before exceptional item 2,351 2,258 2,022 1,770 1,609
- Deposit interest retention tax - - (113) - -
2,466 Net interest income after exceptional item 2,351 2,258 1,909 1,770 1,609
65 Other finance income 62 67 71 71 -
1,590 Other income before exceptional item 1,517 1,426 1,304 1,052 980
- Exceptional foreign exchange dealing losses - (789) - - -
4,121 Total operating income after exceptional 3,930 2,962 3,284 2,893 2,589
items
2,431 Total operating expenses 2,318 2,284 1,997 1,658 1,442
1,690 Group operating profit before provisions 1,612 678 1,287 1,235 1,147
263 Provisions 251 204 134 92 134
1,427 Group operating profit 1,361 474 1,153 1,143 1,013
10 Income from associated undertakings 9 4 3 3 4
5 Profit on disposal of property 5 6 5 2 32
- Profit on disposal of business - 93 - 15 -
1,442 Group profit before taxation 1,375 577 1,161 1,163 1,049
321 Taxation on ordinary activities 306 55 319 333 315
Impact of phased reduction in
Irish corporation tax rates on
- deferred tax balances - - - - 55
321 306 55 319 333 370
25 Equity and non-equity minority interests 24 23 38 28 29
8 Dividends on non-equity shares 8 15 20 16 17
Group profit attributable to the ordinary
1,088 shareholders of Allied Irish Banks, p.l.c. 1,037 484 784 786 633
450 Dividends on equity shares 429 380 335 288 239
2.4 Dividend cover - times 2.4 1.3 2.3 2.7 2.7
125.2c Earnings per EUR 0.32 share - basic 119.4c 56.2c 91.6c 92.5c 74.7c
129.0c Earnings per EUR 0.32 share - adjusted 123.0c 119.4c 106.7c 93.5c 81.1c
124.0c Earnings per EUR 0.32 share - diluted 118.2c 55.9c 91.0c 91.6c 73.7c
Year ended 31 December
2002 Summary of consolidated 2002 2001 2000 1999 1998
US $m balance sheet EUR m EUR m EUR m EUR m EUR m
90,239 Total assets 86,049 89,359 80,543 67,959 53,875
61,332 Total loans 58,483 57,445 50,239 43,127 35,496
75,706 Total deposits 72,190 72,813 65,210 55,241 44,840
1,350 Dated capital notes 1,287 1,594 1,836 1,587 970
408 Undated capital notes 389 426 413 397 170
520 Reserve capital instruments 496 496 - - -
Equity and non-equity minority
288 interests in subsidiaries 274 312 272 227 213
246 Shareholders' funds: non-equity interests 235 279 264 245 210
4,623 Shareholders' funds: equity interests 4,408 4,851 4,944 4,460 2,829
7,435 Total capital resources 7,089 7,958 7,729 6,916 4,392
Five year financial summary (continued)
Year ended 31 December
2002 2001 2000 1999 1998
Restated
Other financial data % % % % %
Return on average total assets(1) 1.24 0.62(2) 1.12(3) 1.36 1.28(4)
Return on average ordinary shareholders' equity 22.4 9.9(2) 16.7(3) 20.9 25.4(4)
Dividend payout ratio 41.4 78.5 42.7 36.6 37.9
Average ordinary shareholders' equity
as a percentage of average total assets 5.4 5.8 6.3 6.1 4.7
Allowance for loan losses as a percentage
of total loans to customers at year end 1.6 1.9 1.9 1.9 1.8
Net interest margin(1) 3.00 2.99 3.02 3.27 3.33
Tier 1 capital ratio 6.9 6.5 6.3 6.4 7.5
Total capital ratio 10.1 10.1 10.8 11.3 11.1
(1)The 2001 amounts have been restated to reflect the implementation of UITF
Abstract 33 - Obligations in Capital Instruments. (2)Excluding the impact of the
exceptional foreign exchange dealing losses, the return on average total assets
was 1.23% and the return on average ordinary shareholders' equity was 19.4%.
(3)Excluding the impact of the deposit interest retention tax settlement, the
return on average total assets was 1.26% and the return on average ordinary
shareholders' equity was 18.7%.
(4)Excluding the impact of the phased reduction in Irish corporation tax rates
on deferred tax balances, the return on average total assets was 1.39% and the
return on average ordinary shareholders' equity was 27.3%.
Accounts in sterling, US dollars and Polish zloty
EUR m STG GBPm US $m PLN m
Summary of consolidated profit and loss account STG GBP0.6505 US $1.0487 PLN 4.0210
for the year ended 31 December 2002 = EUR 1 = EUR 1 = EUR 1
Group operating profit before provisions 1,612 1,048 1,690 6,482
Provisions 251 163 263 1,009
Group operating profit 1,361 885 1,427 5,473
Income from associated undertakings 9 6 10 37
Profit on disposal of property 5 3 5 20
Group profit on ordinary activities before taxation 1,375 894 1,442 5,530
Taxation 306 199 321 1,232
Group profit on ordinary activities after taxation 1,069 695 1,121 4,298
Group profit attributable to the ordinary
shareholders of Allied Irish Banks, p.l.c. 1,037 675 1,088 4,170
Dividends on equity shares 429 279 450 1,726
Earnings per EUR 0.32 share - basic 119.4c 77.7p 125.2c 480.1 PLN
Earnings per EUR 0.32 share - adjusted 123.0c 80.0p 129.0c 494.6 PLN
Earnings per EUR 0.32 share - diluted 118.2c 76.9p 124.0c 475.3 PLN
Summary of consolidated balance sheet
31 December 2002 EUR m Stg GBPm US $m PLN m
Assets
Loans and advances to banks 4,788 3,115 5,022 19,254
Loans and advances to customers 53,447 34,767 56,050 214,911
Debt securities and equity shares 18,450 12,002 19,349 74,188
Intangible fixed assets 457 297 479 1,836
Tangible fixed assets 1,178 766 1,235 4,736
Other assets 5,503 3,580 5,770 22,127
Long-term assurance assets
attributable to policyholders 2,226 1,448 2,334 8,950
86,049 55,975 90,239 346,002
Liabilities
Deposits by banks 16,137 10,497 16,923 64,886
Customer accounts 52,976 34,461 55,556 213,018
Debt securities in issue 3,077 2,002 3,227 12,373
Other liabilities 4,544 2,955 4,765 18,268
Subordinated liabilities 2,172 1,413 2,278 8,734
Equity and non-equity minority interests in subsidiaries 274 178 287 1,102
Shareholders' funds 4,643 3,021 4,869 18,671
Long-term assurance liabilities to policyholders 2,226 1,448 2,334 8,950
86,049 55,975 90,239 346,002
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorised.
ALLIED IRISH BANKS, p.l.c.
(Registrant)
Date 19 February 2003 By: ___________________
Gary Kennedy
Group Director, Finance,
Risk and Enterprise
Technology
Allied Irish Banks, p.l.c.