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AIB impaired loans drop to €7.3B at September-end

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AIB impaired loans drop to €7.3B at September-end

Allied Irish Banks Plc reported net interest margin of 2.57% for the nine months to September 2017, compared to 2.54% in the first half, and said impaired loans for the period declined 20% to €7.3 billion from €9.1 billion at the end of 2016.

The lender said regulatory costs and levies relating to the Single Resolution Fund, the Deposit Guarantee Scheme and the Bank Levy are expected to be broadly in line with guidance given at the half-year stage of around €100 million.

Impaired loans amounted to €7.3 billion at September-end, down from €7.8 billion at the end of June. The lender noted that the reduction in impaired loans is in line with its plan to reach normalized European levels of nonperforming exposures by 2019-end through continued case-by-case loan restructuring and portfolio deleveraging.

The bank's fully loaded common equity Tier 1 ratio increased by 100 basis points to 17.6% as of the end of September, compared to its medium-term target of 13%. The transitional CET1 and total capital ratios stood at 21% and 23.8%, respectively, at September-end.

The supervisory review and evaluation process CET1 ratio for 2018 is 9.525% with overall requirements remaining broadly unchanged. The bank's SREP CET1 ratio for 2017 is 9.00%.

CEO Bernard Byrne said: "Following a strong financial performance in [the first half] and the successful completion of the IPO in June, [second-half year-to-date] performance continues to deliver sustainable profitability, generating capital of 100 [basis points] to finish [the third quarter] with a fully loaded CET1 ratio of 17.6%.

"The growth in new lending and earning loan balances combined with further reductions in impaired loans are creating a stronger balance sheet and further improving the bank's risk profile."

The bank added that it is "well-progressed" with its work on the tracker mortgage examination and that it made substantial provision regarding the matter in 2015, noting that any change in provisioning levels is not expected to have a "material" impact.