Dublin - AFP
Ireland's state-rescued Allied Irish Banks bounced back into profit in the first half as bad loan charges and operating costs fell, it said on Wednesday.
Pre-tax profits stood at 437 million euros ($586 million) in the six months to the end of June, a switch from a loss of 838 million euros a year earlier, AIB said in a results statement.
Net profits, or earnings after taxation, hit 411 million euros in the reporting period. That compared with a loss of 758 million euros last time around.
That marked the first time that AIB was back in profit in the first half since 2011, when it was lifted by exceptional factors including asset sales.
Before that, the troubled bank had last made a first-half profit in 2008, just before the Irish government received a vast international bailout -- which the eurozone nation exited late last year.
- Returns to profitability -
"AIB has achieved its stated aim of returning to sustainable profitability on a post provision basis in 2014 with our half-year results reflecting strong improvements in margins, funding position and capital ratios," the bank said.
The Dublin-based group added that it expected to remain in profit for the year. That would be the first full-year profit posted by the bank since 2008 -- and increases the likelihood of Dublin divesting some of its 99.8-percent stake in the near future.
"Next year is the year if a stakeholder like the government wants to monetise its investment it can do at any point from that stage onwards," AIB chief executive David Duffy told Irish radio on Wednesday.
The announcement comes as a major cost-cutting operation continues at the bank, with operating expenses dropping 9.0 percent to 686 million euros in the period from January to June.
Allied Irish Banks is one of two main "pillar" banks created in an overhaul of the Irish banking system, comprising Bank of Ireland, and a merged AIB and the Educational Building Society (EBS).
The state injected a total of 20.8 billion euros into AIB and its EBS subsidiary, taking a stake of 99.8 percent in the group after the collapse of the Irish banking sector.
AIB said that operating income rose by 36 percent to 1.24 billion euros in the first six months of this year.
In another positive development, the burden of bad or doubtful loans had fallen by 3.2 billion euros or 11.0 percent since June 2013.
"This reduction reflects improving economic conditions coupled with restructuring activity completed with customers in difficulty, partially offset by a growth, albeit at a slower pace, in new impaired loans," Duffy added.
- Signs of economic recovery -
The Irish economy is showing signs of recovery after years of crisis caused by massive debts and a domestic banking crisis that forced the eurozone nation to seek an 85-billion-euro EU-IMF rescue in November 2010.
But the bank warned it still faced a number of challenges including a shrinking loan book and the need to resolve more impaired loans.
AIB last posted a half-year profit in 2011 but only after selling 3.09 billion euros of Polish assets and executing a favourable debt buyback scheme.