Annual Report & Accounts 2009 - Anglo Irish Bank

3. Net interest income 15 months Year
ended ended
31 December 30 September
2009 2008
€m €m
Interest and similar income
Interest on loans and advances to banks 194 524
Interest on loans and advances to customers 4,091 5,306
Interest on available-for-sale financial assets 336 476
Finance leasing and hire purchase income 5 8
4,626 6,314
Interest on financial assets at fair value through profit or loss held on own
account 8 10
4,634 6,324
Interest expense and similar charges
Interest on deposits from banks (758) (528)
Interest on customer accounts (1,716) (2,574)
Interest on debt securities in issue (504) (1,003)
Interest on subordinated liabilities and other capital instruments (131) (331)
(3,109) (4,436)
Net interest income 1,525 1,888
A reduction in benchmark interest rates across the Bank's three core operating currencies of EUR, GBP and USD has resulted in a
decrease in the amounts of gross interest income and expense relative to the prior period.
Group net interest income has declined primarily reflecting an increase in funding costs due to greater competition for customer
deposits, drawings on central bank funding, a reduction in lending arrangement fee income due to the extension of expected
lives of underlying loans and reduced levels of new business.
Interest on loans and advances to customers includes €1,212m (30 September 2008: €1,371m) which has been capitalised on
customer loan balances in accordance with approved credit facilities. The capitalisation or roll-up of interest is an integral
feature of development lending, which totals €17.3bn (30 September 2008: €18.3bn) of the gross loan book. Approximately
94% of development lending balances are currently classified as held for sale.
In July 2009, the European Commission, as a condition of its approval of the Government’s capitalisation of the Bank, required
that no further coupon payments be made on the Group’s Tier 1 securities (note 42).
Included within net interest income is €236m (30 September 2008: €13m) in respect of impaired loans and advances to
customers.
Interest and similar income includes net exchange gains of €47m (30 September 2008: €13m).
Anglo Irish Bank
Annual Report & Accounts 2009
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