Interim Report 2007 - Irish Bank Resolution Corporation Limited (in ...

Business LendingTreasur yWealth ManagementInterim Report2007www.angloirishbank.comSix months ended 31 March 2007T H E R E I S A D I F F E R E N C E

Anglo Irish Bank Interim Report 2007Chairman’s statementRecord profits and earnings per share, record growth in customerlending, an expanded and enhanced funding base, excellent assetquality and the improvement in our cost to income ratio are thehighlights of the period.Sean FitzPatrick ChairmanYour Bank delivered another excellent performance inthe six months to 31 March 2007. Record profits andearnings per share, record growth in customer lending,an expanded and enhanced funding base, excellent assetquality and the improvement in our cost to income ratioare the highlights of the period. These are the key factorswhich have contributed to the Bank’s consistent record ofcreating value for shareholders.Underlying profits for the six months increased by 47%to €552 million, excluding a profit of €22 million on thedisposal of our Isle of Man trust activities in December2006. Including this one off gain, our reported profit grewby 53% to €574 million.Financial highlights of your Group’s performance for theperiod include:Strong profitability and shareholder valueReported pre-tax profit of €574 million and EPSof 63.6 centRecord underlying pre-tax profit of €552 million, anincrease of 47%Record underlying EPS of 60.6 cent, up 45%Continued strong return on equity of 30%20% increase in interim dividend to 6.48 centOutstanding operational performanceExceptional growth in customer lending of €9.3 billion,an increase of 19% on a constant currency basisRobust asset quality with impaired loans representingjust 0.50% of closing customer loan balancesStrong lending work in progress of €9.2 billionImproved cost to income ratio of 25%Total growth in funding of €13.6 billion, up 22%Strong Tier 1 capital ratio of 8.5%It is particularly pleasing that all divisions have contributedso positively to the Bank’s excellent performance.DividendThe Board has again declared a strong increase inthe Bank’s interim dividend of 20%, to 6.48 cent perordinary share.The dividend will be paid on 17 July 2007 to shareholderson the Bank’s register as at close of business on18 May 2007. Withholding tax may apply on the dividenddepending on the tax status of each shareholder.Shareholders will be offered the opportunity of receivingdividends in the form of cash or shares.Progress across the GroupCustomer lending – controlled high quality growthThe six months to 31 March 2007 have producedexceptional growth in customer lending, the Bank’score activity and key profit driver. Net loan growth of€9.3 billion, up 19% in constant currency terms, bringstotal customer lending balances to €59.2 billion includingfunding provided to customers under investmentcontracts. This level of growth, which was at the upperend of our expectations, reflects both the strength ofthe market during the period and the Bank’s expandingclient franchise.Lending growth was very strong across each of ourgeographical lending divisions – 18% in Ireland, 17% inthe UK and 30% in North America. Most importantly,this performance has been achieved whilst maintainingexcellent asset quality, the foundation of the Bank’slending model. Impaired loans are low, representing just0.50% of the total loan book. The Bank continues toadhere to its strict underwriting policies.Margins once again remain stable notwithstanding thesignificant competition in each market. This reflects thestrength of the Bank’s differentiated customer service,providing certainty of delivery to our clients rather thana solely price dependent offering.The Bank anticipates strong lending growth in the sixmonths to September 2007, although it may be imprudentto expect a repeat of the exceptional level of net lendingrecorded in the first half of the year. Looking out furtherwe are confident that the Bank will continue to gain anincreasing share of our target markets, particularly in theUK and North America. Above all, growth will continueto be premised on the Bank’s strict focus on maintainingthe long-term asset quality of the loan book.Treasury – a robust diversified funding platformOur Treasury division delivered an outstanding fundingperformance during the first half of the year with totalfunding up €13.6 billion, 22% in constant currency terms,to €75.4 billion, at the end of March.The Bank’s core strategy of diversifying and extendingthe duration of its funding base continues to strengthenthe Group’s balance sheet. This is evidenced bythe €8.5 billion growth in customer funding, driven inparticular by the progress of our UK retail offering, withcustomer numbers up 75% during the half year to over63,000. Our success in this sector of the marketreflects our reputation for superior customer serviceand competitive, innovative product offerings.A number of other milestones demonstrating theeffectiveness of our funding strategy have been reachedin recent months. In March, Standard & Poor’s, theinternational rating agency initiated coverage of the Bankwith an ‘A’ long-term / ‘A-1’ short-term rating. This,together with our existing strong ratings from the otherprincipal rating agencies - Fitch, Moody’s and DominionBond Rating Service - further enhances the Bank’sstanding in global capital markets.23

Anglo Irish Bank Interim Report 2007Consolidated income statement (unaudited)For the six months ended 31 March 2007Six months Six months Yearended ended ended31 March 31 March 30 September2007 2006 2006mInterest and similar income 2,453 1,411 3,169Interest expense and similar charges (1,730) (927) (2,100)Netinterest income723484 1,069Fee and commission income 77 75 147Fee and commission expense (7) (7) (14)Dealing profits 10 10 27Profit on disposal of Isle of Man trust business 22 - -Other operating income 5 7 11Otherincome10785 171Total operating income830569 1,240Administrative expenses (192) (156) (311)Depreciation (5) (3) (7)Amortisation of intangible assets - software (6) (4) (10)Total operating expenses (203) (163) (328)Operating profit before provisions for impairment 627 406 912Provisions for impairment on loans and advances (56) (35) (66)Operating profit 571 371 846Share of results of joint ventures 3 4 4Profitbefore taxation574375 850Taxation (110) (85) (192)Profit for the period464290 658Attributable to:Equity holders of the parent 462 289 657Minority interest 2 1 1Profit for the period464290 658Basic earnings per share 63.6c 41.9c 93.7cDiluted earnings per share 62.9c 41.3c 92.3cConsolidated balance sheet (unaudited)As at 31 March 200731 March 30 September 31 March2007 2006 2006mAssetsCash and balances with central banks 953 440 488Financial assets at fair value through profit or loss- held on own account 379 456 641- held in respect of liabilities to customers under investment contracts 366 309 316Derivative financial instruments 3,301 2,459 2,030Loans and advances to banks 12,880 12,424 9,267Available-for-sale financial assets 9,935 5,155 4,936Loans and advances to customers 57,865 49,142 40,344Interests in joint ventures 116 68 28Intangible assets - software 21 24 23Intangible assets - goodwill 47 66 66Investment property- held on own account 36 36 35- held in respect of liabilities to customers under investment contracts 2,528 1,956 1,487Property, plant and equipment 37 37 35Retirement benefit assets 23 16 21Deferred taxation 37 34 32Other assets 107 625 342Prepayments and accrued income 38 43 41Totalassets88,669 73,290 60,132LiabilitiesDeposits from banks 8,494 10,275 8,689Customer accounts 45,361 36,858 30,057Debt securities in issue 21,530 15,060 12,263Derivative financial instruments 3,391 2,490 2,068Liabilities to customers under investment contracts 1,802 1,394 1,112Current taxation 125 51 109Other liabilities 29 32 6Accruals and deferred income 186 188 135Retirement benefit liabilities 7 7 7Deferred taxation 48 43 11Subordinated liabilities and other capital instruments 4,067 4,205 3,288Total liabilities 85,040 70,603 57,745Share capital 122 115 115Share premium 1,138 600 587Other reserves (22) 4 8Retained profits 2,384 1,965 1,674Shareholders' funds 3,622 2,684 2,384Minority interest 7 3 3Total equity 3,629 2,687 2,387Total equity and liabilities 88,669 73,290 60,132Contingent liabilitiesGuarantees 1,528 2,175 1,843CommitmentsCommitments to lend 9,235 8,734 7,07367

Anglo Irish Bank Interim Report 2007Consolidated statement of recognised income andexpense (unaudited)For the six months ended 31 March 2007Six months Six months Yearended ended ended31 March 31 March 30 September2007 2006 2006Profit for the period464290 658Net after tax actuarial gains in retirement benefit schemes 6 10 6Net after tax change in cash flow hedges (17) (50) (58)Net after tax change in available-for-sale financial assets (12) (2) (4)Foreign exchange translation - - 2Income and expense recognised directly in equity (23) (42) (54)Total recognised income and expense for the period 441 248 604Attributable to:Equity holders of the parent 439 247 603Minority interest 2 1 1Total441248 604mConsolidated cash flow statement (unaudited)For the six months ended 31 March 2007Six months Six months Yearended ended ended31 March 31 March 30 September2007 2006 2006mCash flows from operating activitiesProfit before taxation 574 375 850Interest earned on financial assets held on own account (140) (68) (177)Financing costs of subordinated liabilities and othercapital instruments 111 89 174Profit on disposal of Isle of Man trust business (22) - -Share of results of joint ventures (3) (4) (4)Other non-cash items 39 53 146Tax paid (29) (32) (163)530 413 826Changes in operating assets and liabilitiesNet increase in deposits 13,192 8,868 20,052Net increase in loans and advances to customers (8,740) (6,596) (15,422)Net (increase)/decrease in loans and advances to banks (190) (61) 17Net increase in assets held in respect of liabilities tocustomers under investment contracts (629) (310) (772)Net increase in investment contract liabilities 408 197 479Net decrease/(increase) in trading portfolio financial assets 77 (624) (439)Net movement in derivative financial instruments (19) 19 (22)Net decrease/(increase) in other assets 520 23 (255)Net (decrease)/increase in other liabilities (5) (18) 8Exchange movements 137 49 72Net cash flows from operating activities 5,281 1,960 4,544Cash flows from investing activitiesPurchases of financial assets (5,899) (1,637) (2,538)Sales and maturities of financial assets 1,102 1,673 2,340Interest received on financial assets net of associated hedges89 67 169Disposal of Isle of Man trust business 44 - -Purchases of property, plant and equipment (5) (2) (8)Disposals of property, plant and equipment - - 1Additions to intangible assets - software (3) (5) (12)Investments in joint venture interests (47) (1) (51)Distributions received from joint venture interests 2 - 11Net cash used in investing activities (4,717) 95 (88)Cash flows from financing activitiesProceeds of equity share issues 542 421 431Proceeds from issues of subordinated liabilities and othercapital instruments - 429 1,552Redemptions of subordinated liabilities and othercapital instruments (99) (81) (260)Coupons paid on subordinated liabilities and other capitalinstruments (79) (53) (155)Equity dividends paid (45) (39) (74)Purchases of own shares (4) (6) (35)Net cash flows from financing activities 315 671 1,459Net increase in cash and cash equivalents879 2,726 5,915Opening cash and cash equivalents 10,800 4,926 4,926Effect of exchange rate changes on cash and cash equivalents (100) (39) (41)Closing cash and cash equivalents 11,579 7,613 10,80089

Anglo Irish Bank Interim Report 2007Notes to the interim reportFor the six months ended 31 March 20071. Basis of preparationThe financial information presented in this Interim Report for the six months ended 31 March 2007 hasbeen prepared in accordance with the current Listing Rules of the Irish Stock Exchange. The accountingpolicies and presentation used in preparing this Interim Report are the same as those set out in the AnnualReport and Accounts for the year ended 30 September 2006.Both the interim figures for the six months ended 31 March 2007 and the comparative amounts for the sixmonths ended 31 March 2006 are unaudited. The summary financial statements for the year ended30 September 2006 as presented in this Interim Report represent an abbreviated version of the Group'sfull accounts for that year, on which the independent auditor issued an unqualified audit report and whichhave been filed in the Companies Registration Office in Ireland.2. Provisions for impairment on loans and Six months Six months Yearadvances ended ended ended31 March 31 March 30 September2007 2006 2006mSpecific 31 20 36Collective 25 15 3056 35 663. Taxation Six months Six months Yearended ended ended31 March 31 March 30 September2007 2006 2006mIrish Corporation Tax 52 33 73Irish Bank Levy - 1 1Foreign tax 51 50 83Deferred tax 7 1 35110 85 192Notes to the interim report (continued)For the six months ended 31 March 20074. Earnings per share Six months Six months Yearended ended ended31 March 31 March 30 September2007 2006 2006BasicProfit attributable to ordinary shareholders462mWeighted average number of shares in issue during the period 726m 689m 701mBasic earnings per share 63.6c 41.9c 93.7cDilutedProfit attributable to ordinary shareholders462mWeighted average number of shares in issue during the period 726m 689m 701mDilutive effect of outstanding options 8m 10m 11mDiluted weighted average number of shares 734m 699m 712mDiluted earnings per share 62.9c 41.3c 92.3cAdjusted basicProfit attributable to ordinary shareholders462mLess: profit after tax on disposal of Isle of Man trust business (22m) - -Adjusted profit440mWeighted average number of shares in issue during the period 726m 689m 701mAdjusted basic earnings per share 60.6c 41.9c 93.7cAdjusted dilutedProfit attributable to ordinary shareholders462mLess: profit after tax on disposal of Isle of Man trust business (22m) - -Adjusted profit440mWeighted average number of shares in issue during the period 726m 689m 701mDilutive effect of outstanding options 8m 10m 11mDiluted weighted average number of shares 734m 699m 712mAdjusted diluted earnings per share 59.9c 41.3c 92.3cAdjusted basic and adjusted diluted earnings per share have been presented to exclude the impact of theprofit arising on the disposal of the Isle of Man trust business on the underlying results for the period.1011

Anglo Irish Bank Interim Report 2007Notes to the interim report (continued)For the six months ended 31 March 20075. Other reserves 31 March 30 September 31 March2007 2006 2006mShare-based payments reserve 21 18 15Available-for-sale reserve (5) 7 9Cash flow hedging reserve (41) (24) (16)Exchange translation reserve 2 2 (1)Non-distributable capital reserve 1 1 16. Dividends(22) 4 8On 9 May 2007, subsequent to the interim balance sheet date, an interim dividend of 6.48 cent perordinary share was declared by the Board of Directors for payment on 17 July 2007. The interim dividendamounts to 49 million and has not been recorded as a liability on the balance sheet. Shareholders will beoffered the option of receiving the dividend in the form of shares or cash.A final dividend of 10.84 cent per ordinary share was declared in respect of the year ended30 September 2006. This was paid on 15 February 2007, 45 million in cash and 33 million by way ofscrip dividend.7. ApprovalThe interim financial statements were approved by the Board of Directors on 9 May 2007.Independent review report to the Directors ofAnglo Irish Bank Corporation plcIntroductionWe have been instructed by Anglo Irish Bank Corporation plc (“the Bank”) to review the financial informationset out on pages 6 to 12 of this Interim Report for the Bank for the six months ended 31 March 2007. We haveread the other information contained in the Interim Report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information.This report is made solely to the Bank’s Directors, as a body, in accordance with the terms of our engagementto assist the Bank in meeting the requirements of the Listing Rules of the Irish Stock Exchange. Our work hasbeen undertaken so that we might state to the Bank’s Directors those matters we are required to state to themin this review report, and for no other purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Bank and the Bank’s Directors as a body, for our review work,for this review report, or for the conclusions we have reached.Directors’ responsibilitiesThis Interim Report, including the financial information contained therein, is the responsibility of and has beenapproved by the Directors.The Directors are responsible for preparing this Interim Report in accordance with the Listing Rules of the IrishStock Exchange which require that the accounting policies and presentation applied to the interim figures shouldbe consistent with those applied in preparing the preceding annual financial statements except where anychanges, and the reasons for them, are disclosed.Review work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4: Review of interim financialinformation issued by the Auditing Practices Board. A review consists principally of making enquiries of the Bank’smanagement and applying analytical procedures to the financial information and underlying financial data andbased thereon, assessing whether the accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an audit performed in accordance with AuditingStandards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express anaudit opinion on the financial information.Review conclusionOn the basis of our review we are not aware of any material modifications that should be made to the interimfinancial information on pages 6 to 12 as presented for the six month period ended 31 March 2007.Ernst & YoungDublin9 May 20071213

Anglo Irish Bank Interim Report 2007Group profileBusiness LendingThe Bank’s principal activity, and mostimportant contributor to profits,is its highly focused lending to thebusiness sector. Lending services areoffered in three core markets: Ireland,the United Kingdom and the UnitedStates – where the Bank has builtstrong indigenous client franchises.TreasuryTreasury’s primary responsibilityis the origination of funding andmanagement of the Bank’s liquidity andinterest rate risk. It also contributessignificant income through itscorporate treasury sales, internationalfinance and trading activities.Wealth ManagementWealth Management providesprivate banking, funds managementand retirement planning servicesfrom offices in Ireland, the UnitedKingdom, Austria, Switzerland andPortugal. Operating as a singlecohesive division, the business ispositioned as a niche provider oftailored investment opportunitiesto a high net worth client base.We have a coherent group of businesses - Lending,Treasury and Wealth Management - delivering high qualityasset growth, a robust and diversified funding platform anda niche private banking service. The success of our offeringis firmly based upon the expertise and commitment of ourpeople, now close to 1,700 across eight countries.USAIrelandIsle of ManUKJerseyPortugalSwitzerlandAustriaBostonChicagoNew YorkDublinCorkGalwayLimerickSligoWaterfordDouglasLondonBanburyBelfastBirminghamGlasgowLeedsManchesterSt HelierLisbonGenevaViennaAnglo Irish Bank Corporation plc is regulated by the Financial Regulator in Ireland.1415

Anglo Irish Bank Interim Report 2007Anglo Irish Bank locationsDublinHead OfficeStephen Court18/21 St. Stephen’s GreenDublin 2Tel: +353 1 616 2000Fax: +353 1 616 2411www.angloirishbank.comRegistrar CorrespondenceComputershare InvestorServices (Ireland) LimitedHeron HouseCorrig RoadSandyford Industrial EstateDublin 18Tel: +353 1 216 3100Freephone: 1800 225 125(Shareholder enquiries)www.computershare.comPrivate BankingConnaught House1 Burlington RoadDublin 4Tel: +353 1 631 0000Fax: +353 1 631 0098CorkAnglo Irish Bank House11 Anglesea StreetCorkTel: +353 21 453 7300Fax: +353 21 453 7399GalwayAnglo Irish Bank HouseForster StreetGalwayTel: +353 91 536 900Fax: +353 91 536 931LimerickAnglo Irish Bank House98 Henry StreetLimerickTel: +353 61 461 800Fax: +353 61 461 898SligoConnacht HouseMarkievicz RoadSligoTel: +353 71 911 9400Fax: +353 71 911 9499WaterfordAnglo Irish Bank HouseMaritana GateCanada StreetWaterfordTel: +353 51 849 300Fax: +353 51 849 398London10 Old JewryLondon EC2R 8DNTel: +44 207 710 7000Fax: +44 207 710 7050BanburyTown Centre HouseSoutham RoadBanburyOxon OX16 2ENTel: +44 1295 755 500Fax: +44 1295 755 510Belfast14/18 Great Victoria StreetBelfast BT2 7BATel: +44 2890 333 100Fax: +44 2890 269 090Birmingham1 Colmore SquareBirmingham B4 6AJTel: +44 121 232 0800Fax: +44 121 232 0808Glasgow180 St. Vincent StreetGlasgow G2 5SGTel: +44 141 204 7270Fax: +44 141 204 7299Leeds1 Whitehall RiversideWhitehall RoadLeeds LS1 4BNTel: +44 113 205 3100Fax: +44 113 205 3111Manchester1 Marsden StreetManchester M2 1HWTel: +44 161 214 3020Fax: +44 161 214 3030Isle of ManJubilee BuildingsVictoria StreetDouglasIsle of Man IM1 2SHTel: +44 1624 698 000Fax: +44 1624 698 001Jersey31 The ParadeSt HelierJersey JE2 3QQTel: +44 1534 611 500Fax: +44 1534 605 055Geneva7 Rue des AlpesP.O. Box 13801211 Geneva 1Tel: +41 22 716 3636Fax: +41 22 716 3619LisbonAvenida da Liberdade190- 5° A1250-147 LisbonTel: +351 210 438 300Fax: +351 210 438 333ViennaRathausstrasse 20P.O. Box 306A-1011 ViennaTel: +43 1 406 6161Fax: +43 1 405 8142Boston(Representative Office)265 Franklin StreetBoston MA 02110Tel: +1 617 720 2577Fax: +1 617 720 6099Chicago(Representative Office)203 North LaSalle StreetChicago IL 60601Tel: +1 312 264 2747Fax: +1 312 264 2750New York(Representative Office)222 East 41st StreetNew York NY 10017Tel: +1 212 503 3000Fax: +1 212 503 3033For further information,please email: marketing@angloirishbank.ieTHIS REPORT IS PRINTED ON REVIVE SILK PAPER WHICH HAS A FIBRESOURCE OF AT LEAST 75% DE-INKED POST-CONSUMER WASTE16