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

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