Anglo Irish Bank Interim Management Statement and Chairman's Address to the Annual General Meeting, 1 February 2008

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2007 has been another year of outstanding achievement for your Bank with record earnings, strong lending growth, excellent asset quality and continued development of our franchises in Ireland, the UK and North America. This excellent performance is grounded in the Group's disciplined and focused business model, prudent risk appetite and very limited exposure to areas affected by current credit market issues.

2007 has been another year of outstanding achievement for your Bank with record earnings, strong lending growth, excellent asset quality and continued development of our franchises in Ireland, the UK and North America.

This excellent performance is grounded in the Group's disciplined and focused business model, prudent risk appetite and very limited exposure to areas affected by current credit market issues.

Key highlights of the Bank's performance include:

Positive earnings momentum

  • Record underlying profit before tax of ?1,221 million, an increase of 44%
  • 41% growth in underlying earnings per share to 131.7 cent
  • Improved cost to income ratio of 22.3%
  • Specific impairment charge unchanged on 2006 at 9 basis points
  • Strong return on equity of 30%
  • Proposed final dividend of 13.01 cent per share bringing total dividend for the year to 19.49 cent, an increase of 20% on 2006

Significant balance sheet strength

  • Record growth in funding of ?25.5 billion2 with customer deposits up by ?16.7 billion2 or 46%
  • Growth in customer lending of ?18.0 billion2, an increase of 37%
  • Continued robust asset quality with impaired loans representing only 0.50% of closing loan balances
  • Strongest capital position in the Bank's history - core equity grew by ?1.4 billion to in excess of ?4 billion. Tier 1 and Total Capital ratios now stand at 8.6% and 12.0% respectively

Current trading
Notwithstanding the current dislocation in wider financial markets the first four months of business have been strong.

Lending markets are returning to a more traditional relationship focused approach, suiting balance sheet lenders like ourselves. The excessive liquidity levels seen in recent years have moderated and credit is re-pricing upwards. Our professional client base envisages potential opportunities arising from these developments.

Lending asset quality, which for Anglo is premised on the quality of the borrower and the strength of their underlying cash flows, continues to be excellent. This is a critical safeguard against issues arising from reliance solely on 'loan to value' metrics.

The Bank continues to benefit from very strong funding and liquidity, evidence of the diversity and depth of its funding base, which enables strong access even during periods of turbulence in certain areas of the market. Our liquid asset position is as strong as at 30 September 2007 and we continue to be a significant net lender to the interbank market. As expected, funding costs have increased but Group net interest margins remain stable.

The Bank has limited exposure to assets impacted by the current credit markets uncertainty. Conditions in the affected markets have weakened further in recent months. Naturally, we remain cautious in our outlook given the risk of further deterioration in the global environment.

The strength of the Bank's balance sheet and funding franchise together with the profitability of its business model was recognised with the reaffirmation of our credit ratings by the two agencies that have published research in recent weeks.

In December we announced, subject to regulatory approval, the sale of our Swiss private banking operations to St. Galler Kantonalbank, a leading local bank. The disposal is consistent with the Bank's clear strategy of focusing on its core lending and complementary treasury and wealth management businesses.

Outlook - maintaining earnings guidance
We are living in a period characterised by significant global economic uncertainty. The more prudent reappraisal of risk will ultimately benefit the long term well-being of most economies. I also believe that those who have managed their businesses tightly and have carefully underwritten risk will differentiate themselves over time.

The fundamentals of the Irish economy remain sound and provide a base for relative economic strength in the future, albeit at lower growth levels. The risks prevalent in certain sectors of the UK, European and US economies also clearly point to moderating economic growth with the likelihood of recession counterbalanced by monetary and fiscal actions.

Given our modest market share in the UK and US and the increasing value attributed to a more traditional, long-term relationship based model we see opportunity to enhance and deepen our franchises further in the coming years. But as always, your Bank will never sacrifice asset quality for growth or market share gains.

The level of performance during the first four months of the year, with profits increasing appreciably in the Bank's core business and continued growth in both customer lending and funding, allows us to re-affirm 2008 guidance in line with current market consensus of 15% growth in earnings per share. Furthermore, your Board looks forward to continued above market performance over the medium and long term.

Sean FitzPatrick
Chairman

Anglo Irish Bank

1 February 2008

1 For the four months ended 31 January 2008
2 On a constant currency basis

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