Allied Irish Banks, p.l.c. Interim Results 30 June 2000

Business Wire, August 2, 2000

Business Editors

DUBLIN, Ireland--(BUSINESS WIRE)--August 2, 2000

AIB Group Interim Results 2000

Profit before taxation _EUR 609m, up 12%

Earnings per share EUR 48.5c, up 13%

Tangible earnings per share up 16%

Operating profit before provisions up 18%

Profit after taxation up 15%

Net interest margin at 3.10%

Interim dividend up 14%

Return on equity of 21.7%

Conservative provisioning at 34 basis points

Chief Executive's Statement

Results

Building on our strong performances in recent years the group's businesses have performed extremely well in the half-year. Earnings per share increased by 13% with tangible earnings per share up 16% and operating profit before provisions up 18%. The return on equity was 22% adding another period to the trend of returns in excess of 20%, with an average return on equity over the last five years of 23%. Our domestic businesses had another excellent performance with retail banking activities in the Republic of Ireland achieving profit growth of 24%. Our foreign operations also performed well demonstrating our successful portfolio strategy with particularly strong performances in Britain, Northern Ireland and WBK in Poland.

Outlook

The outlook for the group is positive in the geographies in which we operate. We are committed to our stated target of low double-digit earnings per share growth over the medium term. The strong performance in the half-year to June demonstrates our ability to compete successfully against new low cost entrants to the domestic market and our e-business developments show our capability to meet the changing market conditions we face. We have continued to strengthen our credit provisions. The group has a high level of non-specific provision cover and our lending criteria are constantly evaluated against changing economic conditions and circumstances in all our markets.

E-business

Interest in e-business remains high. The speed of change in this area is also remarkable. For these reasons, I want to take this opportunity to provide an update on the latest developments throughout the group. Customers, content and channels are at the heart of AIB's e-business strategy. Across the group we have more than four million customers. Today, they have more choice in the way they do business with us thanks to the emerging range of electronic services. We have a great opportunity of creating content around what is for most people a very compelling subject - their financial affairs. We have made good progress in extending the ways - or channels - through which we reach customers.

This year has been notable for the emergence of the mobile phone as a new method of carrying out banking business. In June, AIB became the first bank in Ireland to offer a home loan service on the new Wireless Application Protocol (WAP) phones. Customers can now see AIB's mortgage rates, get a quotation and receive approval in principle on their application while on the move.

Meanwhile, customers in Ireland and Poland are already using their GSM phones to access details of their bank accounts. In time, these services will be enhanced and we already have plans to launch other interactive WAP services in the near future. We can see a world where people increasingly use devices other than computers to access the internet. The mobile phone will be followed by interactive television and broadband services which will provide us with additional channels to reach our customers.

Growth in the established electronic services has been impressive. In Ireland alone, AIB Bank has 130,000 registered users of the direct telephone banking service - 24 Hour Banking. Most customers choose to deal with automated voice systems, others opt to talk to our customer service representatives.

Internet banking is increasingly popular. In America, Allfirst has enrolled 30,000 internet home banking customers in just six months. In Poland, 14,000 customers now use our internet banking services. In Northern Ireland, First Trust Online, an integrated internet and telephone banking service, has more than 10,000 customers.

In the Republic, the number of customers signed up for internet banking has increased by nearly 90% to more than 56,000 since the start of the year. The service expects to have 100,000 users by the end of 2000. These customers can pay bills, transfer funds and check account/credit card balances. Further service improvements are planned for later in the year including the ability to make third party transfers. 24 Hour Online has been rated by A.C. Nielsen research as one of Ireland's most popular websites.

Another development in this area is our standalone virtual bank, which is based in the National Digital Park, Dublin. Product and brand development is well advanced on this project. This innovative customer offering will go live in Ireland by the end of the year and it has excellent potential for use in other group locations.

Since the start of the year, we have launched a dedicated website that allows customers in Ireland apply for a mortgage on-line. The response to the AIB Mortgages Direct service, which also allows customers to make contact by phone, has been very encouraging with home loans business worth more than EUR 56 million sanctioned in principle since its February start date. Another positive factor is the quality of the business - 58% of the applications received over the internet have been approved. Allfirst customers can also apply for mortgages online.