AIB Announces Allfirst's First Half 2002 Net Income


BALTIMORE, July 31, 2002 (PRIMEZONE) -- Allied Irish Banks p.l.c. ("AIB") (NYSE:AIB) today announced that its wholly owned U.S. subsidiary, Allfirst Financial Inc. ("Allfirst"), reported net income to common stockholders of $61.6 million for the six months ending June 30, 2002, compared to a loss of $4.3 million for the same period in 2001.The following table and subsequent commentary provide a reconciliation of the financial performance with business trends.

Six Months Ended June 301


$ millions (after tax)                 2002  2001 (restated) % change
Net Income (Loss) to Common            61.6       (4.3)
Stockholders
Proprietary foreign exchange trading   11.0       98.3
losses
Fraud related charges                   8.9         
Goodwill amortisation                             19.0
Adjusted Net Income to Common          81.5      113.0        27.9%
Stockholders
Provision for specific corporate       15.5         
exposure
Provision for equity securities market  9.0         
value
Reserve for residual losses on          5.6         
indirect auto lease portfolio
Adjusted Net Income to Common          111.6      113.0       1.2%
Stockholders excluding provisions and
reserve

Separately today, Allied Irish Banks p.l.c. (AIB Group) announced itsresults for the half year ended 30 June 2002. Underlying operatingprofit at Allfirst, in AIB Group terms, increased by 5% on thecorresponding period in 2001.

The results of Community Counseling Services Inc., and KetchumCanada, Inc. are excluded from the commentary below.Allfirst's adjusted (for FX losses and equity securities market valueprovision) total revenues grew by 4% in the first half of 2002compared to 2001. Net interest income was unchanged over the sameperiod last year with higher loan product margins offset by lowerearnings from a reduced investment securities portfolio and theimpact of lower interest rates on deposit margins.Average loans for the first half of 2002 (excluding curtailedindirect retail lending / leasing and residential mortgagebusinesses) were up 6% from the comparable period in 2001. Loanbalances at June 30, 2002, excluding these portfolios, were up by 1%when compared to yearend 2001 levels reflecting the impact of theweak economy. Average core deposits for the first six months of 2002were up 1% on the same period in 2001.

Allfirst generated growth in adjusted (for FX losses and equitysecurities market value provision) noninterest income of 10% in thefirst half of 2002 compared to the same period in 2001. Non interestincome included securities gains of $8.7 million pre tax, which werelargely offset by loss of yield on the sale of securities.Noninterest income growth in the company's core banking activitiesshowed increases of 14% in deposit service charges and 10% inelectronic banking income.

Adjusted (for fraud related charges, goodwill amortisation and autolease residual reserve) noninterest expenses increased by 7%compared to the first six months of 2001. Pension, related personnelcosts and an increased depreciation charge accounted for the majorityof this expense growth. Following a review of the indirect auto leaseportfolio, reserves have been increased by $9 million pre tax toprudently cover residual losses as the portfolio runs off. Minimalgrowth in underlying expenses for the full year is expected. A rangeof initiatives is currently being considered to accelerate deliveryof the growth potential of the franchise. A plan is in course ofdevelopment, completion of which is expected before the end of thecurrent quarter. Details will be conveyed when the plan is completedand approved. To achieve efficiencies, a restructuring charge islikely to be incurred.

Nonperforming assets at June 30, 2002 were $135.5 million (1.27% ofloans, other real estate and other assets owned), a $47 millionincrease over the December 31, 2001 level of $88.7million (0.82% ofloans, other real estate and other assets owned). A $50 million loanrelating to one corporate relationship has been placed on nonaccrualstatus at June 30, 2002. The allowance for loan and lease losses atJune 30, 2002 of $181 million increased by $28.5 million over theDecember 31, 2001 level, reflecting a provision of $25 million pretaxfor the aforementioned corporate exposure and represented 143% ofnonperforming loans and 1.70% of total loans. Net charge-offs as apercentage of loans and leases fell from 0.29% in the first half of2001 to 0.24% in the first half of 2002.

Allfirst's primary banking unit, Allfirst Bank, reported regulatorycapital ratios at June 30, 2002 as follows: tier 1 capital ratio of7.86%; total capital ratio of 11.44%; leverage capital ratio of7.16%. The Allfirst Bank capital ratios compare favorably to thefollowing regulatory "well capitalized" standards: tier 1 capitalratio of at least 6%; total capital ratio of at least 10%, andleverage capital ratio of at least 5%.

Allfirst Financial Inc. is a regional, diversified financial servicescompany headquartered in Baltimore, MD, offering a full range offinancial services including banking, trust, investment and insuranceto retail, business and commercial customers. Its banking subsidiary,Allfirst Bank, operates 262 bank branches and 605 ATMs throughoutMaryland, Pennsylvania, Washington D.C., Northern Virginia, andDelaware. Allfirst Financial Inc.'s assets were $17.3 billion as ofJune 30, 2002. Information about Allfirst Financial is available atwww.allfirst.com.

Certain information included in this press release, other thanhistorical information, may contain forwardlooking statements withinthe meaning of the Private Securities Litigation Reform Act of 1995.The forwardlooking statements are identified by terminology such as"may," "will," "believe," "expect," "estimate," "anticipate,""continue," or similar terms. Actual results may differ materiallyfrom those projected in the forwardlooking statements. Factors thatcould cause actual results to differ materially from those in theforwardlooking statements include, but are not limited to: global,national and regional economic conditions; levels of market interestrates; credit or other risks of lending and investment activities;changes in accounting rules and policies; legal and regulatoryproceedings; competitive and regulatory factors; and technologicalchange.

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