DUBLIN: State-owned Allied Irish Banks (AIB) expects a material reduction in provisions against bad debt this year after the rise in arrears in its mortgage and business loan books slowed in the four months to October 31.
The loss-making bank, which has received more 20 billion euros ($26 billion) of state support, set aside 8.2 billion euros for provisions last year, a hangover from the bursting of a huge property bubble.
Tuesday's trading statement also said that AIB has made substantial progress on its restructuring plans.
It is axing 2,500 jobs - almost 20 percent of its workforce - and cutting wages by up to 15 percent in an attempt to turn a profit by 2014, though the continued low interest rate environment remains a challenge, the bank said.
AIB, which remains largely locked out of capital markets, said it would re-engage in a measured manner after rival Bank of Ireland raised 1 billion euros last week in its most significant bond issue in more than three years.
Deposits continued to increase at AIB despite outflows of 1.4 billion euros as a result of the previously announced closure of its operations in Isle of Man and Channel Islands.
Those closures are part of an extensive deleveraging plan set under Ireland's EU-IMF bailout and the bank said that at October 31 it had achieved 83 percent of its deleveraging target of 20 billion euros by the end of 2013.
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