(RTTNews) - Allied Irish Banks Plc (AIB: News ,ALBK.L: News ) said Wednesday that it has raised provisions for bad debt for the full year, due to higher impairment of loans. The company, however, said its financial results will reflect solid operating profits before bad debt provisions set against a background of a very difficult operating environment. In a separate release, the bank announced the appointment of Dan O'Connor, currently non-executive chairman, as executive chairman on a temporary basis.

The bank now expects bad debt charge for the year to be around EUR 5.3 billion, higher than the previous expectation of EUR 4.3 billion, with the increase primarily on the EUR 24 billion portfolio indicated in September by the Minister for Finance that may transfer to NAMA, or the National Asset Management Agency. Of that EUR 24 billion portfolio, about EUR 6.7 billion was impaired at the half year and the company expects the impaired element to have increased at year end by around EUR 3.8 billion to EUR 10.5 billion.

"Additions to impaired loans continue to be heavily weighted to those previously indicated property & construction exposures that may transfer to NAMA," said the company. The loans are mainly in its Republic of Ireland and, to a much lesser extent, UK divisions.

Allied Irish Banks, at its half-year results presentation, said that a bad debt charge outlook figure for the year was likely to be overtaken by the implementation of the first phase of NAMA. Accordingly, the bank did not revise the previously guided figure provided in May.

"We did however note that in light of the continuing deterioration in the economies in which we operate, particularly in Ireland, the risk to that figure of €4.3bn was that it would be higher," the company added.
Excluding bad debt provisions, the bank expects underlying operating profit of around EUR 2 billion for the full year. The company said it expects operating profit to be achieved in all four divisions, Republic of Ireland, Capital Markets, UK and CEE.

The company noted that, excluding the Republic of Ireland, the other three divisions are expected to remain profitable this year underlining the importance of international diversification. It is expected that Capital Markets and CEE have little or no assets that will transfer to NAMA. M&T continues to perform well relative to its US regional banking peers and its Q3 financial performance exceeded market consensus expectations, the company said.

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