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 Post subject: The AIB thread
PostPosted: Wed Jul 23, 2008 8:10 am 
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The other quoted Irish banks - Bank of Ireland, Anglo and PTSB all have a thread on The 'Pin, so why not AIB I hear you all ask.

Well I don't know, but this gross injustice against the largest bank in the country must end.

The 2008 half yearly results on 30th July will be interesting.

Quote:
AIB hits blackspot after gains
By John Mulligan

Wednesday July 23 2008

DAVY Stockbrokers said it expects a further downward revision of AIB's full-year earnings guidance on foot of the contracting economy, where growth was partly fuelled by a corpulent property sector.

A spike in impairment provisions and a cut in earnings guidance are likely at AIB, as trading conditions continue to deteriorate for the country's biggest bank.

Davy's comments coupled with a record $8.9bn (€5.6bn) quarterly loss by US banking giant Wachovia, helped push AIB stock down over 8pc in Dublin to close at €8.05, erasing gains made over the previous couple of trading sessions.

In May, AIB had said it was targeting low single digit percentage earnings growth, and added at the time that overall performance for the first four months had been good.

Last week ratings agency Fitch lowered AIB's debt outlook to negative from stable, saying the group's riskier lending to the construction industry could lead to an increase in impaired loans.

Davy Stockbrokers said yesterday that conditions in the Irish property market and in the general economy have deteriorated significantly since AIB issued its interim management statement in May.

Davy said that just how quickly a likely spike in impairment provisions at the bank occurs will depend on how long Irish financial institutions continue to support struggling property developers.

Davy said recently that it expects earnings per share (EPS) to decline 10pc this year at AIB, and by a further 19pc in 2009, and by 13pc in 2010 as its bad debt losses rose 10-fold from 2007's level to €1.1bn.

In its research note yesterday, Davy Stockbrokers said that EPS for the first half at AIB is guided to decline by 6pc. The broker expects it to fall 8pc. AIB releases its first-half results next Wednesday.

"Unfortunately, these results may give us little incremental insight into what is coming down the tracks," said Davy analysts.

Yesterday Fitch reaffirmed its stable ratings for Bank of Ireland, saying that the bank is "relatively well-placed" to cope with a reasonable amount of stress in the markets.

"Although the bank has reported a notable increase in impaired lending in the commercial portfolio, loan impairments in the mortgage and much smaller personal loan portfolios remained negligible," said Fitch.

The ratings agency added that BOI is adequately capitalised and has a "sound funding base" of customer deposits and "well-diversified wholesale" funding.

In the last financial quarter, Bank of Ireland management said that while the group's residential mortgage portfolio is "proving resilient" in a weakened housing market, there has been some credit grade slippage in the period, particularly in its business portfolios.

http://www.independent.ie/business/iris ... 38583.html


So will we see a sea of red ink? Massive increases in bad debt provisions? Earnings downgrades? Dividends slashed? Rights issue? Share buyback? Takeover target? Business as usual?

Stay tuned.


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PostPosted: Wed Jul 23, 2008 8:53 am 
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It is impossible to take reporting of banks at face value.

My advice, ignore earnings and concentrate on cash flow. You can book earning on accruing interest from developers, say, but you can't magic up the cash.


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 Post subject:
PostPosted: Wed Jul 23, 2008 9:09 am 
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geckko wrote:
You can book earning on accruing interest from developers, say, but you can't magic up the cash.


US Banks Like Indymac/WaMu/Wachovia apparently have been giving negative-amortization mortgages to people and rolling up a bucketload of interest which they will probably never actually earn if the mortgages go into foreclosure - so they will be forced to restate their earnings.

I hope the analysts put the heat on AIB to quantify the extent of this 'revenue' in the earnings conference call.

These developer loans with interest rolling up are Ireland's neg-am loans.


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 Post subject:
PostPosted: Wed Jul 23, 2008 10:42 am 
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A decent analyst should be able to dig into data and look for discrepencies.

For example decent growth in assets on the balance sheet, but weaker growth in new business.


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 Post subject:
PostPosted: Wed Jul 23, 2008 12:15 pm 
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geckko wrote:
It is impossible to take reporting of banks at face value.

My advice, ignore earnings and concentrate on cash flow. You can book earning on accruing interest from developers, say, but you can't magic up the cash.


So can anyone comment on the cash flows of Irish banks from their impenetrable accounts?


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 Post subject:
PostPosted: Sun Jul 27, 2008 10:41 am 
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Quote:
AIB will have the dubious honour on Wednesday of being the first Iseq-listed bank to deliver interim results since the ESRI officially declared a recession in June.

Investors have been dumping Irish banks for nearly a year, expecting just such a development, but a wave of sell-offs in early July brought stock prices to shocking new lows, seemingly in anticipation of worse news to come. Now they may finally get a taste of it.

The market rewarded AIB with a bounce when the bank reported its full-year earnings last February, gaining more than 3% while its peers lost ground. At the time, when US and European banks were finally disclosing the extent of their subprime exposures, investors were relieved to see only modest asset write-downs from Ireland's biggest bank.

AIB chief executive Eugene Sheehy also got out ahead of questions about bad debts by revealing that the bank had put 8% of its property-related loans on a watch list.
>>>>

AIB shareholders prepare for doom and gloom
http://www.tribune.ie/business/markets/ ... rketwatch/

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 Post subject:
PostPosted: Sun Jul 27, 2008 10:54 am 
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The only good thing for AIB is that it could raise possibly a €1 billion by selling its stake in M&T and would have to go cap in hand for a devastating rights issue (which they would not get away methinks)


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 Post subject:
PostPosted: Mon Jul 28, 2008 8:59 am 
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Do AIB really need to raise money now though? My understanding is that they don't really have a problem getting money for loans as they never really got into "package and sell" mode of operation that the others got into?

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 Post subject:
PostPosted: Tue Jul 29, 2008 6:22 am 
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Quote:
Banks led Irish shares sharply lower for a third session in a row amid another sell-off across the sector globally as investors braced themselves ahead of interim figures from Allied Irish Banks tomorrow.
Investor appetite was hit further by news that consumer confidence in Germany has dropped to its lowest level in over five years as soaring energy prices sapped purchasing power and the economic outlook
Dealers said fears about rising bad debts in the banking sector were stoked yesterday by Australia and New Zealand Banking Group (ANZ) and Banco Bilbao Vizcaya Argentaria (BBVA), Spain's second-biggest bank.
ANZ forecast its steepest full-year profit decline in a decade and a half as bad loans swell, while BBVA's second-quarter earnings sank a greater-than-expected 19pc as loan defaults in Spain and Portugal doubled from the same period last year.
"We're really looking towards AIB for guidance on the bad debts cycle here," said a Dublin dealer.
>>>>

Investors braced for more bad banking news
http://www.independent.ie/business/iris ... 42574.html

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 Post subject:
PostPosted: Tue Jul 29, 2008 3:42 pm 
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There are fears in the market that AIB may freeze its interim dividend when it announces first-half results as it looks to strengthen its balance sheet ahead of an expected surge in loan losses in coming years.
http://www.independent.ie/business/iris ... 42574.html

"We are expecting it to report pre-tax profits of 1,144m euro," Goodbody analyst Eamonn Highes said in a note this morning, "and earnings per share of 101.6 cent." Hughes joined the chorus of voices predicting a flat dividend from the bank.
http://www.fxcentre.com/news.asp?2239704


So all the analysts have their knickers in a twist that the dividend announced tomorrow morning will be flat !

Well that would be a disaster with today's low of 6.85 representing a meagre 11.5% yield on last years FY dividend of 0.79.

I'm going out on a limb and predicting that the 2008 H1 dividend increases from last year's H1 27.8c :P


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 Post subject:
PostPosted: Tue Jul 29, 2008 5:23 pm 
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xman wrote:
Quote:
There are fears in the market that AIB may freeze its interim dividend when it announces first-half results as it looks to strengthen its balance sheet ahead of an expected surge in loan losses in coming years.
http://www.independent.ie/business/iris ... 42574.html

"We are expecting it to report pre-tax profits of 1,144m euro," Goodbody analyst Eamonn Highes said in a note this morning, "and earnings per share of 101.6 cent." Hughes joined the chorus of voices predicting a flat dividend from the bank.
http://www.fxcentre.com/news.asp?2239704


So all the analysts have their knickers in a twist that the dividend announced tomorrow morning will be flat !

Well that would be a disaster with today's low of 6.85 representing a meagre 11.5% yield on last years FY dividend of 0.79.

I'm going out on a limb and predicting that the 2008 H1 dividend increases from last year's H1 27.8c :P


I think they are more concerned about the fact that AIB almost always rises its dividend. I think the only time in the last 30 years when they didn't raise it was during the ICI crisis.

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 Post subject:
PostPosted: Wed Jul 30, 2008 6:58 am 
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Quote:
Highlights - AIB Group interim results 2008

Basic earnings per share EUR 114.0c
less profit on disposal of business(1) EUR (12.0c)
less profit on disposal/development of property(2) EUR (0.6c)
adjust for hedge volatility(3) EUR 3.5c
Adjusted basic earnings per share EUR 104.9c down 4%(4)

Divisional profit performance(5)
- AIB Bank ROI down 5%
- Capital Markets down 8%
- AIB Bank UK up 1%
- Poland up 4%
- M&T contribution down 11%

Income/cost gap +5%
Cost income ratio down 2.0% to 49.2%
Bad debt provision charge of 0.21%
Return on equity 21.9%
Tier 1 capital ratio 7.7%
Interim dividend of EUR 30.6c, up 10%


Analysts schmanalysts.


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 Post subject:
PostPosted: Wed Jul 30, 2008 7:06 am 
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Profit Warning

Quote:
Outlook

We expect our good operating performance to continue through 2008. The strong productivity of our business will remain a key focus
area. There are no material signs of a pick up in the difficult conditions apparent in many of the economies and markets in which we
operate. In these conditions funding costs and bad debts will increase relative to last year and we expect these adverse effects to reduce
our full year adjusted earnings per share to a range of EUR 185c - 190c (EUR 205.9c in 2007). Our funding and capital positions are
expected to remain robust.


They were previously forcasting low single digit earnings growth for FY08 and that forecast is now reduced to 185-190c.

So that's about -10% EPS growth yoy. Forward P/E below 4 and prospective dividend yield over 10% based on yesterday's closing price. Earnings call is at 9.30. I'm sure there will be a few questions about the health of the loan book.


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 Post subject:
PostPosted: Wed Jul 30, 2008 7:41 am 
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Don't think these are that bad at all. Always expected Allieds to be the outperformer. Reckon this will close up a decent amount today.


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PostPosted: Wed Jul 30, 2008 7:49 am 
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Quote:
1) BN 7:55 *AIB'S CEO SHEEHY SPOKE ON RTE RADIO IN DUBLIN :ALBK ID
2) BN 7:54 *AIB'S SHEEHY SAYS IRISH ECONOMY WILL BE `FLAT' THIS YEAR
4) BN 7:50 *ZACHODNI CEO KEEPS PLAN TO DOUBLE MARKET SHARE BY 2012 :BZW PW
5) BN 7:50 *ZACHODNI OF POLAND PLANS TO OPEN 100 BRANCHES IN 2009 :BZW PW
6) BN 7:50 *ZACHODNI TO SPEND 50M ZLOTY OPENING ABOUT 50 BRANCHES IN 2008
7) BN 7:49 *BANK ZACHODNI CEO SEES 2008 REV RISING FASTER THAN COSTS
8) BN 7:49 *ZACHODNI CEO MORAWIECKI SPEAKING IN WARSAW INTERVIEW :BZW PW
10) BN 7:33 *AIB CFO SAYS IRISH HOUSE PRICES WILL FALL 30% FROM PEAK :AL
11) BN 7:32 *AIB CFO SAYS EU2.1 BLN WORTH OF LOANS `UNDER WATCH' :ALBK ID
12) BN 7:31 *ALLIED IRISH CFO JOHN O'DONNELL SPOKE IN INTERVIEW :ALBK ID
13) BN 7:31 *AIB 08 BAD DEBT PROVISIONS WILL RISE TO 35BPS, CFO SAYS
14) BN 7:30 *SHEEHY SAYS CONSTRUCTION WEAKNESS WILL AFFECT LOAN BOOK
15) BN 7:30 *AIB'S SHEEHY SPOKE ON NEWSTALK RADIO IN DUBLIN :ALBK ID
16) BN 7:29 *SHEEHY: 70% OF LOAN BOOK DETERIORATION DUE TO CONSTRUCTION
17) BN 7:27 *AIB'S SHEEHY SAYS REST OF YEAR WILL BE `QUITE SOLID' :ALBK ID
18) BN 7:26 *AIB HAS TAKEN `INTENSIVE LOOK' AT LOANS OVER EU1 MLN :ALBK ID
19) BN 7:26 *AIB CEO SHEEHY SPOKE IN NEWSTALK RADIO INTERVIEW :ALBK ID
20) BN 7:26 *AIB CEO SHEEHY SAYS ECONOMY 'ISN'T AS STRONG AS IT WAS'
2) BN 7:10 *AIB SAYS H1 IMPAIRED LOANS 1.1% OF TOTAL LOANS VS 0.8%
3) BN 7:08 *AIB SAYS H1 PROVISION CHARGE IN IRELAND EU89 MLN VS EU46 MLN
4) BN 7:06 *AIB H1 PROVISIONS FOR IMPAIRMENTS EU137 MLN V EU25 MLN :ALBK
5) BN 7:04 *AIB SAYS REDUCED COSTS 2% IN H1 :ALBK ID
7) BN 7:03 *AIB H1 LOAN GROWTH 6% IN H1 :ALBK ID
8) BN 7:02 *AIB SAYS FUNDING,CAPITAL POSITION TO REMAIN `ROBUST' :ALBK
9) BN 7:01 *AIB SAYS NO `MATERIAL' SIGNS OF PICK-UP :ALBK ID
12) BN 7:00 *AIB RAISES H1 DIVIDEND 10% TO 30.6 CENTS A SHARE :ALBK ID
13) BN 7:00 *AIB ADJUSTED H1 EPS EU1.049 VS EU1.088 :ALBK ID
14) BN 7:00 *AIB EXPECTS FY ADJUSTED EPS EU1.85-EU1.90 VS EU2.06 IN 2007
15) BN 7:00 *AIB H1 NET EU1.040 BLN VS EU1.041 BLN YEAR EARLIER :ALBK ID
16) BN 7:00 *ALLIED H1 NET 1.040 BLN; ANALYSTS EST EU879 MLN :ALBK ID


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