Rescued Irish bank report first-half profit

Bailed-out Allied Irish Banks said on Monday it rebounded into first-half profit, boosted by the sale of Polish banking operations, but admitted it remained plagued by "elevated" bad debts. Earnings after taxation amounted to 2.24 billion euros ($3.22 billion) in the six months to June, compared with a net loss of 1.73 billion euros in the equivalent period of 2010, the lender said in a results statement. Earlier this year, AIB sold its 70-percent stake in Poland's Bank Zachodni WBK (BZWBK), and its 50-percent holding in the BZ AIB Asset Management, to Spanish bank Santander for 3.1 billion euros. The deal was completed in April. "The reported profit of 2.2 billion euros includes the sale of BZWBK and capital initiatives taken in conjunction with the state," said Allied Irish Banks in a statement. However, stripping out the BZWBK sale and debt buyback gains, AIB made an underlying loss of 2.6 billion euros, as the lender admitted that it had experienced "continuing elevated bad debts". AIB, once one of Ireland's biggest banks, is almost fully state owned after receiving enormous state bailouts. The group has already received more than 7.2 billion euros in aid from the Irish government. The lender has been divesting assets as part of a restructuring plan to cover record losses from bad property loans. In March, Ireland's central bank ordered a drastic overhaul of the eurozone nation's stricken banking sector, including the merger of Allied Irish Banks with the Educational Building Society (EBS). The overhaul was aimed at creating two main "pillar" banks comprising Bank of Ireland and the merged AIB/EBS. AIB was also ordered to raise an additional 13.3 billion euros in capital and buffer reserves by the end of July, to cover antipated loan losses over the next three years. - Dow Jones Newswires contributed to this report -