Allied Irish Banks near trebles first-half profit

DUBLIN, Aug 7 (Reuters) - Allied Irish Banks (AIB) almost tripled its first-half profits as it clawed back money put aside for bad loans, increased margins and reduced costs.

The bank on Friday reported an underlying pretax profit of 1.24 billion euros to June 30, up from 437 million a year earlier and more than the 1.1-billion-euro profit it made for the whole of 2014.

The rescue of state-controlled AIB has cost taxpayers 21 billion euros, the most given to any Irish bank still trading, and the government hopes to recover it all, beginning with a 25 percent stake sale later this year or more likely next.

"Whilst any decision on a future sale of AIB is entirely one for the government, the results so far this year significantly improve the prospects for a successful transaction whenever it happens," AIB Chairman Richard Pym said, describing the results as "significantly" ahead of the bank's expectations.

Like most Irish banks, AIB last year returned to profit for the first time since the 2008 financial crisis and began writing back some of the billions of euros in provisions it had racked up before Ireland (Other OTC: IRLD - news) 's economy began to recover strongly.

The 99.2-percent state-owned bank said it was able to take an overall provision writeback of 540 million euros in the first half as its total stock of impaired loan volumes fell by 4.2 billion euros to just over 18 billion euros.

Under so-called fully-loaded Basel III banking industry rules, the bank's Core Tier 1 capital adequacy ratio rose to 14.1 percent of assets from 12.2 percent at the end of March.

Excluding 3.5 billion euros of government-owned preference shares, the ratio dropped to 8.3 percent, far less than that of Bank of Ireland.

AIB said the results would enable it to progress with talks with the government on the appropriate capital structure.

Its net interest margin, excluding government guarantee fees, rose to 1.92 percent, while net loans increased marginally to 63.8 billion euros, although, like other lenders whose repayments still outpace new lending, this included positive foreign exchange movements. (Editing by Jason Neely)