Allied Irish Banks posts 1.1 bln euro 2014 profit

(Adds detail, CEO quotes)

March 5 (Reuters) - Allied Irish Banks (AIB) joined rival Bank of Ireland (Other OTC: IRLD - news) in returning to a profit for 2014 as it clawed back money put aside for bad loans after years spent racking up billions of euros in loss provisions.

The rescue of AIB that began in 2009 has cost Irish taxpayers 21 billion euros, the most given to any Irish bank still trading, and the government hopes to sell up to a 25 percent stake this year or early next.

The bank, which is looking for a new chief executive after David Duff said in January he was stepping down, reported an underlying pretax profit of 1.1 billion euros after making a loss of 1.7 billion euros in 2013.

"2014 saw AIB successfully execute its three-year plan to deliver a bank that is sustainably profitable, adequately capitalised and appropriately funded," Duffy said in a statement.

The bank said the improved economy allowed it to take a provision writeback of 188 million euros versus a 1.9 billion euro charge taken a year earlier.

Like Bank of Ireland, which announced a 921 million euro annual profit last week, the pace of loan redemptions at AIB exceeded new lending demand. Its loan book fell to 63.4 billion euros from 64.6 billion at the end of June 2014.

Its Core Tier 1 capital ratio, a measure of financial strength, rose to 16.4 percent or 11.8 percent under the so-called "fully loaded" ratios in new capital rules known as Basel III.

The government has appointed Goldman Sachs (NYSE: GS-PB - news) to advise on the sale of the 99-percent state-owned lender. It is looking to recover all of the 21 billion euros spent on rescuing Ireland's second-largest bank by assets. (Reporting By Padraic Halpin)