Allied Irish UK plans unchanged as reports profit fall

(Adds CFO comments, details)

* Plans for UK business "completely Brexit agnostic"-CFO

* AIB H1 pretax profit 1 bln eur vs 1.24 bln eur year ago

* Bank remains ready whenever government seeks to IPO

By Padraic Halpin

DUBLIN, July 28 (Reuters) - Allied Irish Banks (Berlin: 30544177.BE - news) (AIB) said it is sticking to plans for its UK business despite Britain's vote to leave the European Union, after reporting a fall in first half profit due to fewer one-off gains.

Ireland (Other OTC: IRLD - news) 's fast growing economy is considered more vulnerable than any other in the EU to its neighbour and major trading partner's decision to quit, with Irish banks exposure to the UK accounting for around 21 percent of total assets.

The UK accounted for 14 percent of AIB's pre-provision operating profit last year and contributed to a quarter of all new lending in the first half of 2016, although drawdowns fell 17 percent year-on-year compared to growth of 8 percent in the larger Irish market.

"All of our strategic thoughts in relation to the UK and any actions we take are completely Brexit agnostic, you do it in good and bad weather," AIB Chief Financial Officer Mark Bourke told Reuters following Thursday's results.

"Our UK business, you've got to think of in terms of its overall size, it's a small niche bank. There's no point in calling it (Brexit) in terms of where it goes economically, from our point of view it's manage and keep going."

The 99.8 percent state-owned bank, whose 21 billion euro taxpayer bailout was the biggest for any Irish bank still trading, reported a first half pre-tax profit of 1 billion euros, down from 1.2 billion a year ago.

That was primarily as a result of writing back less of its remaining and shrinking 11 billion euros in provisions racked up during Ireland's financial crisis. It took a writeback of 211 million euros by end-June compared to 540 million a year ago.

Bourke said the results showed very strong and sustainable underlying profitability with net interest margin, the measure of how profitable its lending is, steady since March at 2.08 percent and, he said, only going one way towards the mid-2.30s.

Despite being partially offset by negative movements in its pension scheme, by assets core tier one capital ratio increased to 13.3 percent from 13.1 three months earlier.

The government has pushed back plans to sell a 25 percent stake in the country's second-largest bank into the first half of 2017 and after the British referendum said the timetable could be reviewed again if circumstances change.

"Our job is simply to be ready and from the back end of 2015, all of the internal work has been completed. We remain on standby as soon as the government decides to move," Bourke said. (Editing by Alexander Smith)