Anglo Interim Results 2008

8/13/2019 Anglo Interim Results 2008

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Chairmans statement Anglo Irish Bank has performed strongly in the six months to 31 March 2008,reporting profit before tax of 667 million and underlying earnings per share growth 1 of 15%. Profitability in our core banking business has grown at a significantly higherrate but we maintain a prudent stance in relation to the valuation of assets impactedby the current dislocation in global credit markets.

We have a resilient funding platform with almost two thirds of total funding providedby customer sources and with continued strong access to wholesale markets. Over90% of loan growth for the six months was funded through increased customerdeposits.

The strength of the Banks balance sheet is demonstrated by robust capitalisation,a significant liquidity buffer and minimal term debt maturities during 2008. Lendingasset quality remains excellent. There are no emerging systemic trends causing

material concern though we remain highly vigilant.Highlights for the period include:

Continued strong profitability Profit before tax of 647 million (excluding 20 million profit on the disposal of our

Swiss private bank), a rise 1 of 17% Prudent approach to valuation of assets impacted by market dislocation 15% increase in earnings per share 1 to 69.7 cent Active cost management with cost to income ratio improving by three percentage

points from 22% to 19% Annualised specific lending impairment charge of 0.10% Strong return on equity of 26% Stable net interest margins Continuing strong dividend trend, increasing interim dividend by 20% to 7.78 cent

Significant balance sheet strength Lending growth of 6.1 billion, up 10% on a constant currency basis in the six

months Excellent asset quality with impaired loans representing 0.52% of total loan

balances

Strong growth in funding of 9.9 billion on a constant currency basis

withcustomer deposits up 5.6 billion, an increase of 11% in the six months Excellent liquidity position with treasury assets of 28 billion Increase in core equity to 4.6 billion 2 with robust Core, Tier 1 and Total Capital

ratios of 5.6%, 8.7% and 11.9% respectively


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Balance sheet growth (constant currency)

bill ion31 March

200830 September

2007 *

Change Change %

Assets

Total customer lending 69.0 62.9 6.1 10%

Interbank treasury assets 18.5 12.1 6.4 53%

Other treasury assets 9.5 12.5 (3.0) (24%)

Other assets 4.4 3.7 0.7 19%

Total assets 101.4 91.2 10.2 11%

Equity & liabilities

Customer deposits 54.5 48.9 5.6 11%

Debt securities 22.1 22.4 (0.3) (1%)Interbank deposits 11.6 7.4 4.2 57%

Capital & sub. debt 9.5 9.1 0.4 4%

Other liabilities 3.7 3.4 0.3 9%

Total equity & liabilities 101.4 91.2 10.2 11%

* Balances restated using currency exchange rates as at 31 March 2008

Business Lending controlled high quality growth

Total customer lending (including lending associated with our assurance company)stood at 69 billion at 31 March 2008, reflecting net loan growth of 6.1 billion 3 in thesix months, an increase of 10%. This compares to 9.3 billion and 8.7 billion of netloan growth in the six months to March and September 2007 respectively. Wecontinue to apply a highly selective and cautious approach to new lendingopportunities.

Lending asset quality

Lending asset quality is excellent. The specific impairment charge at 0.10% ofaverage customer loans is in line with the previous year. Impaired loans at

358 million represent 0.52% of the closing loan book, similar to 2006 and 2007levels of 0.52% and 0.50% respectively. Total balance sheet lending provisionsamount to 273 million, covering close to 80% of impaired loans before taking theBanks collateral security into account.

The Group operates a strict underwriting model. We lend to experienced businesspeople and professional investors, providing senior term debt on a secured basis.The Bank does not engage in speculative or unsecured development lending. Thecornerstone of our consistent record on asset quality is strong underlying client cashflows, normally based on long-term contractual rental incomes derived from diversesectors of the service economy. These sectors continue to perform solidly.


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Loans are individually presented and approved at central credit committee in Dublin,chaired independently by Group Risk Management. This team also undertakes acomplete on-site review of all loans at least twice a year, stress testing each andevery client on a loan-by-loan basis to assess the impact of increased interest ratesand lower cash flows. The most recent review of the Banks loan book, completed in

April 2008, confirmed that overall client equity and liquidity streams continue to be

strong and well diversified.The Banks low loss outcome in the event of a default is further underpinned bypersonal guarantees and by the fact that close to 100% of the loan book is securedby a first legal charge on tangible assets, typically on a cross-collateralised basis.

Consistent and proactive management of our asset base, from initial underwritingand throughout the life of each loan, ensures that we are close to our clients. As aresult, potential issues are recognised and dealt with at an early stage, therebymitigating risk. We remain vigilant to ensure the quality of our assets.

Lending Ireland

At the end of March 2008 loans to Irish customers stood at 40.6 billion, up 3.7 billion 3 in the first six months. Customer activity has centred primarily on Irishand mainland European markets.

Price reductions and a significant decline in the supply of new homes have helpedprovide some stability to the Irish residential market. The development component ofour Irish residential activities continues to perform well under difficult marketconditions. Typically, our clients developments are substantially pre-sold and loanfacilities are cross-collateralised with other income producing assets. Most of ourclients operating in this area are long-established, experienced developers withsignificant net worth who have diversified their business interests over the pastnumber of years, both in Ireland and internationally. Reflecting current marketconditions, there are a limited number of smaller relationships which require moreactive monitoring.

The commercial property sector in Ireland is performing solidly with stable rents andlow vacancy rates. As expected, new investment activity has moderated considerablyfrom the record levels of 2007.

Growth in the Irish economy, whilst positive, has slowed. However, many of thefundamentals remain sound with consensus forecasts indicating a gradual pick-up in2009. This follows many years of significant wealth generation for our clients. We arewell positioned to create further value with them over time.

Lending UK

The Banks UK lending business increased loan balances by 5% 3 to 20.1 billion.This performance reflects general business conditions in the UK market whereactivity levels have reduced significantly as buyers encounter a backdrop of morerestricted funding opportunities and sellers have been reluctant to trade assets at

lower levels.


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This is our 23 rd year operating in the UK, building a strong relationship bankingfranchise over this period. The loan book is performing well with client repaymentcapacity remaining strong, supported by improved income and rental levels.

There are emerging signs of potential opportunities in the commercial propertymarket following the recent pricing correction and the downward trend in long-term

interest rates. Looking further ahead, we see considerable opportunity to developand expand our business, especially given our relatively modest market share andour proven ability to develop meaningful client relationships.

Lending North America

Our North American lending business delivered a solid performance in the first sixmonths with net loan growth of 1.4 billion 3. The Bank is established and representedin three prime markets Boston, New York and Chicago. Sentiment and confidencein the US economy has deteriorated significantly in recent quarters. Clearly, we arenot immune to the effects of the economic downturn. However, our geographic focus

and proven underwriting model position the Bank strongly. The entire book is fullyperforming and we have no exposure to the subprime sector.

As with the UK, the opportunity in this market in the medium to long term issignificant given our small market share. Over the past decade we have maintained ahighly selective approach to this business, as evidenced by a client base of less than300. We will continue with this prudent policy.

Treasury delivering in challenging market condi tions

Our Treasury division has performed strongly in the first half of 2008, providing arobust, diversified funding and capital platform, maintaining excellent liquidity andmanaging the Banks interest rate and foreign currency risks whilst servicing theneeds of our treasury clients.

This performance is reflected in:

a significant liquidity buffer with liquid assets of 28 billion customer deposits comprising close to two-thirds of total funding customer deposits, term funding and capital representing 116% of customer loans

minimal term debt maturities to calendar year end 2008 of 3 billionCustomer deposits

Our customer deposit franchise has again delivered in a highly competitive marketwith balances increasing by 5.6 billion 3 or 11%, taking total customer funding to

54.5 billion. Customer deposits fund 80% of cumulative lending and over 90% oflending growth in the period, thereby protecting Bank liquidity. Deposit growth waswell spread throughout all target markets. The Banks customer deposit businessdates back over three decades in Ireland, two decades in the UK and now spans 16different geographic markets across Europe and North America. The continuing

success of the Banks customer funding activities, both retail and non-retail, ispremised on consistently competitive pricing and a strong customer service ethos.


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In line with the rest of the market, the cost of customer funding has increasedreflecting sustained competition. Rather than seeking to generate profit, the goal ofour customer deposit business has always been to enhance and diversify the Banksfunding base. Consequently, the impact on our net interest margin is comparativelylow.

Retail customer balances now stand at 20.7 billion, with in excess of 50,000 newcustomers added in the period. More than half of these new customers have investedin term products with durations of one year or longer. Customer retention remainsexcellent at over 95%.

Our non-retail customer deposit business, which most recently has expanded into theUnited States, has grown strongly with balances outstanding of 33.8 billion, anincrease of 13% 3. This strong, relationship focused business provides ongoinggranular funding by targeting a diverse base of long term holders of cash, such assmall and medium sized corporates, charities, investment managers, local authoritiesand credit unions. The average non-retail customer balance is 4 million. As well as

continuing strength in our traditional core markets of Ireland, the UK, the Isle of Manand Austria, we have also experienced strong growth in the wider European market.

Market funding

The Bank continues to attract significant levels of market funding with new issuancecomfortably exceeding redemptions. Whilst the public longer term capital marketshave been restricted for all participants, we have raised 2 billion of term funding inthe period through private placings and interbank activity. The Bank has alsobenefited from strong activity in commercial paper and certificates of deposits withdurations out to one year whilst maintaining pricing discipline at sub-libor levels.Gross issuance in the period amounted to over 12 billion, resulting in currentbalances increasing by more than 25% on year end.

Term funding at close to 16 billion is consistent with the level outstanding at yearend. Looking forward, we are well positioned with just 3 billion of term funding, or3% of the Group balance sheet, maturing during the remainder of calendar 2008.

Liquidity

The Bank is highly liquid with a customer loan to deposit ratio of 127% and over 28 billion of liquid assets and short term bank placings. Access to a wide range offunding sources has remained strong throughout the current turbulence in creditmarkets. We have continued to be a significant net lender to the repo and inter-bankmarket.

The Group operates within the regulatory liquidity rules of the Irish FinancialRegulator, considered to be one of the most stringent regimes in Europe. The Bankalways maintains a significant buffer over these requirements.


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The Bank is further enhancing its liquidity through the external rating of pools ofcustomer lending assets. This process, primarily in the form of repo-eligible coveredbonds, provides access to close to 10 billion of additional secured market funding.Our recently completed $10 billion US 144a capital and term debt programme willprovide another previously untapped funding source as markets become lessconstrained.

Assets i mpacted by t he cur rent capit al markets di slocation

In order to protect future earnings we have taken a prudent approach to the valuationof assets impacted by the credit market dislocation. The Bank has only limitedresidual exposure to these asset classes.

Following cumulative write-downs and disposals, the Banks exposure to structuredinvestment vehicle assets is 3 million.

We have no direct exposure to US or other subprime sectors. Following cumulative

write-downs through the income statement and reserves of 111 million and 76 million respectively, the carrying value of assets indirectly linked to US subprimeis 63 million.

The Bank has minimal trading activities. This is reflected in our low trading Value atRisk which, at a 99% confidence level, averages 0.3 million, stemming solely fromthe management of customer related positions.

Wealth Management

Our Wealth Management division is a niche provider of tailored financial productsand solutions to a high net worth clientele. Operating profit for the six months grew by6% to 36 million. In addition, a gain of 20 million was recognised on the recent saleof our private bank in Switzerland. The Swiss business, which did not contributetowards lending or funding, accounted for less than 1% of Group profit in 2007.

Cost management

Cost management has always been a significant focus for the Bank. This, together

with the inherent flexibility in our cost base, is a key operating and strategicadvantage, evidenced by our cost to income ratio improving from 22% in 2007 to19%. Notwithstanding this, we are continuing core investment across the Group.

Capital str ength

Retentions will continue to deliver significant equity capital generation to support theBanks growth. Core equity has increased to 4.6 billion 2, bringing the Banks coreratio to 5.6%. In addition, Tier 1 and Total Capital ratios are robust at 8.7% and11.9% respectively.


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The Capital Requirements Directive/Basel II became effective on 1 January 2008.Our capital requirements are currently calculated using the Standardised methodpending a move to the Internal Ratings Based approach.

The annuity and low volatility nature of the Groups income stream and its efficientcost structure result in consistent capital generation. We expect our core equity ratio

to further strengthen in the second half of the year. In addition, the Bank does notneed to raise Tier 1 or Tier 2 debt capital before late 2009.

Credit ratings

External independent rating agencies, Standard & Poors, Moodys, Fitch andDominion Bond Rating Service have each recently reviewed and reaffirmed all of ourratings with a stable outlook.

Dividend growth

The Board maintains its progressive dividend policy, declaring a 20% increase in theBanks interim dividend to 7.78 cent per ordinary share.

The dividend will be paid on 15 July 2008 to shareholders on the Banks register asat close of business on 16 May 2008. Withholding tax may apply on the dividenddepending on the tax status of each shareholder. Shareholders will again be offeredthe opportunity of receiving dividends in the form of cash or shares.

People

I take this opportunity to thank our people for their outstanding contribution duringthese challenging times for the banking sector. Their collective commitment reaffirmsmy belief in our unique culture of ownership and delivery and gives me greatconfidence for the Groups performance in the years ahead.

Outlook

We maintain full year guidance of 15% earnings per share growth. However, therecontinues to be risk to profitability across the banking sector associated with furtherfinancial market disruption and the potential impact of a protracted deterioration inthe wider economic climate.

Prudent management of asset quality and strict liquidity discipline are our primaryareas of focus in the current environment. We will continue to invest and createadditional capacity in our diversified funding franchise. We anticipate that lendinggrowth will be in the region of 10 billion for the full year, supported by currentlending work-in-progress of 6.8 billion. As always, this will be funded throughcustomer deposits and longer term debt.


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The current challenging environment for the banking sector underlines the relevanceof our relationship focused business model, strict underwriting criteria and strongownership culture. These position the Bank to maximise the potential in each of ourcore markets and increase market share, particularly in the UK and US, in themedium to long term. Accordingly, we see significant opportunity to sustain ourdelivery of above market returns for our shareholders.

Sean FitzPatri ckChairman

6 May 2008

1 Excludes profit on disposal of Swiss private bank in 2008 and Isle of Man trust business in 20072 Excludes preference share capital and non income statement reserve movements3 On a constant currency basis


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Statement of Directors' responsibilities

The Directors are responsible for preparing the Interim Report in accordance with International Accounting Standard 34 (IAS 34), the Transparency (Directive 2004/109/EC) Regulations 2007 andthe Transparency Rules of the Irish Financial Services Regulatory Authority.

The Directors confirm that the condensed set of financial statements have been prepared inaccordance with IAS 34 and that they give a true and fair view of the assets, liabilities, financialposition and profit of the Group and that, as required by the Transparency (Directive 2004/109/EC)Regulations 2007, the Interim Report includes a fair review of:

important events that have occurred during the six months ended 31 March 2008; the impact of those events on the condensed financial statements; a description of the principal risks and uncertainties for the remaining six months of the financial

year; and details of any related party transactions that have materially affected the Groups financial position

or performance in the six months ended 31 March 2008.

Directors: David Drumm (Group Chief Executive),William McAteer (Executive Director),Pat Whelan (Executive Director).

Secretary:Natasha Mercer.


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Consolidated income statement (unaudited) For the six months ended 31 March 2008

Six months Six months Year

ended ended ended

31 March 31 March 30 September2008 2007 2007

Note m m m

Interest and similar income 3,333 2,453 5,371Interest expense and similar charges (2,375) (1,730) (3,805)Net interest inco me 958 723 1,566

Fee and commission income 85 77 177Fee and commission expense (5) (7) (16)Dealing profits 11 13 19Fair value movements 2 (112) (3) (6)Other operating (expense)/income (1) 5 21Other (expense)/income (22) 85 195Total operating inco me 936 808 1,761

Administrative expenses (164) (192) (368)Depreciation (5) (5) (11)

Amortisation of intangible assets - software (8) (6) (14)Total operatin g expenses (177) (203) (393)

Operating profit b efore provisions forimpairment 759 605 1,368

Provisions for impairment:Loans and advances to customers (33) (56) (82)Other (79) - (67)

3 (112) (56) (149)

Operating prof it 647 549 1,219Share of results of joint ventures - 3 2Profit on disposal of businesses 4 20 22 22

Profit before taxation 667 574 1,243

Taxation 5 (125) (110) (235)Profit for the period 542 464 1,008

Attr ib utabl e to :Equity holders of the parent 548 462 998Minority interest (6) 2 10Profit for the period 542 464 1,008

Basic earnings per 0.16 ordinaryshare 6 72.4c 63.6c 134.7c

Diluted earnings per 0.16 ordinaryshare 6 72.0c 62.9c 133.2c


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Consolidated balance sheet (unaudited) As at 31 March 2008

31 March 30 September 31 March

2008 2007 2007Note m m m

AssetsCash and balances with central banks 1,093 848 953Financial assets at fair value through profit or loss

- held on own account 264 430 379- held in respect of liabilities to customers under

investment contracts 528 644 366Derivative financial instruments 2,323 1,355 964Loans and advances to banks 17,416 12,051 12,880

Assets classified as held for sale 278 288 - Available-for-sale financial assets 9,231 12,530 9,935Loans and advances to customers 67,972 65,949 57,865Interests in joint ventures 80 88 116

Intangible assets - software 14 17 21Intangible assets - goodwill - 46 47Investment property

- held on own account 21 25 36- held in respect of liabilities to customers under

investment contracts 1,766 2,090 2,528Property, plant and equipment 32 37 37Retirement benefit assets 7 29 23Deferred taxation 68 47 37Other assets 274 143 107Prepayments and accrued income 28 35 38Total assets 101,395 96,652 86,332

LiabilitiesDeposits from banks 11,631 7,601 8,494Customer accounts 54,536 52,686 45,361Derivative financial instruments 1,868 1,175 1,054Debt securities in issue 22,045 23,588 21,530Liabilities to customers under investment contracts 1,364 1,779 1,802Current taxation 137 63 125Other liabilities 150 175 29

Accruals and deferred income 160 190 181Retirement benefit liabilities 5 7 7Deferred taxation 47 49 48Subordinated liabilities and other capital instruments 5,070 5,274 4,067Total liabil iti es 97,013 92,587 82,698

Share capital 123 122 122Share premium 1,155 1,139 1,136Other reserves 7 (217) (92) (17)Retained profits 3,314 2,883 2,386Shareholders' funds 4,375 4,052 3,627Minority interest 7 13 7Total equity 8 4,382 4,065 3,634

Total equity and liabil ities 101,395 96,652 86,332

Contingent liabilitiesGuarantees 899 1,524 1,528

CommitmentsCommitments to lend 6,840 9,775 9,235


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Consolidated statement of recognisedincome and expense (unaudited) For the six months ended 31 March 2008


ended ended ended31 March 31 March 30 September

2008 2007 2007 m m m

Profit for the period 542 464 1,008

Net actuarial (losses)/gains in retirement benefit schemes, after tax (19) 6 12Net change in cash flow hedging reserve, after tax 82 (17) 5Net change in available-for-sale reserve, after tax (200) (12) (107)Foreign exchange translation (8) - (8)Net expense recognised directly in equity (145) (23) (98)Total recogn ised inco me and expense for the period 397 441 910

Attr ib utabl e to :Equity holders of the parent 403 439 900Minority interest (6) 2 10Total 397 441 910


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Consolidated condensed cash flowstatement (unaudited) For the six months ended 31 March 2008


ended ended ended31 March 31 March 30 September

2008 2007 2007 m m m

Net cash flows from operatin g activit ies before taxation 4,318 5,310 6,682Tax paid (56) (29) (217)Net cash flows from operatin g activiti es 4,262 5,281 6,465

Cash flows from investing activitiesNet decrease/(increase) in available-for-sale financial assets 2,658 (4,797) (7,623)Interest received on available-for-sale financial assets net of

associated hedges 358 89 332Net decrease/(increase) in assets classified as held for sale 10 - (288)Proceeds on disposal of businesses 114 44 44Purchases of property, plant and equipment (2) (5) (12)Proceeds on disposals of property, plant and equipment - - 1

Additions to intangible assets - software (7) (3) (7)Investments in joint venture interests (1) (47) (42)Proceeds on disposals of joint venture interests - - 13Distributions received from joint venture interests 1 2 10Purchases of investment property held on own account - - (1)Proceeds on disposals of investment property held on own

account - - 11Net cash flows from investi ng activit ies 3,131 (4,717) (7,562)

Cash flows from financing activiti esProceeds of equity share issues 17 542 552Proceeds from issues of subordinated liabilities and other

capital instruments - - 1,259Redemptions of subordinated liabilities and other

capital instruments (30) (99) (104)Coupons paid on subordinated liabilities and other capital

instruments (152) (79) (205)Equity dividends paid (87) (45) (86)Purchases of own shares (16) (4) (17)Net cash flows from fin ancing activit ies (268) 315 1,399

Net incr ease in cash and cash equivalents 7,125 879 302

Opening cash and cash equivalents 10,832 10,800 10,800Effect of exchange rate changes on cash and cash equivalents (668) (100) (270)Closing cash and cash equivalents 17,289 11,579 10,832


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Notes to the interim reportFor the six months ended 31 March 2008

1. Basis of preparation

This Interim Report for the six months ended 31 March 2008 has been prepared in accordance with therequirements of the European Union ('EU') Transparency Directive and IAS 34 'Interim Financial Reporting' ,as adopted by the EU. The accounting policies applied in preparing this Interim Report are consistent withthose set out in the Annual Report and Accounts for the year ended 30 September 2007.

From 1 October 2007 the Group has applied IFRIC Interpretation 10 'Interim Financial Reporting andImpairment' . It clarifies that any impairment losses on goodwill and equity instruments recognised in aninterim period may not be reversed in subsequent interim periods. This does not have a material impact onthe Group.

The Group will adopt the amendment to IAS 1 'Presentation of Financial Statements' in respect of capitaldisclosures and IFRS 7 'Financial Instruments: Disclosures' in its Annual Report and Accounts for the year

ended 30 September 2008.

Both the interim figures for the six months ended 31 March 2008 and the comparative amounts for the sixmonths ended 31 March 2007 are unaudited. The summary financial statements for the year ended30 September 2007, as presented in this Interim Report, represent an abbreviated version of the Group'sfull accounts for that year, on which the independent auditors issued an unqualified audit report withoutreference to any matters of emphasis and which have been filed in the Companies Registration Office inIreland.

2. Fair value movements Six months Six months Yearended ended ended

31 March 31 March 30 September

2008 2007 2007

m m m

Net movement in financial assets designated at fairvalue held on own account (112) (3) (6)

The net movement in financial assets designated at fair value held on own account in the six months ended31 March 2008 reflects the change in fair value of certain financial assets containing embedded derivatives.

These assets were designated at fair value through profit or loss at inception in accordance with IFRS andform part of a portfolio of assets which are held for long-term investment purposes.


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Notes to the interim report (continued) For the six months ended 31 March 2008

6. Earnings per 0.16 ord inary share Six months Six months Yearended ended ended

31 March 31 March 30 September

2008 2007 2007

Profit attributable to ordinary shareholders 548m 462m 998mLess: profit after tax on disposal of businesses (20m) (22m) (22m)

Adjusted profit 528m 440m 976m

Weighted average number of shares in issue duringthe period 757m 726m 741m

Dilutive effect of options outstanding 4m 8m 8mDiluted weighted average number of shares 761m 734m 749m

BasicBasic earnings per 0.16 ordinary share 72.4c 63.6c 134.7c

Adjusted basic earnings per 0.16 ordinary share 69.7c 60.6c 131.7c

DilutedDiluted earnings per 0.16 ordinary share 72.0c 62.9c 133.2c

Adjusted diluted earnings per 0.16 ordinary share 69.4c 59.9c 130.3c

The calculation of basic earnings per ordinary share is based on the profit attributable to ordinaryshareholders divided by the weighted average number of ordinary shares in issue excluding own sharesheld to satisfy share options granted or to be granted under the Anglo Irish Bank Employee ShareOwnership Plan, shares held in respect of the Deferred Share Scheme and shares purchased by Anglo Irish

Assurance Company Limited for the benefit of policyholders.

Adjusted basic and adjusted diluted earnings per share have been presented to exclude the impact of theprofit arising on the disposal of Anglo Irish Bank (Suisse) S.A. on the results for the period ended31 March 2008 and the impact of the profit arising on the disposal of the Isle of Man trust business on theresults for the periods ended 31 March 2007 and 30 September 2007.


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Notes to the interim report (continued) For the six months ended 31 March 2008

10. Segmental reporting continued

Business segments Year ended 30 September 2007

Inter-

Business Wealth Group segment

Lending Treasury Management items eliminations Group

m m m m m m

Revenue from externalcustomers 4,138 1,166 278 - - 5,582

Inter-segment revenue - 2,833 - - (2,833) -Total revenue 4,138 3,999 278 - (2,833) 5,582

Operating profit 1,207 (4) 71 (55) - 1,219Share of results of joint

ventures - - 2 - - 2Profit on disposal of Isle of

Man trust business - - 22 - - 22Profit before taxation 1,207 (4) 95 (55) - 1,243

External assets 63,146 27,152 6,210 144 - 96,652Inter-segment assets 1,229 55,025 - 9,569 (65,823) -Total assets 64,375 82,177 6,210 9,713 (65,823) 96,652

Revenue includes interest and similar income, fee and commission income, dealing profits, fair valuemovements and other operating (expense)/income. Inter-segment transactions are conducted on an arm'slength basis. Group items include the return earned on the Group's equity capital, the margin cost ofsubordinated debt and other capital instruments and central overheads.

On 1 October 2007 certain loans and advances and the related income were transferred from WealthManagement to Business Lending. Prior period comparatives have been adjusted to reflect these changes.

11. Dividends

On 6 May 2008, subsequent to the interim balance sheet date, an interim dividend of 7.78 cent perordinary share was declared by the Board of Directors for payment on 15 July 2008. The interim dividendamounts to 60 million and has not been recorded as a liability on the balance sheet. Shareholders will beoffered the option of receiving the dividend in the form of shares or cash.

A final dividend of 13.01 cent per ordinary share was declared in respect of the year ended30 September 2007. This was paid on 14 February 2008, 87 million in cash and 12 mill ion by way ofscrip dividend.

12. Approval

The interim financial statements were approved by the Board of Directors on 6 May 2008.


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Documents

Anglo Interim Results 2008