* Irish fin min says bank's results support 2017 IPO plans
* AIB sees scope for progressive rise in "modest" dividend
* FY profit 1.7 bln eur, fully loaded CET1 ratio 15.3 pct
(Adds CFO interview, quotes from chairman)
By Padraic Halpin
DUBLIN, March 2 Allied Irish Banks
(AIB) became the first domestic-owned Irish lender to restart
dividends since the financial crash almost a decade ago,
proposing a 250 million euro ($263 million) payment and saying
it was ready to IPO this year.
Finance minister Michael Noonan said the bank's performance
supported the view that 2017 is an appropriate time to consider
selling Ireland's 25 percent stake. Last month, he raised the
possibility of doing so as early as May as markets improve.
The 99.9 percent state-owned bank was valued at 11.3 billion
euros at the end of last year, meaning a share sale yielding
almost 3 billion euros would be one of the largest bank listings
in Europe since the 2008 financial crisis.
"Market conditions at the moment are pretty receptive but
that can move in a week, move in a day," AIB chief financial
officer Mark Bourke told Reuters in a telephone interview.
"There is huge interest in the Irish story, which has
continued to deliver and we are a pure play on that. When that
is added to the performance and recovery the bank has made, the
interest levels are always pretty high among investors."
AIB pointed to strong financial results and robust capital
as supporting its "modest" dividend. The bank intends to
maintain a conservative stance but sees scope for a progressive
payment, Bourke said following AIB's results on Thursday.
AIB's main rival, 14 percent state-owned Bank of Ireland,
last week delayed restarting its dividend payments until next
year. Royal Bank of Scotland's Irish unit Ulster Bank
announced the resumption of payments to its parent company late
AIB, whose 21 billion euro taxpayer bailout was the biggest
for any Irish bank still trading and more than four-times that
of Bank of Ireland, reported a full year pre-tax profit of 1.7
billion euros, down from 1.9 billion a year ago.
But that was primarily as a result of writing back far fewer
of its remaining and shrinking 9.1 billion euros in provisions
racked up during Ireland's financial crisis. Its writebacks
totalled 294 million last year versus almost 1 billion in 2015.
The bank's core tier one capital ratio - a measure of
financial strength - increased sharply to 15.3 percent at the
end of 2016 from 13.7 percent three months earlier.
Bourke said the banks' UK business, which accounted for 14
percent of pre-provision operating profit last year, had held up
after Britain's vote to leave the European Union and was
"broadly, far better than anyone would have forecast."
However the outlook was uncertain, he said, and while Irish
business customers heavily reliant on the UK had weathered the
storm quite well, they had an awful lot of work to do to prepare
for Britain's scheduled departure in 2019.
AIB chairman Richard Pym also raised another potential side
effect, saying that while an influx of financial firms moving to
Dublin from London was welcome, it increased the risk of AIB
losing key staff.
($1 = 0.9503 euros)
(Editing by Alexander Smith)