1

Allied Irish Banks, p.l.c.

Introduction to

AIB Mortgage Bank (AIBMB)

Covered Bond Programme

Aaa / AAA / AAA

Benchmark Transaction

December 2006

2

Contents

Overview of Allied Irish Banks p.l.c.

The Irish Economy and the Irish Housing Market

AIB’s Funding Profile

AIB Mortgage Bank’s ACS Issuance

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Allied Irish Banks, p.l.c.

Ireland’s largest publicly quoted company

Retail & commercial bank with strong franchises in all geographies

# 1 bank in Ireland with leading market shares in core banking products

By market capitalisation €18.6bn (November 2006) >17% of Irish Stock Market Index

Y/E 2005 - total assets € 133bn, PBT € 1.7bn

1H 2006 - total assets € 144bn, PBT €1.2bn

Senior debt ratings Moody’s ‘Aa3’ (stable outlook)S&P ‘A+’ (stable outlook)Fitch IBCA ‘AA-’ (stable outlook)

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Geographic profile- June ‘06

PBT 10%RWA’s 4%5yr Av.GDP 3.0%

Shareholding of 24% in M&T BankContribution to PBT 7%5yr Av.GDP 2.6%

PBT 15%RWA’s 18%5yr Av.GDP 2.3%

PBT 37%RWA’s 41%5yr Av.GDP 5.1%

AIB Bank, ROI Division UK Division

M&T Bank Poland Division

Capital Markets Division

PBT 27%RWA’s 37%

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Divisional Performance

2005

2006 (H1)

AIB Bank Republic of Ireland €779m 24% €453m 19%

AIB GB & NI €322m 18% €184m 18%

Capital Markets €403m27% €300m 45%

Poland €132m13% €114m 62%

M&T * €148m 16% €80m 11% * after tax figure

Profit before tax

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Strong asset quality and robust capital

2004 2005 2006(H1)

1.3% Impaired loans (ILs) 1.0% 0.8%

5.8% Criticised loans / total loans 5.1% 5.1%

0.7% Gross new ILs 0.4% 0.4%

73% Total provisions / ILs 78 % 81%

20bpts Bad debt charge 15 bps 3bpts

Tier 1 7.2% 8.0%

Total Capital 10.7% 11.1%

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Key performance features

Double digit growth in all principal franchises

Cost / income ratio 2.7% and down in all divisions

Investing in our people to underpin rates of retention & recruitment

Operating profit 24%

Strong asset quality, impaired loans to 0.8% and down / stable in all divisions

Intense focus on single enterprise operations

Robust capital and funding positions

Confident we will continue to achieve balanced and well managed growth

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The Irish Economy and Housing Market

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Republic of Ireland Economic Trends

1990 1995 2000 2005 (e) 2006 (f)

Population (‘000) 3,506 3,601 3,789 4,131 4,235

Employment (‘000) 1,160 1,282 1,671 1,929 1,997

Unemployment (‘000) 172 177 75 86 89

Unemployment (% ) 12.9 12.2 4.3 4.2 4.2

Inflation (% )* 3.4 2.5 5.6 2.5 4.0

Exchequer + / (-) as (% GNP) (2.0) (1.7) 3.6 (0.4) 0

GNP per capita (€) 8,712 12,936 23,460 32,935 34,165

GNP growth rate 7.1% 8.9% 9.2% 5.4% 6.3%

Gen. Govt. Debt/ GDP (% ) 94.0 81.0 37.8 27.4 25.0

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0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0

2

4

6

8

10

12

14

16

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The Irish Labour Market Has Been Transformed

Total Employment ’00S (LHS)

Unemployment Rate % (RHS)

The Irish Labour Market Has been Transformed(‘000s) (%)

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Population Growth

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

0-14 15-24 25-44 45-54 55-64 65+

1996 Census 2002 Census 2010 CSO Projections

Source: DOE and ESRI

Population Age Profile Estimates (m)

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Robust Public Finances

Government budget

Surpluses average 1.5% of GDP since 1997

Budget close to balance in coming years

Large current budget surpluses

Significant capital expenditure/borrowing

Gen Gov Debt/GDP ratio

27.4% at end 2005(e) and declining

Down from 90% of GDP during the 1990’s

Compares very favourably to eurozone average Debt/GDB of 71%

Relatively Low Tax Economy

Corporation Tax @ 12 ½% ; well below eurozone average

Personal Tax & Insurance Rates are LOW, no property taxes

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Many Factors Underpin Strong Housing Demand

Continued strong inward migration

Favourable demographic trends

Untapped demand – Rising Headship rates

Demand for second homes

Strong growth in economy and employment

Maturity of Government savings scheme (SSIA’s) in 2006/7

Home ownership is seen as an attractive tax efficient savings scheme, there are no personal or municipal taxes on residential property

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Functional Demand for House Completions (Year to April)

Avg

1996 –

2002

Avg

2002 -

2006

2006

(e)

2007

(f)

2008

(f)

Indigenous Population

Growth 12,550 16,500 16,300 16,300 16,300

Migration Flows 13,650 17,800 25,800 27,700 24,000

Headship 1,250 17,000 24,000 26,000 21,500

Second Homes 10,800 14,000 11,500 10,800 8,600

Replacement of Obsolete

Units 6,500 8,300 8,800 9,200 9,600

Completions 44,750 73,600 86,400 90,000 80,000

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Summary: A Sound Economy

Public finances to remain close to balance

Very low national debt. Declining debt/GDP ratio

Low tax economy attracting FDI and workers

Virtual full employment despite high immigration

Favourable demographics supporting growth

Inflation back close to Eurozone average

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Funding Profile

Allied Irish Banks, p.l.c

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AIB’s Publicly Traded Securities

Short Term Instruments

Certificates of Deposit , €, STG, US$, Can$, A$

US $ 10 bn Commercial Paper Programme

US $ 10 bn Yankee CD Programme

€ 5b French Certificate of Deposit Programme*

Can $3b Maple Commercial Paper Programme*

Long Term Instruments

AIB plc ( Aa3 / A+ / AA-)

€ 30 b EMTN programme

AIB Mortgage Bank (Aaa / AAA / AAA)

€ 15b covered bond EMTN programme

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Source of funds

0

20

40

60

80

100

2005 H1 2006

CapitalSenior Debt

ACSCDs & CPsDeposits by banks

Customer a/cs

52%

24%

10%

10%

49%

25%

10%

7%

%

4% 6%3%

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0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2007 2008 2009 2010 2011 2012 2015 2020 2025 Perp.

ACS Snr-Priv.Place. Snr-Benchmk Tier (ii) Tier (i)

Euro 82%

STG 14%

US$ 4%

Step-up issues – adjustedto earliest step-up date

Moody’s S&P Fitch

Aaa AAA AAA

Aa3 A+ AA-

Aa3 A+ AA-

A1 A(Lwr)/A-(Uppr) A+

A2 A- A+

€ (m)

Asset Covered Securities 3,500

Senior Debt - Private Placements 2,800

Senior Debt - Benchmark Issues 6,750

Tier (ii) 3,500

Tier (i) 2,700

Total 19,250

Debt Distribution October 2006€ (m)

Debt funding – well distributed and diversified

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AIB Mortgage Bank’s ACS Issuance

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Overview of AIB Mortgage Bank

Registered as a Designated Mortgage Credit Institution

License granted by Regulator – Feb 2006

Non-guaranteed, Public Unlimited Company - wholly owned by AIB plc

Shareholders investment exceeds €650m

9 Directors, including 4 non-executive directors

Major activities outsourced to AIB (ROI) Division, subject to terms of the

Service Level Agreement

€13.6bn residential mortgage loans transferred to AIB MB from AIB (ROI)

Prudent Discount Factor - 15 %

Pool Overcollateralisation set @ > 5%

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ACS Act (2001) - Irish Legislation

Restricts asset classes – currently Public Sector and Residential Mortgages

Specialist bank principle - AIB Mortgage Bank

Conservative valuation methodology – haircut applied to increases in value (Prudent Market Value)

Prudent Market Value of Pool must be > ACS principal outstanding

Interest Receivable from pool must be > interest payable on the ACS for any 12 month period

Weighted Average maturity of the pool must be > ACS maturity

B/S interest rate sensitivity subject to limits

In the event of default - NTMA (Govt. Agency) appointed - Pool exempt from bankruptcy proceedings - Bond holders prioritised

Mandatory disclosure requirements

Covered Asset Monitor – independent external monitoring

Legislative changes planned for 2007

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ACS - Mortgage Origination

Irish mortgage market drawn balances exceed €100bn,

AIB has a market share of 16%+

AIB has a presence in all major towns and cities, by a

network of 188 branches and 87 sub-offices

35% - 40% of the Banked Public have a primary account

relationship with AIB

90%+ of our branched sourced mortgages come from

existing bank account holders

AIBMB currently does not book mortgages introduced

through intermediaries

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ACS - Credit Policy

Max Loan amount determined by DSR ( Debt Service Ratio ) = the

Proportion of Net Income that is prudent to allow for purposes of

Mortgage Repayments

DSR is stress tested to allow for increases in interest rates of 2%

Max LTV = 92%

Lenders have no sanctioning Targets/Quotas

Loan to be repaid by scheduled retirement date

Exceptions are approved by Senior Mortgage Lenders subject to the

customers ability to repay

Regular reporting to Regulator

Arrears as % of total advances at end June - 0.4%

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House mortgages - Republic of Ireland

Primary focus on debt service ratio (repayment capacity)

New Business

Consistent LTVs (% no’s of drawdowns) Dec 02 Dec 04 Jun 06

< 75% 66 67 65

> 75% < 90% 26 24 21

> 90% 8 9 14

Total 100 100 100

Strong arrears profile Dec 02 Dec 04 Jun 06

% total mortgage advances 0.8% 0.5% 0.4%

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ACS - AIBMB Collateral Pool at November 2006

Minimum Contractual Overcollateralisation 5%

Actual Overcollateralisation >10%

Pool Size by PMV €7.8 bn

Aggregate Prudent LTV 38%

WA indexed LTV 54%

Dublin/Non-Dublin 31/69

No. of Properties 50,400

BTL/Owner Occupier 23/77

Fixed Rate 16%

Interest only 22%*

Prudent Market Discount 15%

WA Seasoning c. 25 mths

Currently no commercial mortgages

Arrears > 3 months removed from pool

Minimal interest rate risk

* Life of interest normally <5 years then reverts to annuity

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ACS – AIB’s Issuance Strategy

€15 billion EMTN Programme established (Aaa/AAA/AAA)

Very high quality Covered Asset Pool

Successful Inaugural Dual Tranche Issue - €2.5bn 3 year, €1.0bn 7 year - strong secondary market performance

One issuing document to be updated annually

Ongoing commitment to investor relations - Regular marketing initiatives- Establishment of web-access- Rating Reports posted on website

Regular benchmark issuance across the curve

Participation in Euro Private Placements

To be recognised by investors as a consistent and responsible Issuer

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Contacts

AIB Web Site : www.aib.ie / investor relations

Provides a comprehensive library of AIB & AIB Mortgage Bank programmes, listing particulars and presentations

AIB Economic Research :www.aibeconomicresearch.com/research.asp?2

Provides comprehensive analysis of the Irish economy and housing market

AIB Group Investor Relations www.aibgroup.com/investorrelations

Exec., GM Group Finance : Alan Kelly T: + 353-1-641-4191

Manager : Maurice Tracey

AIB Global Treasury bond.issues@aib.ie

Chief Dealer, Debt Issuance : Sean Cremen T: + 353-1-641-7803