AIB has signalled that its core businesses are performing strongly and that the group is on course to report more than 10 per cent growth in profits this year.
The bank's Irish and UK businesses are experiencing particularly robust growth, with analysts suggesting this augurs well for other Irish financial institutions which should also benefit from strong economic fundamentals.
In a trading statement issued to the stock markets yesterday, the Republic's biggest bank said it is continuing to target middle single-digit growth in adjusted earnings per share at the interim and full stages, up from 60 cent and €1.18 in the previous year, respectively.
According to the bank, the main factors partly offsetting the operating strength of AIB's business include the impact of adverse currency translation of overseas earnings and a higher effective tax rate due to its mix of profits. Both of these issues are expected to cease or substantially reduce in significance next year, it said.
AIB shares closed 10 cent higher in Dublin yesterday at €12.35, as investors viewed the statement as upbeat.
NCB analyst Mr David Odlum said the bank had indicated a very good start to 2004 and that its performance would suggest that the likes of Bank of Ireland and Anglo Irish Bank are also enjoying good business growth.
In Ireland, where the bank is expecting the economy will grow by around 4 per cent this year, AIB has reported continuing strong demand for its products and services.
Its loan book is on target to increase by around 20 per cent with the bank claiming to have won market share gains in the business and personal banking sectors. AIB said it had managed to maintain broadly stable margins on its loans despite a very competitive environment.
The full impact of the cut in European Central Bank interest rates last year affected its demand deposit margins but the bank said deposit volumes are likely to rise by 10 per cent.
Its life assurance subsidiary, Ark Life, has reported a good sales performance with the business said to be benefiting from the operating changes made in 2003.
In the UK, the bank has continued to expand and develop a high-quality business and wealth management franchise. In Northern Ireland, First Trust continues to profitably grow its share of key products in the business and personal markets. That business is aiming for 20 per cent growth in mortgages this year.
AIB's capital markets division is delivering a good performance with loan growth expected to be in the mid-to-high teens on the back of a resurgence in demand from Irish customers and improvements in its UK and New York portfolios.
Profits from Bank Zachodni,AIB's bank in Poland, will rise significantly as that economy begins to recover. Its loan advances will grow in double digits, with products such as local currency mortgages and leasing proving popular with consumers there. It has also shed 1,000 jobs and has implemented further cost-cutting measures to improve its cost-base.
In the US, M&T Bank - in which AIB has a 22.5 per cent interest - is expected to produce double-digit earnings growth this year.
Throughout 2004, the bank expects that its loan will grow at about twice the rate of its customer deposits, something which will put further pressure on its margins, which are expected to come in at the higher end of the 0.20 to 0.25 of a percentage point range previously guided.
