Strong growth in all its geographical markets and contributions from acquisitions meant a 66 per cent jump in pre-tax profits to £401.3 million at AIB Group for the six months to the end of June.
With profits of just over £2 million per day, the group chief executive, Mr Tom Mulcahy, said the outcome reflected strong core earnings in Ireland, the bank's geographic spread of business and its acquisition strategy.
The latest results are not directly comparable with the first half of 1997 because of the inclusion of the £840 million Dauphin acquisition in the US, the increase in AIB's stake in WBK in Poland, and the sale of credit card and mortgage businesses in the US.
However, Mr Mulcahy said the underlying core operations accounted for about half the increase in profits. At 26.9 per cent the return on shareholders' funds, up from 22.3 per cent, and the return on assets at 1.41 per cent, from 1.18 per cent, are the highest in AIB's history.
Profit after tax was 71 per cent ahead at £259.8 million, with earnings per share up 37 per cent to 30.6p. Shareholders are to get an interim dividend of 8.1p per share, up 19 per cent.
A geographical breakdown shows that the domestic market produced profits of £149.5 million, up 43 per cent. Profits from branch banking in the Republic were 37 per cent ahead.
Growth was fuelled by strong loan demand, with a 14 per cent rise in loans. Deposits were 5 per cent ahead. On bank charges, Mr Mulcahy said these were under review in order to simplify them and make them more transparent. Pointing out that AIB had not raised its charges since 1992, he said "a standard charge for a given quantum of transactions" was likely, as well as set charges for accounts with high volumes of transactions.
A breakdown by division shows that profits at AIB Bank rose by 41 per cent rise to £182.7 million. This division comprises retail and commercial operations in the Republic, Northern Ireland, Britain, the Channel Islands and the Isle of Man, and AIB Finance and Leasing, Card Services, International Consultants and Ark Life Assurance Company.
Profits in Northern Ireland were 15 per cent ahead, while profits in Britain were up 20 per cent.
At Ark, profits were up 51 per cent, while Card Services produced a 21 per cent rise. Finance and leasing profits rose by 20 per cent, boosted by a 16 per cent increase in loans - mainly for cars. However, the contribution from the Republic was down to 37.3 per cent from 43 per cent of group profits, reflecting strong performances in other geographical areas. The Republic accounted for 47 per cent of group assets. The US accounted for 35 per cent of group profits and just 30 per cent of group assets.
In the US, profits almost doubled, with a 96 per cent increase to £123.4 million, boosted by a six-month contribution from Dauphin. Strong growth in trust and investment advisory fees, deposit service charges and investment security gains helped the outcome. AIB New York produced a 19 per cent rise in operating profits.
The capital markets division - treasury, international, investment and corporate banking - delivered a 10 per cent rise in profits at £47 million. Mr Mulcahy said corporate and commercial treasury had added significantly to its customer base.
WBK in Poland contributed £25 million, up from £14.3 million. At £452 million, the group operating profit was 62 per cent ahead. The cost income ratio, at 56 per cent, was down from 63 per cent despite a 25 per cent rise in costs to £576.4 million. In competitive markets the net interest margin - profit on lending less the cost of funds - contracted again to 3.52 per cent from 3.69 per cent. In the Republic the margin fell to 3.28 per cent from 3.46 per cent, Mr Mulcahy described the outlook as positive, particularly in Ireland where the economic prospects "continue to be very favourable".
