AIB's operations are set to record double-digit earnings growth this year, the bank's chairman told its shareholders yesterday.

Its recently appointed chairman, senior counsel and former attorney general Mr Dermot Gleeson, said in his opening statement to its annual general meeting at the bank's Dublin headquarters that AIB had had to make some difficult decisions in 2003.

These included the sale of British asset-management business Govett last autumn, which resulted in a €139 million write-off against its 2003 profits. In addition, there was the merger of US subsidiary Allfirst with M&T Bank and a restructuring of its Polish business.

"AIB's business has made a strong start to this year," Mr Gleeson said. He added that first-quarter post-tax profits at its Polish operation were 166 per cent up on last year while M&T, in which AIB has a 29 per cent interest, recently said that earnings this year would be in line with market expectations.

"We are set to record double-digit earnings growth in our operating divisions in 2004, and mid-single growth in underlying adjusted earnings per share," Mr Gleeson told the meeting.

He apologised to the meeting that the annual report and accounts did not contain any detailed information on the Govett sale. However, he did state that the deal was announced to the market and was widely reported at the time. "It was not like we were trying to keep anything quiet," he said.

A number of shareholders expressed disappointment at the bank's poor share-price performance over the last year. Yesterday it was trading at around €12.30, while the stock sold as high as €14.30 in May of 2003.

Group finance director Mr Gary Kennedy argued that AIB was performing in line with its peers.

"Looking at the price-earnings ratio of banks in the UK and of some of our Irish competitors and you will find that we are on the right track as a bank," he said. "The fact is that banks are not the flavour of the month with the markets at the moment."

Both Mr Gleeson and AIB's chief executive, Mr Michael Buckley, defended the bank's high exposure to the mortgage market. Mr Buckley said that the average loan-to-value ratio of the properties mortgaged to the bank was 70 per cent, while 11 per cent of applications failed because they did not meet the bank's risk management criteria.

"I would be very comfortable with our mortgage book," Mr Buckley said.

Sharp exchanges between Mr Gleeson and a number of unhappy shareholders punctuated the meeting.

"Our catering manager here tells me that at the lunch after the a.g.m, the average shareholder eats €25 worth of food," Mr Gleeson argued at one point. "So if you bought just one share at between €12 and €13, you are getting a 200 per cent return on your investment."

Six directors were re-elected: Mr Buckley, Mr Gleeson, Mr Kennedy, Mr Pádraic Fallon, Sir Derek Higgs and Mr John McGuckian.