AIB's Polish subsidiary, BZ WBK, has reported a better-than-expected performance in the first quarter of 2004 with analysts suggesting this could be the fastest-growing part of the group this year, writes Siobhán Creaton, Finance Correspondent

In the three months to the end of March, BZ WBK recorded a more than doubling of profits to 154.9 million zloty (€32.6 million) compared with 71.4 million zloty in the first quarter of 2003.

Its performance was boosted by a 52.8 million zloty dividend that it received from Polish insurer Commercial Union Group, up from 23.1 million zloty in the previous year. The bank's profits also benefited from strong growth in lending during the three-month period.

Its total income rose by 16 per cent to 500.5 million zloty. Its income from fees and commissions was up 14.3 per cent to 141.7 million zloty, with account maintenance and cash transfer fees, credit commissions, e-banking and card fees being the main contributors.

The bank's operating costs were 4 per cent lower at 300.5 million zloty and the bank reduced its provisions for bad debts by 11 per cent to 33.2 million zloty in light of an improvement in asset quality.

At the end of March, the bank had total assets of 25.2 million zloty, up 2 per cent.

Davy analyst Mr Scott Rankin said BZ WBK looked well on course to achieve its full-year estimates. When the dividend is deducted, Mr Rankin suggested that the underlying results would be nearer to 76 million zlotys.

BZ WBK's performance is unlikely to have any real impact on AIB's profits this year.

Davy estimates that the Polish bank will account for just 3 per cent of the group's profits this year. Its contribution should rise to 5.6 per cent in 2005.

Earlier this week, M&T Bank, the US financial institution in which AIB has a 22.5 per cent stake, reported a slightly weaker-than-expected performance in the first quarter of 2004 but signalled it would meet its full-year target.