AIB said yesterday that results for 2005 would be toward the top end of its targeted range following a strong performance across all of its businesses this year, writes Jane O'Sullivan, Markets Correspondent

The bank, which said in August that earnings per share (EPS) would be between 140 cent and 142 cent, now expects them to be at the upper end of this range when it releases results on February 22nd. In 2004, the bank recorded EPS of 127.1 cent.

In addition to recording double-digit profit growth, AIB said it had gained market shares in certain sectors and products while income was growing faster than costs, which should lead to a lower cost/income ratio.

However, shares in AIB gave up ground amid concerns about the performance of its Polish division. They closed 24 cent, or 1.3 per cent, lower at €18.40.

The bank said its loan growth in Poland was expected to be around 2 per cent in 2005, well below the levels seen in other parts of the bank, while deposits are expected to grow by just 3 per cent. The bank said that realising more rapid growth remained "challenging" due to "subdued business demand" and its focus on low-risk local currency mortgages.

But Ireland continues to perform strongly for the bank with "buoyant, high-quality volume growth", again a feature of its Irish retail and commercial banking business. The bank is anticipating loan growth of around 25 per cent in 2005.

Underlining the strength of the Irish economy, Bank of Ireland has also increased its business lending forecasts.

The bank, which now claims a 27 per cent share of the small and medium-sized business market, expects to lend some €7.1 billion to businesses in the year to March 2006.

This is up from its previous forecast of €6.5 billion, made last June.

Meanwhile, AIB is also expecting a strong performance from its British and Northern Irish operations with loan growth of around 25 per cent while deposits are forecast to increase by around 18 per cent.

In its capital markets division, AIB expects a significantly increased contribution from corporate banking, which accounts for more than half the profit of the division. It expects loans in the division to grow by around 25 per cent. The bank said its investment banking arm was having a good year with "a particularly notable performance" from Goodbody Stockbrokers and its corporate finance division.

In the US, the bank expects another year of "good profit growth" at its associate, M&T.

AIB said its asset quality remained "resilient" and there had been no deterioration in any of its portfolios.