AIB expects strong growth across its Irish and international operations to continue next year.
In a trading statement issued to the stock exchange yesterday, AIB said it expected to achieve its target of earnings growth in "the low double digits".
The group said it intended to develop both organically and strategically in this financial year, specifically in Ireland and Britain. It recently announced the proposed merger of Wielkopolski Bank Kredytowy and Bank Zachodni in Poland. The statement said this merger represented another milestone in its Polish strategy to build a national banking franchise. AIB has been successful in winning customers through new distribution channels, including the Internet, and is confident this will continue. By the end of the year, it will have 100,000 customers who deal with the bank over the Internet in Ireland. Similar initiatives in the US, Poland and Britain will ensure the group's online customer base in those markets grows to 17,000 this year.
The group's businesses have continued to perform well since the announcement of half-year results in August. AIB reported a 12 per cent rise in interim pre-tax profit to €609 million (£479.6 million), with earnings per share income rising slightly stronger at 13 per cent, or 48.5 cents. Operating profit before provisions was 18 per cent.
The bank said the economies where it has operations have all performed in line with expectations. The Irish economy continues to be particularly buoyant despite some inflationary pressures and expectations of a gradual slowdown over the medium term.
Loan growth across the group will be about 15 per cent this year. In Ireland, it will be close to 25 per cent and the British businesses are likely to deliver volume increases in the region of 15 per cent. The US division, however, is likely to show weaker growth, coming in at less than 10 per cent. In Poland, loan growth will be about 15 per cent, which the bank says is a "creditable performance" given the relatively high interest rates in that economy and the subdued activity at Bank Zachodni.
Deposits at a group level should grow by about 10 per cent, with a significant increase expected in Ireland in the second half. The bank's net interest margins will be lower than the 25 basis points experienced in 1999 - in line with expectations. Growth in activities outside core lending and deposit taking will be about 10 per cent, with Ark Life and foreign exchange commission at AIB's Irish banking network making a strong contribution.
Costs will be higher but will be contained within the target of about 5 per cent. Asset quality remains strong, with US subsidiary All-first showing particular resilience. This has resulted in lower bad-debt provisions in all divisions in the second half.
The full-year results will also show an exceptional charge of €113 million, representing the group's full settlement with the Revenue Commissioners in relation to DIRT from 1986 to 1999. AIB shares in Dublin closed 33 cents lower at €12.70.
