AIB Group should increase its profit before tax from £372.6 million in 1995, to £411 million in 1996 and to £440 million in 1997, according to the latest review of the bank by Davy Stockbrokers.

These projections have been revised upwards following the good interim results.

Earnings per share should rise from 34.2p to 37.2p and 39.8p over the same period.

The latest interim results, Davy said, were characterised by healthy growth in non interest income and the strongest volume growth since the late 1980s which is finally feeding through to profits. This is happening despite further margin compression but asset quality has stabilised.

The review has pushed up its dividend growth forecast for 1997 from 12 per cent to 14 per cent, bringing it up to 16.8p from 16.5p. This is expected to leave capital ratios at the end of 1997 still comfortably ahead of its forecast leaving the group well placed to expand.

Margins are expected to remain under pressure in Ireland and in the US but that pressure is likely to be less intense. The environment of asset quality continues to look good. While the pace of growth in lending may presage an increase in the level of bad debts, an increase is not yet in the offing.