AIB has signalled that shareholders should expect mid-single digit growth in earnings per share for 2002, with the bank's businesses in Britain and Ireland underpinning a good performance.
The $691.2 million fraud at its US subsidiary, Allfirst - announced by group chief executive Mr Michael Buckley in February - was absorbed in the bank's 2001 accounts. In a trading statement issued ahead of its full-year figures, the bank has cautioned that weakness in equity markets could affect the performance of Ark Life in turn affecting earnings growth.
The earnings projections exclude the $35 million (€34.98 million) restructuring charge at Allfirst which primarily relates to a voluntary severance scheme at the Baltimore-based bank. AIB has agreed with New York bank M&T to merge Allfirst with its operations with the Republic's biggest bank taking a 22.5 per cent stake in M&T.
The banks are seeking regulatory and shareholder approval for its completion due in the first quarter of next year.
In the statement, the bank said it believed the M&T deal would "reposition and strengthen" its involvement in US regional banking.
During the year the AIB group's income continued to grow strongly. In the Republic its domestic and commercial banking franchises drove earnings. According to the bank, the pipeline of new business remained strong with overall loan growth expected to rise by 16 per cent.
Its mortgage lending remained buoyant with the bank signalling growth of 25 per cent in 2002. Other retail and commercial loans were also better, up by around 13 per cent.
The amount of money on deposit at AIB's Irish operations increased by 8-9 per cent while the demand for equity products was weaker, in line with the decline in equity markets. This affected its Ark Life subsidiary in particular.
In Britain and Northern Ireland, AIB reported strong loan and deposit growth. In Northern Ireland its commercial and retail lending is growing ahead of expectations. Overall, the bank suggests loans will rise by between 17 and 18 per cent with deposits likely to be up by as much as 15 per cent.
In the US its core deposit business held up, but commercial and corporate loans were down. It has restructured its investment securities portfolio to limit potential volatility which will reduce the overall portfolio by about $1 billion.
This is expected to result in a net gain to the bank of $71 million although the lack of business momentum will partly offset the earnings benefit.
Its capital markets division was affected by volatile markets although banking fees from corporate customers grew strongly.
In Poland, where AIB has been undertaking a substantial investment programme in its branch network, deposits were down by 3 per cent, although the sale of mutual funds products has helped to boost non-interest income.
Economic conditions in Poland are expected to remain difficult although the bank is not expecting any material impairment of its loan book.
AIB has stated that the quality of its loans throughout the group remain satisfactory and that non-performing loans as a percentage of average loans have not increased significantly.
For 2002 it expects that its provision for bad debts will be broadly unchanged for the first half of 2002.
AIB's results for the year to the end of December 2002 will be announced on February 19th, 2003.
