Bank and building society stocks will perform robustly this year with disquiet over wider credit access unlikely to harm profits, Goodbody Stockbrokers has said.

Citing revenue growth as a key challenge over coming months, Goodbody said institutions' retail, credit-driven focus and lower equity markets leverage would protect margins. Concern over the levels of credit issued by banks was unsubstantiated, said analyst Mr Len Riddell. "We remain relaxed with regard to credit quality for the Irish banks. The likelihood of a Europe-wide credit deterioration creeping down the food chain in the retail sector appears slim," he said.

Revenues can also be protected through creative efforts to reduce overheads, Goodbody said.

"Cost-cutting offers significant potential for Irish banks in 2003," Mr Riddell added.

Cooling in property prices is probable but is unlikely to be so dramatic as to seriously unsettle the market. "A slowdown in the pace of growth in asset prices and mortgage credit during 2003 is inevitable. We stress that an aggressive correction is unlikely however," he said.

Anglo Irish Bank remains Goodbody's top pick. The bank, which has consistently outperformed the market in recent years, has been set a target of €8.30, well ahead of its current price of €6.80.

The broker prefers Bank of Ireland to AIB, but both retain their current ratings - "buy" and "add" respectively. Irish Life & Permanent also retains an "add" rating, although its target price comes back to €11.50. First Active comes back to "reduce" following its recent charge.