A $15 million (#13.07 million) provision against loans to shipping companies operating in the Far East has taken some of the gloss off an otherwise solid set of results from Allied Irish Banks' subsidiary in the US, First Maryland Bank (FMB).

Net income for FMB in 1998 was $218.1 million (#131.75 million) compared to $151.2 million in 1997 although when once-off gains and charges are excluded, the rise in net income was 33 per cent to $194.4 million (#169,39 million).

In the final quarter of 1998, net income rose 26 per cent to $34.9 million (#30.41 million) although when once-off merger costs in 1997 and technology costs are excluded, net income was virtually unchanged at $40.3 million (#35.11 million).

AIB chief financial officer Mr Declan McSweeney said that First Maryland has a $300 million shipping loan book - about 3 per cent of the total loan book. Most of this involves lending to shippers operating in the Far East, and as a result of the various economic problems in the region, some of these shippers found themselves in difficulties as charter rates fell by 50 per cent.

As a result, First Maryland has made a provision of almost $15 million against shipping loans. "We're happy that we are now adequately provided for in the shipping area," said Mr McSweeney, who added that shipping represents just 3 per cent of First Maryland's loans.

The $14.7 million provision against shipping loans was more than covered in the final quarter of 1998 by $19.3 million in securities gains. For the year, securities gains were more than $60 million, compared to little more than a break-even on its securities book in 1997.

Net interest income rose from $495.8 million to $542.2 million while non-interest income jumped from $326.1 million to $450.1 million. The main factors behind the 22 per cent rise in non-interest income were the big securities gains, increases in account charges and trust fees and a $60 million gain on the sale of the bank's credit card loans.