M&T Bank, in which AIB is the largest shareholder, yesterday posted a 7.4 per cent rise in first-quarter profit, helped by growth in loans and cost constraints.

Net profit jumped to $203 million (€166 million), or $1.77 a share, from $189 million, or $1.62 a share, a year earlier - comfortably ahead of analysts' expectations.

Chief financial officer Rene Jones said the Buffalo, New York-based company was encouraged by a 9 per cent increase in its commercial loan and commercial mortgage loan portfolios.

Loans and leases increased 5 per cent from a year ago to $40.9 billion, while deposits rose to $38.2 billion from $36.3 billion a year earlier.

M&T operates more than 650 branches in six eastern US states and Washington DC, and is one of the 20 largest US banks, with assets of $55.4 billion at the end of March.

AIB is the largest single investor by virtue of its sale of AllFirst to M&T following the Rusnak scandal. Warren Buffett is the second-largest stakeholder in the bank.

Partly offsetting the favourable impact of loan growth was a lower net interest margin, which fell to 3.73 per cent from 3.83 per cent a year earlier.

M&T said it bought back 1.3 million of its shares at an average cost of $108.57 each.

Its board authorised the company to purchase up to five million common shares last November.

The bank raised its quarterly common stock dividend by 33 per cent to 60 cents, from 45 cents.

M&T shares closed at $115.44 on the New York Stock Exchange yesterday, having risen about 12 per cent in the past year.