US BANK M&T, in which AIB has a 24 per cent stake, posted a profit of $202.2 million (€128 million) in the first three months of the year, up 15 per cent on a year earlier, as bad debt write-offs fell back from the levels of the final three months of 2007.

M&T booked a $29 million gain, or 26 cent per share profit, from the flotation of Visa last month. This helped to offset rising credit costs at the bank, which is based in Buffalo, New York.

Net income increased to $1.82 per share in the first three months of the year from $1.57 a share, or $176 million, a year earlier.

Operating earnings also rose 15 per cent, to $215.6 million, or $1.94 per cent share. Loans increased 13 per cent to $49.3 billion, or by 2.6 per cent on the previous quarter. Assets rose to $66.1 billion from $57.8 million a year earlier.

M&T, which contributes about 7 per cent of AIB's group earnings, set aside $60 million for bad loans in the first three months of the year, more than double the $27 million a year earlier.

Net charge-offs of loans, the measure US banks use on bad debts, rose to $46 million from $17 million a year earlier due to the downturn in the residential property market resulting in higher delinquencies in loans.

M&T also experienced a rise in write-offs in consumer loans.

Non-performing loans rose to $495 million, or 1 per cent of the bank's loans, at March 31st, 2008, up from $273 million, or 0.63 per cent of loans, a year earlier. This was up slightly from $447 million, or 0.93 per cent of loans, at the end of last year, due to non-performing home loans and residential development loans.

Davy analyst Emer Lang said the bad debt trend at M&T was "quite encouraging" given that net charge-offs totalled 0.38 per cent of loans in the first three months of 2008, down from 0.46 per cent in the final three months of last year. "It looks like they have seen off the worst of it," she said.