AIB has signalled it will deliver low single-digit profit growth for 2003 as the strength of the euro and the impact of charges such as the Government's bank levy weigh on its earnings.
In a trading statement issued yesterday, the Republic's biggest bank said it expected to achieve strong growth at its businesses in Ireland, Northern Ireland, the UK and at its capital market division. Earnings from its bank in Poland though will be significantly below last year although trading has shown signs of improvement, according to the statement.
The bank's indicated performance is broadly unchanged from that signalled at the half-year stage and held no surprises for investors. AIB shares yesterday closed down 15 cents at €12.22.
AIB says it is on target to increase its overall loan book by 20 per cent this year, ahead of the expected 16 per cent rise in the market. Mortgage and non-mortgage lending remains buoyant and the bank has reported a strong business pipeline.
AIB has been very aggressive in winning business in the residential mortgage market and is on target to show a 30 per cent increase for this year. The statement noted that the bank had not relaxed its lending policy and practices during this period. Other lending should rise by 20 per cent and will be driven primarily by good demand from its business banking customers.
Deposits are set to rise by 8-9 per cent. Its life assurance subsidiary, Ark Life, will show a better performance in the second half of this year but will bring in broadly the same performance as 2002.
In Britain, AIB has said loans and deposits are on target to achieve percentage increases in the mid 20s to high teens respectively. In Northern Ireland, its First Trust bank is expected to record a more than 20 per cent increase in loans and about a 15 per cent rise in deposits.
The bank's capital market division, including Goodbody Stockbrokers, has delivered a good performance with its increased participation in corporate finance activities earning higher margin fees.
AIB operates the fifth-biggest financial institution in Poland, Bank Zachodni, but the low interest rate environment there has depressed its earnings. However, customer demand for its products has begun to improve with home mortgages and commercial leasing strengthening. The bank has begun to restructure this business, including large-scale redundancies, and it is set to be completed on target.
In the US, AIB has an investment in M&T Bank, which now includes the Irish bank's former Allfirst operations. These two businesses are being integrated and are expected to be marginally accretive to the group's earnings in the current year.
