AIB has signalled a very strong showing in 1999 with lending volumes across the group expected to rise by 20 per cent.

In an unprecedented move, AIB has issued a trading statement to the Irish Stock Exchange reporting that its businesses have continued to perform well since its half-year results in August. The Republic's largest bank is well positioned to achieve a much improved full-year out-turn.

AIB reports that lending growth in the Republic is expected to show a 25 per cent increase this year, while its UK operations will deliver a 10 per cent rise. Its US banking operation, Allfirst, is also performing well and should deliver growth in mid-single digits and Polish bank, Wielkopolski Bank Kredytowy (WBK) is achieving very substantial growth, with lending volumes expected to increase by more than 30 per cent in 1999, it stated.

The bank contends that despite low interest rates and increased competition, particularly in the Irish market, the decline in net interest margins will be similar to that seen in the first half of 1999. "This constitutes a creditable out-turn in view of the margin erosion previously anticipated from the convergence of Irish and European interest rates in late 1998 and significant reduction in Polish interest rates," according to the statement.

During the first six months of its financial year, AIB said its margins declined by 0.25 of a percentage point but this was more than offset by volume growth. At that time, group chief executive Mr Tom Mulcahy said he expected a contraction of 0.3 of a percentage point in margins over the entire 12-month period. AIB has continued to strive towards achieving a lower cost base and has been working towards bringing the group's cost to income ratio to the mid-50 per cent range, according to the statement.

"This allows us to continue necessary investments in technology and e-business, and in our Polish division, network development, new business lines and process reengineering."

The bank says it is focusing on other activities, including its life assurance arm, Ark Life, Allfirst's trust and advisory businesses and AIB's activities based at Dublin's International Financial Services Centre.

Looking forward, AIB says it aims to deliver low double-digit growth in earnings per share over the medium term.

The statement was issued ahead of a series of meetings with financial analysts who track the company's progress and issue profit forecasts.

The briefings will continue up until December 31st when the bank will enter a closed period, which precludes it from commenting on its financial performance until its full-year figures are issued in February.

Analysts are forecasting that AIB will achieve pre-tax profits of up to €1.2 billion (£945 million) in 1999, up from just over €1 billion in the previous year.

This was the first time AIB had issued such a statement and represented the establishment of a new policy in terms of briefing shareholders, it said yesterday.

Mr Maurice Crowley, head of capital and group investor relations at AIB, said: "This is a common enough practice with publicly quoted companies and affords us with an opportunity to brief shareholders in between our interim and final results."