If international doubts about Irish property are weighing on AIB's share price, the top three men in the bank showed their confidence in the business by spending a total of €3.64 million yesterday on shares in the group.

Chief executive Eugene Sheehy spent €2.8 million, chairman Dermot Gleeson spent €550,020 and finance director John O'Donnell spent €279,000 after AIB reported interim pretax profits of €1.32 billion.

With mortgage applications down 25 per cent, AIB said there was nothing in that and acknowledged that the housing market is in a period of "rational adjustment". The bank continues to tell a positive story on property, saying its asset quality in all sectors in the Republic is strong.

"There is going to be a reduction in activity in residential construction in Ireland next year. That's obvious to everybody. The issue is what will the impact of it be. We have said for many years now that a sustainable level of activity for construction in Ireland is around the 50,000 mark," Mr Sheehy said.

Stating that AIB's best estimate was that construction next year will drop to 50,000-60,000 units from 75,000 this year, he said that must be counterbalanced by strong activity in the commercial sector.

Mr Sheehy said AIB maintains conservative lending criteria with 85 per cent of home loans going to its customers. Some 56 per cent of the bank's commercial book is in the Republic, but AIB said it is spread between commercial investment and development (54 per cent together) and residential investment and development (43 per cent together).

AIB also pointed to a low level of impaired loans in its property and construction book (4 per cent) against a group average of 0.7 per cent in June 2007. The group average was down from 0.9 per cent at the end of December. In the same period, the number of "criticised loans" as a percentage of the total fell to 4.8 per cent from 4.9 per cent.

While AIB has more than doubled its provisions for impairments to €25 million from €12 million in June, it said the provision charge remained low at 0.04 per cent of average loans compared with 0.03 per cent a year earlier.

In the Republic, impaired loans remained at 0.6 per cent of total customer loans and the provision charge was 0.15 per cent of average loans compared with 0.14 per cent in June 2006.