Strong profits growth at AIB in the first half of 1996 was based on a solid performance in core banking operations. The only blot on the results was losses on US credit card lending. The group is now focused on integrating its £840 million Dauphin acquisition in the US, developing its Polish subsidiary and increasing business in its Irish, UK and funds management businesses. With a contribution from Dauphin in the current half, the geographic diversification of group profits would intensify.

In the US some 150 people are working to integrate Dauphin with AIB's First Maryland operation. Group chief executive Mr Tom Mulcahy said he was confident about costs savings projections. The best of each operation would be retained and the process would take 12 to 18 months. Small fill-in acquisitions may be made in the south Pennsylvania/Maryland/Washington DC and Northern Virginia area.

Credit card losses in the US, at 6.7 per cent of credit card loans, were "disappointing" but not out of line with industry experience in a market where personal bankruptcies are high. FMB is improving its scoring procedures and trying to predict pre-bankruptcy behaviour. It is currently reconsidering its co-branding arrangement with Bell Atlantic, which may be terminated.

In Poland AIB is "in no rush" to take full control of WBK bank where it has a 60 per cent stake. Some 27 new branches have been opened this year and 25 have been added by acquisition. By year end WBK will have 150 branches in western Poland. Investment in WBK over the next few years would mean that there would be no great profit increases in medium term, Mr Mulcahy said.

In funds management the John Govett acquisition is now fully integrated. AIB's target of $20 billion (£13.7 million) funds under management by the year 2000 is reachable, he said. The current level is $18 billion.

In the domestic market AIB is examining further cross-selling opportunities. It now sells three products on average to each customer, up from two. Other opportunities include developing its European life and pensions business.

On a possible share buy-back Mr Mulcahy said "We have approval to buy back 50 million share, that is the extent of my comment". The bank got shareholder approval to buy back its shares following the Dauphin acquisition through which Dauphin shareholders got 161.1 million AIB shares. A buy-back would dampen the impact on the share price of any flowback into the Irish market of shares from the US.

"The flowback has been very small," Mr Mulcahy said. Shareholders got shares at $43 which are now worth $52 and the dividend will be 60 per cent higher than the dividend they got from Dauphin.