Allied Irish Bank posted a 13 per cent rise in underlying 2007 earnings as expected today, but said growth would slow to a low single-digit percentage in 2008 on slower economic expansion.
Ireland's biggest bank by market value said adjusted earnings per share (EPS) rose to 205.9 cents from 182.8 cents in 2006, broadly in line with the average forecast which had shown a rise to 206.4 cents.
Pre-tax profits for the year were of €2.5 billion, down 4 per cent on the €2.6 billion reported in 2006 but in line with expectations.
At 10am the bank's shares were trading at €13.79, up 2.5 per cent on the Dublin market.
Revenues increased by 12 per cent to €4.87 billion in 2007. The AIB board has recommended a final dividend of 51.2 cent per share.
This final dividend coupled with an interim dividend of 27.8 cent per share brings the overall dividend to 79 cent per share, a rise of 10 per cent on 2006.
AIB's operations in the Republic saw a profit rise of 13 per cent last year to €1.094 billion. Profits at AIB's UK division were up 20 per cent at €452 million on the back of a 20 per cent rise in loans and 17 per cent growth in deposits.
AIB also saw profits rise at its 70 per cent owned Polish bank, Bank Zachodni WBK. These grew 29 per cent to €269 million on the back of strong loan demand.
However, profits at US-based M&T bank - in which AIB has a 24 per cent stake - were down 7 per cent last year at €120 million due to turbulence in the financial markets and weakness in the US residential housing sector.
"Asset quality is expected to remain good although bad debt provisions are expected to rise from the very low level in 2007 due to lower economic growth and a more difficult operating environment," the bank said in a statement.
"Based on these factors, we are targeting low single-digit growth in 2008 adjusted basic earnings per share".
AIB had said in December that, despite significant headwinds, it expected all of its operating divisions to contribute to group profit growth next year thanks to good underlying demand for its products.
Group Finance Director John O'Donnell said he still expected growth across the board and that the company's forecast for 2008 was in line with current market expectations that underlying EPS would grow 4 per cent to 214.4 cents this year.
"What we've said is low single-digit growth and I think that's very much in line with market expectations," he said.
Mr O'Donnell said growth in AIB's Irish mortgage loan book was set to slow to 7 to 8 per cent this year from 14 per cent in 2007, following an end to Ireland's decade-long property boom.
For the group, Mr O'Donnell said he expected slowing global economies to prompt a slowdown in overall lending growth to 10 per cent, from 23 per cent last year.
"A lot of people seem to be questioning if there's any growth there at all at the moment," Mr O'Donnell said in an interview. "But we're still firing on all cylinders."
Shares in AIB have lost 45 per cent of their value since hitting a record high just over 12 months ago, after global market turmoil compounded worries over Ireland's slowing property market.
The stock was flat at €13.45 in Dublin by 8.26am, outperforming a 1 per cent weaker Irish market.