AIB foresees good home loan earnings and stable margins

Allied Irish Banks forecasts another strong performance this year, with earnings per share expected to grow by more than 10 per cent. The trading statement was in line with market expectations and analysts are unlikely to alter their forecasts for 2001.

In Ireland, the bank's business continues to perform strongly. Loan growth would reflect continuing strong economic growth in the Republic, it said.

AIB expects loan growth to be in the low teens this year, with demand for residential mortgages remaining particularly strong.

The outlook for deposit growth is also good, in line with expectations.

Demand for new savings and investment products has slowed temporarily, due to the new Government-sponsored Special Savings Incentive Accounts.

Despite intense competition, the bank's margins remain stable and costs are being well managed.

The bank suggests costs will be contained at around 10 per cent, including one-off costs associated with the introduction of the euro and salary increases.

In Britain and Northern Ireland, the bank's business banking operations are performing satisfactorily, with loan and deposit growth in line with forecasts.

In the US, the economic slowdown has not had any adverse affect on its Allfirst business. Significant corporate loan repayments have had an impact on loan volumes in the first quarter but an improvement in loan growth is expected over the rest of 2001.

Asset quality remains strong and net interest margins have improved, the bank said. The bank is not seeking aggressive growth in Poland this year, with sluggish economic conditions and high real interest rates resulting in non-performing loan ratios remaining at broadly similar levels to December 2000.

The integration of the Wielkopolski Bank Kredytowy and Bank Zachodni is making good progress.

Overall, the bank said non-interest income continued to perform strongly, with growth of around 10 per cent expected. Fees, particularly in corporate banking, have been buoyant, although asset management fee income and private client revenues have been affected by weaker equity markets and lower trading by customers.

Results for the six months to the end of June will be announced on August 1st.