AIB's Polish outlet set to double profits

AIB's Polish subsidiary, Bank Zachodni WBK, says tight cost control and a relatively low bad debt charge will help profits to double in 2002.

The bank announced net profits of 71 million zlotys (€17.9 million) in the third quarter of its financial year yesterday.

Chief exective Mr Jacek Ksen said fourth-quarter results would be slightly better. "I would expect our net profit in all of this year at 285 to 300 million \," he said.

The results mark a pick-up in the bank's performance following restructuring of the business. The bank is the fifth largest in Poland.

A spokeswoman for AIB said the figures indicated the bank was making the progress it had said it would and that it was confident this would continue.

Mr Ksen said the bank, with a market value of $1.3 billion (€1.3 billion), wanted to increase its return on equity ratio to 15-17 per cent next year from 13-14 per cent planned for 2002.

"Our ambition and obligation is to reach the profitability levels of AIB, which has a return on equity of around 20 per cent or more, but of course it is not a matter of one year," said Mr Ksen.

Thanks to improving results and strong growth potential, Zachodni has been one of Warsaw's best performing large capitalisation stocks this year, surging nearly 40 per cent to 69.5 zlotys. Tight cost control should help Zachodni bring its cost to income ratio below 60 per cent next year from 68.3 per cent in the first nine months of 2002.

"Since interest revenues are now falling and competition is strong, only banks with good cost control have a chance of posting decent results," said Mr Ksen.

(Additional reporting by Reuters)