Bank chief executive is optimistic about future

With 11 per cent earnings growth in the first half of the year despite a severe setback in Poland, AIB's new chief executive, Mr Michael Buckley, was in confident mood at yesterday's results presentation.

He repeated the bank's target to produce low double-digit earnings growth for the full year.

While analysts generally welcomed the results for the half year, some have warned that the earnings target is challenging.

Davy analyst Mr Scott Rankin sounded a note of caution.

"We would reiterate our view that the group's medium-term target of double-digit growth will remain a challenge, particularly as economic growth slows across the group's territories."

In Ireland, Mr Buckley is bullish about the prospect for both AIB and the national economy. Even though there will be a significant slowdown in economic growth from the recent peak of 11 per cent, Mr Buckley said the Irish economy would perform significantly better than any other EU economy.

"We won't see 10 or 11 per cent growth, but we will see continued employment growth and increases in consumer spending. Our Irish business will continue to operate in a relatively high performance economy."

AIB intends to grow its Irish business by increasing the volume of products sold to its existing customer base.

"We have a 38 per cent share of the money transmission market, but in many product areas we don't have anything like that market share," he said.

In Britain and Northern Ireland, Mr Buckley said AIB was more likely to grow by opening more branches than by acquisition, although he added it would be alert to any acquisition opportunities that arise from asset disposals by the major British banks.

Despite suggestions that AIB may be open to selling its Allfirst banking operation in the United States, Mr Buckley was adamant Allfirst was not for sale.

"Selling the American operation is not in my line of sight," he stated.

On the contrary, AIB wants to expand Allfirst into areas where it is currently under-represented, such as the northern suburbs of Washington DC and in Virginia.

"We would like a stronger presence, we are in the acquisition business but American regional banks are trading on fairly racy multiples."

Asked about the possibility of AIB itself becoming a takeover target given that the rationalisation in the British banking sector has come to an end, Mr Buckley said: "I don't intend to spend my time looking behind me. That's the best way to run into a wall. We are aware of what's going on in the UK but our challenge is to be seen as a high-performance bank and have that reflected in our share price."

Mr Buckley dismissed the idea of a merger between AIB and Bank of Ireland as a defensive measure against an overseas bid and said: "Can you imagine the reaction to a merger between us and Bank of Ireland?"