Analysis:By any measure, 2006 appears to have been a bumper year for Irish banks - and AIB is no exception. If anything, company executives went out of their way yesterday to trumpet the performance last year leading to 25 per cent growth in pre-tax profit.
Part of the thinking behind this uncharacteristic ebullience appears to be an effort by the bank to highlight how exceptional the 2006 performance was and to manage market expectations going forward. The last thing the bank wants is any over-reaction to an inevitable slowdown in rates of growth to healthy but more sustainable levels.
According to analysts, there is some truth in what they are saying and the somewhat subdued projections for 2007 - AIB yesterday forecast earnings per share (EPS) growth "in the low double digits" compared with 25 per cent last year - shouldn't be interpreted as bad news.
"Even if you went back to this time last year you would never start out saying growth is going to be 20 per cent plus," says Scott Rankin, a banking analyst at Davy. UK broker Collins Stewart agrees, also noting that AIB's management has a tendency to understate guidance this early in the year. While concerns about the impact of a possible slowdown in the housing market have been raised, AIB is not as exposed on this front as some of its domestic rivals and Eugene Sheehy was at pains yesterday to point to the diversity of the bank's business.
Analysts agree, viewing the decline in the bank's reliance on its home market - last year 50 per cent of profit was generated in the Republic compared with 64 per cent in 2003 - as positive.
As for the future, company management was bullish yesterday about the potential, emphasising the prospects for organic growth - particularly in its UK and Polish operations.
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