The Republic's biggest bank, AIB, has delivered profits of almost €1.4 billion for 2002 a year after the $691 million (€643 million) fraud at its US subsidiary, Allfirst.
The fraud shaved €789 million off AIB's profits for 2001, reducing its pre-tax profits to €577 million.
Over the past 12 months, strong growth in lending, combined with a large increase in income earned from bank fees and commissions, helped its profits to rebound to levels slightly better than had been expected.
AIB group chief executive Mr Michael Buckley said it had delivered a strong performance despite tougher economic conditions and its own problems.
"We believe we have delivered something special given the background environment. The heart of AIB is beating strongly and we will deliver a compelling combination of growth and resilience in the coming year," he said yesterday.
The bank expects to finalise the sale of Allfirst to the US bank M&T by the end of March. Under its terms, AIB will take a 22.5 per cent stake in M&T, which is based at Buffalo in upstate New York.
It will also receive $886 million in cash, which it will use to buy back its own shares in the market.
Mr Buckley said that he expects to be in a position to buy back the shares almost immediately after AIB receives this cash from M&T at the end of March.
AIB shares were unable to buck the downward pressure on international banking stocks yesterday and its shares closed at €12.40 down 10 cents in Dublin.
Shareholders will be paid a dividend of 49.06 cents per share on the back of last year's performance, a 12 per cent increase on the previous year.
Earnings per share rose by 6 per cent to €1.23.
Its Irish business reported a 5 per cent increase in profits to €590 million or 42 per cent of the group's profits.
AIB claims to have increased its share of the market in mortgages, and residential and commercial lending.
During 2002 it advanced €3.6 billion in loans, an increase of 20 per cent.
The bank has been very aggressive in the mortgage market and has managed to grow its book very strongly, reporting a 31 per cent increase last year.
Other commercial and retail lending increased by 16 per cent. Mr Buckley said AIB's loan book remained in very good shape and the quality of assets remained very robust.
The most disappointing performance came from the bank's Ark Life assurance subsidiary, where profits slumped from €84 million to €57 million.
The bank said that much of this downturn was as a result of the difficult equity markets.
Annual premium equivalent sales, the industry measure for calculating new business, dropped by 12 per cent to €179 million from €200 million in the same period last year.
Mr Buckley said Ark Life would be expanding its product range, selling products developed by other financial institutions, in the months ahead as part of an effort to improve its performance.
Its capital markets division, which includes Goodbody Stockbrokers, achieved an 8 per cent rise in profits to €209 million, driven by a good contribution from corporate lending.
Outside of the Republic, AIB's banking division in Britain and Northern Ireland reported an 8 per cent increase in profits to €240 million, with the bank claiming new business in niche sectors.
In Poland, where the bank operates as Bank Zachodni WBK, profits increased by 71 per cent to €61 million with the group again reporting good growth in its mortgage and other lending activities.
Profits at Allfirst fell by 13 per cent at €308 million, including €13 million in restructuring costs.
Mr Buckley said it had stabilised the bank since the fraud to ensure that Allfirst was in good shape going into M&T.
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)