AIB's US partner M&T bank reports strong earnings for third quarter

M&T, the US bank in which AIB has agreed to take a 22.5 per cent stake in, has reported strong third- quarter earnings

M&T, the US bank in which AIB has agreed to take a 22.5 per cent stake in, has reported strong third- quarter earnings. In the three- month period, the bank's earnings were $117.2 million (€118.92 million) compared with $97.9 million (€99.3 million) in the same period last year in line with market expectations.

The outturn equates to earnings of $1.27 per share with the bank expected to meet Wall Street earnings forecasts for the year.

Last month AIB announced that it had reached $3.1 billion agreement with M&T under which it would take over the Irish bank's US subsidiary, Allfirst, and AIB would take a 22.5 per cent stake in M&T.

The deal, which is subject to the approval of regulators and shareholders, is expected to be completed by the end of March 2003.

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The New York-based bank's performance was helped by an increase in consumer loans. M&T, which is headquartered in Buffalo, reported cash earnings of $1.32 per share up from $1.24 in the same period last year.

It has increased its provision for credit losses to $37 million up from $28 million. Net charge-offs of loans totalled $36 million, including $17 million on two commercial leases with an airline that has filed for bankruptcy protection.

Commenting on the results yesterday, M&T executive vice-president and chief financial officer, Mr Michael Pinto, said its core business continues to perform reasonably well in light of general economic conditions.

"While uncertainties exist regarding future economic conditions and the level of interest rates, at this time we remain comfortable that M&T's full-year results will meet of exceed the current consensus of analysts' estimates of earnings per share of $5.07."

At the end of September, M&T had total assets of $34.1 billion. Its deposits stood at $22.5 billion.

When it merges with Allfirst M&T the bank will have 700 branches in six states. The merger is expected to yield cost savings of $100 million, $60 million of which will be delivered next year and will involve some re-organisation.

The world's most successful investor, Mr Warren Buffett, owns 5.7 per cent of M&T.