M&T Bank disappoints with first-quarter figures

M&T Bank, the US financial institution in which AIB has a 22.5 per cent stake, has reported a slightly weaker-than-expected performance in the first quarter of 2004 but is signalling that it will meet its full-year target.

The bank, which is based in Buffalo, New York, reported a 37 per cent rise in after-tax income to €159 million (€133 million) in the first three months of 2004. Its diluted earnings per share came in at $1.30, below brokers' forecasts of up to $1.39 per share.

Part of the shortfall was due to a €7 million charge related to its mortgage business, which equates to 6 cents per share. When adjusted, the performance is still shy of expectations.

M&T shares fell by more than 1 per cent in New York following the announcement, with brokers expected to revise down their forecasts for the bank in 2004. The bank has reiterated it is likely to achieve the earnings per share growth of between $5.90 and $6.10 for 2004.

The weaker performance, caused by a disappointing outturn in its mortgage business which was partly offset by an improvement in its commercial lending, is not viewed as having any adverse material impact for AIB's profits this year.

Most analysts believe the bank is facing a difficult year. Announcing the figures yesterday, M&T executive vice-president and chief financial officer, Mr Michael Pinto, described its first-quarter results as "mixed".

"We are encouraged by the resumption of growth in our commercial loan portfolios and the improvement of our overall credit quality, including lower levels of net charge-offs."

Its residential mortgage banking business experienced declines in revenue from both the first and fourth quarters of 2003, Mr Pinto added.

M&T acquired AIB's former subsidiary Allfirst, which is based in Baltimore, Maryland, and has been integrating the two businesses. During the first quarter of this year, merger-related expenses amounted to $4 million.

NCB analyst, Mr Stephen Odlum, said that while investors wouldn't be overly upset with this result, M&T had underperformed other US banks.

M&T shares were trading at €98.30 at the start of 2004. Yesterday the share price fell by $1.19 to $85.10.