M&T Bank, the US bank in which AIB has a stake of almost 25 per cent, said yesterday that easing mortgage pressure had contributed to a higher-than-expected quarterly profit.
The bank's results marked a recovery from the prior quarter, when the US housing slump forced the mid-Atlantic regional bank to write down some home loans and buy back troubled loans it had sold.
Second-quarter net income for M&T, which also counts Warren Buffett's Berkshire Hathaway as a shareholder, rose by 1 per cent to $214.2 million (€155 million), or $1.95 per share, from $212.6 million, or $1.87, a year earlier.
Profit topped the average analyst forecast for $1.85 per share. It increased from the first quarter's $176 million, when profit had fallen by 13 per cent from the comparable year-earlier period.
"Results were significantly improved," chief financial officer Rene Jones said on a conference call.
Lehman Brothers analyst Jason Goldberg wrote that earnings were "fuelled by better-than-expected fee-income results, particularly in mortgage banking. Importantly, asset quality metrics only showed modest deterioration".
Mortgage revenue at Buffalo, New York-based M&T fell 14 per cent from a year earlier to $35.5 million, but more than doubled from the first quarter.
"There's a bit of softness," Jones said. "Overall, we feel pretty good about it."
Non-performing loans nearly doubled to $296 million, in part from the addition of a $34 million loan to a mid-Atlantic residential home builder and developer.
"The credit is still paying, but the value of the [ underlying] property has declined," Jones said. "We had to re-evaluate the credit on the basis of the loan to value." M&T said it has $57.9 billion of assets, and more than 650 branches in seven mid-Atlantic states and Washington, DC.
Revenue at the bank rose by 5 per cent to $745 million, helped by higher deposit service charges. Non-interest expenses increased 4 per cent to $392.7 million. - (Reuters)
