Bank of Ireland has achieved solid if not spectacular growth in the past 12 months but it still has a lot of work to do if it is to convince the markets it knows where it is going in the future.

A 10 per cent increase in pretax profits to €920 million (£725 million) was achieved on the back of strong growth in business volumes across the group. But as almost 80 per cent of its profits are earned in the booming Irish economy, analysts had been expecting the bank to achieve a higher level of growth closer to €960 million.

Nonetheless, during the 12 months the bank grew its net interest income, which is earned from lending and deposit activities, by 11 per cent to €1.2 billion while other income amounted to €900 million. And despite intense competition in the savings and mortgage market, Bank of Ireland managed to hold its net interest margin relatively steady at 2.55 per cent.

A 10 per cent rise in the bank's operating expenses during the year when it has been signalling that cost-cutting is its focus was not well received and investors will now be closely watching cost movements in the months ahead.

But it is the bank's failure to comprehensively assure investors that it has a successful strategy for the future that is causing it most problems.

While group chief executive, Mr Maurice Keane, insists the bank has a "clear view" of how the group will develop going forward, yesterday's near 10 per cent slide in the share price suggests investors are sceptical.

Much emphasis has been placed on how financial institutions are positioning themselves to cope with the threat posed to their business by the Internet. Mr Keane has revealed the bank is to set up a separate company - BOIe - to forge electronic commerce alliances and partnerships with other groups. He stresses the bank is very seriously committed to this project which will be run in an "entrepreneurial and energised" fashion with Esat Telecom founder, Mr Denis O'Brien providing a stewardship role as a director.

It is unclear just how this company will develop. Some analysts suggest it has limited growth potential in the Irish market as Bank of Ireland is already one of the leading providers of such services.

Another issue which must be addressed by Mr Keane and his executives is the bank's UK activities. Its Bristol & West subsidiary is relatively small and requires greater scale to achieve a position of strength in that market.

The bank is also continuing to sit on up to €560 million in surplus capital having failed to make any acquisitions.

Mr Keane says the bank will continue to pursue strong growth opportunities, focusing on the Irish market while keeping an eye on niche markets outside the Republic.

He says there is a gulf between where the bank sees itself going and the perception that is in the markets. "Maybe we haven't been doing enough talking about what we are doing." Only time will tell.