Bank of Ireland reported a 5 per cent rise in first-half profits today in line with predictions made in its September trading update and said it was confident about the outlook for the full year.
But asset management and its Bristol & West branch network in Britain remained key challenges.
Bank of Ireland said profit before tax and exceptional items for the half year to September 30th rose to €676 million from €642 million last year.
Bank of Ireland Asset Management's (BIAM) assets under management fell 3 per cent to €56 billion in the six months under review, reflecting net outflows of €2 billion.
Pressure from poor investment performance and the departure of four members of BIAM's investment team led to further outflows after the end of the first half.
"Between October 1 stand November 5th, 2004, we have received notification of terminations amounting to €5.7 billion - it should be noted that for each €1 billion change, the marginal impact, in a full year, on profit before tax is €2.5 million approx," Bank of Ireland said.
The group said it was strengthening its investment team and announced the appointment of Mr Kevin Dolan as BIAM's new chief executive.
Mr Dolan, president and chief executive at LCF Rothschild Equity Partners, replaces Mr Brian Goggin, who was appointed as the bank's chief executive earlier this year.
But Mr Goggin said that, despite the sharp outflows, BIAM would not change its investment strategy.
"I would describe this as a cyclical period of relative investment underperformance, which BIAM has experienced previously and has successfully overcome".
On the bank's other key challenge area, UK financial services, Mr Goggin said the group was in talks on financial advice business Chase de Vere and was considering its options on the Bristol & West network.
"We have concluded that Chase de Vere is no longer a strategic fit for the group, and we've had expressions of interest in this business, and we are in discussions with a number of parties," he said.
Mr Goggin said the group had cut its Bristol & West branch network and altered management. "But the reality is that despite the progress that has been made, that business line is still struggling . . . and continuing it as it's presently delivering is not an option."
He did not say what solutions were being considered.
Bank of Ireland shares were 1.3 per cent higher at €11.10, beating a flat Irish stock market and outperforming rival AIB, which was 0.4 per cent lower.
"The results are pretty much in line with guidance," Davy banking analyst Ms Emer Lang said in a research note.
"While the outcome at earnings level is slightly ahead of our estimate, we are content to leave our March 2005 figure intact, bearing in mind that BIAM heads into H2 with lower assets under management."