M&T Bank, in which AIB holds a 24 per cent stake, said first-quarter profit fell 68 per cent as rising unemployment led borrowers to fall behind on loans.
Net income fell to $64.2 million, or 49 cents a share, from $202.2 million, or $1.82, in the same period a year earlier, the lender said today.
M&T Bank chief executive Robert Wilmers has resisted reducing the dividend or selling new shares, even after taking $600 million from the US Treasury’s bailout last year.
M&T sold the government preferred shares under the Troubled Asset Relief Program, which distributed almost $300 billion to more than 500 banks since October.
“We do not believe M&T will need to raise common equity” with a share sale, said Albert Savastano, an analyst at Fox-Pitt Kelton Cochran Caronia Waller, in a note to investors before the earnings were released. Cutting the dividend was “a greater possibility,” he wrote.
Banks have faced mounting losses over the past year as a record number of homeowners proved unable to keep up with payments.
President Barack Obama in February launched a $75 billion loan-modification plan to stem foreclosures, which surged 30 per cent that month from a year earlier.
Some economists have argued that job losses and falling home prices have a bigger impact on delinquencies than mortgage terms. Unemployment last month reached 8.5 per cent, the highest since 1983.
M&T, which has more than 700 branches in states including New York and Pennsylvania, has fallen about 42 per cent in the past year, besting the 61 per cent decline in the KBW Bank Index.