Allied Irish Bank Defies Economic Slowdown

by Jason Gorringe, Tax-News.com, London

02 August 2001

Ireland's largest bank, Allied Irish Banks, yesterday reported a 9 per cent rise in pre-tax profits to I£409m in the half year to June 30, and said it hoped for more than 10% profits growth for the year as a whole despite the economic downturn. AIB has operations in Ireland, the US, the UK and Poland.

Saying that it planned to expand further in the US, the bank reported operating profit from its US activities up 6 per cent to I£104m in the first half, with provisions climbing 9 per cent. The unit, which has a strong presence in providing banking to not-for-profit organisations, generates one-quarter of group earnings. Retail banking and corporate banking operations in the UK performed strongly, and AIB said that the quality of its loan book remained strong. However, the bank said it had been hit by the economic slowdown in Poland.

Declan McSweeney, chief financial officer, said AIB would look at bolt-on deals in the US and would be interested in a deal in the UK but there were few opportunities. "We'd like to be a lot bigger in the UK but find it hard to find acquisitions of a size that makes sense for us," he said. Mr McSweeney said AIB wanted to increase its lending to small businesses in the US and broaden its focus away from corporate lending. "We are overweight in corporate lending there," he said.

"You should see some small acquisitions, and substantial progress on a larger deal, in the next 12 months," said Gary Kennedy, AIB's acting finance director. "We are a little bit different to other European banks in that we've been in the US for 25 years. Our domestic market does not need a lot of investment and there's not a lot available to us in the UK."

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