Allied Irish Bank unveiled its first-half pre-tax profits yesterday, beating analysts' forecasts with a 12 per cent rise, and revealed that it is planning a standalone internet bank, to be launched at the end of the year. The strong pre-tax profits of 609m Euros (US$559m) in the six months to June 30 must be a welcome change in AIB's fortune, given that Ireland's largest bank by asset value has been faced with a steep fall in its share price over the past year as low interest rates and new competitors have sliced margins.
Declan McSweeney, AIB's chief financial officer said 'There is margin pressure in the domestic market, but we feel it is largely behind us. The positive news for us is that interest rates are moving up.' At present, AIB has a domestic internet banking unit that has enrolled 56,000 customers since the beginning of the year and forecasts 100,000 users by the end of 2000.
AIB's above average results are expected to mark a turning point for the bank. Shares are predicted to rise again - they have suffered badly since the arrival of Northern Rock and Bank of Scotland - and having been criticised by some analysts who say AIB has been slow to embrace internet banking, the bank has decided to address these criticisms. In addition to its existing internet banking operation, AIB plans a standalone virtual bank, based in the National Digital Park in Dublin. AIB CEO Tom Mulcahy said of the service, due to go live by the end of the year: 'Product and brand development is well advanced on this project.'
AIB has also launched an online mortgage application service, AIB Mortgages, and is also set to become the first bank to offer a unique secure online payments service for credit card transactions. Developed by Orbiscom, a software group in which AIB has taken a minority stake, the Transact online package allows customers to pay for goods without divulging their card number. Mr Mulcahy said: 'We are using technology to win valuable business for AIB by attracting new customers, many of whom were previously hard to reach.'
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