AIB has signalled a strong performance at its Irish and international businesses, with profits expected to rise by more than 10 per cent this year.

The bank, which this week was criticised by the Irish financial services regulator for concealing the overcharging of customers for eight years, indicated that this issue has not affected its Irish business.

In a statement to the stock markets, AIB said its performance in 2004 was strong and that it was comfortable with market analysts' consensus forecasts that it would produce adjusted earnings per share of €1.25.

The statement was broadly in line with expectations. AIB shares closed 2 cent higher at €14.72 following the announcement.

Meanwhile, Royal Bank of Scotland, which owns Ulster Bank and First Active, has given an upbeat outlook for next year and said it was very confident it would meet market expectations for 2004.

Royal Bank of Scotland's chief executive, Sir Fred Goodwin, said the bank had strong income growth across its businesses.

AIB's performance was boosted by a strong contribution from all of its divisions, helped by relatively high growth rates in these economies.

In the Republic, which accounts for 50 per cent of the bank's profits, AIB says it has extended its "prime position" in retail and commercial banking, and has grown its market share across a range of products and services.

Customer deposits are expected to grow by almost 15 per cent this year. Loan growth is targeted to be around 25 per cent, while sales at Ark Life will be lower.

The bank will absorb the €50 million cost of the foreign exchange overcharging investigations in this year's accounts.

Its capital markets division, which includes its corporate banking and Goodbody Stockbrokers businesses, is likely to record significant double-digit loan growth in 2004 with its treasury and investment banking activities performing ahead of last year.

In the UK, the bank expects loans to increase by more than 20 per cent and deposits to grow by around 18 per cent.

AIB's banking operations in Poland will also make a significant contribution, following difficulties in the previous year. The bank expects deposit growth of around 5 per cent and loan growth of around 8 per cent. The statement says asset quality continues to improve and that costs will be lower this year following the implementation of a range of cuts in 2003.

The Republic's biggest bank also has a 22.5 per cent interest in M&T bank in the US. Yesterday it said that it continues to perform very well and the profit contribution from this investment, in dollar terms, is anticipated to show a double-digit annual increase.

The bank had previously indicated that adverse currency translation could have an impact of around 4 per cent after hedging.

"Asset quality remains strong and all key indicators are positive," according to the AIB statement.

The bank will report full-year results on February 22nd, 2005.