Allied Irish Banks hopes to raise its Polish unit's profitability and market share, the head of AIB Poland said in an interview yesterday, confirming that the bank remains committed to its investment in Poland.

Mr Gerry Byrne said BZ WBK, in which AIB has a 70.5 per cent stake, may pay out more than 20 per cent of its 2004 net profit as a dividend. BZ WBK will report its results on Tuesday.

Mr Byrne repeated earlier assurances that the bank has no plans to leave Poland, where analysts have long predicted a wave of consolidation as weaker foreign strategic investors bow out while others strive to build critical mass.

"From what I hear, no strategic investor in the Polish banking sector is looking to depart - certainly we are not," Mr Byrne told Reuters. "If an opportunity came up, we would seriously consider increasing our presence."

Mr Byrne said AIB would consider merging BZ WBK with a similar-sized bank, but would want to have at least 51 per cent of the new entity.

He said that, without a merger, BZ WBK - a mid-sized lender with total market value of $2.3 billion - could raise its market share to 10 per cent from the current 6 per cent in five years. AIB wants to see its unit raise return on equity (a measure of profitability) to 20 per cent - a level found in Polish banking only among the biggest lenders.

"I believe that, in the Polish market, if any bank can get around the 20 per cent zone - one or two percentage points on either side - it would be doing very well. Our ambition in the next couple of years is to get into that zone."

In November, BZ WBK said its 2004 return on equity might reach 17 per cent, up from 5.5 per cent in 2003. "On an underlying basis (BZ WBK's) results for 2004 will show substantial growth. What we envisage for 2005 is a continuation of the momentum of the revenue line... we are very confident that on an underlying basis, 2005 and the next number of years will show significant growth," Mr Byrne said.

In the first three quarters of last year, BZ WBK's net banking revenue rose to nearly 1.4 billion zlotys from 1.3 billion a year earlier, while costs fell to 873 million zlotys from 974 million. The bank has said 2004 net profit will rise to 400 million zlotys from 129 million in 2003, thanks in part to about 150 million zlotys in profit from one-off transactions.

Mr Byrne said the bank would review its dividend policy and could pay out more than 20 per cent of its 2004 profit.