AIB intends to protect its profits from further expected pressure on income from core lending and savings business by boosting non-interest income - fees and commissions and income from other businesses - increasing business volumes and cutting non-performing loans.

Tight cost control and investment in new technology to deliver products and services to customers are part of the bank's ongoing strategy to maintain double digit earnings per share growth. Branches will become selling operations aimed at increasing the number of products and services sold to every customer.

While there will be changes in the way branches are used and in location because of population trends, chief executive Mr Tom Mulcahy said the network was being increased rather than cut back with 20 new outlets opened in the last two years.

Finance director Mr Gary Kennedy said he expected further slippage in net interest margins (profits from core lending and funding activities) in the current half. Over the full year he forecast a fall of 0.22 to 0.25 of a percentage point in margins which have fallen over the last few years as competition in retail and corporate markets increased. AIB plans to drive ahead its non-interest income as a proportion of total income to offset some of the margin decline from the current level of 38.3 per cent.

For all banks developing their e-business offerings will be an important part of holding on to existing customers and finding new customers. It should encourage the development of more innovative customer-focused products and services. But the most important aspect is the need to protect existing revenue streams and develop new revenue sources.

AIB says its e-business roll-out is on target. It plans to extend its WAP phone services, introduce online-stockbroking through its Goodbody Stockbrokers subsidiary and launch a virtual stand alone bank. And it will examine how its Internet products and services could be accessed through interactive television and broadband services.

In the Republic AIB now has 56,000 customers signed up for Internet banking and expects to have 100,000 users by year-end. Customers can pay bills, transfer funds and check accounts and credit card balances through the Internet and some €56 million of loans have been approved through the mortgage website. More than 10,000 business customers are using its electronic business banking services for cash management and financial administration, AIB says.