AIB 6% fall in first half earnings

AIB said this morning it expects earnings for the first half of this year to be 6% lower than the same period a year earlier.

In a trading update AIB reiterated that it expects low single-digit percentage earnings growth for the year based on the assumption that conditions for the first four months of the year are maintained.

Approximately 3 per cent of the lower earnings is due to result from the adverse effect of the relative strength of the euro.

The bank said its international and corporate businesses were growing faster than its Irish retail and commercial deposits.

AIB expects loan growth to slow to 10 per cent this year and the bank said it was responding to this by reducing costs, which are estimated to rise by 3 per cent this year.

AIB has maintained its forecast for bad debts saying it expects these to account for no more than 0.2 per cent of its loan book.

AIB said it has ample liquid assets which at the end of the first quarter remained at €31 billion, broadly similar to the level at the end of 2007.

The bank said it was "particularly vigilant" in the management of its residential development loan book which is under pressure due to the marked slowdown in the housing market.

AIB said the number of cases requiring "close management" and that action plans to "minimise risk and possible loss are being implemented on a case-by-case basis".

The bank said following a recent review of its international property loan portfolio it was "satisfied that they remain resilient".

It said its commercial property loans sector in Ireland was robust. AIB is forecasting loans and deposits growth of around 4 per cent and 2 per cent respectively.

A 20 per cent increase in deposits in its UK division is forecast by AIB, which also targeting high single digit percentage increase in its loan book there.

At 11.12am AIB shares were marginally ahead at €13.64.

Bloomberg