Strong lending sees Anglo Irish Bank raise profit target and shares rise
In a trading update to the markets, the bank said it expected earnings per share would be about 5 cent better than the current market forecast of 124c a share.
However, in a bad day for bank stocks listed on the ISEQ 100, the group fell nearly 3% to €13.74, a fall of 41c on the day.
The bank said it expected total lending to be up more than 30% and that its pipeline of new loans was strong.
It said it also believed the rate of lending would be higher than reported at its half-year results in March this year.
Despite growing concerns about debt burdens and fears for the housing sector in Ireland, Anglo Irish Bank said its interest rate margins were stable and that it was not worried about bad debts. The bank also said its asset quality was “robust”.
Chief executive David Drumm said the current uncertainty in the markets showed the attractiveness of Anglo’s “unique relationship-driven model”.
Shares in the bank were up 26c in early trading at €14.41.
However, those gains went into decline in afternoon trading and all of the gains were lost. Davy Stockbrokers, which recently reduced its Anglo share price target to €17 as part of a sector-wide strategy, said the statement form the group was upbeat.
It forecasts that it will continue to grow.
Shares are expected to move back upwards given the magnitude of this profit upgrade.
The stock is trading on around nine times forward earnings and looks cheap, Davy said
Anglo described its liquidity position as “excellent”.
Davy said that view corresponded with what it had been told by the bank a few weeks ago.
It also added that rumours of the bank being forced to pay high premiums for money in recent weeks were unfounded.
Davys are brokers to the bank, which it has described as the fastest-growing bank in Europe.
