AIB share value down €800m but profits of €2.75m per day

ALMOST €800 million was wiped off the value of AIB shares yesterday despite the bank making €2.75m in profit a day in 2003. The country’s largest bank made €1.01 billion last year, down from €1.37bn in 2002.

The fall in profits was one of the main reasons the bank's shares slipped as much as 8% yesterday. Other factors were the strength of the euro against the dollar and pound and the Government's three-year banking levy, which shaved €29m off the bottom line.

AIB also suffered from lower earnings from its Polish banking operation and a loss on the sale of its British fund-management business.

Although AIB's overall profits were down, the bank made €637m from its Irish operations up from €560m in 2002. A 34% surge in mortgage lending and a 25% rise in personal loans and credit card lending accounted for a large part of the profits.

Chief executive Michael Buckley said though mortgage lending was ahead of all its rivals in the Irish market, it was following strict guidelines in policy on whom it was lending to.

"We haven't changed our criteria, we still focus on repayment capacity," he said. The bank is also introducing early retirement where 200 jobs will go. It has staged a remarkable recovery since John Rusnak lost AIB's US bank Allfirst €700m on foreign currency trading. Last year AIB sold Allfirst to US firm M&T for €700m in cash and 22% of M&T's shares. The shares are now worth almost €2.5bn.

However, AIB's profits are small compared to those earned by the Royal Bank of Scotland, which owns Ulster Bank and First Active. Last week it said it made a staggering €23m a day in profits in 2003.