Banks’ investors ‘should take profits’

INVESTORS in AIB and Bank of Ireland should give consideration to taking some profits following the recent price surge in stocks, some analysts believe.

Opportunities to re-invest at a lower price may emerge or funds could be staked on Irish Life and Permanent, Bloxham Stockbrokers head of equity research Kevin McConnell believes.

Mr McConnell acknowledges there is a quandary for investors as a result of the improvement in the AIB and BoI share price, which places them on what the Bloxham brokers said was a deserved premium to their British counterparts.

“Now might be the time to take some profit, not selling off all your holding, and maybe come back in at a lower price or switch to IL&P,” the highly respected analyst said.

Goodbody’s Bill Hanley concurs and agrees that it may be time to take some short-term profits in Irish banks.

“Since the beginning of June, AIB and Bank of Ireland have enjoyed share price gains of 12% and 11% respectively. This compares very well with the European Banks Index, which has risen by just 3%,” he said.

Mr Hanley points out that AIB has traditionally traded at a price-earnings discount to the British banking sector but is now at a 10% premium.

The Goodbody analyst looks overseas for re-investment. “The British banks could represent a better short term investment,” he said.

However, on the long-term front Merrion Stockbrokers banking analyst Séamus Murphy believes AIB shares can hit €14.40 by year’s end. AIB opened at €13.25 yesterday.

Meanwhile, ABN Amro Holding NV chief executive Rijkman Groenink said the biggest Dutch bank wants to expand in Italy and pursue more acquisitions across Europe.