The bank's 2005 pre-tax profits, which were 24% higher than in 2004, also include a €44 million gain on the sale and leaseback of its head office in Dublin.
Chief executive Eugene Sheehy said the bank has seen strong loan growth in Ireland and Britain, while the capital markets division and Polish banking arm BZ WBK also enjoyed a rise in profits.
"There isn't any part of the group that is dragging the rest down," Mr Sheehy said at a press conference yesterday.
"We saw a very strong performance in all areas."
At group level, the cost to income ratio declined by 2.2% to 55.2%, while earnings were also boosted from a greater part of its profits being generated in economies with lower corporation tax rates.
Shareholders were rewarded with a 10% hike in the dividend to 65.3 cent, to be paid out of earnings per share of 145.9c.
The bank's Irish operations was the biggest contributor to annual profits, though the proportion of earnings from overseas units increased in 2005.
The bank's Irish business saw profits rise by 24% to €779m. Excluding €50m put aside to cover the cost of repaying overcharged customers and the subsequent investigation of certain foreign exchange transactions, profits were 15% higher.
Mr Sheehy said total lending to Irish customers rose 28%, but its share of the mortgage market slipped as it focussed more on the business sector.
Mortgage lending rose by 24% year-on-year, compared to a 28.8% increase in private sector credit.
The bank shrugged off fears that individuals were borrowing too much. Mr Sheehy said AIB is the only institution that does not offer all customers 100% mortgages and carries out rigorous testing on customers' ability to repay loans.
In Britain and the North, profits grew 18% to €322m, with lending 29% higher. The bulk of profits in this division were generated from AIB's British business banking arm, while the Northern Irish unit First Trust kicked in an 11% earnings rise.
AIB Capital Markets, which includes its corporate banking arms, Goodbody Stockbrokers and treasury operations, added €403m to group profits, up 27%.
In Poland, BZ WBK saw profits rise 13% to €132m on the back of strong consumer loan growth. The bank also said the provision for bad debt level continued to decline.
M&T Bank, the New York based financial institution in which AIB has a 22.5% state, added €148m to profits in the year.
Despite the record profits, shares in AIB were less than 1% higher at the close of trading yesterday.