M&T net income increases to €145m

M&T BANK, the American regional bank in which AIB has a 22.5% stake, met market expectations with its first-quarter results yesterday.

The bank reported net income of $189 million (€145 million) for the three months to March, 19% more in dollar terms than the same quarter last year. The figure was slightly below the $192 million recorded in the quarter ended December.

Earnings per share were 25% higher year-on-year at $1.62.

Return on equity, expressed in annual terms, improved from 11.2% to 13.4%.

Chief financial officer Michael Pinto said the results were generally in line with expectations but that growth in commercial lending was “particularly encouraging.” “Credit quality trends continue to be favourable, with relatively low levels of non-performing loans and net charge-offs,” he said.

The bank, which is one of America’s top 20 banks and operates in Pennsylvania, New York, Maryland and Virginia, said profits for the full year were expected to meet previous forecasts. Residential mortgages performed well, while the bank also kept a lid on operating costs, which fell by 6%.

Net interest income was 5% ahead at $446 million, thanks to higher lending volumes.

But the bank’s net interest margin, a key ratio that measures the difference between the price paid for money and the rate charged to customers, declined from 3.92% to 3.83%.

The bank said this reflected rising short-term interest rates in America, as rates paid on customer deposits rose more quickly than rates charged on loans.

Non-interest income showed positive progress, rising $6 million to $234 million. This was put down to fee-based revenues accruing from setting up corporate lending facilities and homeloans.

Shares in M&T fell 1% in early trading in New York yesterday, but AIB shares were largely unaffected by the news, adding 10c to close at €16.29.

The bank’s stake in M&T is valued at about €2 billion but is expected to come under review under incoming chief executive Eugene Sheehy.

Analysts expect the bank will be forced to sell the stake if M&T decides to make a sizeable acquisition in the months ahead.