ISEQ stable despite AIB share plunge

A DISMAL performance from AIB, which had its recapitalisation programme approved, failed to push Irish stocks into negative territory yesterday.

Strong gains from CRH and Elan helped offset the 11% drop in AIB’s share price to €1.02.

The ISEQ closed 10 points higher at 2,611 as Bank of Ireland gained 2% to €1.17 and Irish Life and Permanent increased 1% to €2.73.

It is a busy week for AIB. It will hold its AGM in Dublin today having said earlier this week it will have to set aside more money for bad loans than previously anticipated.

In a statement released on Monday the bank said it will provide about €4.3 billion to cover souring loans this year, equivalent to 3.25% of total lending.

It said in March that under a stress scenario provisions could rise to €4bn in 2009 from €1.8bn in 2008.

NCB analysts said: “Overall, Allied Irish Bank’s update highlights further deterioration in asset quality, particularly in its Irish property and construction book, although criticised loans have increased in other sectors in Ireland.”

The European Commission yesterday approved AIB’s €3.5bn government recapitalisation programme. It said the emergency recapitalisation of AIB is to “remedy a serious disturbance in the Irish economy.”

“This capital injection will enable AIB to weather the financial crisis” and avoid “disproportionate distortions of competition,” said Neelie Kroes, the EU Competition Commissioner.

Meanwhile, Fitch Ratings yesterday affirmed CRH’s long-term issuer default rating and senior unsecured rating at BBB+. The agency revised the outlook on the company’s long-term issuer default rating to negative from stable.

On the ISEQ yesterday CRH moved up 15c to €17.61, Grafton Group rose 7c to €2.77. Kingspan progressed 8c to €4.32.

C&C jumped 14c to €1.94 after reporting profits broadly in line with expectations, Glanbia however dived 21c to €2.10, while Kerry Group was unchanged at €15.98 after a trading update stating that the company is on track to meet its targets for 2009.

In Frankfurt, the DAX closed down 0.3% at 4,854, while in Paris the CAC lost 0.5% to 3,231. In London, the FTSE ended down 0.2% to 4,426.