AIB expect strong growth

ONE of the top broking houses has reiterated its buy recommendation on AIB shares.

Due to issue a trading statement in early December AIB is expected to show strong growth in both its Irish and British markets.

The about face by Merrion Capital in recent months about the bank's prospects is quite striking.

Having met management recently analyst Seamus Murphy has had his reservations put at rest.

His chief concern was that Allfirst was yielding just 9% on capital, money that could be far better deployed by the bank elsewhere in its other more profitable operations.

But several factors have kicked into play since Merrion's reservations about the bank were made known through its research unit.

In particular Mr Murphy said he is firmly of the view that AIB has put in place a strategy for the US that allows it far more significant growth prospects and better returns going forward.

Mr Murphy is at pains to point out that AIB's 22% stake in M&T which was part of the deal involving the sale of Allfirst has given the Irish bank a plank on which to evolve its strategy in the US regional banking market. He says: "No matter how the ownership of the 22.5% stake evolves longer term, the key point is that AIB has a diversified international platform for growth and the drag by Allfirst on the group's return and earnings profile is likely to be eliminated."