M&T record earnings of €285m
Earlier this month, AIB completed the sale to M&T of its troublesome US subsidiary Allfirst Financial Inc. for about $3.1 billion in stock and cash leaving AIB with a 22.5% holding in M&T and a €450m war chest to complete a share buy back programme. AIB has already bought back more that €140m in shares in the last week.
Merrion stockbrokers banking analyst, Elaine Brownlee, said M&T’s results and, more importantly, the fact that M&T did not change its guidance on earnings going forward in a troubled US economy underpins the strength of the decision of AIB to offload Allfirst to M&T, while retaining a very significant portion of the enlarged business.
Merrion rate AIB a buy with an end 2003 price target of €14.95, shares closed at €13.01 yesterday.
“Our cash EPS estimates for M&T Bank are $5.89 for 2003 and $6.65 for 2004. Over the next year a key driver of operating earnings growth will be synergies from the Allfirst transaction, which closed as planned on 1 April 2003. Initial guidance is for US$101m of cost savings, with US$60m expected in 2003,” stated Ms Brownlee.
AIB are the major shareholders in M&T Bank along with Warren Buffett’s Berkshire Hathaway Inc. Mr Buffett, whose investments avoided the tech stock melt-down, is regarded as one of the shrewdest investors around.
M&T Bank Corp, yesterday, said first-quarter net income rose 2.6% as fees from mortgages and consumer deposits climbed.
Net income increased to $116.5 million, or $1.23 a share, from $113.6 million, or $1.18, in the same quarter a year ago, spokesman Michael Zabel said.
M&T, based in Buffalo, New York, said consumers borrowed more during the quarter to take advantage of low interest rates.
Mortgage revenue surged 23% to $34.5 million, while service fees from deposit accounts rose 10% to $43.3 million.
M&T set aside $33 million for soured loans in the period.
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