AIB has reported pre-tax profits of €2.5 billion for 2007, down 4% from the figure of €2.6 billion in 2006, but in line with the bank's guidance.
Revenues rose by 12% to €4.87 billion last year from €4.33 billion the previous year, despite what the bank called 'adverse changes in worldwide banking'.
Basic earnings per share rose by 13% to 205.9 cent. The bank's board is recommending a final dividend of 51.2 cent per share. The final dividend, together with the interim dividend of 27.8 cent per share, amounts to a total dividend of 79 cent per share, up 10% on 2006.
The bank's Republic of Ireland division saw profits for 2007 up by 13% to €1.094 billion, against ' a less buoyant economic backdrop'. Operating profit was up 13% while operating expenses rose by 9%.
Irish customer deposits grew by 3%, while period end loans rose by 20%. AIB said that demand for loans was good, with growth in business lending particularly strong. Its retail banking division saw another 'strong' year with good growth in business and mortgage lending, while growth in personal lending was impacted by the effect of maturing SSIAs on credit demand.
AIB's UK division saw its profits rise by 20% to €452m with loans and deposits up by 20% and 17% respectively. The strong growth in the division was driven by success in business banking.
Profits at its 70% owned Polish bank, Bank Zachodni WBK, jumped by 26% to €269m for €2007. The bank said that demand for credit has been exceptionally strong with total loans rising by 39% in the year. Customer deposits increased by 26%.
The contribution from its 24% owned US bank, M&T, fell by 7% to €120m in 2007 from €141m the previous year. The bank said this was due to the 'unprecedented turbulence in the financial markets and in particular, the US residential real estate sector'. The contribution from the US bank was also hit by a weakening US dollar relative to the euro.
M&T Bank Corp said last month that its 2007 profit tumbled by 70% as it reported that net income fell to $64.9m from $213.3m a year earlier.
AIB's Capital Markets division saw profits fall by 8% to €532m after the previous year's profit included a €26m profit from the Ark Life deal. Operating profit rose by 6% and was achieved despite the bank incurring mark to market writedowns of €131m.
The bank said that trading income was affected by what it called global market dislocation effects - namely the fallout from the US sub-prime housing crisis. AIB said it was writing down €131m as a result of these effects, but added that its total credit exposure to US sub-prime mortgages is low.
AIB said it is targeting low single digit growth in adjusted basic earnings for 2008. It says that bad debt provisions are expected to rise from the very low level in 2007 due to lower economic growth and a more difficult operating environment. It added that asset quality is expected to remain good, however.
'AIB delivered a strong performance in 2007, despite adverse changes in worldwide banking', commented the bank's CEO Eugene Sheehy.
'We are serving a growing number of customers in our high quality domestic and international franchises. The broad base and resilience of our business is a hallmark of AIB which positions us to deliver profitable growth in the more challenging operating environment for 2008,' he added.
AIB shares closed up 45 cent at €13.90 in Dublin.
