AIB has reported pre-tax profits of just over €1.3 billion for the first half of this year, up 8.6% on the same period last year. It has also raised its target for earnings growth for the full-year.
AIB's banking operations in the Republic saw profits grow by 18% to €534m. Loans were up 26% compared with the same period last year, while deposits rose 12%. AIB said the provision for bad debts rose marginally to 0.15% of loans.
Deposits have been flat since the end of 2006, however, which chief executive Eugene Sheehy blamed on the withdrawal of some SSIA money.
The bank said there was strong growth in business and personal lending in the Republic, and 'good growth' in mortgage lending despite slowing demand in the housing market. But Mr Sheehy told RTE radio mortgage applications had shown a drop of 25%.
Capital Markets profits climbed by 3% to €333m, though growth was a stronger 12% when last year's sell-off of Ark Life was stripped out.
In the UK, profits rose by 19% to €223m, with a particularly strong performance from First Trust in Northern Ireland. AIB's Polish profits grew by 35% to €155m, lifted by increased business activity.
In the US, profits from AIB's share of M&T Bank dropped by €6m to €74m after it took a mortgage-related charge in the first quarter. AIB also made €41m from property sell-offs.
Across the group, adjusted earnings per share rose by 16% to 108.8 cent and a 10% higher interim dividend of 27.8 cent is to be paid. AIB said it now expected adjusted earnings per share to grow by a 'low teen' percentage instead of the previous low double-digit.
Total income at the bank rose by 17% to €2.4 billion, with net interest income climbing 16%. Operating costs were up 13% but AIB says costs as a proportion of income fell.
The bank said its provision for bad debts remained low at €30m, just 0.04% of total loans. Total loans were 12% ahead of a year earlier, with deposits up 3%.
Davy Stockbrokers said they are comfortable maintaining their 2008 Earnings Per Share at 225c, implying growth of 8% off their upgraded 2007 estimate.
However, Davys added that the current share price indicates that investors are sceptical.
'We continue to believe it will take evidence of a stabilisation in Irish housing, with no contagion into the rest of the economy, to provide reassurance that estimates are robust', it said in a research note.
This is unlikely to occur until later in the year, it added.
Davy said that based on their unchanged 2008 estimates and current sector valuations, their new price target is 2550c.
AIB shares were down 17 cent at €19.08 in Dublin this afternoon.
