AIB said it expects profit growth this year in each of its operating divisions - Republic of Ireland, Capital Markets, the UK and Poland.
In a trading update, it said that customer demand for its products and services remain good, although the operating environment has recently become more difficult. It said it is targeting growth of around 13% in 2007 earnings per share, in line with its previous guidance issued in August for low teen growth in earnings per share.
It said that the effects of the global market dislocation in the second half of this year have created significant headwinds for the banking sector. 'Despite AIB not being immune to some of these effects, our earnings target underlines the resilience of our franchises and underpins our confidence in the future,' today's trading statement says.
The bank said it expected charges in relation to bad debts to increase from a very low level this year but that they should still be within their long-term assumption of 30 to 35 basis points of average loans.
AIB says that in conditions where access to term debt is severely curtailed for all banks, it is in a relatively strong position. 'Our most significant source of funding, about 47% of our total requirement, is our solid, highly predictable retail and business customer deposit base comprising two million customers,' the bank says.
AIB says its total credit exposure to US sub-prime mortgages is low and it added that it has no exposure to conduits or SIVs, either directly or through backstop facilities. However, it says that its M&T operations in the US is experiencing a very challenging environment for regional banks.
On the Irish front, AIB says that as the housing market has materially changed, and as activity slows, the bank's income from residential development and mortgages will also slow.
However, it says that lending to residential developers is heavily weighted to borrowers with 'extensive experience, assets and cashflows derived from diverse segments of the property market. It said it expects loan growth in 2007 of close to 20%.
AIB shares closed up 50 cent at €15.60 in Dublin.
