AIB has said it expects its earnings for the first half of this year to be down 6% on the same period a year earlier. But the bank has reiterated that it expects low single-digit percentage growth in earnings for the whole of 2008.
In a trading update, AIB said these figures included the effect of the strong euro. It also left its forecast for bad loans unchanged, expecting these to account for no more than 0.2% of all loans.
The bank said its international and corporate businesses were showing faster growth than its Irish retail banking divisions. It also said loan growth would slow to 10%, and just 4% in the Irish market.
On the effects of the credit crisis, the bank said its funding position was strong, helped by growth in customer deposits, and there were 'early signs' of an improvement in conditions. Banks have been more wary of lending to each other since last year because of the crisis in the US sub-prime mortgage market. This has driven up the interest rates at which banks lend to each other. AIB said these higher costs would knock 0.1 points off its net interest margin this year.
The bank said activity in the Irish housing market continued to be low, and the number of loans which 'require close management' had increased. It said it was taking action to minimise risks in this area, adding that it was also satisfied that its international loan books were resilient.
AIB shares were up two cent to €13.62 in Dublin this afternoon.
