Ireland's second-largest bank yesterday challenged prevailing wisdom and outlined plans to expand in the US while cutting bad debt provisions, despite the global economic slowdown.
Dublin-based Allied Irish Bank gave an upbeat assessment of credit quality at its US operations, and said the region was the main area in which it would be making acquisitions.
"You should see some small acquisitions, and substantial progress on a larger deal, in the next 12 months," said Gary Kennedy, AIB's acting finance director. "We are a little bit different to other European banks in that we've been in the US for 25 years. Our domestic market does not need a lot of investment and there's not a lot available to us in the UK."
AIB plans to boost the commercial and retail banking operations at its Allfirst subsidiary, which has branches in Maryland, Pennsylvania, Virginia and Washington DC. It follows Royal Bank of Scotland's purchase of the retail franchise of New England-based Mellon Financial for $2.1bn (£1.4bn) last month.
AIB posted results showing operating profit from its US activities up 6 per cent to 170m euros (£104m) in the first half of the year, with provisions climbing 9 per cent. The unit, which has a strong presence in providing banking to not-for-profit organisations, generates one-quarter of group earnings.
Group pre-tax profits rose 9.5 per cent to 667m euros and pre-tax profits in the UK and Ireland 15 per cent to 372m euros.
Mr Kennedy defended the bank's decision to reduce provisions 4 per cent, to 67m euros, at a time when other banks were increasing reserves against bad debts, saying asset quality remained high.Reuse content