Tom Mulchahy, chief executive, said other key features of the strong profit growth were the significant reductions in the provisions for bad debts in all divisions and lower total costs.
Provision for bad and doubtful debt halved to Ir£62.9m in 1994 from Ir£127.6m in 1993. The group said this reflected on-going improvement in credit quality and an improved economic environment in both Ireland and Britain.
Total operating expenses were down for the first time by 0.4 per cent to Ir£783.8m, with staff costs declining 2.5 per cent. Profits in its AIB Bank division rose 27 per cent to Ir£187.5m
The British operations increased profits150 per cent to Ir£39.0m from Ir£15.2m in 1993.
AIB said lending growth was strong in both the Republic of Ireland and in Northern Ireland, particularly in home loans, in contrast to Britain.
Total loans and advances to customers in the Republic of Ireland increased by 10 per cent, while deposits grew by 10 per cent. However, AIB said the low-interest rate environment in Ireland had a negative impact on deposit margins and was largely responsible for the decline in the group's overall net interest margin, which slipped to 4.04 per cent from 4.33 per cent in 1993.
In the US, AIB's operations saw a 25 per cent increase in pre-tax profit to Ir£109.5m in 1994 from Ir£87.7m in 1993.
"This good performance was mainly underpinned by a substantial improvement in credit quality in First Maryland Bancorp and AIB New York."
Profits at AIB's capital markets divisions slipped 22 per cent due to difficult bond markets in the first half of the year, although profitability improved in the second. Profits at the division slipped to Ir£44.2m from Ir£56.9 million in 1993.
The bank is looking to eastern Europe for future projects, and already has a 16.5 per cent stake in a Polish bank.
Hugh Feeley, group general manager, said the bank had looked at buying HMC, the centralised mortgage lender, but had not been prepared to pay the money that Abbey National eventually came up with.
"We looked at a few other UK mortgage books, but we didn't like the asset quality," said Mr Feeley.
He added that the bank was not concerned by the prospect of a :".third force" being created in Ireland to rival the two dominant banks, AIB and Bank of Ireland.