Record AIB profit will help fend off predators

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The Independent Online
THE BUOYANT Irish economy helped Allied Irish Banks (AIB) achieve record first-half profits, and the bank said it was optimistic on prospects for the second half of the year.

Pre-tax profits at AIB rose 66 per cent to IRpounds 401.3m (pounds 346m) in the six months to June. Tom Mulcahy, AIB group chief executive, said: "The first half of 1998 has seen another period of exceptional business performance at AIB. Our participation in supporting economic growth in all our markets makes us confident that we will substantially grow our business base into the medium term."

Although the figures were ahead of brokers' expectations, the shares lost 1p in London to close at 935.5p. Dealers said the share price fall should be seen against a backdrop of volatile stock market conditions.

Gary Kennedy, the group finance director, admitted that the group could be seen as a takeover target for the larger banks, but said he hoped that AIB's strong growth would help it keep its independence. He said: "It's naive to think we're not on someone's list, although we would prefer to retain our identity."

Mr Kennedy said that continued success at the bank should act as a defence against unwanted bid approaches.

The bank has made no secret of its intention to expand its businesses outside the Republic of Ireland, Mr Kennedy said, although it had yet to find a suitable acquisition in the UK. The finance director said AIB would like to boost it retail banking operations in the UK, but was less convinced of the value of a UK building society to the group.

AIB increased the interim dividend by 19 per cent to IR8.1p per share.