UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the date of 4th December, 2002
ALLIED IRISH BANKS, public limited company
Bankcentre, Ballsbridge, Dublin 4, Republic of Ireland
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F..X... Form 40-F.....
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ..... No ..X...
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ________
For Immediate Release 4th December 2002
Allied Irish Banks, p.l.c.
Trading Update
Allied Irish Banks, p.l.c. ("AIB") is issuing the following update on trading
prior to its year end close period.
Performance in 2002 has been underpinned by the strength of our retail and
commercial banking franchises, particularly in Ireland and the United Kingdom,
together with our other high quality relationship businesses. We continue to
invest in developing our capability to provide our customers with a superior and
distinctive suite of products and services, delivered through the customers'
preferred channel. Our income continues to grow at a rate in excess of our costs
which reflects our clear focus on building proactive customer relationships.
This year, we continue to target mid-single digit growth in adjusted earnings
per share, subject to any change since 30 June in the embedded value of Ark Life
as a result of the performance of equity markets in the six months to 31
December, and excluding a restructuring charge of approximately $35 million at
Allfirst. (At our interim results presentation, we referred to a recovery plan
for Allfirst which would include restructuring initiatives. An early retirement
programme was announced during August and the restructuring charge relates to
the accrued retirement liability for those employees who have accepted the
invitation to participate).
A key event in the second half of this year was the announcement of the proposed
merger of Allfirst Financial Inc. with M&T Bank, thereby creating one of the
twenty largest US banking companies. We believe that our partnership with M&T
will reposition and strengthen our involvement in U.S regional banking.
Regulatory and shareholder approvals are currently being sought and assuming
approval is obtained we expect to complete the proposed merger during the first
quarter of 2003.
Republic of Ireland Division
Performance in our domestic retail and commercial banking franchise continues to
be a key driver of Group earnings. Revenue growth is being generated by
satisfying an increasing proportion of our customers' needs. The business
pipeline remains strong and we expect overall loan growth of about 16% this
year. Our home mortgage activity remains buoyant, we continue to gain market
share and loan growth will be about 25%. Our other retail and commercial loan
portfolios are also increasing strongly and we expect growth to be around 13%
for the year. Deposits in our Republic of Ireland Division will increase by
between 8 - 9%. Customer demand for equity linked savings has been materially
reduced by adverse market conditions and this will affect Ark Life revenues this
year. We are aligning Ark Life more closely with our distribution channels to
ensure we maximise the significant potential in the savings and investment
market.
The slower growth in global economies is also being experienced in Ireland where
we expect GDP growth of approximately 3% in 2002. There are challenges to the
competitiveness of the Irish economy which must be carefully managed to ensure
that Ireland continues to realise its potential to achieve sustainable growth of
3-4% per annum.
Great Britain and Northern Ireland Division
The distinctive customer proposition that we offer business banking customers in
Great Britain is evidenced by the recent announcement by the Forum of Private
Business that, following their independent survey and for the fifth consecutive
time, we have been awarded the accolade of Best Business Bank. We continue to
build the strength of this franchise, leveraging our relationship management
skills to both deepen and extend our share of chosen market sectors. Our
previously stated intention to double our capability over the next three years
remains a priority. Strong loan and deposit growth is being generated. In
Northern Ireland, commercial and retail lending is growing ahead of expectations
and we continue to invest in the further development of our service delivery
channels. Overall, we expect 17 - 18% growth in loans in Great Britain &
Northern Ireland with deposits increasing in the 13 - 15% range.
U.S.A. Division
2002 has been a difficult year for Allfirst. We are now managing the transition
of the business into the proposed merger with M&T. Average core deposits have
remained stable and we are achieving growth in our retail loan portfolios.
However, commercial and corporate loan volumes are down and together with the
continued reduction in our run-off portfolios the effect is likely to be an
overall reduction of 4 - 5% in loan volumes for the year.
A restructuring of the investment securities portfolio is now almost complete.
The purpose of the restructuring is to reduce the potential volatility of the
portfolio by replacing long dated securities with shorter dated issues and by
reducing the overall portfolio by approximately $1 billion. The expected gains,
net of loss of yield in the final quarter of 2001, are estimated to be $71
million. However, the current lack of business momentum will partly offset this
earnings benefit.
Our separate Allied Irish America franchise, focused on the not for profit
sector, continues to enjoy a year of further growth.
Capital Markets Division
In common with our other divisions, performance is being underpinned in
difficult and volatile markets by the consistent and dependable revenues
generated from its relationship customer base. Corporate Banking fees are
growing strongly. Overall percentage loan growth is expected to be about mid
single digit, reflecting a combination of good growth in our U.K. and
international mid-market corporate business and subdued growth in Ireland due to
reduced customer demand. Our interest rate management activities continue to
perform strongly, although the impact of continuing uncertainty in financial
markets will adversely affect revenues from asset management and the mark to
market elements of our trading activity.
Poland Division
The substantial investment programme in our branch banking and service delivery
channels is on schedule and near completion. Loan growth of 7 - 9% is expected.
While deposits are expected to decrease by around 3% in line with the overall
market, we have seen strong growth in non interest income which includes
significantly increased sales of mutual funds products. The prevailing economic
conditions remain difficult but we do not expect any further material impairment
of the loan book. Loan loss provisions will be lower than 2001 on an underlying
basis. Our carefully developed franchise is positioned to generate strong and
sustainable earnings growth.
Non Interest Income
In the divisional analysis, we have commented on trends in component features of
non-interest income. At overall Group level we expect an increase of about 6%
this year.
Costs
Productivity remains a priority with cost growth expected to be managed in mid
single digits. We continue to target an underlying reduction in cost / income
ratios for all Divisions in 2002.
Asset Quality
Asset quality remains satisfactory overall and non-performing loans as a
percentage of average loans are not significantly increasing. The quality in our
retail and commercial banking franchises is robust. We are especially vigilant
in monitoring our credit exposures in corporate markets, where we have seen some
deterioration. The current unpredictability in corporate markets makes
forecasting difficult. However, at this point in time, we expect the provision
charge for the year to be broadly similar to the first half at 37 basis points
as a percentage of average loans. Provision coverage remains good with a strong
level of general provisions.
Margins
Some attrition due to the product mix and the effect of low interest rates on
deposit margins is being broadly offset by good interest rate management. We
expect the Group net interest margin for the year to be around 3%.
Corporate Governance and Risk Framework
We have had a major focus throughout the year on implementing the actions
decided upon by our Board following the Allfirst fraud. The assessments by
external consultants of our risk and governance organisation have been
concluded. Their recommendations are guiding our work programme, on which we are
making good progress. Implementation of these recommendations underpins our
commitment to validate that our practices and policies meet the highest
expectations of our shareholders and regulators and also form an integral part
of our preparations for the requirements of Basle II. Board and Audit Committee
linkages have been strengthened and we have deepened our management capability
through the recently announced appointments of a new Group Chief Risk Officer
and a new Head of Group Internal Audit.
Group results for the year ended 31st December 2002 will be announced on 19th
February 2003.
-ENDS-
For further information please contact:
Alan Kelly Catherine Burke
Head of Group Investor Relations Head of Corporate Relations
AIB Group AIB Group
Bankcentre Bankcentre
Ballsbridge Ballsbridge
Dublin 4 Dublin 4
Tel: +353-1-6600311 ext. 12162 Tel: +353-1-6600311 ext. 13894
Key Points
* Mid-single digit growth in adjusted earnings per share expected*.
* Income continuing to grow at a rate in excess of our costs.
* Strong loan growth continuing in Ireland and Great Britain.
* Non interest income at overall Group level will be similar to that
achieved in 2001.
* Cost growth expected to be managed in mid single digits.
* Asset quality remains satisfactory with no significant increase in
non-performing loans as a percentage of average loans.
* Group net interest margin for the year expected to be around 3%.
* subject to the embedded value impact on Ark Life in the second half of the
year, as a result of the performance of equity markets in the same period, and
excluding a restructuring charge of approximately $35 million at Allfirst.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALLIED IRISH BANKS, p.l.c.
(Registrant)
Date 4th December, 2002 By: ___________________
Gary Kennedy
Group Director, Finance,
Risk and Enterprise
Technology
Allied Irish Banks, p.l.c.