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 9 December 2004
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 of 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 9 DECEMBER 2004
Allied Irish Banks, p.l.c.
Trading Update
Allied Irish Banks, p.l.c. ("AIB") (NYSE:AIB) is issuing the following update on
trading before its year end close period.
Our performance in 2004 is strong. We are comfortable with market analysts'
consensus forecast of 125c in adjusted earnings per share for 2004, relative to
the comparable base of 118c in 2003.
We occupy prime positions in economies characterised by relatively high growth
rates, providing a favourable platform for us to sustain and grow our profits.
Our business pipelines reflect a positive outlook and underpin our confidence
that current momentum will be maintained.
We continue to expect double digit aggregate profit growth in constant currency
from our operating divisions this year. We expect to maintain a clear positive
gap between income and cost growth and a consequent reduction in our cost /
income ratio. M&T continues to perform very well and the profit contribution
from this investment, in dollar terms, is also anticipated to show a double
digit annual increase.
As indicated at the interim stage, we expect an adverse currency translation
impact of around 4% after hedging. Other offsetting factors to group earnings
continue to be a higher effective tax rate due to geographic profit mix and
Polish minorities.
Our capital and funding positions are prudent and we are actively managing both
to support future profitable growth and optimise returns.
REPUBLIC OF IRELAND DIVISION
We are extending our prime position in retail and commercial banking and gaining
market share across a range of products and services in a competitive
environment. Growth is being fuelled by broadly based demand in both the
business and personal markets. Customer support is particularly evident in our
deposit performance where we expect growth this year of close to 15%, relative
to market growth of c.11%. Loan growth is targeted to be around 25% and we
continue to apply strict profitability and credit quality criteria.
Sales at Ark Life are predominantly in lower margin products; consequently
profit contribution is likely to be a little lower this year.
As indicated at the interim stage, the total cost associated with the foreign
exchange charges investigation is EUR 50m. This will all be charged in this
year's accounts and is included in the guidance contained in this update.
GREAT BRITAIN AND NORTHERN IRELAND DIVISION
The division is on target to record a strong increase in profit again this year.
In Great Britain, our relationship banking business continues to develop its
position as a premium quality, differentiated franchise. This was underlined
again recently when, for the sixth consecutive time since 1994, we have been
voted Britain's Best Business Bank by the Forum of Private Business. We are
increasing our presence in those sectors where we have established a reputation
for superior service, with particular and growing appeal to medium sized
enterprises. Our franchise development drive is being underpinned by the ongoing
recruitment of high calibre people who are being integrated into the expanding
management structure of our business in Britain.
In Northern Ireland, First Trust is also enjoying a very good year. Notable
market share gains are being made in both business and personal banking. A solid
operating performance is underpinned by good asset quality.
For the division overall, this year we expect loans to increase by over 20% and
deposits to grow by around 18%.
CAPITAL MARKETS DIVISION
Profit momentum is being sustained by customer demand.
Corporate Banking is likely to record significant double digit loan growth in
2004 and we are achieving high risk adjusted returns on capital employed. Our
international teams, who now account for more than half of Corporate Banking
profit, are enjoying buoyant demand in their carefully chosen niches in
acquisition / project finance and CDOs. In Ireland, our leading franchise is
benefiting from a sustained recovery in demand for our tailored suites of
products and services.
In Treasury, consistent growth is being driven by the strength of relationships
with Irish and mid tier international corporates. Use of risk limits remains
modest and we expect a good performance from trading activities.
Investment banking is performing well and is ahead of last year.
POLAND DIVISION
Following the difficult operating environment in 2003, this year's outcome will
be much stronger.
Non-interest income will be significantly higher, with investment fund, dividend
and card fees all well up. We anticipate deposit growth of around 5%, reflecting
an acceleration in the second half, without the interest rate environment
induced margin pressure of 2003. Expected loan growth of around 8% reflects a
good performance in business lending and local currency mortgages - sectors in
which customer demand at present is low but which carry satisfactory risk
characteristics. Asset quality continues to improve and remains best in class.
Costs will be lower this year following implementation of the cuts announced in
2003 and an ongoing focus on efficiency.
M&T BANK CORPORATION
Consistent guidance this year has been for double digit growth in diluted GAAP
earnings per share. This was reiterated at M&T's Q3 results announcement.
Features of the nine months to September included solid loan growth, with higher
commercial demand offsetting subdued consumer volumes. Asset quality improved
and the bad debt provision was down on the comparative period. Core operating
expenses were well controlled.
The Allfirst integration has surpassed expectations. There are further material
opportunities and synergies and extracting these benefits is likely to be a
primary area of focus for M&T in 2005.
MARGINS
We expect the underlying net interest margin to reduce by around 25 bps this
year. Both the quantum of reduction and factors causing it are unchanged from
previous guidance. The primary factor continues to be that loans are growing
faster than deposits; less significant factors are deposit pricing, business
mix, competition and business funds reinvestment. Loan margins remain broadly
stable and the return on lending proposals is measured to ensure it exceeds
returns from alternative uses of capital.
As also previously guided, there will be a technical reduction of around 8 bps
in the net interest margin following implementation of a new policy for
reinvestment of our capital funds.
NON-INTEREST INCOME
We expect growth this year of around 10%. Increased demand from corporates and
medium sized enterprises is driving lending fees. Polish non-interest income is
broadly strong. CDO and account activity fees are also performing well.
COSTS
A mid single digit increase is anticipated this year. Cost control is
satisfactory despite a step up as we apply increasing resources to ensure
preparedness and compliance with industry wide regulatory / governance
requirements, such as IAS, Basel II, Sarbanes Oxley and the Irish Companies
(Audit and Accounting) Act, 2003.
ASSET QUALITY
Asset quality remains strong and all key indicators are positive. We continue to
apply stringent stress tests to our credit portfolios. They confirm their
resilient and robust characteristics. Provision coverage is good.
We now expect the provision charge this year to be around 20 bps of average
loans.
NOTE
Group results for the year to 31st December 2004 will be announced on 22nd
February 2005.
During March 2005, shortly after our results announcement, we intend to host an
investor / analyst presentation in London. The purpose of this presentation is
to indicate the effect that IAS (International Accounting Standards) will have
on AIB, following their introduction on 1st January 2005. Accordingly, to ensure
clarity, we consider it appropriate to provide like for like market guidance for
2005 at that presentation rather than at our 2004 results announcement.
-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
Dublin 4 Dublin 4
Tel: +353-1-6600311 ext. 12162 Tel: +353-1-6600311 ext. 13894
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 authorised.
ALLIED IRISH BANKS, p.l.c.
(Registrant)
Date 9 December 2004 By: ___________________
Gary Kennedy
Group Director, Finance,
Risk and Enterprise
Technology
Allied Irish Banks, p.l.c.