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 7th DECEMBER 2006
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- ________
7th DECEMBER 2006
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. Please note that all trends in this
update are in constant currency terms.
Throughout 2006 we have experienced very positive trading conditions in all our
key markets. The focus of our people combined with buoyant customer demand for
our products and services has been central to performance. Across our franchises
this combination is driving significant, high quality growth in operating profit
at good rates of return on capital. The operating performance is being
complemented by exceptionally good asset quality. The increase in contribution
that we anticipate from M&T this year reflects its quality and resilience in
challenging market conditions for US regional banks.
We continue to target growth of over 20% in 2006 earnings per share*. This is in
line with previous guidance given at our interim results presentation and is
relative to a 2005 base figure of 145.9c.
The achievement of at least a 3% positive gap between the rates of income and
cost growth is a core objective. We expect to exceed that objective this year in
all our operating divisions. The investments we are making in operations and
technology will heavily influence our capability to sustain productivity gains
in future years. We are encouraged by the early outcome of these investments -
notably in improved operations, an enhanced risk and control framework and in
assisting our preparations to meet the imminent regulatory requirements of
Sarbanes Oxley and Basel II.
Our capability to take advantage of the plentiful supply of business
opportunities is underpinned by solid capital and funding positions. These
positions are supported by the returns we are achieving on high quality business
development and by a range of available capital and fund raising options.
* Excludes profit on property sales and leaseback transactions, business
disposals and hedge volatility under IFRS
REPUBLIC OF IRELAND DIVISION
Our domestic franchise continues to outperform and extend its leading market
position. Revisions and improvements to a range of products and services have
proven popular with new and existing customers. In a strong and resilient
economy in which GDP is likely to increase by around 6% this year, growth in
loan and deposit volumes is expected to be close to 30% and 20% respectively. We
continue to gain market share in deposits as well as in business and personal
lending. In mortgages, while retaining our relatively conservative risk
criteria, volume growth is now expected to be broadly in line with the market
this year. Loan and deposit product margins overall are stable despite intense
competition while mortgage margins are reducing in line with expectations.
Our high potential wealth management business is gaining momentum. Within this
area, our joint venture in life and pensions with Aviva/Hibernian has been well
integrated and in recent months there has been a notable increase in customer
demand and sales through our franchise, particularly in higher margin products.
CAPITAL MARKETS DIVISION
The sustainable nature of this division will be underlined again this year by
its strong performance, further extending its long record of unbroken profit
growth. Performance will be led by Corporate Banking which now comprises almost
two thirds of the division's profit. The customer loan book is targeted to
increase by around 15% in highly liquid corporate markets. There is an abundance
of lending opportunities, particularly for our international specialist
franchises, although we are vigilant in choosing those opportunities which meet
strict criteria for risk adjusted return on capital. This disciplined approach
to optimising returns is also applied to our existing portfolios.
In Global Treasury, performance is broadly in line with expectations. Our
customer service business is a highlight this year and this unit also provides
significant input to relationship management initiatives across our banking
franchises.
In Investment Banking, performance is very good and well spread across the
business units.
UK DIVISION
A high level of growth will be achieved again this year. We are targeting both
loans and deposits to increase by around 20%.
In Great Britain we continue to grow our business in robust mid corporate
banking sectors. Our long established reputation for delivering outstanding
service was recently recognised again by the business community. In a
comprehensive survey carried out every two years by the Forum of Private
Business, we retained our position of "Britain's Best Business Bank" - the
seventh consecutive occasion that we have been voted No. 1. In Northern Ireland
growth is being achieved through a combination of a good performance in business
banking, a refreshed product suite in the personal market and further efficiency
gains.
In both markets we are responding to customer demand by extending our product
range and delivery channels. We are developing a wealth management business as a
natural, complementary extension to our proven success in business and corporate
banking. We continue to invest in the consistent addition of high quality
people, improved locations and systems to sustain our growth.
POLAND DIVISION
Significant progress is being made in Poland where well spread, buoyant customer
demand is a feature of our business. Anticipated loan growth of close to 20%
reflects increases across all key business and personal portfolios.
We are distributing to target markets through our corporate centres, branches
and external channels. This segmented approach together with the use of
sophisticated credit techniques by skilled, experienced people enables us grow
without compromising asset quality. Customer deposits are expected to increase
by around 8%. In the overall savings market our No. 1 ranked investment
performance will be reflected by exceptional growth in funds under management
and our leading stockbroking business will be a further source of strong income
growth this year.
M&T BANK CORPORATION
M&T continues to outperform in a difficult trading environment. This was evident
again in the above market consensus results for the first 9 months of 2006. A
clear focus on efficiency with income growing faster than costs was complemented
by very solid asset quality.
MARGINS
Currently there are 3 principal causes of reduction in our net interest margin.
In order of effect these are 1) loans growing faster than deposits 2)
re-investment of customer account funds and 3) business mix and competition. In
the cases of 1) and 2) the negative effects are beginning to moderate. In the
case of 3) the effect is broadly unchanged. This year we expect our net interest
margin to reduce by close to 20 basis points.
NON INTEREST INCOME
An increase of around 14% is targeted for 2006. Key growth areas include Polish
asset management and brokerage services, customer treasury services, Irish
cardholder activity, investment and protection and general insurance fees.
COSTS
Cost growth is expected to be 12-13%, which is above trend but driven by buoyant
business growth. It also reflects our accelerated commitment to invest heavily
in our people, systems and locations so that we can sustain long term profitable
growth and meet all our regulatory requirements. As indicated earlier in this
update income is expected to grow at a rate of more than 3% greater than costs
this year.
ASSET QUALITY
Credit quality remains strong in all our markets. This year we expect the bad
debt charge to be around 13 basis points of average loans, broadly in line with
previous guidance. This is higher than the charge (3 bps) incurred at the
interim stage, reflecting the anticipated lower level of recoveries and
writebacks rather than any material deterioration in the loan book.
NOTE
Group results for the year ending 31st December 2006 will be announced on 6th
March 2007.
-ENDS-
For further information please contact:
Alan Kelly Catherine Burke
General Manager, Group Finance 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 7th DECEMBER 2006 By: ___________________
John O'Donnell
Group Director, Finance,
Risk and Enterprise
Technology
Allied Irish Banks, p.l.c.