AIB expected to announce lower share earnings
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Allied Irish Bank is expected to lower its full-year guidance today as the economy deteriorates and the lender counts the cost of joining the Government's guarantee scheme.
The group forecasted three months ago it would deliver full-year earnings per share of 185c-190c.
The market now expects a figure closer to 170c. Analysts will be watching more closely, however, for comments on bad debt assumptions and AIB's capital position in its trading update.
They believe AIB will find it hard to maintain guidance that bad debt losses will peak at 0.6pc-0.8pc of loans next year.
"As the UK banks target core tier one ratios above 8pc... the Irish banks capital requirement has increased on a relative basis, potentially putting them at a commercial disadvantage in the wholesale markets," said Bloxham Stockbrokers. AIB's ratio stood at 6.2pc in June.
Davy analysts assume AIB will pay no final dividend in 2008 and scrap payouts for the next two years. Analysts also widely see the group selling its 24pc stake in US bank M&T.
- Joe Brennan
