Business Irish

Wednesday 1 October 2014

The Business week in 60 seconds with Colm Kelpie

Duffy delights as AIB announces better-than-expected profits

Published 03/08/2014 | 02:30

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David Duffy of AIB. Photo: Frank McGrath

DAVID Duffy received a boost last week. The AIB chief executive has presided over a few tough years at the State-owned lender, but its first-half results were better than most analysts had expected.

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The lender reported profits before tax of €437m, compared with a loss of more than €800m in the same period last year.

Analysts Cantor Fitzgerald said the result beat expectations and claimed the bank was continuing to "turn the corner" and benefit from an improving economy.

AIB has cost taxpayers about €20bn and Mr Duffy said nothing would be done to repay the State until the outcome of European-wide stress tests in the autumn.

Central Bank hikes growth forecast

Finance Minister Michael Noonan will have breathed a sigh of relief at the Central Bank's latest economic pronouncement on Monday, which was the most upbeat forecast for the economy since before the crash.

It said economic growth will be faster this year than previously thought, at 2.5pc, compared with 2pc.

Growth next year will be 3.3pc, it predicted.

But Central Bank economist John Flynn warned against significantly easing up on cuts and tax hikes by the Government in October's Budget, despite claims by Mr Noonan that some softening up was possible.

Ryanair's knock-out set of results

Ryanair reported a knock-out set of results at the beginning of the week, with first quarter pre-tax profits soaring 152pc to €197m as revenue climbed almost 11pc.

The airline carried 24.3 million passengers in the period, 4pc more than it did in the first quarter last year. The results were well ahead of analyst expectations and the airline raised its full-year profit guidance.

The carrier also said that it would return €520m to shareholders in the fourth quarter via a special dividend.

EU sanctions target Russian banks

The European Union last week moved to curb Russia's access to bank financing and advanced technology in its widest-ranging sanctions yet over President Vladimir Putin's backing of the rebellion in eastern Ukraine.

EU governments agreed in Brussels on Tuesday to bar Russian state-owned banks from selling shares or bonds in Europe and restricted the export of equipment to modernise the oil industry, a key prop for Russia's economy.

New contracts to sell arms to Russia and the export of machinery, electronics and other civilian products with military uses will also be banned.

Argentina defaults for second time

Argentina has defaulted for the second time in 12 years after last-ditch talks with what it called "vulture creditors" failed.

After a long legal battle with hedge funds that rejected Argentina's debt restructuring following a 2002 default, Latin America's third-biggest economy failed to strike a deal in time to meet a midnight payment deadline.

Even a short default will raise local companies' borrowing costs, pile more pressure on the peso, drain dwindling foreign reserves and fuel one of the world's highest inflation rates.

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