"Our participation in supporting economic growth in all our markets makes us confident that we will substantially grow our business base into the medium term," chief executive Tom Mulcahy said in the groups results statement.

The results were even stronger than the market had expected but after shocks from Wall Streets third biggest points drop ever depressed AIBs share price, traders said.

The stock opened 1-1/4 Irish pence down in Dublin at 1088-3/4 and by 0815 GMT it had dropped 20 to 1070. In London, it rose 10 pence sterling to 947 in early trade but by 0815 GMT had fallen back to 925 pence.

AIB said it would pay an 8.10 Irish pence dividend -- an improvement of 19 per cent. Earnings per share improved by 37 per cent to 30.6 pence on the basis of a 71 per cent leap in profit attributable to shareholders to259.8 million pounds.

The bank noted the results were not directly comparable with the same 1997 period due to its US acquisition of Dauphin Deposit Corporation, an increase in its shareholding in Polish subsidiary Wielkopolski Bank Kredytowy SA. to 60 per cent and the completion of its US divisions credit card and residential mortgage origination businesses.

AIB said net interest income increased 33 per cent to 634.6 million Irish pounds due to the changes and growth in loans -- most strongly in Ireland where they increased by 14 per cent -- and deposits, which improved five per cent there and by six per cent in Britain and Northern Ireland.

"The outlook for the second-half of the year is positive particularly in Ireland, where the economic prospects continue to be very favourable," the group said.

Operating expenses increased by 25 per cent to 567.4 million pounds, mostly due to the acquisitions, but cost income ratio dropped to 56.1 per cent from 63.1 per cent.

Managements best estimate of thecost of the introduction of the euro to the year 2002 was 22 million Irish pounds, half of which had already been expensed, the group said.

The equivalent estimate for millennium compliance costs was about 26 million Irish pounds, 60 percent of which had been expensed.

Non-performing loans fell to 1.5 per cent of total loans and a charge of 44.9 million pounds for bad and doubtful debts was 0.4 percent of average loans compared to 0.5 per cent in 1997.

AIB said the integration of US subsidiary First Maryland Bancorp and Dauphin was proceeding satisfactorily and was on schedule to be completed this year.

Capital markets performed 10 per cent better, giving a profit of 47.0 million Irish pounds.