Foreign banks having taken an absolute drubbing in the last week. Allied Irish Banks (NYSE:AIB) hasn't been spared, despite operating in a healthy economic environment, having strong results, and expecting more of the same.

While we slept last night, Allied Irish, which competes with Bank of Ireland (NYSE:IRE), Barclays (NYSE:BCS), and HSBC (NYSE:HBC), to name a few, released its preliminary results for 2006. After adjusting for one-time gains, earnings per share came in at 1.828 Euros per share ($2.40 or $4.79 per ADR), which is an increase of 25% compared to last year. The results reflect a 1.63% return on assets and a 29.0% return on equity, and were largely driven by AIB's ability to grow its revenues 4% faster than its costs. Over the long term, the company continues to target growing its revenues 3% faster than its costs.

Results at each of AIB's divisions were strong, with operating profits up 18% in the UK, 23% in Ireland, 52% in Poland, and 29% in the Capital Markets business. The only area of weakness was at M&T Bank (NYSE:MTB), where payments to AIB were down 4%, because of an accounting change. AIB owns 24.2% of M&T.

Both loan and deposit growth at AIB was strong, though loan growth continued to outpace deposit growth. This continues to weigh on the company's net income margin, but this is a dynamic the company is working to improve on in future years.

Ireland has seen its own property bubble, much like we have here, but there's not much cause for concern in AIB's balance sheet. Loan loss provisions this year were slightly higher than last year on an absolute basis, but lower when compared to the higher levels of interest income; overall charge-offs were still low. Over the years, AIB has proven itself a disciplined lender, and its loan loss reserves should be adequate.

With a Tier 1 capital ratio of 8.2%, AIB remains close to its targeted range of 7% to 8%, while maintaining a high growth rate. Next year, the company expects this growth to slow to the low double digits. In the meantime, shareholders will see a final dividend that's 10% higher than last year's, and they can expect regular dividend increases to largely keep pace with earnings growth.

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At the time of publication, Nathan Parmelee had no financial interest in any of the companies mentioned -- but that's nothing personal. He was ranked 164th out of 23,636 Motley Fool CAPS investors. The Motley Fool has an ironclad disclosure policy.