Judging by the low-single-digit price-to-earnings multiple of Global Gains favorite Allied Irish Banks (NYSE:AIB), you might think the bank is in a similar situation to hurting U.S. counterparts such as Wachovia (NYSE:WB) and Citigroup (NYSE:C), which have been drubbed by exposure to the U.S. housing market.

You’d be wrong. Allied posted 2007 results that, although not exactly rousing, should certainly put the bank ahead of most of its counterparts in the States, not to mention competitors such as Bank of Ireland (NYSE:IRE) and HSBC (NYSE:HBC). For the year, total operating income was up 13%, with operating profit up an even stronger 18%. On an adjusted basis, basic earnings per share climbed 13%. Both return on average assets and return on average equity fell for the year, though ROE still finished at a very respectable 22%.

To be sure, there was still room for improvement in the year's results. For those who have been following Allied, the quarter brought some more of the same in terms of a tightening interest margin. The bank closed out the year with a net interest margin of 2.14%, compared with 2.26% in 2006. Allied blamed the continued tightening on funding costs and lack of sufficient deposit growth, along with competitive pressures.

Also affecting results were a few items that will sound familiar to investors in the U.S. banks I mentioned above. Since the current credit dislocation has spread globally, Allied has not been immune to trouble, though it hasn't faced nearly the magnitude of associated losses that the U.S.-based banks have had. For the year, Allied wrote down 92 million euro in its trading portfolio, 177 million euro in its available-for-sale portfolio, and 39 million euro in its structured-securities portfolio -- 25 million euro of which was related directly to U.S. subprime. The bank's remaining direct exposure to U.S. subprime is limited to a 128-million-euro whole-loan portfolio and a 199-million-euro asset-backed-security portfolio, though this doesn't preclude the bank from seeing other areas hit by lousy credit markets.

Allied is looking at a tough environment going into 2008, since the global credit problems have yet to abate and a rise from the low bad-debt provisions in 2007 is expected. Allied has projected earnings-per-share growth in the low single digits for the year -- not a terribly exciting outlook. However, looking at this in context -- other banks are losing huge sums of money, and Allied is trading at a ridiculously low multiple (not to mention offering a nice dividend yield) -- makes me think that Allied's stock should be one to watch.

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