Bear Stearns' Irish profit falls 25%

Profits at the Irish arm of US-based investment bank and securities dealer, Bear Stearns, dropped 25 per cent to $30 million (€22 million) last year.

And returns lodged by Bear Stearns Ireland Ltd show that derivative trading drove a 150 per cent growth in its assets to $36 billion.

Accounts lodged with the Companies' Registration Office (CRO)show that pre-tax profits at the Dublin-based bank for the 12 months ended November 30th 2006 fell almost 25 per cent to $30 million, from $39.5 million the previous year.

The fall in profit came despite a 20 per cent increase in fee income over the same period, to $6 million from $5 million, and an $80 million jump in interest income to $180 million.

A doubling in interest payable to $144 million and an increase in expenses to $20.1 million from $14.3 million cut into Bear Stearns' pre-tax surplus for the year.

The growth in costs was partly due to an increase in workers to 105 from 85 and a $3 million jump in payroll costs to $13.2 million.

Bear Stearns Ireland Ltd's latest returns show total assets stood at $36 billion on November 30th last, $22 billion more than on the same date in 2005.

The growth was driven by an increase in the value of derivatives owned by the company to $24.7 billion last year from $2.9 billion in 2005.

At the liabilities side, the bank sold $23.8 billion worth of derivatives in 2006, compared with $3.3 billion the previous year.

Derivatives are financial instruments based on a commodity, security or currency. Most such instruments traded on capital markets are forward contracts - an agreement to buy something at a given price at some point in the future - based on currencies.

The notes to the accounts show that the derivatives traded by Bear Stearns were currency swaps - agreements to exchange a fixed amount in one currency for another at an agreed future date - and forward contracts.

On the balance sheet date, $24.4 billion of the total derivatives held were swaps and forward contracts with third parties. and $164 million were with group companies.

Of those sold, $23.3 billion of the total were with third parties, and the balance was with group companies.

Bear Stearns Ireland is based on Charlotte Way in Dublin's city centre. The group is headquartered in New York and has offices across the US.

Outside the US, it has a presence in London, Milan, Hong Kong and a range of other locations. It has over 14,000 employees worldwide.

Bear Sterns' core businesses are institutional equities, fixed income, investment banking, global clearing services, asset management and private client services.

The group recently reported that in the first three months of the year, net revenues rose 14 per cent to $2.5 billion, net income grew 8 per cent to $554 million and earnings per share were up 8 per cent to $3.