GOOD loan growth with lower costs and lower bad debt provisions boosted pre tax profits at First Maryland Bancorp by 8 per cent to $184.2 million for 1995. Profits after tax at the Allied Irish Banks subsidiary were 8 per cent higher at $120.2 million.
Results for the year and for the final quarter of 1995 were in line with market expectations. Profits after tax increased by 10.5 per cent to $31.5 million for the final quarter. FMB recorded good growth in core earnings with a 3.8 per cent rise in net interest income. Profits increased despite much lower gains from the sale of securities - gains on these sales were down to $2 million in 1995 from $15.6 million in 1994.
While the twelve month provision for bad debts fell from $23 million to $16 million, provisions increased in the final quarter to $5.7 million from $2 million. FMB senior vice president Mr Jim Smith said there was "no real deterioration" in asset quality in the final quarter. The increase in provisions reflected the addition of the Bell Atlantic credit card venture in Delaware.
"We felt it was prudent to add to provisions. We now have 82 million credit cards with sums outstanding for up to 60 days", he said. The cobranding venture through FMB subsidiary First Omni has resulted in new lending of $80 million since it was announced in October, he added. Transactions on the card which carries the Bell Atlantic and First Omni brand names are processed by FMB in a deal which gives FMB access to about 11 million customers. FMB intends to promote the card in seven or eight Us states this year, Mr Smith said.
FMB's provisions this year should be lower than the 1995 figure of $16 million, according to Mr Smith.
Costs fell by 1.9 per cent to $388 million for 1995. But there was a 2.9 per cent rise in costs in the final quarter to $98.4 million.
Mr Smith attributed the increase to costs associated with the Delaware credit car venture. "Costs will rise next year as the project grows possibly close to $400 million because all costs have to be amortised in the first year," he said.
Interest income increased by 17 per cent to $510 million for 1995 reflecting a 12.5 per cent increase in lending. By year end FMB's loan portfolio had increased to $6,139 million. Credit quality improved, with non performing loans down to $33.3 million from $59.3 million. With FMB's year end allowance for credit losses at 533 per cent of non performing loan, up from 322 per cent, the bank has scope to feed back some of the allowance into profits.
