GROWTH in lending higher fee income and profits from acquisitions lifted pre tax profits at the First National Building Society group by 20 per cent to £24.1 million for 1995.
Pre tax profits at the building society itself rose 8 per cent ore £1.5 million, to £20.1 million. But pre tax profits for the group, which, in addition to the building society, includes Mortgage Trust in Britain and the deposit taking operation in Guernsey, jumped 20 per cent to £24.1 million.
The managing director, Mr John Smyth, described the result as a strong performance in competitive markets. "The group is a business operating in Ireland and in the UK and the results should be looked at in group terms," he said.
The group advanced £344 million in new loans during 1995, up from £275 million. Some £278 million of the new lending was advanced in Ireland, while £66 million was advanced by Mortgage Trust in Britain. Net new lending by the group was £179 million after repayments and redemptions are taken into account. The building society reported net new lending of £159 million for 1995.
In competitive markets, the group net interest margin - the difference between its cost of funds and earnings from lending fell to 2.5 per cent from 2.7 per cent. Asked if the First National would respond to moves by the EBS group to reward its mutual members with reductions in mortgage rates and increases in deposit rates, Mr, Smyth insisted that "our margin reflects the value we are giving our customers right across the board".
The £4 million rise in group pre tax profits was made up mainly of a £12.95 million rise (25 per cent) in net interest income to £64.7 million and a £1.5 million rise in income from fees and commissions to £5.8 million.
This was partly offset by a £9.1 million rise in administrative costs to £42 million, a £600,000 (80 per cent) increase in bad debt provisions and a £700,000 (21 per cent) increase in the depreciation charge.
Mortgage Trust, the British mortgage operation acquired at the end of 1994 for £20.5 million, contributed about £4 million to the latest results, according to the deputy managing director, Mr Tony Shanahan. The operation, now fully integrated into the group, advanced £60 million in new loans in 1995.
The £1.5 million increase in pre tax profits in the building society was mainly made up of a £2.2 million rise in net interest income to £52.4 million and a £2 million in fee and commission income to £5.4 million.
Some of this increase was offset by a £2.5 million rise in administrative costs to £34.4 million and a £200,000 rise in the bad debt provis' for 1995 to £900,006. The building society advanced net new loans of £159 million in 1995, bringing total loans to customers to £1.67 billion at the end of the year.
The 4.3 per cent rise in net interest income at the building society compared with the 25 per cent rise in group net interest income reflecting the intense competition in the domestic mortgage and deposit markets.
Growth in fee and commission income at building society level reflected First National's strong move into tracker bonds. Introduced to offer savers investment alternatives and to generate funds and commissions for the society, the commission income has replaced traditional income from loan arrangement fees.
Group costs increased by 27.8 per cent to £42 million for 1995 which included a full year of Mortgage Trust. Costs at the building society increased by 8 per cent to £34.4 million. The group reported a cost income ratio of 64.44 per cent for 1995. If a voluntary parting scheme introduced in 1994 and continued into 1995 was stripped out the ratio would have been 63 per cent, according to Mr Shanahan.
With reserves of £119 million at the end of 1995, First National recorded a return of 16.33 per cent on average reserves. Total balance sheet assets increased by 9 per cent to £2.3 billion with a return on average assets of 0.8 per cent.
