IIB Bank profits increase by 23%

Strong mortgage and business lending drove profits at IIB Bank to €88 million in 2004, the financial institution said yesterday.

Chief executive, Mr Ted Marah, said yesterday that IIB's after-tax profits for the year were €88.2 million, a 23 per cent increase on the previous year's gains of €71.7 million.

Excluding a once-off gain for the sale of the bank's stake in First Active, Mr Marah said profits were closer to €83 million. "That is still a 14 per cent increase," he said.

IIB will not pay a dividend to its shareholder, Belgian bank KBC, this year. Last year its parent agreed to forego a €38 million payment, which was reinvested in the Irish business.

Mr Marah said that this had led to an effective increase in the bank's capital base of €160 million over two years. IIB plans to raise €100 million in subordinated debt this year, which will further add to its capital.

Capital employed stood at €654.6 million at the end of 2004, compared with €525.2 million a year earlier.

Advances grew 28 per cent to €9.1 billion from €7.1 billion, while deposits increased at a similar rate to €11.8 billion from €9.3 billion.

The bank's advances to deposits ratio was virtually unchanged at 76.9 per cent.

A key driver of growth during the year was residential mortgage lending, with new advances reaching €2.2 billion. Mr Marah said that an equilibrium between supply and demand had slowed the annual rate of house price increase to 8.9 per cent in December 2004.

However, he argued that this market would continue to deliver growth on the basis that the Republic had a young population while the average household size was still higher than that in the rest of Europe.

Activity in the bank's corporate and property businesses grew by 21 per cent. The bank is focused on medium and larger businesses.

Last year it co-funded Quinlan Private's €1.1 billion purchase of Savoy Hotels in London. IIB raised approximately half the cash. It also worked on funding two public-private partnerships, the Dundalk and Fermoy bypasses.

The bank announced yesterday that its founder and long-standing chairman, Mr Patrick McEvoy, will retire this year. Mr McEvoy set up the bank in 1973.