Ulster Bank yesterday reported a 15 per cent increase in total income in the first half of the year, buoyed by a strong mortgage and lending market.
The bank, which in 2003 bought First Active to expand its mortgage activities, increased the amount it contributes to its parent, Edinburgh-based Royal Bank of Scotland, by 18 per cent, or £39 million, to £251 million.
Total income at Ulster Bank alone rose to £408 million in the six months to the end of June, up from £354 million in the year-earlier period.
Ulster Bank, one of the top three lenders in Ireland, is benefiting as more and more people choose to invest in property, prompted by historically low interest rates.
"The Irish market is healthy and our strong figures continue to show this," said chief executive Cormac McCarthy.
"Our business is in a very good state and we expect it to continue growing."
Mr McCarthy said the bank planned to expand its activities in Ireland by adding branches and continuing to offer what he called "innovative" products.
In July, First Active was the first bank in the Republic to start offering 100 per cent mortgages to first-time buyers. Since then, rivals including Permanent TSB, have followed suit.
"We already have a very well spread footprint across Ireland, but are still looking to increase it," said Mr McCarthy. He declined to say exactly how much the bank is spending on the branch expansion, other than that the amount was "significant".
Since June 2004, the bank has added 86,000 new customers, a number Mr McCarthy said he was "happy with".
Expenses increased by 8 per cent in the period to £127 million,reflecting the expansion of the business. The bank, which employs more than 5,000 people across Ireland, took on 200 new staff in the period.
Mr McCarthy said he had no concerns about the high levels of debt being taken on by Irish borrowers, saying that the way people managed their finances was changing in the same way the Irish economy was changing.
"We are a very cautious, prudent and careful lender and see nothing in our business that would lead us to have concerns," he said, adding that if anything, he expected the bank's mortgage take-up to increase, helped by the introduction of the 100 per cent mortgage.
Interest income increased 18 per cent to £306 million in the period, while the bank's net interest margin declined as total lending grew faster than customer deposits.
Mr McCarthy said demand for savings accounts had slowed as people sought alternative ways of saving.
Across the whole of the RBS group, which also includes Citizens in the US, total income increased by 15 per cent in the half to £12.5 billion. Pretax profit excluding integration costs rose by 18 per cent to £4 billion.
Mr McCarthy declined to comment on reports that RBS was in talks to buy a 10 per cent stake in Bank of China for £2.5 billion, a rumour that helped push the group's share price down in London. Earlier, during a conference call with British journalists, Fred Goodwin, the group's chief executive, said the bank was "looking rather than leaping" at expansion into China.
While in the UK the bank said it has seen a small increase in personal arrears. Mr McCarthy said Ulster Bank has no concerns such issues will spread into the Irish market. He also said the integration of First Active is on track.
