First Active expects rise in pre-tax profits

First Active said yesterday that it expected pre-tax profit growth in the first half to be in the high single digits.

However, growth in basic earnings per share (EPS) was expected to be slightly less than this, once tax and the newly introduced Government banking levy were factored in, the company said.

The results for the six months ending June 30th will be announced on July 22nd.

First Active said residential advances in the five months to the end of May remained strong, with gross new advances 35 per cent higher than the previous year. Its branch network accounted for 70 per cent of new advances with 30 per cent sourced through intermediaries.

Commercial advances also performed strongly in the five-month period with lending volumes of more than €200 million.

On funding, the company said it was in the process of completing a securitisation of €750 million of residential mortgages, which is expected to close within the next month.

Net interest income is expected to be around 20 per cent ahead of the first half last year, reflecting growth in the core Irish business and the contribution to profits from its British activities, which have now been sold.

First Active said margins had been "relatively stable" in the period with a fall in deposit margins offset by gains from hedging.

However, the company said the market for investment products had been weaker than in 2002, partly reflecting the impact of the opening of Special Savings Incentive Accounts last year.

First Active is still expecting a rise of around 10 per cent in other income in the first half. "We are encouraged with the progress which continues to be made as a result of our ongoing increased focus on fee-income generating activities," the company said.

Operating cost growth in the first half is expected to be in line with inflation. First Active said asset quality had been maintained in the period and the bad debt charge was expected to be in line with the normal charge.

Shares in the group rose by seven cents to €4.47 yesterday as analysts described the trading statement as "solid" and said they intended to upgrade full-year forecasts.

NCB said it would be upgrading its full-year pre-tax profit and EPS forecasts by 3 per cent. Meanwhile, Merrion plans to raise its full-year pre-tax estimate for the group by 4 per cent to €67 million from €64.4 million.