STRONG growth in lending, a good performance in its treasury operations and a sharp rise in income from its subsidiaries contributed to a 20.6 per cent rise in Irish Permanent profits to £42.4 million last year.
On the back of this strong performance, its 137,000 shareholders, most of whom received shares when the company converted from a building society in 1994, will be paid a dividend of 7p on each share held, it said yesterday. This means that shareholders qualified for the minimum issue of 300 shares when the building society was floated on the stock market will be paid £21. Those with 600 shares will receive £42.
The shares closed unchanged at 390p in Dublin yesterday, as its full-year profits came in largely in line with broker's forecasts. The shares were issued at flotation at 180p.
Despite fierce competition in the mortgage and savings market throughout 1995, net interest income - the profits on lending less the cost of funds - rose by 12 per cent to £91.5 million compared with £81.9 million in 1994.
Growth in the number of residential mortgages and other loans more than offset the tightening of margins in the highly competitive savings and mortgage market, the chief executive, Mr Roy Douglas, said.
The Irish Permanent reported a sharp rise in its core business, advancing £406 million in new mortgages, compared with £342 in 1994. Of this, almost £20 million was advanced through its UK division.
Mr Douglas says it has maintained its position as the biggest provider of home loans in the Republic, estimating that it currently holds around 20 per cent of the mortgage market.
On the commercial side, the former building society also reported increased business, advancing £73 million in new commercial mortgages, against £66 million in 1994. This brings its total commercial mortgage portfolio to £298 million at the end of 1995.
However, low rates of interest and strong competition for deposits was blamed for a slowdown in the rate of growth in the retail savings market, with a net increase of £208 million in 1995, compared with £270 million the previous year.
Outside of its core business, its subsidiaries made a good contribution to the group's profits. Total other income increased by 63 per cent to £16.5 million, representing 15.2 per cent of total group profits.
Irish Progressive, the life assurance company formerly Prudential Life, adding embedded value profits of £9.5 million in its first full-year's trading within the group. It was bought for £31 million in 1994.
The group's motor finance arm, Irish Permanent Finance, returned a profit of £1.43 million, reporting a 52.4 per cent increase in new lending. In 1995 it advanced £64 million in new motor finance loans, compared with £42 million in 1994, bringing the value of its loan portfolio by year end to £100 million.
Irish Permanent's Isle of Man-based company, set up in 1992, added £513,000 to the group's profits. The private bank, Guinness & Mahon, also bought by the Irish Permanent in 1994, managed to return to profitability, recording a return of £289,000.
Its treasury division made strong gains on the back of a buoyant government gilt market, particularly in the second half of the year. Dealing profits increased from £0.2 million in 1994 to £1.4 million last year.
Increased fees and commissions and other earnings by the group added £7.8 million to its bottom-line performance. Fees and commissions paid out by the Irish Permanent also rose, from £1.5 million to £2.2 million over the 12-month period.
Administrative costs at the former building society rose by 13.7 per cent in 1995 to £62.3 million from £54.8 million in the previous 12 months. According to Mr Douglas, this sharp rise reflects the growing investment in the development of the group's products and services and is also partially due to the full-year consolidation of Guinness & Mahon.
