Anglo profits beat expectations

Anglo Irish Bank has posted another bumper set of figures with pre-tax profits up 35 per cent to €308 million in the six months to the end of March. The results were ahead of market expectations and were achieved on the back of continued strong demand for lending in its core Irish, UK and US businesses.

Anglo's new chief executive, David Drumm, described the bank's performance as phenomenal. "We are firing on all cylinders. This has been an excellent first half performance for the bank," he said yesterday. With a pipeline of €4.9 billion in loans approved but yet to be drawn down by its customers, Anglo is expecting a robust full-year outturn.

Earnings per share rose by 30 per cent to 66.7 cent while shareholders will be paid an interim dividend of 4.51 cent per share, a 20 per cent increase on the previous year.

Anglo shares moved higher in London on foot of the better-than-expected results. The shares gained 77 cent in Dublin to end at €9.75.

Lending to customers increased by €4.3 billion net, up 18 per cent to €28.7 billion. In Ireland, lending to customers was up 19 per cent to €15.8 billion, loan growth in the UK rose by 15 per cent to €11.3 billion, while in the US loans to customers increased by 26 per cent to €1.6 billion.

Overall, some 55 per cent of the bank's lending is to customers in the Republic, 40 per cent in the UK and 5 per cent in the US. Mr Drumm said the bank had managed to maintain stable lending margins and that its asset quality was robust.

The bank has a general provision for bad debts of €230 million, of which €68 million is a specific provision. During the six months, the bank's non-performing loans amounted to €159 million, equivalent to about 0.5 of one percentage point of its overall loan book. Mr Drumm would not comment on whether it had an exposure to Waterford Wedgwood, citing customer confidentiality.

Its total funding increased by 19 per cent to €34.5 million, with 65 per cent of this generated from Anglo's customer deposit base.

The bank's total assets increased by 17 per cent to €40 billion during the six month period.

Looking forward, Mr Drumm said he could see lots of long-term attractive growth potential for the bank and stressed that it would continue to focus the type of business it pursued under his predecessor, Sean FitzPatrick.

He said there was plenty of growth potential in its key markets and that while its growth strategy was not predicated on making acquisitions, it will be opportunistic in the right circumstances.

The bank also indicated that the impact of the new International Financial Reporting Standards (IFRS) accounting regulations would be at the bottom of analysts' expectations. Some brokers upgraded their forecasts for Anglo following the positive tone by as much as 5 per cent.

Anglo's wealth management business generated €44 million during the first half of its financial year with treasury sales netting a further €30 million.