BANK of Ireland shares fell 11p to 500p after the bank reported flat results for the first half of the year. Profit growth in the Irish market offset lower income from the US and treasury operations to give first half pre tax profits of £193.1 million, up from £191.8 million for the same period last year.

Profits after tax fell to £129.2 million from £130.4 million. The figures were in line with market expectations and brokers attributed the share price fall to profit taking.

Some 83 per cent of profits were "generated in the Republic and Northern Ireland, where profits rose by 4.4 per cent.

Chief executive Mr Pat Molloy, said he was pleased with the latest in results in both quantitative and qualitative terms. He described the last year as "a transition period", involving the "restructuring" of interests in the US, planning for the £600 million acquisition of Bristol & West in Britain and the reorganisation of the retail operation.

Earnings per share at 25.2p were down from 25.7p reflecting a higher tax charge as the bank now pays tax on its US earnings and the fact that there are more shares in issue as shareholders take shares instead of a cash dividend. Shareholders will get a 6.1p dividend, up 22 per cent.

In the retail division which includes branch operations in the Republic and the UK, profits rose by 6.4 per cent to £104.4 million boosted by the strong domestic economy. The division provided 53 per cent of first half profits. Growth in the volume of loans and deposits offset lower profit margins in competitive markets.

Lending for home mortgages in Ireland was up 11 per cent on the first half of 1995 and 8 per cent ahead of the end March 1996 level. But, with overall mortgage lending up by about 16 per cent in the Irish market, the bank's share of the market has fallen. Other lending, which includes personal and business loans, rose by 9 per cent in the Republic year on year, compared with market growth of about 12 per cent, and by 11 per cent in the UK.

Mr Molloy rejected any suggestion that the bank was not an aggressive mortgage lender. But he admitted to cutting back on low profit wholesale lending. This was in order to manage its balance sheet and conserve assets in order to fund the Bristol & West acquisition without calling on shareholders, he said.

Asset quality remained strong in a buoyant economic environment with loan loss provisions down to £10.1 million from £12.5 million." However in competitive markets the net interest margin profits from lending less the cost of deposits edged down again from 3.9 per cent to 3.8 per cent. A change in the deposit mix from demand to high cost term deposits was the main reason for the margin fall.

In the corporate and treasury division, profits fell by 11 per cent to £36.9 million, or 18.7 per cent of group profits. Mr Molloy described this result as "satisfactory in the prevailing conditions". A dealing loss of £400,000 was reported compared with a profit of £11.5 million in the previous first half. Results in the first half last year were boosted by very strong treasury profits and good loan loss recoveries.

Profits from the "other group activities division were 15 per cent ahead at £42.1 million, or 21.4 per cent of group profits. This division includes Lifetime Assurance, Bank of Ireland Asset Management, Bank of Ireland Security Services and Davy stockbrokers, all of which generated higher profits, Mr Molloy said.

Profits from the US fell by 33 per cent to £13.5 million. This follows the merger of the bank's US subsidiary, First New Hampshire, with Citizens Financial group giving Bank of Ireland a 23.5 per cent share of the enlarged bank. Merging the banks cost $34.7 million (£20.9 million), of which Bank of Ireland had to pay $8.2 million, and it incurred a tax charge of $8 million on its US income. The underlying contribution from the US before tax and restructuring costs was up from $32 million to $35 million.