In its first set of results since the completion of the Irish Life/Irish Permanent merger, Irish Life & Permanent has recorded strong growth, with a 60 per cent increase in lending and a 35 per cent rise in sales of life assurance and pension products.
Although after-tax profits fell from €151.7 million to €108.7 million, this was largely due to exceptional items. The underlying performance was very sound with operating profits up 19 per cent to €133.9 million.
Shareholders will receive a dividend of 10.1 cents per share, representing a 13 per cent increase on the former Irish Life dividend and a 31 per cent increase on the former Irish Permanent dividend. The results were ahead of market forecasts and are likely to generate upgrades to full-year forecasts by analysts.
Chief executive Mr David Went described the figures as "a tremendous set of results, a very satisfactory outcome given the restructuring of the merged business". He said that IL&P has benefited from a clear strategic focus and its "Ireland-first philosophy".
Finance director Mr Peter Fitzpatrick said: "We're writing increasing volumes of new business, we're seeing an uplift in operating profits on the banking side and merger synergies will more than offset the impact of lower interest and mortgage rates."
On the banking side of the business, gross new lending jumped 60 per cent to more than €1.3 billion with earnings from banking products up 43 per cent to €29.1 million. New residential mortgages rose 48 per cent to €707 million, reflecting the buoyancy of the housing market and the consequential demand for loans.
Sales growth in the life assurance and pensions business was not quite so dramatic, although sales of life and pensions products rose 35 per cent to €149.7 million while product earnings in the life assurance operations were 36 per cent higher on €86.7 million. This rise in sales came about despite the loss of the First Active tied agency business which Irish Permanent enjoyed prior to the merger. Overall new business margins increased by a half to 12 per cent for the six months to the end of June.
While IL&P is now focused primarily on its Irish business, it has substantial life assurance business in the US and this had a "very welcome turnaround in the first half", said Mr Went. Operating profits in the US rose from $12.3 million to $16.1 million as a result of improved margins and a gain on the disposal of a block of business, which helped to offset a reduction in investment earnings. The City of Westminster subsidiary in the UK more than doubled its after-tax profits from £4 million sterling to £10.4 million sterling.
