Competition eats into profits at ICS

Intense competition in the mortgage and savings market has eaten into profits at the ICS Building Society.

The Bank of Ireland-owned society has reported a modest 7.7 per cent rise in pre-tax profits to £36.1 million (#45.9 million) in 1999 while its deposits fell by 4.2 per cent to £1.3 million.

The arrival of Bank of Scotland and Northern Rock into the mortgage and deposit market last year has put pressure on financial services companies to offer more attractive rates to retain customers.

The ICS has reported a 57 per cent rise in new loans to customers, with its mortgage book up 21.5 per cent to £1.1 million. The building society estimates it has increased its share of the mortgage market from 6.5 per cent to 7.1 per cent last year.

Like all Irish financial institution, ICS saw its profit margins on its core lending and savings business decline. Its total net interest income fell by 5.2 per cent to £41.6 million. Its earnings from fees and commissions were strong mainly due to income from processing mortgages on behalf of Bank of Ireland.

Its cost to income ratio marginally improved over the 12 months from 31.7 per cent to 31.4 per cent. Commenting on the results, ICS managing director Mr Ted McGovern said it was pleased with the growth in mortgage lending but suggested the mortgage market would become even more competitive.