EBS Building Society has returned an 8 per cent rise in pre-tax profits to €31.6 million (£24.9 million) as intense competition in the mortgage and savings market begins to bite.
The mutually-owned society's results were also depressed by a €3.6 million payment to the Revenue Commissioners in settlement of its DIRT liabilities between 1986 and 1999 arising out of the inquiry of the Dail Public Accounts Committee.
During 2000, the EBS advanced €4.9 billion in loans to customers, an increase of 19 per cent on 1999. This increase was below the rate of growth in the Irish mortgage market last year, estimated at around 25 per cent, with more aggressive pricing and greater competition making progress more difficult.
EBS chief executive, Mr Ted McGovern, who took over in January, described the 19 per cent rise in lending as "respectable" saying the society was comfortable with its performance. "We have no problem lagging market growth. We are looking for steady growth and have achieved a level of growth that we feel is right for our members," he said.
Its share of the mortgage market fell from 14.2 per cent in 1999 to 13.4 per cent last year compared with 14.7 per cent in 1998. The EBS had been among the cheapest providers of mortgage finance to customers until the arrival of Bank of Scotland. And while all of the mortgage providers have responded with more keenly priced products, AIB in particular has become a dominant player in the Irish mortgage market matching Bank of Scotland's offering.
Mr McGovern said Bank of Scotland has not "come up on the radar" in terms of poaching its customer base and stressed the EBS's rates were still very competitive and attracting new customers. "I don't believe Bank of Scotland is offering a sustainable proposition. We haven't adopted a level of pricing that would move the society into the red," he said yesterday.
The society's total operating income dropped by €9.1 million last year to €84.2 million compared with €93.3 million. Interest margins - the profit it makes from the amount the society has to pay depositors and charge borrowers - continued to tighten, falling from 1.8 per cent to 1.4 per cent. Inflows of savings to the society were marginally higher than in 1999. Over the 12 months it attracted €437 million or 9.1 per cent of the Irish savings market compared with 9 per cent in the previous year.
Sales of its Summit funds were strong, with funds under management up by 90 per cent to €354 million. EBS funds are managed by Montgomery Oppenheim which have been achieving strong investment returns. The EBS funds account for 10 per cent of the Republic's new investment fund market.
