Stronger growth in mortgage lending contributed to a 15.5 per cent rise in pre-tax profits to £36.6 million (€46.5 million) at First Active last year. The former building society, which floated on the stock market last October, said it expected to increase its share of the mortgage market this year and was keeping its eyes open for acquisitions.

Meanwhile, group chief executive, Mr John Smyth, reported a steady take-up of free share entitlements by its members. Some 10.5 million of the total 120 million shares issued at the time of flotation are still unclaimed. Members of the former society have up to three years to claim their entitlement.

First Active's shares closed unchanged in Dublin yesterday ending the day's trading at €4.35 after the record results. Shareholders will receive a dividend of 2.40 cents per share for the three month's trading in 1998. The final dividend will be paid on May 17th.

After tax, First Active showed a 16 per cent increase in profits to £27.8 million (€35.3 million). The year-end result was buoyed by stronger residential lending in the second half of 1998 following a repositioning of its key products. New lending increased by 34 per cent to £893 million last year. Some £548 million was in the Republic with a further £345 million in Britain. First Active estimates it has held onto its share of the Irish mortgage market which it puts at around 12.5 per cent, predicting it can improve this position over the coming 12 months. Customer account balances were also up, rising by 10 per cent to £3 billion. Net interest income increased by 15 per cent to £94.6 million. In line with other financial institutions, the net interest margin declined from 2.05 per cent to 2.02 per cent.

The British contribution to group profits was substantially lower than in 1997 at £6.2 million mainly due to the inclusion of once-off gains last year. Despite the downturn, Mr Smyth said the group was "more than satisfied" with its core profits in Britain. First Active has concentrated on current account mortgages and buy-to-let mortgages in that market and is optimistic that it can continue to grow its share of that specialist niche.

The group is keen to expand its business but stated it did not have any specific acquisition within its sights at the moment. Mr Smyth said there was "nothing imminent" but that it was considering its options.

First Active expects its link-up with Friends First will also enhance its growth prospects this year, as it offers a wider distribution network for its mortgages and other products.

The group's bad-debt provisions increased significantly rising from £1.1 million in 1997 to £4 million last year. Group finance director, Mr Tony Shanahan, said the increased charge did not reflect any deterioration in its loan portfolio or concerns about the British and Irish markets and largely reflected a restructuring of its provisions in Britain.