Fundamentals seen as being favourable for more growth

FURTHER strong growth in the Irish economy, low interest rates and the rising number of potential new mortgage customers, will support increased profits at the Irish Permanent over the next couple of years, according to the chief executive, Mr Roy Douglas.

The group, already one of the State's largest mortgage providers, intends to continue offering special discounts for new mortgage customers in a strategy to secure a greater market share. Mr Douglas anticipates a general decline in interest rates, although he indicated that a reduction by the Bundesbank would probably be needed before the Irish Permanent cut its rates.

Attractive rates of interest will also to be paid on its range of savings and deposit type accounts in the face of strong competition, he said.

The past year was primarily a year of consolidation for the group, according to Mr Douglas. Its most recent acquisitions, the Irish Progressive insurance group and Guinness & Mahon, bought in 1994, had been "successfully integrated" and had contributed substantially to its profits, he said. Its costs, however, are set to rise even further due to increased investment in new products and services.

As to future growth in the Irish market, Mr Douglas said that the former building society would consider further acquisitions in the financial services sector. Coming broadly in line with market forecasts, its latest results show that, while margins in its core lending and savings business will continue to be squeezed, this will be offset by volume growth and increased income from its subsidiaries.

Over the past 12 months the rate of growth in other income has outpaced growth in its core net interest income and accounted for over 15 per cent of group profits.

Yesterday brokers remained optimistic that the Irish Permanent would outperform other financial stocks, such as AIB and Bank of Ireland, in enhancing profitability over the next couple of years. Some forecast a 10 per cent increase in pre-tax profits between 1995 and 1997.