Irish Life and Permanent (IL&P) has signalled good results for 2003 with continued strong growth in its mortgage and lending activities driving profits higher.

In a trading statement issued to stock markets yesterday, the life assurance and banking group expects residential mortgage lending to rise by 30 per cent for the year with the overall loan book up 17 per cent.

The life assurance business, which had been adversely hit by weak investment markets, has begun to recover well with sales for the second half of this year expected to be more than 15 per cent higher than in 2002.

"Trading conditions for both the life and banking businesses continue to be favourable," the statement said. The group has signalled it will deliver a performance somewhat ahead of market expectations.

Davy Stockbrokers believes stronger volumes and higher margins should push the group's new business profits up to more than €40 million, ahead of its previous €37.7 million forecast.

Irish Life & Permanent shares rose 10 cent on foot of the statement to close at €12.30.

The group said the momentum had increased across the group's key operations with a very strong recovery in the pipeline of new lending.

Its Irish Permanent banking operations is the State's biggest residential mortgage lender.

Gross new lending for the group, including Ireland and the UK, is expected to be just short of €6 billion for the full year, representing growth of more than 30 per cent.

New residential mortgage lending in Ireland is expected to also grow by about 30 per cent for the year while new mortgage lending in the UK, through its Capital Home Loans business, will exceed the strong growth performance of the first half. Consumer finance lending enjoyed a strong second half with new lending growth of 11 per cent expected for the full year.

The group confirmed improved performances at its retail and corporate life assurance divisions and expects second half sales to rise by more than 15 per cent.

Full year life sales in Ireland will be down, as guided, by about 22 per cent or €326.4 million reflecting the SSIA impact in the prior year numbers. Excluding SSIA sales of €101 million in 2002 the retail life division's sales for the year are expected to be ahead by more than 16 per cent. Corporate life sales should grow by circa 5 per cent for the full year.

Irish Life Investment Managers, the group's fund management business, enjoyed a very strong year with new investment inflows up by 30 per cent.