NIB bucks banking trend by doubling pretax profits

NATIONAL IRISH Bank (NIB) doubled pretax profits to €6 million in the first three months of this year, compared to the same period in 2007, as mortgage lending bucked trends, rising 29 per cent - almost three times the market rate.

The bank's loan book increased 27 per cent to €9.6 billion year-on-year - almost twice the market rate - with business lending rising 26 per cent. Deposits increased 14 per cent to €3.2 billion.

Total income grew 14 per cent to €47 million. Credit losses rose to €5 million from €1 million, reflecting "higher general provisions" and the larger loan book. Losses amounted to 0.2 per cent of the bank's loan book.

NIB is spending €30 million on its branch network. It is merging five branches and opening five, which will keep its network at 64 branches by the end of the year.

A new branch opened in Navan, Co Meath, yesterday, with 10 more planned by the end of 2009.

NIB chief executive Andrew Healy said the ongoing investment was "paying off" as its lending and growth figures showed. "Undoubtedly, the economic slowdown and, in particular, the continuing increase in the cost of funds, has resulted in tougher operating conditions. However, we have a very clear growth strategy and we're focused on building a powerful franchise which will compete aggressively in the long term."

NIB will offer a four-month fixed-term deposit account from next month, which will pay 5 per cent on balances up to €65,000.

The bank continues to offer low interest rates to mortgage holders with low loan-to-value (LTV) ratios. It offers a tracker mortgage rate of 4.5 per cent to borrowers who have an LTV mortgage of 50 per cent or less on their property.

Kevin Gallen, the bank's deputy chief executive, said NIB had grown its share of the mortgage switcher market from a low-single digit percentage to 20 per cent with its low LTV mortgage products. He said this market would rise to 30 per cent of new mortgages from 19 per cent last year. "The increase in rates has been a wake-up call to many borrowers."

Danske Bank, NIB's owner, posted first-quarter pretax profit of 3.41 billion Danish crowns (€455 million), down 36 per cent on lower income and higher costs.