Permanent conversion reaps £42m

HAS the limited product building society about as much future as pre-decimal currency, a financial dodo awaiting extinction? With more societies moving up from the foothills of boring but reliable mortgage lending to scale the more grandiose peaks of financial services is conversion to plc status among the bigger and more robust lenders irresistible? In Britain the giant Abbey National seems to think so. Announcing this week that pre tax profits last year grew 10 per cent to exceed £1 billion sterling with assets topping £100 billion chairman Lord Tugendhat painted a bleak picture for those still clinging on to pitons of mutuality.

Tugendhat contends that traditional building societies will see their share of the British mortgage market drop to 25 per cent next year compared to 72 per cent a decade ago. The future for all lenders lies within, what the terms, diversified personal services group

In Ireland the smaller but equally vibrant building society movement faces similar choices. Irish Permanent, the state's largest mortgage provider with 20 per cent of the market, is numbered among the recent converts and showing the benefits of being unshackled from mutuality . This week the Permanent announced a 20.6 per cent increase in annual pre tax profits to £42.4 million and is pushing for an increased share of the mortgage market, using special discounts for new customers as an inducement. The group is considering further acquisitions to broaden its range of financial services.

Chief executive Roy Douglas says growth momentum stems from buoyant demand for lending, a good performance from treasury operations and rising income from subsidiaries. Net interest income profits on lending less the cost of funds rose 12 per cent to £91.5 million in a savings and mortgage market characterised by brutal competition.

Irish Permanent will pay its shareholders a dividend of 7p for each share held. The share price has taken off since being listed at 180p and closed this week at 392p.