K & H Bank, the Hungarian bank in which Irish Life has a 23 per cent stake, has reported a 9 per cent rise in profits after tax to 2.77 billion forints (£9 million) for 1997. Total assets rose by 25 per cent to 456 billion forints (£1.5 billion).
The bank is bullish about trading prospects in the current year as the government plans to sell off its remaining 28.75 per cent stake to foreign and domestic investors.
The latest results include extraordinary income from the sales of equity holdings and extraordinary expenses attributed to the part privatisation of the bank.
Before the net extraordinary expenses, K & H per-tax profits on extraordinary activities were marginally lower down from 3.47 billion forints to 3.45 billion forints. The fall was attributed to tighter margins in a competitive market and high costs.
Chief executive, Mr Janos Eros, said K & H had a three-year target of increasing profits by 700 per cent and pushing assets above 500 billion forints. Mr Eros disclosed after the K & H annual general meeting yesterday that the bank's shares would be listed on the Budapest exchange when the Government sold its remaining 28.75 per cent stake through a domestic and international offer in June. Some 75 per cent of the shares will be offered to foreign investors with the balance offered to domestic investors.
Subscriptions will be invited on June 7th and the allocation and pricing of shares will take place on June 16th. Trading in the shares will start by June 30th.
K & H is Hungary's third largest bank by assets with about 10 per cent of the domestic market. Last year, in the first stage of its privatisation, Irish Life and Kredietbank in a joint venture each acquired 23.13 per cent and the European Bank for Reconstruction and Development acquired 18.19 per cent. The joint venture partners have an option to buy the EBRD stake.
Mr Gerry Danaher of Irish Life, who is on the K & H board, said his company had no plans to buy any more shares.
The joint venture would retain its effective majority stake after flotation, he said. About 6 per cent of the shares are currently owned by small shareholders and the Social Security Healthcare Fund.
Irish Life is helping K & H to set up insurance and a pensions funds operations.
