GOOD growth in business and personal lending at ACCBank last year pushed pre tax profits up 5 per cent to £13.9 million.

However, announcing its 1996 results yesterday, chief executive, Mr John McCloskey warned that margins were becoming increasingly tight, and that the bank would need a substantial partner if it was to remain an aggressive player in the Irish market.

Chairwoman, Ms Gary Joyce urged the Government to allow the bank to begin discussions with a possible partner. "We need that decision as soon as possible," she said.

Ms Joyce said they were looking for a bank that was "interested in what ACCBank can offer and has the capital to support its future development".

She insisted the board and management had not identified any potential partner. ACCBank is understood to favour a takeover or a strategic alliance with a large European bank.

Mr McCloskey said that, without substantial resources, the bank would be squeezed out of the Irish market because it would not be able to provide customers with the service they want.

The bank reported a 10.5 per cent increase in its profits after tax to £9.85 million. The latest figures show strong growth in lending with the bank advancing £542 million last year, up £140 million on the previous 12 months.

The biggest increase was to the business sector, with commercial loans up by £118 million to £286 million at the end of last year.

Personal lending, mainly new mortgages, was also buoyant, rising from £96 million to £118 million. Lending to farmers was flat, staying at £135 million. Overall the bank's loan book grew by 29 per cent to £1.1 billion.

The figures show that the bulk of ACCBank's lending was to the business sector, accounting for 48 per cent of its total loans.

It retains a substantial farming customer base though, with 27 per cent of loans to this sector, while personal lending accounts for the remainder of its business.

Margins earned in its lending business fell considerably dropping from around 3.5 per cent to closer to 3 per cent.

Interest income rose from £99.7 million of million in the 12 months to the end of December last, while interest paid to depositors increased from £59.1 million to £64.4 million.

Over the 12 months, total operating income rose from £45.4 million to £48.8 million.

The bank will pay the Government a dividend of £2.8 million.

Last year it received a State equity injection of £5 million.

In the current year it is seeking a further £7 million to expand its branch network and services.