Record levels of mortgage lending and an influx of new savings business saw pre-tax profits at the EBS grow by 11 per cent to €41.7 million last year, writes Una McCaffrey

Conditions have remained robust in 2003, the building society said yesterday, reporting growth of 30 per cent in owner-occupier mortgage business in the year to date.

They expressed caution about the coming months, however, predicting that house prices will slow as supply improves and demand from investors dissipates.

The mutually-owned society provided mortgages worth a total of €2.1 billion last year, up 39 per cent on 2001. Within this, buy-to-let business grew by a massive 359 per cent to €202 million.

EBS chief executive, Mr Ted McGovern, said that while he expected residential investment to lose some momentum this year, it would remain an important feature of the market in the future.

Net lending at the EBS, which takes account of mortgages paid off in the course of the year, rose by 54 per cent to €1.1 billion.

The performance helped the society to increase its share of the gross mortgage residential market slightly from 17.2 per cent to 17.5 per cent, according to internal estimates.

Mr McGovern acknowledged that an increasingly sophisticated marketplace meant the EBS could no longer rely on price as its central selling point.

While declining to dwell on a current review of legislation governing building societies, Mr McGovern said the EBS hoped to become "more relevant" by gaining greater flexibility.

Mr McGovern said EBS wished to "evolve" within mutuality rather than "escape" it.

"The legislation paints you into a corner," he added.

The society's latest step towards innovation came yesterday when it received approval from the Pensions Board to launch a standard Personal Retirement Savings Account (PRSA), its first foray into the pensions market.

Savings and investments performed well for the EBS last year, with deposit inflows growing by 47 per cent to €839 million, boosted by contributions to Special Savings Incentive Accounts.

The society has predicted that continued market uncertainty will contribute to growth in its savings business this year.

Mr McGovern acknowledged, however, that if the European Central Bank delivers another rate cut soon, the society will have difficulty in passing it on to savers because deposit rates are already so low.