Results signal for flotation

Half year results next week from Irish Permanent and First National will help set the stage for the imminent flotation of First National. Analysts will use the figures to compare the operations in order to assess the likely flotation value of the mutual building society which is to become First Active on flotation.

Strong results are expected from Irish Permanent against the background of a booming economy. Good growth in mortgage lending, though margins will have tightened, strong growth in car loans and profits growth at the life assurance subsidiary Irish Progressive are expected. Brokers expect half year profits of around £29 million, up from £25.9 million.

At First National, which produced pre-tax profits of £31.7 million for 1997, the strong domestic environment will have helped profits. But the building society is now more exposed to the difficult British market which accounts for more than 40 per cent of its assets under management.

Irish Permanent is on a current price earnings ratio of 21 times. But there are reasons why First National may come to the market on a different multiple. These include the bid premium in the Irish Permanent share price - through the sizeable chunk in the hands of Abbey National with the five-year period of protection from takeover due to end in September 1999 - and the fact that Irish Permanent is seen as a purer play on the domestic market given the relative sizes of the two operations in Britain.