EBS plans to raise interest rates

Home-owners are facing higher mortgage repayments after EBS said it may raise interest rates by the end of the year, only weeks after the building society said it would increase variable mortgage rates.

Speaking at a presentation of the building society's annual results in Dublin today chief executive Fergus Murphy said that the increase could be around 60 basis points.

EBS announced earlier this month that it would raise rates from May 1st, increasing its standard variable interest rate from 2.63 per cent to 3.23 per cent while fixed rate and tracker mortgage rates will remain unchanged.

The building society today reported a loss after tax of €79 million for 2009, as heavy impairment charges of €195 million were incurred during the year. Some €83 million of the charges related to loans transferred the State's "bad bank" scheme, the National Asset Management Agency (Nama).

The pace of deterioration in the asset quality of its residential book has slowed, EBS said. The level of home lending arrears greater than three months was 4.9 per cent at the end of last year.

Operating profit rose 33 per cent on 2008 figures to €96 million, while total income 12 per cent higher at €193 million.

The building society said its total capital ratio was 10.1 per cent, with a tier 1 capital ratio of 6.7 per cent, which are in excess of regulatory requirements.However, EBS has a capital requirement of €875 million to reach the new ratios laid out by the Financial Regulator by the end of the year, which will be provided by the Government.

There are also ongoing discussions around the possibility of private equity investment.

Additional reporting: Bloomberg