Anglo Irish Bank has delivered another strong performance and confidently suggests that it will have nothing but more good news for investors over the next 18 months.
The bank, which specialises in the small and medium-sized business market, reported a 48 per cent rise in pre-tax profits to €228.6 million in the six months to the end of March, more than 4 per cent ahead of market expectations.
Commenting on the figures yesterday, Anglo Irish Bank chief executive Mr Sean FitzPatrick said that everything points to a strong outcome for the full year. "If we can keep our feet on the ground and stay doing the same things in the same way we will perform strongly" he said.
Anglo Irish Bank experienced the strongest period of profit growth in its history in the first half of its financial year with customer lending up 15 per cent to €21.3 billion. This equates to record net loan growth of €2.8 billion, ahead of the bank's €1.9 billion forecast.
Earnings per share rose by 53 per cent to 51.42 cent up from 33.55 cent in the same period last year. Shareholders will be paid an interim dividend of 7.52 cent per share, a 54 per cent increase.
Anglo Irish Bank shares traded lower at €13.50, down from €13.52 in a day when the Dublin market closed weaker. Yesterday, analysts were preparing to upgrade their forecasts for the bank with Davy suggesting it could raise its profit targets by between 5 and 6 per cent.
Some 54 per cent of the bank's profits came from Ireland, 35 per cent from the UK and 11 per cent from continental Europe and the US. The bulk of its business, some 28 per cent, is with the professional services sector. The retail sector accounted for 15 per cent, distribution and wholesale 12 per cent, and the leisure sector 11 per cent.
During the six months the bank reported a €9.6 million specific provision for bad debts, down from €11 million in the same period last year. The bank has also stopped making any further general provisions for bad debts for the foreseeable future.
The move will immediately boost profits and the dividends paid to shareholders. Some institutional investors, particularly in the US, are understood to have supported the bank's change in policy, but Mr FitzPatrick said the bank would reverse this policy if and when it was necessary.
The bank has total provisions for bad debts of €291.4 million, twice what is sufficient to cover a collapse in its loan portfolio. This is well beyond the European norm where the average financial institutions would aim to have reserves equal to about 80 per cent of their total loan book liabilities.
The bank has €3.4 billion of work in progress, with €1.8 billion in Ireland, €1.4 billion in the UK and €150 million in Boston. This compares with €3 billion of work in progress in the previous year. The bank insisted that asset quality was not being sacrificed for volume growth.
