Interim profits rose by 35 per cent at Anglo Irish Bank on the back of a 21 per cent rise in lending to customers while the bank headed into the second half with a loan pipeline at record levels.
Anglo said yesterday that it loaned €7 billion more to customers in the six months to the end of March than in the same period a year earlier.
The outlook for its business remained positive, the bank said, with work in progress at €7.1 billion, while sentiment among its customers remained strong.
"The continuing momentum in the business is evidenced by record lending work in progress at the end of March in excess of €7 billion," chief executive David Drumm said.
This is ahead of market expectations of around €6.6 billion. Of this, €3.6 billion is in Ireland with loans in progress of €2.5 billion in Britain and €1 billion in the US market. The bank expects more than 80 per cent of these loans to be drawn down.
The strong loan growth to €41.2 billion in the first half was the main factor behind the increase in interim pretax profits to €375 million.
Earnings per share rose by 30 per cent to a record 41.9 cent per share, in line with analysts' expectations.
The bank announced an interim dividend of 5.4 cent per share, a 20 per cent increase on 2005.
Despite continued investment of €163 million in the business, including the recruitment of 100 new employees, the bank's cost-income ratio was unchanged at 29 per cent.
However, shares in Anglo lost 28 cent, or 2 per cent, to €13.47 yesterday amid some investor concern about higher costs.
The bank's strong loan performance was evident across its three markets with growth of 17 per cent in lending in Ireland, which accounted for 56 per cent of the total.
In the UK, lending rose by 21 per cent to €14.8 billion while it was up by 41 per cent in the US market to €3.5 billion.
Lending margins remained stable in all three markets at around 2 per cent, the bank said.
The bank's strong lending performance was matched on the funding side as total funding rose by 22 per cent to €51 billion.
Customer deposits accounted for nearly 60 per cent of this as they rose to more than €30 billion from €25 billion. Net interest income rose to €488 million, while fee and commission income totalled €75 million with dealing profits contributing €10 million to total income of €569 million, a 35 per cent increase. The bank said asset quality remained "robust" with non-performing loans of €239 million accounting for just 0.5 per cent of the total loan book. Nonetheless, it has taken advantage of good trading conditions to make a general provision of €111 million on top of specific provisions of €131 million.
