PRE tax profits at the Bank of Ireland owned ICS building society rose marginally in 1995 to £26.7 million, after a surprise charge for property revaluation.

Operating profits increased by 7 per cent to £28.3 million but a £1.6 million charge against profits following the revaluation of the society's headquarters in Dublin's Westmoreland Street, depressed the pre tax result.

Despite a strong property market, ICS has written down the value of its headquarters from £5.2 million to £3.6 million, resulting in a £1.6 million charge against profits. This meant pretax profits only rose marginally by £0.3 million.

It is now group policy to revalue property every three years, according to managing director Mr Ted McGovern. The value in the books was made up of the cost of acquiring a number of properties on a piecemeal basis in the 1980s and converting them into the headquarters, he explained.

"Our property valuers, Jones Lang Wooton, said the value of the premises was £3.6 million." The directors took the view that the deficit was such that it would be a significant number of years before the valuation at open market prices would equate to book value, therefore they decided to revalue downwards, he said.

Operating profits at ICS increased by £1.9 million to £28.3 million, boosted by a £1.4 million increase in fee income to £2.8 million. Most of the increase in fee income was generated by its new mortgage processing operation which was phased in from September 1994.

However, net mortgage advances were well down on record 1994 levels. ICS advanced total loans of £91.5 million in 1995 with net new loans of £28 million after repayments, compared with total advances of £119 million and net new loans of £60 million in 1994. At the end of 1995 ICS had total mortgage book of £576 million, up from £548 million.

In 1995 ICS concentrated on its mortgage processing operation. ICS now processes all new mortgage lending by Bank of Ireland branches, as well as its own mortgages. In addition, ICS administers the Bank of Ireland mortgage book from its centre in Haddington Road, Dublin, where 90 people are employed administering mortgages worth £1.8 billion.

The centre has the capacity to administer about half of all the mortgages written in the Irish market, Mr McGovern said. ICS is talking to two mortgage providers who could become customers, he said.

Reflecting spending on the processing centre, the ICS cost income ratio rose to 29.1 per cent from 28.5 per cent. Mr McGovern said the ratio "will come back into line" this year.

Against the trend in results from banks and building societies, ICS reported an increase in its net interest margin to 3 per cent from 2.97 per cent. The rise reflected a decision not to bid to retain some high cost savings, he said.

Profits after tax slipped to £15.5 million from £15.8 million, reflecting an increase in the tax rate to 42 per cent from 40 per cent.

With year end deposits of £1,157 million and mortgage advances of £576 million, ICS had a high liquidity ratio of about 50 per cent and could be described as under lent. "We would love to have loaned more and we hope to be more successful in the mortgage market this year," Mr McGovern said.