Irish Life & Permanent has reported a sharp fall in profits last year as weak stock market conditions, a writedown in the value of its US business and the cost of integrating TSB Bank affected its bottom line.

The group announced operating profits of €49.6 million, down from €284.2 million in the previous year, after factoring in write-offs and costs of more than €170 million.

The figures were broadly in line with market expectations as the group had issued a profit warning in December.

Group chief executive, Mr David Went, said the figures masked a strong underlying performance and reported a very strong start to 2002.

The final dividend jumps 10 per cent to 43 cents. The group also announced plans to buy back a further €150 million worth of shares. It completed a similar buy-back last year. Within two years, it aims to have bought back 10 per cent of its issued share capital.

Earnings in the life assurance business grew 10 per cent in 2001 while its banking business, which included an eight-month contribution from TSB Bank, increased by 43 per cent.

Irish Life & Permanent sold two of its three US businesses, last year resulting in a write-off of €69.5 million. It also wrote down the value of its remaining US business, Guarantee Reserve, by €50 million and absorbed €51 million as the full cost of integrating Irish Permanent and TSB Bank.

The group was close to reaching a deal to sell Guarantee Reserve at the end of last year, but difficulties experienced by potential purchasers in raising finance for the deal scuppered the sale, it said yesterday.

It has now restructured Guarantee Reserve in a bid to generate earnings in the short term while it continues to assess its options. This business generated losses of almost €30 million last year.Despite the weak headline profits, the group did show strong underlying performance for 2001.

Sales of pension and life products were significantly higher with retail sales up 23 per cent and corporate sales up 32 per cent.

The banking business achieved higher profit margins largely due to broadening of its product range. Its loan book increased by 18 per cent while its deposit base expanded by 10 per cent.

Mr Went said home loan applications were running nearly 50 per cent higher in the first few months of 2002 compared with last year. About 15 to 20 per cent of these are coming from investors availing of tax incentives which were restored by the Government in the last Budget.