Bank of Ireland has reported an 8 per cent rise in pre-tax profits to €1.26 billion and forecasts that it can continue to deliver at least a similar increase in 2005. After exceptional items of €97 million, the pre-tax profit was €1.17 billion.

The bulk of the exceptionals were associated with the write-off of the remainder of goodwill associated with its Chase De Vere financial advisory operations in Britain.

Announcing the outturn yesterday, chief executive Mr Michael Soden said the bank was ideally positioned for growth. "We are experiencing strong momentum across all divisions of the business. I expect the increase in economic momentum to continue through the current year and for our two main markets in Ireland and the UK to continue to outperform."

The bank, which generates 56 per cent of its profits in the Republic, benefited from the surge in mortgage and other lending in the Irish economy in the 12 months to the end of March.

Commenting on the Irish Financial Services Regulatory Authority's current investigation into overcharging of customers at AIB, Mr Soden said Bank of Ireland had reviewed all of its charges and was satisfied that it was compliant. "There is nothing for us to be concerned about."

Bank of Ireland's results were broadly in line with market expectations and were well received by investors.

Yesterday the bank's share price rose 15 cent to €10.15 after the announcement. Earnings per share rose by 8 per cent to 106.7 cent and the bank's shareholders will receive a 12 per cent increase in their dividend to 41.4 cent per share.

Bank of Ireland's retail operations contributed €419 million in profits, up 7 per cent on the previous year and were largely driven by its mortgage lending. The bank, which owns ICS building society, now claims to be the State's biggest mortgage lender. During the year, its mortgage and other lending grew by 20 per cent and it has expressed confidence that its mortgage book can grow by more than 20 per cent in the current year.

Its life assurance division recovered strongly with profits rising from €87 million to €147 million of the group's profits while its capital markets and stockbroking business generated €371 million. Bank of Ireland Asset Management contributed €125 million, up 11 per cent.

The bank's UK division, which includes its Bristol & West subsidiary, yielded a 4 per cent rise in profits to €373 million. This part of the bank has been extensively restructured, leading to the closure of one quarter of Bristol & West branches and the rationalisation of its financial advisory business.