Bank of Scotland Ireland has reported a 12 per cent rise in pre-tax profits to €65 million in the first six months of this year. The bank, which is part of the Halifax Bank of Scotland group, said the quality of its loan book remained strong and it would continue to expand its presence in the Republic this year.

HBOS unveiled a £2.16 billion profit (€3.26 billion) in the six-month period which was slightly better than market expectations.

Its chief executive, Mr James Crosby, said revenue growth and cost control would continue to drive the bank forward next year as Britain's biggest mortgage lender sells more credit cards and insurance and adds current accounts. "Don't just think about this year. That's going to be a very strong year, but think about next year. That's also going to be a good year," he said.

Bank of Scotland Ireland, which plans to expand into retail banking in Ireland within the next 18 months, recorded that its income had grown from €105 million to €129 million in the first half of this year. Operating profits rose to €74 million compared to €67 million in the same period last year. Its provision for specific bad debts fell from €9 million to €8 million while its general provision halved from €2 million to €1 million.

A spokesman said the bank had a strong loan portfolio and demand for its lending products, which are principally offered to small business customers, was holding up extremely well.

Its net interest margin, a measure of the profitability of its core lending and deposit business, fell during that period, from 2.2 per cent to 1.9 per cent.

The HBOS chief executive yesterday also expressed doubt that a UK bank would bid for Abbey National, which on Monday agreed to a takeover by Spain's Santander Central Hispano.