Bank of Scotland Ireland has reported a 37 per cent increase in pretax profits in the first half, boosted by a strong take-up of the group's retail offering in the Republic.

The bank, which is in the process of turning the former ESB retail network into its own retail bank branches, delivered pretax profits of €102 million in the six months to the end of June. Customer deposits increased 23 per cent in the period to €7.1 billion, while advances were €20 billion, 30 per cent ahead of the year-earlier period.

Mark Duffy, chief executive, said the results were particularly pleasing considering they were achieved against a backdrop of substantial growth and investment in the retail banking network. So far the group has opened 17 of the 46 planned branches and now has a presence in at least three of the Republic's four provinces.

The rollout has been supported by the introduction of new products, including home loans, credit cards, personal loans and savings accounts. Its current account is due to be introduced early next year. According to Mr Duffy, the take up of the new products has been encouraging. However he declined to say where the new customers were coming from except to say they were switching from rival banks.

"As demonstrated by our advances growth, our existing intermediary businesses have also benefited greatly from the enhanced visibility and broader products suite," he said.

The bank's UK parent, HBOS yesterday reported pretax profits of £2.65 billion (€3.8 billion) in the same period, an increase of 17 per cent. But news of the profits rise was offset by an increase in bad consumer loans.

Mr Duffy said the outlook for the remainder of 2006 for the bank's Irish operations was positive.