Bankof Scotland Ireland (BOSI), which includes the former State-owned ICC Bank, has reported a strong performance in 2002 with profits up 84 per cent to €115.7 million.
The bank, which specialises in providing services to the small and medium-sized business sector, has reported good client demand in the current financial year despite the economic uncertainties.
Announcing the figures yesterday, BOSI chief executive Mr Mark Duffy said lending volumes this year were ahead of last year. He also pledged that BOSI would become the number one business bank in Ireland by 2005.
The bank estimates its share of the small-business sector at 18.3 per cent, making it the third-largest player behind Bank of Ireland at 19.5 per cent and AIB at 25 per cent. "Bank of Ireland can feel the heat of our breath. It is the most vulnerable," according to Mr Duffy.
The bank contributes 20 per cent of its parent's - Halifax Bank of Scotland's (HBOS's) - profits from business banking.
During 2002, the bank integrated ICC with Bank of Scotland Ireland's business, which included a voluntary severance scheme that cost the bank €12.4 million. It reported growth in lending and deposits, and managed to widen its profit margins slightly on these activities last year.
In 2002, BOSI issued loans totalling €7.03 billion, up from €5.2 billion in the previous 12 months.
The bank incurred a hefty increase in its bad debt charge from its banking business, which increased from €15 million to €22 million. This includes charges for bad debts in the loan book at Bank of Scotland and ICC Bank.
It also wrote off €6.6 million in bad debts from ICC's venture capital portfolio related to financial difficulties at up to eight investee companies, including some technology firms.
ICC's venture capital business retains an exposure of €85 million for up to 35 investee companies on its books. BOSI finance director Mr Harry Slowey said the bank also had unrealised gains of €40 million on this portfolio.
The bank's loan book is diversified, with 19 per cent of lending advanced to investment property, the single biggest sector. Other large sectors it has exposure to include wholesale and retail businesses, along with the hotel and leisure industry. Mr Duffy said the bank did not intend to reduce its exposure to these sectors this year.
The amount of money deposited with the bank swelled to €3.4 billion from €2.6 billion during last year, while total income rose to €218 million with operating profits from the enlarged entity climbing to €144.3 million.
Meanwhile, HBOS, Britain's fifth-biggest bank by stock market value, reported pre-tax profits before exceptional items of £3.06 billion sterling (€4.5 billion), slightly below market consensus of £3.28 billion. However, after one-off items for fluctuations in HBOS's investments, pre-tax profits came in at £2.9 billion, just above the market consensus.
