RESULTS: The EBS building society has reported a good start to 2002, with strong demand for home loans, but remains cautious about the prospects for the rest of the year.

The mutually-owned society has reported a 19 per cent rise in profits before tax in 2001 to €37.6 million on the back of growth in its core savings and mortgage business.

Demand for mortgages in the early part of 2001 was strong but the society has blamed events such as the outbreak of foot-and-mouth disease and uncertainty about the strength of the Irish economy for a fall off in the second half.

Total home loans to residential mortgage customers increased by 8.5 per cent to €1.27 billion. Net lending, taking account of mortgages paid off during the year, was €723 million up 9.7 per cent on 2000. The EBS estimates this performance equates to market share of 16.9 per cent, up from 15 per cent.

On average it provided mortgages worth around 67 per cent of the purchase price of the property being financed. The average mortgage from the EBS in 2001 was for €140,000, with the society reporting that a high number of first-time buyers were relying on parents or other relatives to provide financial assistance to buy a home. Parents generally give their children a lump sum, take out a mortgage on their own home, or agree to pay part of the monthly mortgage repayments, according to the EBS.

Chief executive, Mr Ted McGovern, believes house prices are still too high in the Republic, which has created huge pent-up demand for property.

"Affordability has not gone away. It will take quite a number of years for that demand to be met. We will have to wait and see when the spring buying season starts whether demand will hold up" he said.

About 60 per cent of new mortgage applications came from first-time buyers in the early months of 2002 with the balance coming from property-owners trading up and investors re-entering the market.

The society also recorded a sharp rise in customer deposits, up 30 per cent on 2000. The flow of new personal savings almost trebled during the 12-month period, some of which were from individuals putting money into the Government-backed Special Savings Incentive Accounts (SSIAs).

Since the scheme was launched in April 2001, the EBS has opened 25,000 SSIA's and is hoping this will rise to between 40,000 and 50,000 by the April 30th deadline.

About 75 per cent of customers have opted for the SSIA deposit account, with 25 per cent selecting an account that invests in world stock markets. The society said this reflects the volatility in equity markets and customers concerns about economic conditions.

The EBS has also once again reaffirmed its commitment to remaining a mutually-owned society, ruling out any imminent windfalls for customers.

"We have re-taken our vows on mutuality. We believe that is what makes us different in the eyes of the market" Mr McGovern said.