The EBS building society has said it returned €20.5 million to its 500,000 members last year in the form of lower mortgage rates, better savings rates and lower transaction costs.
The payment, which it calls a mutuality dividend, increased from €8.5 million in 2003 and it expects to be in a position to increase next year's payment by 10 per cent. The society yesterday reported a pre-tax surplus of €56.1 million, down from €62.6 million in the previous year. The fall in profits is in line with its strategy to return benefits to its members out of its annual profits.
Announcing the figures EBS chief executive, Ted McGovern, said it is determined that over time the society's commitment to mutuality will yield more tangible benefits for its customers. "We are not a bank and therefore we are not in the business of maximising profits in the short-term. Instead we believe in optimising our surplus, which is a totally different approach," he said.
During 2004 the EBS recorded a 26 per cent rise in new lending to €3.1 billion. Of this, new residential mortgage lending increased by 21 per cent to €2.7 billion and commercial property loans were up 72 per cent at €445 million.
Its savings and deposits also improved over last year with customer funds increasing from €506 million in 2003 to €1.4 billion.
The society reduced its net interest margin - the difference earned on its core savings and borrowing activities from 1.33 per cent to 1.08 per cent and is working towards bringing it down to around 1 per cent in the future.
The society had held advanced negotiations with the Dutch financial institution, Rabobank, last year with a view to agreeing a merger but these talks have broken down and are unlikely to be resumed.
The society said that process incurred a cost of around €2 million.
Mr McGovern said the EBS was interested in speaking to other "like-minded" organisations, with greater resources. The proposed changes in the building society legislation, which if passed by the houses of the Oireachtas, would clear the way for such a link-up.
Mr McGovern insists the delay of the implementation of this new legislation is not hampering its business, but admitted that the uncertainty surrounding its possible implementation had formed one of the reasons for Rabobank's disengagement from its discussions with the EBS.
The Minister for the Environment, Dick Roche, has indicated that the new legislation would be passed by the end of this year. If this happens it would also clear the way for Irish Nationwide to demutualise.
Mr McGovern said the society was particularly pleased that the international ratings agency, Moodys, upgraded its credit rating earlier this year. He said this upgrade was an endorsement of the clarity of its business strategy and its financial strength.
