EBS Building Society will form a joint venture with Britannia Building Society to distribute mortgage products through brokers in the Republic. Laura Slatteryreports.
EBS said discussions with Britannia were at an advanced stage and that it expects the joint venture to be in operation in the second half of the year. Britannia is the second largest mutual building society in the UK.
EBS yesterday reported pre-tax profits of €65.9 million for 2006, a record figure for the society, and an increase of 23 per cent on the previous year.
EBS said the Britannia alliance, which is subject to regulatory approval, would help it improve its position in the broker market. Brokers sell 40 per cent of mortgages in the Republic, and this figure is expected to grow.
In 2006, the first full year in which EBS distributed mortgages through the broker channel, residential mortgage lending at the society grew 18 per cent, ahead of the market average of 16.9 per cent as measured by the Irish Banking Federation (IBF) and PricewaterhouseCoopers.
EBS advanced a record €4.6 billion in gross lending in 2006, up 22 per cent, and the overall loan book was up 20 per cent to €14.6 billion. Commercial lending, which grew 36 per cent in 2006, now accounts for 10 per cent of its business.
EBS chief executive Ted McGovern said he expected growth in the mortgage market to be flat in 2007, following a slow start to the year, but that the "pump was still well primed" for lending to remain at a high level.
"The market was €40 billion last year and the expectation is that it will be €40 billion again. These are big, big numbers."
Assets at EBS grew 17 per cent last year and are now approaching €20 billion. This means the society has almost doubled in size since the end of 2003.
Profits after tax were up 49 per cent to €57.7 million. EBS attributed the higher rate of increase compared to pre-tax profits to the abolition of the bank levy.
EBS said more than 90 per cent of maturing SSIAs in the past three months had remained invested.
The Britannia joint venture is the latest in a series of partnerships formed by EBS with financial services companies, and the society said yesterday that the performance of its recent ventures with Irish Life and Allianz were ahead of initial targets.
