National Irish Bank's (NIB) underlying profits jumped 181 per cent to €34 million in the first six months of the year, as mortgage lending at the bank soared well ahead of the market average and the bank attracted a number of corporate banking clients, writes Laura Slattery.
Mortgage lending at NIB increased 52 per cent year-on-year, two and a half times ahead of the average increase in the market, while overall loans to customers were up 51 per cent to €8.5 million. NIB's total lending book has now increased 158 per cent since the bank's acquisition by Danske Bank in March 2005.
The spurt in lending helped the bank made a pretax profit of €12.8 million in the first half of 2007, once the cost of integrating the bank with its parent company's systems and other expenses were taken into account.
This compares with a pretax loss of €17.2 million in the first six months of 2006, when it moved to Danske Bank's technology platform.
Full-year pretax profits at the bank are likely to be significantly higher in 2007 than the €3.5 million recorded last year, as it has secured strong income growth but kept its operating expenses flat. Its cost-income ratio has fallen sharply as a result.
Total income at NIB rose 33 per cent to €92.5 million in the first half.
Non-interest income rose 38 per cent to €18.4 million due to the sale of investment products to personal customers and interest rate risk management products to corporate clients.
Quinn Group, Eirgrid/SONI and Buy & Sell are among the high-profile firms that have signed up to NIB's expanding roster of business clients.
Customer deposits increased 32 per cent to €3 billion.
NIB chief executive Andrew Healy said increases in interest rates had prompted homeowners to consider the cost of their mortgage, and that the bank had attracted a high number of mortgage switchers to its books.
NIB has approved €1.7 billion worth of approvals for its LTV mortgage since its launch last October. The mortgage offers lower interest rates to homeowners whose loans are less than 80 per cent of their property's value. NIB said one in four people who move their mortgage was switching to its books.
