LOWER bad debts helped ICC Bank to a 14 per cent increase in pre tax profit to £12 million in the year to last October. The bank said it expected the buoyant conditions to continue, although growth may not be as rapid as last year.

Profits were enhanced by a reduction in bad debts and provisions from £6.44 million to £5.45 million. The bank also took advantage of increased profits to set up a general provision for bad loans of £750,000.

Mr Michael Quinn, managing director, said the bank had taken the opportunity to establish the fund as a "prudent measure". There was no pressure from either the Central Bank or auditors to do so, he added.

As a result, bad debt provisions were 0.61 per cent of year end loans, from 0.86 per cent a year earlier. This is just above the target range of 0.5 per cent to 0.6 per cent set by Mr Quinn a year ago.

The bank expects continuing demand from manufacturing, retail, tourism and general property sectors. ICC is moving further into residential property with increased loans for residential developments. The bank also revealed it was considering moving into certain "niche areas" of the retail market.

Other factors which would contribute to 1996 profits were the new Belfast unit which would start up next week and a "more innovative approach" from the newly structured finance unit, including the venture capital and BES units, Mr Quinn said.

ICC's venture capital operation performed well, achieving a return of almost 20 per cent, or 18 per cent when annualised over eight years. However, only £5.5 million was invested in nine companies from £4.5 million in 1994.

The bank had already invested £3 million of venture capital in the first three months of this year and was close to closing an additional £1 million of venture capital funds, said the corporate finance director, Mr David Fassbender. He added that he hoped venture capital funding would rise to £9 million for 1996.

A total of £13.5 million was raised under two BES funds for the year, making a total of £35 million invested in BES projects.

The bank plans further BES in vestments for the year, although Mr Quinn noted there could be a delay following the new certification requirement announced in the recent Budget.

Earnings per share grew 19.5 per cent allowing a dividend payment of 15p per share, bringing the full dividend payment for the year to 21p, an increase of 5 per cent. As a result, ICC will pay the State a dividend of £2.5 million.

Operating income rose 3.7 per cent rise to £36.4 million, with marginal growth of net interest and dividend income and £724,000 realised from the sale of property. The bank also managed a 1 per cent fall in total operating expenses to £24.39 million.

Net interest income - the difference between the bank's interest earnings from lending and the interest it pays for its funds - remained virtually flat at £27.5 million. At the same time, net interest margins narrowed to 2.45 per cent from 2.57 per cent, reflecting increasing competitive pressure, Mr Quinn said.

Profits after tax rose 19.4 per cent to £8.7 million.