A better-than-expected performance from its general insurance associate, Allianz Ireland, helped Irish Life & Permanent to deliver a 10 per cent increase in pretax profits last year.
The company's two core divisions, life assurance and banking, also performed well, combining strong sales growth with tight cost control, to produce a pretax profit of €400.2 million, ahead of market expectations.
On the banking side, the group said 5,000 customers had switched to Permanent TSB's free current account product in February, following the introduction of a new code of practice on switching at the end of January. Permanent TSB, which opened 35,000 current accounts last year, is hoping that this will rise to 50,000 to 60,000 this year as it takes advantage of the new code.
Earnings per share were up by 8 per cent to 120 cent as the company said 2005 had started well and it was confident of another strong performance this year. It plans to pay a final dividend of 38.5 cent, bringing its full-year dividend to 55 cent per share, an 8 per cent increase on 2003. The life assurance business contributed €215 million to the company's results, an increase of 13 per cent. New business performed strongly, rising by 17 per cent to €310 million, ahead of the market.
The company said its fund management arm, Irish Life Investment Managers (ILIM) had record inflows of €1.6 billion last year, bringing funds under management to more than €20 billion for the first time.
The pretax contribution from the group's banking and other business fell to €122.5 million from €128.8 million. However, the 2003 results included a once-off gain of €26 million. If this is stripped out, profit was up by 19 per cent reflecting strong growth in mortgage lending and lower administration costs.
Like its peers, Irish Life & Permanent continued to reap the benefits of strong economic growth with new loans issued up by 33 per cent to nearly €8 billion. The company's mortgage business accounted for the lion's share of this, increasing by 30 per cent to €4.9 billion.
Allianz Ireland, in which the company holds a 30 per cent stake, contributed €62.6 million to the results, a 38 per cent increase.
Irish Life & Permanent said this reflected a strong underwriting result in favourable market conditions. However, its performance was helped by the fact that there were no weather-related catastrophes last year.
Margins remained under pressure, as the net interest margin slipped from 1.63 per cent to 1.4 per cent although the company said it believed the worst was over for margin attrition.
The group succeeded in driving costs down by 1 per cent to €225 million while it is targeting a cost/income ratio of below 50 per cent in its banking division, compared to 56 per cent last year.
The share price closed 15 cent lower at €14.80 in a generally weaker market although analysts described the results as a "solid" set of numbers.
