Irish Life and Permanent has signalled that its earnings this year will be in line with market expectations as it continues to benefit from good growth in its banking and life businesses.

In a trading statement, the group said it expects its total loan book to grow by more than 20 per cent in 2005 on the back of strong mortgage lending in the Irish economy. Sales of its life insurance and pension products are expected to show growth of more than 15 per cent with new business earnings set to rise by more than 40 per cent.

It said that a strong economy and, in particular, a buoyant labour market, together with opportunities for the group by the maturity of Special Savings Incentive Accounts (SSIAs), provide a very positive backdrop for both its banking and life businesses going into 2006.

"The environment in which the group is operating continues to be positive as the Irish economy is performing exceptionally well with rapid employment growth and strong domestic demand," according to the statement. Some brokers were preparing to upgrade their profit forecasts for the stock following the statement. On the day, though, Irish Life and Permanent shares closed at €16.42, down 28 cent, with sources attributing the fall to the presence of one sizeable seller during the session.

Its banking business, Permanent TSB, has made significant progress and has opened about 60,000 new current accounts this year with the balance in these accounts at the bank expected to rise by over 20 per cent.

Overall income at Permanent TSB is expected to grow by about 5 per cent. Its net interest income, generated from lending and deposit activity, is due to rise by 8 per cent for the full year with its profit margin reduced by its increased use of wholesale funds to advance lending. Other income will be reduced due to the trading loss at its treasury operations which it previously disclosed.

The bank will continue to focus on cost management although its total costs will show a modest increase which will be below the rate of wage inflation, it said. The group will incur exceptional costs of €14 million in relation to its change programme. Margins at its life assurance business are expected to be of the order of 19 per cent, ahead of its 17 per cent target. The contribution from its existing book is expected to be in line with market guidance.

The performance of investment markets in the year to date is ahead of expectations with short-term investment fluctuations running at about €80 million.