International Securities Trading Corporation (ISTC), the finance company set up by Tiarnan O'Mahoney last summer, has reported a €1.7 million profit for its first nine months.
Company's chairman Ray French told shareholders yesterday that ISTC was now on track to record pretax profits of more than €5 million for the full year to September. For 2007, he "confidently" forecast profits of more than €12 million.
ISTC raises debt finance in the capital markets and then lends this on to regulated banks and insurance companies in the form of Tier 1 and Tier 2 capital and other financial instruments.
By mid-March, the firm had a total loan portfolio of €492 million, with clients drawn from 20 countries.
In the Republic, ISTC lends to AIB, Bank of Ireland, Irish Life & Permanent and Anglo Irish Bank.
Mr O'Mahoney, former chief operating officer at Anglo Irish, said the result for the nine months to March had been well ahead of expectations. The company, which raised €145 million from more than 200 high-net-worth individuals a year ago, had budgeted for a loss in its initial period of operations.
Its current value on a grey market operated by Goodbody Stockbrokers is about €250 million.
Shares are trading at a 30 per cent premium to the issue price of €100 per unit.
Mr O'Mahoney said he was "pleased" ISTC had achieved all of its objectives for the first year. He said the firm was recording monthly gross revenue flows of €750,000 and had more than €2 billion in available funding.
ISTC's margin on its loans was higher than its target of 100 basis points, he added. He expects the firm to generate annual pretax profits of about €50 million within three to four years.
This same timeframe is also likely to see the company take a stock market listing.
Yesterday's nine-month result came on operating income of €5.3 million, while operating expenses amounted to €3.6 million.
The company's four directors, including Mr O'Mahoney, were paid €779,000 between them.
ISTC shareholders also heard yesterday that the firm had been awarded an investment-grade credit rating by DBRS, a US agency. DBRS said the firm's business model was "coherent and sustainable" and gave it a rating of BBB.
ISTC must execute its growth strategy with limited downside risk if it wants to maintain this rating, the agency added.
