International Securities Trading Corporation (ISTC), the banking venture set up by former Anglo Irish executive Tiarnan O'Mahoney, has reported pretax profits of €6.5 million for the year to September 2006.

The company said it expects to make a profit before tax of €13.5 million in the current year, €1.5 million more than it forecast in May. It said the results to last September were ahead of expectations and were driven by strong lending volumes and margins.

ISTC, which was set up last year, raises debt finance on the capital markets and lends the money to banks and insurers as Tier 1 and Tier 2 capital and other financial instruments.

Operating income for the year was €14.6 million, while operating expenses stood at €8.1 million, which the bank said reflected its investment in staff and its office. It currently employs 15 people, including a number of former senior executives with major financial institutions such as Goldman Sachs, Credit Suisse, Merrill Lynch and JP Morgan.

Its loan portfolio of €1.2 billion is substantially ahead of its target of €500 million, the company said. To date it has served 125 borrowers primarily in Europe, Australasia and the US and its average loan is around €9.5 million.

"ISTC currently has approximately €2.5 billion of unused funding lines available to finance future balance sheet growth," said chairman Ray French. It is recommending a final dividend of €1 per share. Mr O'Mahony raised € 145 million from more than 200 wealthy investors in a private placing at the end of June last year. Since then, ISTC's shares have traded in a grey market operated by Goodbody Stockbrokers.

Around 5 per cent of the company's equity has been traded in the past year and the share price has soared to €280. This compares to the issue price of €100 a share and gives ISTC a market capitalisation of €531 million.