Lending at National Irish Bank (NIB) surged by 54 per cent over the first half of the year as the market responded well to the relaunched group's offerings. Una McCaffrey reports.

NIB, owned by Danish bank Danske, said loans had increased to €5.6 billion in the six months to the end of June, with the growth coming across all business lines.

Mortgage lending was 55 per cent higher than a year earlier at €1.9 billion, while business lending, including corporate loans, climbed by 57 per cent to €3.4 billion. Personal lending amounted to €600 million at the end of the half.

Margins narrowed a touch, with this attributed to increased competition. Andrew Healy, NIB chief executive, said that it was "pleasing" to see the bank's underlying business perform strongly over the period.

Growth across all lending categories was well ahead of the market, but NIB was starting from a lower base than its competitors. The bank relaunched in April, having passed through a €70 million change programme after being acquired by Danske.

The cost of this repositioning led to a loss for the first half, with NIB in the red by €17.3 million at the end of June.

This compared to a profit of €1.3 million a year earlier, as NIB absorbed the €21.4 million cost of technology changes and a €6.8 million acquisition-related write-off.

The bank said this was "in line with expectations".

Deposits over the half fell from €2.6 billion to €2.3 billion, but the decline was due largely to the transfer of €650 million in deposits between bank divisions. Stripping this out, deposits climbed by 8 per cent.

Kevin Gallen, deputy chief executive at NIB, said the bank was doing particularly well from maturing SSIA funds, with its ECB tracker deposit taking in €2 million in new funds each day.

Mr Gallen said NIB was winning high levels of new business from other players, with 60 per cent of personal mortgages drawn from competitors and up to 65 per cent of new deposit business won from the same sources.

NIB operates from 59 branches and 13 business centres and has plans to open 15 new greenfield branches over the coming two and a half years. Mr Gallen said locations for these had been identified, with suitable premises now being sought.

Northern Bank, which Danske operates in the North, also posted good growth over the half, with lending up by 42 per cent at €7 billion and deposits growing by 37 per cent to €7.3 billion.

The bank recorded a loss of €27.4 million, again due largely to integration costs.

Danske, the group, reported a small rise in first-half pretax profits on the back of higher interest income and credit loss reversals and maintained its expectation for lower full-year earnings.

Pretax profit rose almost 2 per cent to 8.5 billion Danish crowns (€1.1 billion).