Irish Life & Permanent has shown that the two businesses are generating good growth in sales and profits for the group and that the merger is broadly delivering what it promised. And while disappointed with its failure to buy Ulster Bank, group chief executive, Mr David Went, is upbeat about its future prospects.
The merger of Irish Life and Irish Permanent in 1998 was the biggest corporate deal undertaken in the Republic. The first full-year figures for the enlarged entity are broadly in line with expectations.
The strong growth in group sales reflects the continuing buoyant conditions in the Irish economy and its ability to use its expanded sales force and branch network to cross-sell a wider range of products.
Its stock market-based product, Scope, was one of the strongest performing lines for the group in 1999. When Scope was introduced last June, the company set an first-year sales target of #120 million. Such was its popularity that this was exceeded within five months and in 2000 sales have amounted to #50 million to date.
The 1999 figures also received a boost from funds raised by the bank through the sale of its Irish Life Finance subsidiary and its interest in the K&H Bank in Hungary to Irish Intercontinental Bank last year. Costs associated with the completion of the merger also benefited the bottom-line performance.
While the Irish and British operations delivered solid growth in profits for the group, the marginally weaker contribution from its US Interstate life subsidiary is something which Irish Life & Permanent must focus on going forward.
Irish Life & Permanent had made no secret of its desire to expand into the clearing system and the logical next step for it was to bid for Ulster Bank when it was put up for sale last year by its British parent, NatWest. It joined with Bank of Ireland to make a joint bid estimated at up to £2 billion (#2.54 billion) on the basis that it would take Ulster's retail operations in the Republic while Bank of Ireland could expand in Northern Ireland. That ambition was dashed when Royal Bank of Scotland won control of NatWest and decided to retain Ulster Bank.
The group chief executive says Irish Life & Permanent is currently in an exceptionally strong position and he is very confident about its future prospects. The only cloud on the horizon, it seems, is its share price. It closed unchanged yesterday at #8, almost 50 per cent below record highs achieved last year.
Mr Went says he is not obsessed with the prevailing low price of its shares, preferring to keep his eye on managing the business.
He believes the strong fundamentals underpinning the financial sector will eventually win out and restore confidence in bank shares. He reinforced this view yesterday by buying 15,000 Irish Life & Permanent shares at #8, which is equivalent to about £95,000.
