First Active chief executive Mr Cormac McCarthy has said consolidation in the banking industry is inevitable. But after the group's annual meeting in Dublin yesterday, Mr McCarthy refused to comment on the likelihood of a merger or takeover between Bank of Ireland and AIB.

He said a strong indigenous banking industry was important for the State and he noted that the banking sector was already coping well with foreign competition. "First Active is already competing with the big players now so, whatever may come, we will just have to compete with the market as it stands."

The challenges for the coming year, Mr McCarthy said, were to maintain cost savings and grow revenues in a demonstrable way. He commented that there was more to do on the savings side of the market.

The board of First Active recommended a final dividend for 2001 of 9.05 cent per share, giving a total dividend for the year of 13.55 cent. This will be paid on May 17th to shareholders on the register at the close of business on April 5th, 2002.

Addressing shareholders at the meeting, First Active chairman Mr John Callaghan said the group's prospects were positive. "We have a strong business focused on providing a range of value-added products at competitive prices," he stated.

Mr Callaghan said First Active was continuing to move away from products and service areas in which it had limited scale and which were "non-remunerative relative to the burden of administration involved".

Mr Callaghan said last year's 32 per cent rise in pre-tax profit was due largely to the new management team's success in rigorously controlling cost while increasing the scale of the business. The cost-income ratio for the year was 58.7 per cent, compared to 64.9 per cent in 2000.

The move by First Active to a new purpose-built headquarters in Leopardstown, Dublin, in July last year was the final step in the group's restructuring programme, Mr Callaghan said. "We have achieved the cost savings and operating efficiencies expected from the move. More importantly, we are now seeing the benefits of the changes in the way we do our business. First Active's share price closed at €4.52 on the Dublin stock exchange yesterday, down €0.03.