The EBS has reported another strong year, with pre-tax profits up 40 per cent to €40.2 million (£31.6 million) in 1999. The pre-tax profit figure includes an exceptional €11 million cost incurred in the upgrading of its computer systems and branch conversions. When adjusting for this one-off cost the building society showed just marginal growth with pre-tax profits up 2 per cent to €29.2 million, from €28.7 million.

Over the 12 months, the EBS claims to have retained a 14 per cent share of the mortgage market and managed to maintain its profit margins at the same level as in 1998.

The loan book increased by 22 per cent to €4.1 billion. Of this, €1.2 billion was in home loans and top-up loans to existing home-loan customers and loans for investment property. At the same time the society's savings base grew by €1.2 billion to €5.2 billion, from €4 billion.

And despite aggressive competition in EBS's core mortgage and savings business, margins over the full-year were kept at 1.8 per cent. Pressure on margins intensified in the second half of 1999 and will continue going forward.

Profit margins within the financial sector will remain under pressure and institutions such as the EBS could see margins pared back to around 1.4 per cent this year. The rate of profit growth at the EBS was also hampered by an almost threefold increase in its provisions for bad debts.

The 1999 accounts show bad debt provisions have increased to €4.3 million, from €1.3 million. The EBS said the huge increase was due to its concerns about overheating in the residential property market. The society is increasingly focused on increasing the share of business it can generate through its direct telephone service and the Internet.