EBS has increased its 1998 after-tax surplus by 29 per cent to £15.1 million (€19.17 million), following further strong growth in lending last year.

The building society estimates that its share of the new residential mortgage market remained steady at 19 per cent, making it one of the largest home loan providers in the state.

Total advances - which include home loans, top-up loans and loans for property investment - rose by 35 per cent to £844 million (€1.07 billion).

Net advances, after repayments by borrowers, increased by 34 per cent to £588 million. Of this, £518 million was residential lending, while investors accounted for £70 million.

EBS also reported a strong performance on the funding side, increasing its share of the new retail savings market from 4.9 per cent in 1997 to 8 per cent last year. At yearend, funding balances stood at £3.2 billion, an increase of 31 per cent, with customers accounting for £2.4 billion and bank borrowings for the remaining £0.8 billion.

During the year, EBS requested a rating from Moody's Investor Services, which awarded it a long-term debt rating of A-3 and a short-term rating of P-2. The society said both ratings were well in line with similar mutual and publicly-quoted institutions in Ireland and Europe. They should enable EBS to raise funds from a substantially wider base.

Other sources of funding are also likely to emerge following the introduction of the euro. But EBS' chief executive, Mr Pat O'Reilly, said it was important for the society to retain a high proportion of its funding from customer accounts. EBS would not like to see retail funding, which accounted for 75 per cent of its year-end balances, to drop below 50 per cent.

The society says a growing number of customers are looking to managed funds as a long-term investment in a low interest rate environment. EBS Asset Managers, its managed funds subsidiary, reported its best-ever performance with sales of £58 million.

EBS' net interest margin - the profit from core lending and funding activities - slipped to 1.8 per cent from 2.1 per cent. Despite the drop in margins, the society still posted an overall surplus, mainly due to strong volume growth and a further downward movement in its expense-to-asset ratio. This fell to 1.1 per cent from 1.4 per cent in 1997 and is one of the lowest in the Irish market. But EBS is aiming to get it below 1 per cent. Volume growth should help the society further reduce its costs, but EBS is also considering other ways of reducing expenses. It is currently examining non-core services, including money transmission, transaction accounts and foreign exchange, to ensure that they are not raising costs or lowering service levels in its core products.

"A small but fairly expensive banking business has grown up, but we don't want to be a mini-clearing bank," says Mr O'Reilly. "We give electronic access to our customers, but we are not in the money transmission business."

Already, EBS has taken a decision to withdraw from Cashere, the ATM network set up by the building societies, and will rely on AIB's Banklink service to permit its customers to withdraw cash.