OUR mutual friends at the EBS paid a high price last year in defence of their mutuality, somewhat hamstrung in a savings and mortgage market inundated by a plethora of financial products vying for business from an increasingly cost conscious public.

Unlike some of their competitors, which have discarded the shackles of mutuality to evolve into mainstream banking, the EBS, which claims a 10.5 per cent market share, remains firmly committed to being owned by its savers and borrowers.

The decision last February to both trim mortgage rates and to increase the interest paid to depositors, a policy beneficial to all customers, cost the EBS over £5 million in lost profits.

Annual results this week show that pretax profits at the society fell 20 per cent from £23 million to £18.3 million as the EBS effectively gave £5.7 million back to customers through preferential interest rates.

If the benefits package had not been introduced, pre tax profits would have increased to £24 million, according to chief executive Pat O'Reilly.

Notwithstanding the slippage in profits, 1996 was considered a super year" for the society with sustained growth in total assets, which rose 17 per cent to just over £2 billion. The society were content to operate within the narrower confines of mutuality, is keen to expand its asset base by suitable acquisitions.