Anglo Irish Bank today reported a 17% increase in underlying pre-tax profits for the six months to the end of March, and said it continued to expect that growth for the full year would be 15%.
Pre-tax profits rose to €647m for the six month period. This excluded a €20m profit on the disposal its Swiss private bank. Underlying earnings per share (EPS) rose by 15% to 69.7 cents. The bank had said in March that it expected to post a 15% increase.
The bank announced an interim dividend of 7.78 cent, an increase of 20%.
Anglo Irish Bank said it had a resilient funding platform with almost two thirds of total funding provided by customer sources and with continued strong access to wholesale markets. 'Over 90% of loan growth for the six months was funding through increased customer deposits,' the bank said.
During the bank's first half year, it saw lending growth of 10% to reach a figure of €6.1 billion. It said it had an 'excellent' asset quality with impaired loans representing 0.52% of total loan balances.
The bank said it operates a 'strict underwriting model'. 'We lend to experienced business people and professional investors, providing senior term debt on a secured basis. The bank does not engage in speculative or unsecured development lending,' it explained.
At the end of March, Anglo Irish Bank said that loans to Irish customers stood at €40.6 billion, up €3.7 billion in the first six months. It said that price reductions and a major decline in the supply of new homes have helped provide some stability to the Irish residential market.
The bank's UK lending business increased loan balances by 5% to stand at €20.1 billion. It said that there are emerging signs of potential opportunities in the UK commercial property market following the recent pricing correction and the downward trend in the long-term interest rates.
Its North American lending business saw a 'solid' performance in the six month period with net loan growth of €1.4 billion. It said that sentiment and confidence in the US economy has deteriorated significantly recently and the bank is not immune to this downturn.
'However, our geographical focus and proven underwriting model position the bank strongly. The entire book is fully performing and we have no exposure to the subprime sector,' the bank said.
Anglo Irish Bank said that in order to protect future earnings, it has taken a prudent approach to the valuation of assets impacted by the credit market 'dislocation'. It added that it only has limited residual exposure to these asset classes.
It said that after cumulative write-downs and disposals, its exposure to structured investment vehicle assets is €3m.
'We have no direct exposure to US or other subprime sectors. Following cumulative write-downs through the income statement and reserves of €111m and €76m respectively, the carrying value of assets indirectly lined to US subprime is €63m, the bank said.
The bank said that it maintains full year guidance of 15% earnings per share growth.
'However, there continues to be risk to profitability across the banking sector associated with further financial market disruption and the potential impact of a protracted deterioration in the wider economic climate,' it added.
'The current challenging environment for the banking sector underlines the relevance of our relationship focused business model, strict underwriting criteria and strong ownership culture,' commented Chairman Sean FitzPatrick.
'These position the bank the maximise the potential in each of our core markets and increase market share, particularly in the US and US, in the medium to long term. Accordingly, we see significant opportunity to sustain our delivery of above market returns for our shareholders,' he added.
Anglo Irish Bank shares jumped 47 cent to close at €9.67 in Dublin.