Savings with Northern Rock up 33%

IRISH savers, attracted by high interest rates, increased their savings with British bank Northern Rock by 33% over the last 12 months.

The actual number of Irish retail savings account customers increased by 45% to 21,000. They deposited €181 million with the Newcastle-upon-Tyne headquartered company in 2002, bringing the total savings lodged with its Irish operations to €736.2 million. On average, Irish customers hold €35,057 in their saving accounts.

Chief executive Adam Applegarth reported that total retail deposit balances for the year increased by €3.0 billion to €23.5 billion. Pre-tax profits were up by 18.0% to 501

Mr Applegarth said: “Our low costs, relative size and ability to retain existing customers mean we remain confident of achieving our targets.”

Northern Rock opened an office in Dublin in November 1999, initially offering a variable rate demand account, Direct Saver, for personal customers.

Dolmen Securities analyst, Stuart Draper said: “Unlike First Active, much of Northern Rock’s volume growth was eaten away by margin erosion as a result of higher funding costs.

This meant that it had to rely on non-interest income to generate the strong year-on-year earnings growth, in the form of higher fee income from a substantial increase in mortgage volumes.”

Credit quality remained very solid, with its arrears remaining at half the industry average, and its provisioning rate of 0.2% remaining low.

“The strong volume growth shown in these results is also positive news for Bank of Ireland’s UK mortgage business, Bristol & West, which is generating growth from its high margin buy to let niche.

Results from First Active also confirmed continued buoyancy in Irish mortgage lending,” he added..