Ulster profit surge on new mortgages

ULSTER Bank has posted a 15% rise in pre-tax profits for 2005 following a surge in lending to mortgage and business customers.

The bank, which also owns First Active, said profits jumped to €775 million in 2005.

Mortgage lending was ahead by 31% at €19.2 billion, higher than the overall rise in credit growth in the Irish market, helped by the introduction of 100% mortgages and switcher products, chief executive Cormac McCarthy said.

He dismissed concern expressed by AIB last week that 100% mortgages were bad for consumers.

"100% mortgages have been a feature of the market for some time. 100% mortgage products are relieving an anomaly ... that was preventing some people from getting in to the mortgage market and we are very happy with it," Mr McCarthy said.

The bank said it sees the boom in mortgage lending continuing, though not at the present growth rate

"If you look at the demographics in Ireland we have a young and growing population with full employment and people need houses," Mr McCarthy said.

He added: "We don't take a view that interest rates will rise to the extent that it will impact on people's capacity to repay their loans."

Total loans at the bank, including its business in the North, were up 23% to €41.1bn with market share gains in business lending and the current account market.

Ulster Bank added 68,000 new customers and believes transaction-free banking will add to this tally.

The bank has increased its bad debt provision by €19m, but said this reflected an increase in lending and not inability to repay.

Ulster Bank's parent, the Royal Bank of Scotland, yesterday said that pre-tax profits rose 21% to £7.94 billion (€11.6 bn) as it raised its full-year dividend to 72.5 pence, up 25% from 2004.