Anglo Irish profits soar

ANGLO IRISH BANK’S positive flow is set to continue next week, when the company is expected to announce a 40%-plus increase in pre-tax profits.

NCB and Davy Stockbrokers were both bullish yesterday on the predictions for the bank’s figures for the first six months, scheduled to be released next Wednesday.

NCB’s pre-tax profit estimate is €217m (+39%) compared to Davy who expect profits of €218.9 (+42%).

NCB’s David Odlum said strong growth in the loan book will again be the main contributor to performance.

“Our forecasts assume growth in average interest earning assets of 19% and a slight increase in nett interest margins. The 2002/03 nett interest margin was distorted, in part, by a high level of drawdowns during the end of the period. Work in progress was strong at €3bn at the end of September 2003.”

Mr Odlum said they expect a strong set of numbers with revenues and costs performing well.

“The key points will be the outlook for volume growth and nett interest margins, and an update on asset quality,” he said, maintaining a buy recommendation.

Davy analysts Emer Lang and Scott Rankin identified one of the key drivers of Anglo’s results as the pace of lending growth.

“For instance, compound annual growth in lending has averaged 39% over the past five years (to September 2003), translating into 41% annual growth in profits. The key change to our forecast in January was to raise the level of nett new loans to €3.9bn, compared with less than €3bn previously,” they said.