EBS profits surge 9% to €53.8m

JOINT ventures could form part of EBS Building Society's future strategy in certain circumstances, but the group's mutual status was not negotiable, chief executive Ted McGovern said yesterday.

With Irish Nationwide due to "demutualise", EBS will be the sole occupier of the mutual space in the Irish market.

"That gives EBS a unique marketing position within the Irish market," said McGovern.

He was speaking after the group announced strong results for 2005, showing pre-tax profits ahead by 9%, topping €53.8 million.

Gross lending rose 22% to €3.8 billion while its overall loan book rose by 20% to €12.2bn. Residential mortgage advances were up by 27%.

If the group charged the same rates as its competitors, profits for the year would have been between €15m and €20m higher.

ESB confirmed yesterday that it will enter into new relationships with Irish Life and Allianz, which it says will deliver a range of new products and services this year to its growing customer base.

And the drive is on to expand the group's business, which today accounts for about 12% of the Irish mortgage market.

EBS has begun selling mortgages through the broker channel for the first time, which opens up about 40% of the home loan market.

As a result it is forecasting even stronger new business flow from the broker market this year.

ESB said its "mutuality dividend" to members increased by 10% to €22.5m in 2005.

Mr McGovern restated the EBS commitment to mutuality and said in the context of expected building societies' legislation, EBS would emerge as the only mutual focussed on long-term value for its members as opposed to maximising short-term profitability.

"It is the key to our future success. Things change and all we need to do is keep the ship steady," he said.

He dismissed the likelihood of a house price bubble but admitted the group has insurance cover on big mortgages and protected itself in the 100% mortgage market which it entered recently.

Chief Financial Officer Alan Merriman rejected suggestions 100% mortgages were irresponsible.

"The choice was to stay on the sidelines and do nothing. We decided we were better off going with a limited pilot in an effort to understand that end of the market and the quality of the borrowers," he said.