"Gross new lending for the group (Ireland and Britain) is expected to be just short of E6 billion for the full year, representing growth of over 30%. New residential mortgage lending in Ireland is expected to grow by circa 30% for the year while new mortgage lending in Britain by Capital Home Loans will exceed the strong growth performance of the first half. Consumer finance lending enjoyed a strong second half with new lending growth of circa 11% expected for the full year," the company said.
The company said that after the sharp fall in life sales in the first half principally reflecting the impact of the Government-sponsored Special Savings Incentive Account (SSIA) products in the prior year life sales growth resumed strongly in the second half of 2003.
The company said retail and corporate life divisions enjoyed strong second-half growth with combined second-half sales expected to show growth of over 15% in the second half of the year.
"The main driver of the strong second-half performance has been pensions and, in particular, the success enjoyed in the new PRSA pensions market.
"Excluding SSIA sales of E101m in 2002, the Retail life division's sales for the year are expected to be ahead by over 16%. Corporate life sales should grow by circa 5% for the full year.
The company said the contribution from banking for the year is expected to be strongly ahead of 2002. "Modest net interest income growth is expected for the year as the margin squeeze from falling interest rates offsets the contribution from strong lending growth. The net interest margin for the full year is expected to fall to just over 160 bps (2002: 178 bps) reflecting the full impact of rate cuts and the increased cost of wholesale funding for the rapidly growing loan book," the company said.
However, the company said the bank is on schedule to achieve the targeted cost synergies of 29m by the end of 2003 and total bank costs will be below 2002 levels.
The company disclosed that recovery in investment markets, will be partially offset by the impact of the weaker dollar and British currencies, resulted in short-term investment fluctuations ("below the line") of approximately 25m as of Dec 12th in the Life division.
This compares with a negative of E96.7m for the full year 2002.
"Trading conditions for both the life and banking businesses continue to be favourable. The residential mortgage market remains robust and the pipeline for new lending is very strong. In the life business we are very encouraged by our successful start in the PRSA market. In addition the improvement in investment markets has been positive for distributor and investor confidence and we see a continued recovery in momentum in our life business," the company said.