Bank of Scotland in combative form

BANK of Scotland (Ireland) has confirmed its assault on the dominance of the two big banks.

The bank, owned by Halifax Bank of Scotland, is to challenge the might of Bank of Ireland and AIB by the introduction of new products including credit cards and savings products.

Colin Matthew, head of the parent HBOS’s international business, said cards and savings would be among new products the bank would add in Ireland.

Bank of Scotland (Ireland) yesterday announced pre-tax profits of €65m for the first six months of the year. That is up from €58m over the same period last year.

Richard McDonald, executive director of the Irish subsidiary, said the bank was on course to become the major player in the small to medium sized business market by the end of 2005.

In the last 12 months, total lending has risen by an impressive 30%, he said.

“Let Michael Buckley of AIB say what he wants,” he said.

McDonald was referring to Buckley’s recent claim that AIB had nothing to fear from the HBOS subsidiary.

Results earlier this week from the beleaguered AIB, fighting off damaging allegations of overcharging and tax evasion, showed the country’s biggest bank was not about to keel over.

It showed strong growth across all its divisions and said the trend would continue through the year.

The Scottish bank achieved strong growth in its deposit taking activities during the period.

These were up by 36% as the group deepened its involvement with the Irish business sector during the six month period.

Overall, Mr McDonald said, “it was a strong six months and we are on track to be the number one business bank by the end of next year.”

By the end of the period the Irish operations held €5.6bn in deposits, up from €4.1 billion in the first half of 2003.

Total lending to customers amounted to €9.2 billion, up from €7.1 billion the same time last year.

The bank said it was continuing to achieve good growth in Ireland with annualised growth in customer lending of over 30% with deposits up 36% in the first half.

It was investing in the Irish business by extending its product and distribution reach into retail banking, he said.

HBOS, which is the biggest mortgage lender in the UK, reported a 21% jump in pre-tax profits to £2.16 billion sterling.

The profits were in line with market expectations and came on the back of higher deposits and sales of investment products.

HBOS, formed by the merger of home-loan specialist Halifax and Bank of Scotland three years ago, said its return on equity rose to 18.6% in the first half of the year from 17.2% the same time last year.

The bank said that its policy of tightening retail lending criteria as interest rates rise had resulted in good but slower overall rates of growth.

Total loans and advances to customers grew by 6% to £299 billion in the first six months of the year.