Record growth continues at ACCBank

ACCBank profit growth continues pre merger as the group unveiled a 31 per cent increase in pre tax profits for 1998 to £20.5m. In terms of earnings per share, this amounted to 39p up 27 per cent and the company increased its dividend payout by 11 per cent to £4m.

According to the bank's chief executive, John McCloskey, the bank achieved record growth in a very competitive market due to declining interest rates. ACCBank is now destined for merger with TSB bank and for eventual floatation on the stock market.

In teeing up for sale or floatation, the ACCBank has consistently increased reported pre tax profit levels though a mechanism of diversification away from agri based lending. ACCBank accounts for 15 per cent of farm lending but the main growth by the bank has been in the personal lending for houses and car financing.

In the last four years the company has grown its after tax profits by 140 per cent as the bank has focused on tax based lending which reduced the tax payable by the bank and increased the after tax profits. This helped to boost the company's balance sheet which stood at £2.2billion last year and support further lending. Over the same period ACCBank more than doubled its lending.

Non interest income at the bank grew by 43 per cent while interest income grew by 12 per cent. On running cost side, this rose by 10 per cent with the cost to income ratio falling to 65.7 per cent. While this represents a move in the right direction, the ACCBank's costs are higher than the industry norm. This should fall when the merger is completed.

The results reflect the very buoyant lending growth in Ireland in recent year in most sectors of the economy. The track record of growth at the bank amounts to a return on equity of 15.5 per cent.

Last year ACCBank grew its deposits by 20 per cent in the competitive interest rate environment and increases its loan book by a healthy 15 per cent.

Commenting on the pending merger with TSB, ACCBank chairman Gary Joyce said that "ACCBank will make a very significant contribution to the new bank and the experiences gained from the ACCBank programme of change and diversification in recent years will provide the new grouping with a valuable asset."