ICS Building Society has reported pretax profits of €91.7 million for 2004. The Bank of Ireland subsidiary said that it processed more than €5 billion in mortgages last year, of which 70 per cent were processed on behalf of other parts of the Bank of Ireland group.
The remainder of the business was originated from brokers and the society's nine retail outlets.
Joe Larkin, the managing director of the society, said that demand for mortgages in 2005 was ahead of forecast despite the continuing deceleration of house price growth.
"In the first two months of 2005, mortgage applications received were up over 20 per cent compared to the same period last year," said Mr Larkin.
"The conditions that make for a buoyant market still pertain; demographics, low interest rate, high employment and strong growth," he said.
He said that the society took the view that interest rates would rise by half of a percentage point over the course of the year and that this was unlikely to cause any significant problems for borrowers.
Mr Larkin said that, notwithstanding recent comments from Central Bank governor John Hurley that some lenders may be overextending, the society was not concerned about the quality of its loan book. "We stress test all new mortgages for a two percentage point increase," he said.
He added that the two major threats to the stability of the property market - a sharp increase in interest rates or a drop in employment - were unlikely to manifest themselves.
The society's assets grew from €4.656 billion to €5.728 billion, of which deposits formed €2.86 billion compared to €2.58 billion a year ago.
New mortgage advances rose by 20.6 per cent to €1.41 billionwhile asset quality also improved, with arrears as a percentage of the mortgage book falling 0.03 of a percentage point to 0.11 per cent.
The group's cost/income ratio fell from 25.1 per cent to 22.8 per cent and is low by the standards of the industry. It reflects the large amount of business that the society does on behalf of the bank and also the relatively low cost of the broker channel, which accounts for around 20 per cent of turnover. The society received more than €51.8 million in fees from other units of the bank for processing and servicing mortgages.
Mr Larkin said that, despite its low cost/income ratio, there was no guarantee that the society would not be affected by the group-wide restructuring announced by Bank of Ireland chief executive Brian Goggin on Tuesday.
The group plans to shed more than 2,100 staff to achieve annual savings of €120 million. "There is always room for improvement," said Mr Larkin.
He said that the society was now doing a significant amount of business online and had increased the number of customers coming through this channel by 172 per cent in the past 12 months.
