PRE TAX profits at the state owned ICC Bank fell from £12 million to £9.1 million for the year to end October 1996, pulled back by a £4 million restructuring charge.

But underlying profits were 8.4 per cent higher at £13.03 million before the exceptional restructuring charge. ICC decided to take the full £4 million cost of restructuring over the next two years against last year's profits because "it was prudent" to do so, according to the managing director, Mr Michael Quinn.

The provision will cover the cost of a voluntary redundancy package aimed at reducing staff numbers by 30-40 people over the next two years and an early retirement scheme. But there will be increased employment in some areas where special skills are required, he said.

Aimed at cutting operating costs by £2 million per annum and boosting income, the restructuring plan includes a full examination of the bank's operations to improve delivery systems and to identify new income opportunities. ICC has had 25 applications for voluntary redundancies and the early retirement offer will close at the end of March, Mr Quinn said.

Net interest income at ICC rose by 8.6 per cent to £29.9 million. It was boosted by an 11 per cent increase in lending with £90.9 million advanced in net new loans to customers, and a 15 per cent rise in customer deposits with £99.4 million taken in during the year.

In the core banking business, ICC recorded strong growth in lending for hotels, other tourism projects and property, Mr Quinn said. The instalment credit portfolio rose by 50 per cent and the contribution from international trade finance was up 30 per cent.

But profits from core lending and funding activities were held back by another fall in the net interest margins in competitive markets. The margin fell from 2.45 per cent to 41 per cent. Interest on Government bonds boosted net interest income by just under £1 million.

When dividends, fees and commissions and foreign exchange income are included, ICC's operating income rose by 6.3 per cent to £38.7 million. Administrative costs were 3.1 per cent higher at £18.6 million. ICC'S cost to income ratio fell from 53 per cent to 50 per cent.

The bank added £1 million to the general provisions fund set up in 1995, bringing the fund to £1.75 million. But it reduced its provisions against specific losses. Overall, its bad and doubtful debt charge for the year was £0.5 million lower at £4.6 million.

The 1996 outcome was depressed by a £1.6 million provision against profits for falls in the value of some of the bank investments. ICC declined to provide details but Mr Quinn said the provision was increased from very low levels and added that the value of unrealised investments in its venture capital operation rose by £2 million or 27 per cent.

Reflecting the restructuring and investments provisions, ICC's profits after tax fell by 19 per cent to £7.1 million. Earnings per share fell from 72.4p to 58.9p. The dividend to the Government will be unchanged at £2.5 million.

Investments by the ICC venture capital division at £14 million were more than twice the 1995 level. But the division's contribution to profits was down, reflecting the investment provisions.

At year end ICC's total assets were 8.1 per cent higher at £1.32 billion.