Intense competition in the mortgage and deposit market together with restructuring costs have hit profits at First Active. Pre-tax profits at the former building society fell by 9 per cent to €41.1 million (£32.4 million), once one-off gains are stripped out, broadly in line with market expectations.

Headline performance was boosted by a €9.1 million gain from the sale of 60 per cent of its UK business to Britannic and €8 million raised from the sale of its head office in Booterstown, while restructuring costs amounted to €6.9 million. When these exceptional items are included pre-tax profits come in at €41.2 million, up 77 per cent compared with €23.2 million in 1999.

Earnings per share increased to 22.3 cents and shareholders will receive a dividend of 11.75 cents per share, an increase of 12 per cent. First Active shares closed at €2.50, up two cents. The shares are still trading below the flotation price of €2.86.

Announcing the results, chief executive Mr Cormac McCarthy said the group had completed its cost cutting programme and First Active was now well positioned for future growth. "The restructuring has gone well and the group's strategic position is clearer than before".

Mr McCarthy said the exceptional items, which amounted to €20.1 million, were effectively re-invested in the business and were used to widen its provision for future bad debts, to restructure its treasury operations and to pay the €3.4 million in DIRT arrears owed to the Revenue Commissioners.

The bank, which is primarily focused on the Irish mortgage market, has lost some market share. It estimates it now has 15 per cent of the new mortgage market compared with 16 per cent in the previous year. Some €10 million of cost savings were achieved last year with the final €3 million due next year.

New lending increased to €1.5 billion with the group seeing a 22 per cent annual increase net of repayments and redemptions. Mr McCarthy said its loans book remained very strong and the higher bad debt provisions did not reflect any concerns about asset quality going forward.

During the year it lost deposits, with customer accounts down from €3.6 billion to €3.5 million and funds under management dropping from €8.2 billion to €7.6 billion.