Pre-Tax profits at the State-owned ICC Bank rose by 28 per cent to £9 million for the six months to end April, against a background of strong demand for loans for small and medium-sized businesses in a buoyant economy. Stating that he was "very satisfied" with the result, managing director, Mr Michael Quinn said he was "hopeful" the Government will make an early decision on the future of the bank "in everyone's interest". The Minister for Finance, Mr McCreevy, is considering the future of both the ICC and ACC banks. The ICC board and management has submitted its corporate plan for the future to the Department of Finance.
The board wants the Government to approve the sale of all or part of ICC to a partner who will facilitate its expansion and development as a lender to small and medium-sized business and in the venture capital market. A number of players have expressed interest including Bank of Ireland, Irish Permanent and Irish Intercontinental Bank. But in its submission to the Department of Finance, the MSF union, which represents staff at ICC, has suggested the Government retains ownership of the bank and invests £40 million over four years in developing it. Staff at ICC are concerned about threats to job security, pension rights and union recognition in any sell-off. In the event of a sell-off the union wants staff to be given a 5 per cent stake in the bank and to be given the opportunity to buy a further 9.9 per cent stake.
Discussions are ongoing between the parties and Department officials on the issues concerning the bank's future. But most observers expect the bank will be sold, with tender offers expected to be invited in the autumn. The latest results indicate that ICC could fetch a price in the region of £220 million. But more important than the price to all the parties concerned will be the plans of prospective purchasers for the future development of the bank. The results show that lending to core small and medium-sized business customers increased in a very competitive market. Cash advances for the period were up 18 per cent to £223 million. At the end of April, ICC had £1.25 billion in outstanding loans. Asset quality was strong with the cost of non-performing loans at its lowest level for eight years, Mr Quinn said.
Only 1.04 per cent of total loans were considered to be non-performing loans, down from 1.65 per cent in the continuing buoyant economic environment. Mr Quinn said there were no signs of any slowing in loan demand or any disimprovement in loan quality. "This is something we watch very carefully," he said.
Lending growth was helped by the £10 million equity injection by the State shareholder in October 1997. But the issue of just under 10 million new shares resulted in a reduction in earnings per share from 38.1p to 28p.
ICC's Venture Capital made investments of just over £4.5 million in the period while the bank raised £3 million for investments through the Business Expansion Fund scheme.
