The costs associated with various inquiries have taken their toll at National Irish Bank (NIB). Pre-tax profits fell by 13 per cent to £14 million (€17.8 million) in the half-year to the end of March, despite the buoyant economic environment.

Expenses at NIB jumped by 32 per cent to £29 million in the first half, partly due to the costs associated with the ongoing investigations at the bank.

NIB has been the subject of a number of investigations, including inquiries by two High Court inspectors into allegations of interest and fee loading by the bank and the sale of unauthorised offshore bonds.

Costs associated with the investigations in the six-month period totalled £1.6 million and the bank expects costs to be in excess of £3 million by the end of the current financial year.

Preparing for Economic and Monetary Union (EMU) and the year 2000 also contributed to the rise in non-interest costs, as did investment in distribution.

The increase in expenses pushed the bank's cost/income ratio up to 69.4 per cent from 58.8 per cent a year earlier and offset an 11 per cent increase in net interest income to £30 million and a 9 per cent rise in other operating income to £12 million.

NIB said strong growth in lending, particularly mortgages, outweighed the impact of slightly lower margins, which slipped to 3.4 per cent from 3.5 per cent.

Net loans and acceptances were up 7 per cent at £1.28 billion and within this, housing loans grew by 9 per cent to £466 million. Bank deposits rose by just 1 per cent to £1.18 billion, while total assets were up by 8 per cent at £1.8 billion. NIB's profit after tax and before abnormal items was unchanged at £10 million.

"Overall, we consider this performance highly satisfactory in an intensely competitive market," NIB said. The bank has ended its previous practice of issuing an interim results statement in pounds and the interim figures were included with the overall results for its parent National Australia Bank, which itself announced a 25 per cent increase in operating profits after tax to 1.39 billion Australian dollars (€862 million).