National Irish Bank has reported a 27 per cent increase in underlying profit last year, boosted in particular by the introduction of its new loan-to-value mortgage product. Claire Shoesmithreports.

Andrew Healy, the bank's chief executive, estimates that NIB was responsible for about 10 per cent of all new mortgage activity in Ireland in the fourth quarter following the introduction of the new product in October. This compares with a market share of between 2 and 3 per cent earlier in the year.

While there are currently no official figures to back up Mr Healy's estimate, the popularity of the new product, whereby the interest rate (charged at a margin of between 0.5 and 0.59 percentage points over the European Central Bank base rate) is linked to the value of the property, is in keeping with the initial take-up reported back in November.

In the first eight weeks of the campaign more than €500 million of mortgage applications were processed - equal to 20 per cent of the bank's end-of-year mortgage book.

Mr Healy said 2007 had started strongly and that January had been "as good if not better" than the final quarter of 2006.

Overall residential mortgage lending rose 54 per cent, while the total loan book increased 51 per cent to €6.9 billion.

Customer deposits were also strong, up 27 per cent at €2.9 billion. Mr Healy said the bank would be introducing several new products this year targeting SSIA holders. Across the bank, profit before tax, goodwill and integration costs totalled €38.1 million last year, up from €25.1 million in 2005.

On a pre-tax basis, including money spent integrating the bank's IT system with that of its parent company, Danske Bank, the figure was €3.5 million.

Mr Healy said the performance, which compares with a loss of €14.2 million in 2005, was ahead of the bank's expectations.