Rumours of the demise of the Celtic Tiger economy can be considered much exaggerated after Anglo Irish Bank, Ireland’s niche corporate lender, reported record loan growth in the year to September 30.

A net increase in the total loan book of €6.3bn (£4.4bn) lifted from €18.1bn to €24.4bn was the main driver behind a 45 per cent jump in pre-tax profits, up from €346.5m to €504.1m.

Even adjusting for the fact that the bank is not making a general bad-debt provision this year, profits were ahead by 28 per cent.

The bank, which lends to small businesses, such as publicans and professional firms, saw total income up by more than a quarter from €571.2m to €723.2m. Net interest income grew 27 per cent from €414m to €523.5m, while fees and commissions were up from €152.3m to €183.9m.

Costs increased at a slightly slower pace, up by 19 per cent from €155m to €185.4m. While the economy may have cooled since the heady days of 1999-2000, the bank’s Irish lending book grew 34 per cent, or by €3.3bn. The UK, now 41 per cent of total loans outstanding, grew slightly faster, with total loans up 38 per cent to €9.9m. The US, where it has a small banking operation in Boston, achieved a 20 per cent increase to €1.33bn.

The rise in lending was not accompanied by any deterioration in asset quality. While it did not take a general provision, total provisions are running at 195 per cent of non-performing loans, compared with an EU average closer to 80 per cent.

A final dividend of 15.04 cents (14 cents) lifts the full-year pay-out by 20 per cent to 22.56 cents, to be paid out of earnings per share of 114.53 cents (78.03 cents).

FT Comment

Certainly on the basis of €4.1bn worth of loans agreed during the year but not yet drawn down, there is little sign that Anglo is flagging. Rather 2005 should be even better than 2004. Brokers are forecasting profits before tax of €580m or earnings per share of 1.30. The share price was up 73 cents on Wednesday at 16.40. This puts Anglo on a rating of about 12.5 times. While more expensive than Bank of Ireland and Allied Irish Banks, this is still cheaper than most UK banks. And Anglo, as a corporate lender, would not be tainted by a collapse in the UK housing market.

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