Focus on small firms reaps Anglo Irish big profits

Anglo Irish Bank, the mortgage lender to small businesses that has the best performing shares in Europe this year, continued its meteoric profits rise, posting an increase of 65 per cent in the second half of the year. Pre-tax profits for the year were up 34 per cent to €261m (£167.3m) and overall lending was up 24 per cent.

Sean Fitzpatrick, the chief executive of the bank, said its specialist focus on small businesses had allowed it to make solid growth without taking on extensive lending risks. Anglo Irish shares have gained 52 per cent this year, valuing the company at €2.16bn.

"Anglo Irish has produced its usual set of excellent results with earnings up more than expected," said Mark Thomas, an analyst at Fox Pitt Kelton. Analysts are relieved the bank is expanding outside Ireland – lending in the UK outstripped growth in Ireland for the first time this year – and its dependence on the Celtic Tiger boom is thinning.

Lending in Ireland, where the bank has a 17 per cent market share, rose 20 per cent in the year while lending in the UK grew 31 per cent. The bank also saw good growth in the US where lending was up 26 per cent. Assets have grown 23 per cent to €19.4bn in the past year.

The UK now accounts for 40 per cent of the bank's loan book, and could rise to 60 per cent within a few years.

Mr Fitzpatrick will continue to focus on organic growth rather than seek acquisitions to expand the business. "We're not going to be pulling any rabbits out of hats," said Mr Fitzpatrick, who yesterday promised investors he would be "boringly consistent" with the bank's strategy. "It will be more of the same with the way we have traditionally grown the bank. We have a recognised franchise and will grow the bank within our control."

Unlike some of its larger high street counterparts, Anglo Irish has escaped exposure to bad debts by keeping a narrow lending criteria of small businesses, mostly accountants, solicitors and doctors, as well as pubs and hotels. Bad debt reserves were increased by 13.2 per cent to €16.3m in the year. It will pay a total dividend of 12.53 cents a share for the year, up 20 per cent on last year.