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Profits Surge at Irish Life & Permanent Over Strong Growth in Mortgages

Irish Life & Permanent, the top provider of mortgages and insurance in Ireland, said Wednesday net profit grew 18% in 2006.

Irish Life, Ireland's third-largest financial services company, reported strong growth in sales and new business across its three key divisions: Irish Life insurance, Irish Permanent mortgages, and Permanent TSB retail bank.

Net profit for the year through December rose to 561 million euros ($740.5 million) from 475 million euros in 2005.

About 90% of Irish Life's business is generated within the Republic of Ireland, where incomes and property prices have surged since the Celtic Tiger economic boom began in the mid-1990s. The company also has a growing presence in the United Kingdom, including Northern Ireland, which last year posted the strongest gains in property prices in the whole of Europe.

The company would be badly exposed by any downturn in the property market, particularly in Dublin, where property prices have quadrupled in the past decade and the Irish Central Bank has warned of excessive values.

But Chief Executive David Went said he expected the economy and the Irish Life stable of businesses to keep roaring ahead in 2007.

"The outlook for the economy is very positive, and each of our key businesses is well primed to maximize performance," he said.

Irish Permanent attracted 8.7 billion euros ($11.5 billion) in new mortgage business in 2006, up 37% from 2005. The total value of Irish Life mortgages in the Republic of Ireland increased 30% to 23.1 billion euros ($30.5 billion).

Ireland's housing boom is driven by a combination of factors: growing disposable incomes, strong jobs growth, low interest rates, a comparatively high birth rate and heavy immigration, particularly from Eastern Europe.