DUBLIN-BASED stockbroker Davy made a pre-tax profit of more than €30 million in the first six months of this year.

The figure emerged yesterday in a "mid-year update" sent to Davy's 100 shareholders by chief executive Tony Garry.

In the note, which has been seen by The Irish Times, Mr Garry said Davy's net assets are currently €140 million, "representing more than three times our regulatory capital requirement".

Mr Garry added that Davy "continued to trade profitably in the third quarter" of this year "after taking into account the costs of the recent redundancy package".

He said costs associated with the "credit union issue" were fully provided for in its 2007 accounts.

This relates to a €35 million settlement between Davy and a number of credit unions designed to cover losses incurred on investment bonds bought from the stockbroker before the collapse of the global markets.

Mr Garry closed his short letter by stating that he expected Davy to build on its performance so far this year.

"Undoubtedly, the remainder of 2008 will be challenging but I have no doubt that with the combined effort and commitment of the entire Davy team, we can build on the performance achieved in the year to date," he said.

The contents of this letter will squash rumours that had been circulating in recent weeks about Davy's financial position, in light of the credit crunch and the collapse in value of major stock markets.

A spokesman for Davy declined to comment either on the update provided to shareholders or on Davy's expected financial performance in the final three months of this year.

Davy and other stockbrokers in Dublin have seen activity levels decline sharply in recent months due to the banking crisis and the ban on short-selling, raising questions about whether consolidation could be on the cards.

In July, Davy announced plans for 75 redundancies among its 520 staff. It also sought a 5 per cent pay cut from staff on annual earnings of more than €50,000.

These changes are thought to have been implemented in full.

Davy is Ireland's biggest stockbroker.

It was the subject of a €350 million management buyout (MBO) in 2006 that saw Bank of Ireland sell its 90.44 per cent shareholding in the business and about 100 staff become shareholders. The buyout was funded by Anglo Irish Bank.

In early 2007, Mr Garry told The Irish Timesthat Davy's intended to double its profits to €100 million within five years.