Nama set for ‘potential surplus’ of €1bn when it winds down

The National Asset Management Agency made an after-tax profit of €458 million in 2014, more than double the €214 million surplus of the previous year. This has emerged from the publication of its annual report today, which shows a fourth consecutive year of profitability by the State agency.

Nama chairman Frank Daly reiterated previous guidance that Nama could achieve a “potential surplus” of €1 billion for the State by the time of its wind-down.

The Minister for Finance Michael Noonan welcomed Nama’s positive financial performance and said any surplus achieved by the agency on completion of its work would be offset against the national debt.

In his chairman’s statement, Mr Daly said Nama hoped to complete its “core work” by 2018, “well ahead of our original target of 2020”.

Nama also announced that it has redeemed 64 per cent of the €30.2 billion in senior debt that it used to purchase loans from Irish banks five years ago. A redemption of €1.75 billion today brought the total to date to €19.35 billion.

Nama generated €8.6 billion in cash last year, almost double the level of 2013. Total cash generated by mid May 2015 was €26.6 billion. Loan impairment charges fell by 85 per cent to €137 million in 2014.

Some €3.2 billion has been approved in capital advances to debtors and receivers to enhance various assets secured on Nama loans.

Nama’s losses on derivatives trebled last year to €159 million, including €147.7 million in termination fees.

Its operating expenses fell to €157 million from €211 million in 2013. The agency’s tax charge reduced to €52 million from €70 million a year earlier as it released deferred tax assets.

Mr Daly said some 630 debtor connections remained in place at the end of 2014 out of an original 780. He said this number would reduce substantially when it brings Project Arrow to market shortly, involving 480 smaller debtors.

By value, it is in a consensual workout with debtors who account for 70 per cent of its loan portfolio.

Nama recorded an impairment charge of €137 million last year, down from €914 million in 2013. Its cumulative impairment provision amounts to €3.6 billion against its loans and receivables portfolio.

Nama chief executive Brendan McDonagh was “reasonably confident” that the agency had reached the “end of the road” on impairment charges and that the potential for writebacks now existed.

When asked if Nama might have extracted more value from the sale of Irish assets if it had held on to them rather than selling them before the economy had turned, Mr McDonagh said: “We’ve done a calculation that if we’d sold no assets at all and held on to them, and paid off none of our senior debt ...we’d have paid an extra €500 million in interest costs. We have to take the view that we sold €1 billion of assets in a very depressed market between 2010 and 2012 but we had to do that to get assets going.”

Nama also announced that, as part of its end-2016 delivery target of 4,500 housing units, some 1,600 residential units had been delivered by mid-May 2015. Planning permission has been secured for another 5,800 units, of which 2,400 are under construction.

In addition, permission has been sought or will be sought this year for another 4,300 units. Another estimated 13,600 units are at the pre-planning assessment stage with planning applications to be submitted after 2015, if commercially viable. Nama funded more than 40 per cent of the new housing supply in Dublin last year.