Impaired loans at EBS subsidiary increase to €214m

Impaired loans at EBS subsidiary Haven Mortgages Ltd increased last year by €6 million to €214.5 million, or 19.3 per cent of the firm's loan book, new figures show.

Accounts just filed by Haven Mortgages Ltd show the firm’s loan book at the end of last year totalled €1.1 billion.

EBS established Haven Mortgages Ltd in late 2007 with the purpose of growing the society’s presence in the intermediary mortgage market.

The directors state that the market remains active for the purpose of providing mortgages.

The figures show the firm recorded a profit of €14.8 million in 2012 despite of a further €16.6 million write-down in loans.

The profit – which followed a loss of €20 million in 2011 – arose mainly from an exceptional one-off gain of €25 million.

The total interest income amounted to €14.7 million compared with €18.8 million in 2011 and the directors state that the decrease arises due to a reduction in the loans to customers balance and a reduction in average mortgage interest rates.

The directors state that Haven’s share of the intermediary market - that accounts for 18 per cent of the overall mortgage market in 2012 – reduced from 4.7 per cent to 0.6 per cent in 2012.

The directors stated: “This percentage reflects our reduced appetite for mortgage business during a very challenging year”.

They added: “We expect the operating environment to remain difficult throughout 2013.”

The directors said the main drivers behind the increased level of loans 90 days in arrears or impaired in its residential loan book were unemployment, wage cuts and high levels of personal debt.

The figures show that in spite of the increased level of loan impairments, the number of repossession executed in 2012 totalled only one on an owner-occupier property, with no repossessions carried out on buy-to-let properties.

The accounts show Haven disposed of two repossessed properties in 2012 with a shortfall of €400,000 on the sale of the properties.

A note says: “Haven has received a number of requests for forbearance from customers who are experienced cash flow difficulties . . . Haven considers these against the borrowers current and likely future financial circumstances, their willingness to resolve these issues, as well as the legal and regulatory obligations.”

The note continues: “As part of that process, loans are tested for impairment and where appropriate, the loans are downgraded to impaired state and provisions raised.”