Nama books profit of €247m for 2011 with help from tax credits

THE NATIONAL Asset Management Agency made a pretax profit of €11 million last year after writing down the value of loans by another €1.3 billion following further declines in property.

The State agency made a profit of €247 million for the year after booking a tax credit of €235 million as accounting rules allow loan impairments to be offset against taxes on future profits. Nama made an operating profit of €1.28 billion before bad debts.

The writedown in loans brings impairment charges since Nama was set up in 2009 to €2.75 billion, amounting to 9.6 per cent of loans.

The 2011 profits compare with a loss of €1.18 billion in 2010 after a bad debt charge of €1.485 billion.

Brendan McDonagh, the chief executive of Nama, said he was confident it had “more than adequately provided” for loan impairments. The agency noted it had an unrealised surplus of €1.82 billion on cashflows that it had not yet recognised in its income statement.

Nama said it was “well on track” to repay €7.5 billion of the €32 billion it borrowed to buy the loans by the end of next year, a target set by the agency and adopted by the troika of lenders.

The agency aims at least to break even by recovering the €32 billion borrowed to purchase loans with a face value of €74 billion from five financial institutions. “The task before us is significant, but I am optimistic that Nama will succeed in doing the job set out for it,” said Mr McDonagh.

The agency said it had approved asset sales of €9.2 billion to date, including €5.6 billion last year, and has recorded cash inflows of more than €8.4 billion in the 27 months since Nama was set up.

“Cash-flow generation is vitally important for Nama and remains very strong,” said Mr McDonagh.

The accounts for 2011, the first year covering Nama’s full operations, show it acquired the final €2.8 billion of bank loans between March and October 2011.

Mr McDonagh said it was “unhelpful” that there wasn’t greater transparency around the prices at which properties sold. The Central Statistics Office taking account of cash sales in its price index and the setting up of the property sales register should generate more sales, he said.

He felt property prices in Dublin had “bottomed out”, while chairman Frank Daly said he was “cautiously optimistic” about a recovery. There was a strong possibility Nama would put more properties up for sale under the agency’s deferred mortgage payment scheme in the autumn, he said. The initiative, which protects buyers from negative equity by deferring 20 per cent of the purchase price for five years, has led to the sale of 42 properties out of 115 on offer in a pilot scheme.

In an attempt to dispel myths that Nama was “ruining” the hotel and golf industries, Mr McDonagh said the agency had one in 20 golf courses in the State and one in eight hotels. It has about one in 10 of the worst “ghost estates”.

Minister for Finance Michael Noonan said the agency had responded “very strongly” to a recommendation that it become more entrepreneurial by his adviser, former banker Michael Geoghegan.

Nama was investing €2 billion in properties to increase the value of assets and providing €2 billion in vendor finance to assist buyers of commercial properties, he said.

Staff costs at Nama rose to €24 million last year from €10 million in 2010 as the number of employees rose to 202 at the end of last year. (It was 214 at the end of May.) Seven board members of Nama shared fees of €523,000 for the year. Mr McDonagh was paid €430,000 and Mr Daly €154,000.

Mr McDonagh was awarded a performance bonus for 2011 but waived it “in view of the economic challenges facing the country”, Nama said. Legal fees trebled to €9.5 million for 2011.