Irish Life & Permanent is expecting a better performance in the second half of this year although life sales are likely to be down by as much as 25 per cent on 2002, according to chief executive Mr David Went.

Yesterday, the life assurance and banking group said that life sales would be down by 40 per cent in the six months to the end of June, but that its banking business has performed well. "There had been some uncertainty as to how much of the shortfall in new life business would be offset by the outperformance in the bank which had a better first half than we had been expecting," he said yesterday.

Mr Went said that although the appetite for equity products remained low, the group was performing ahead of some of its peers in areas such as tracker bond sales and was seeing a satisfactory take up of Personal Retirement Savings Accounts (PRSAs). The banking operations will be affected by some erosion in profit margins in the lower interest rate environment in the months ahead.

Mr Went's comments followed publication of a trading statement offering guidance to investors on its half-year performance. Weak equity markets have adversely affected its life business, which accounts for 57 per cent of the group's income.

The company had issued a profits warning in April to alert the market to the difficulties in the life sector. Yesterday's statement indicated some improvement with the banking business delivering good growth.

Irish Life & Permanent shares had traded lower ahead of the statement but ended the day unchanged at €9.75. Most analysts have revised down their forecasts for the group on foot of the earlier profit warning. Its half-year figures will be issued on September 3rd.

The statement said that a stronger-than-expected outcome on the banking side in the first half is expected to offset lower earnings from life assurance activities.

On the life side, when the sales of the Government-backed Special Savings Incentive Accounts (SSIAs) are stripped out of last year's sales figures the group believes the overall result will be flat.

Sales of protection and investment bond products will be ahead of last year, but pension sales are slower due to changes in the tax filing dates coupled with the impact of the introduction of PRSAs in the second quarter.