Irish Life & Permanent won’t be selling any loans to the Government’s so-called bad bank, the National Asset Management Agency (Nama), chief financial officer David McCarthy said this morning.
“We’ve gone through the portfolio and we don’t have development loans and don’t think we have any assets that are capable of going into NAMA,” McCarthy said in an interview.
At 1.45pm shares in the lender were up 3 per cent at €4.10.
Irish Life & Permanent reported a worse-than expected first-half operating loss this morning as jobless borrowers struggle to repay mortgages but said it expected arrears to peak towards the end of the year.
The lender said it had seen a significant rise in mortgage arrears in Ireland during the first half with 6,122 mortgages out of 188,000 issued in arrears of 90 days or more.
Impaired loans account for 1.1 per cent of all lending loans and have more than doubled to €442 million.
IL&P said there was evidence the rate of increase in arrears is moderating and that the broader economic environment showed signs of improvement.
Finance Director David McCarthy said the full-year operating loss would come in a range of €50 to €100 million depending on the timing of impairment charges and funding costs.
"Given the extreme stress that we have just come through, given the extreme stress that we are seeing in the economy at the moment that is not a bad outcome," he said.
Irish Life's loss compares with a €300 million operating profit a year ago.
The group, one of the biggest mortgage providers in the State, raised its expected loan loss rate for 2009-2011 to 1.7-1.8 per cent of loans from 1.6 per cent after changing its estimate for unemployment to peak next year at 16 per cent rather than 14 per cent.
Mr McCarthy said Irish Life & Permanent expected Irish arrears to peak towards the end of this year as unemployed borrowers work through their difficulties.
"We would expect to see the level of arrears stabilising as we come towards the end of the year and into 2010," he said.
The group said arrears had peaked in the UK, where its book is mainly composed of buy-to-let loans.
Sales of life and pension products dropped 43 per cent in the first half and Mr McCarthy said they would be down 25-30 per cent overall in 2009, with second-half sales helped by an easier year-on-year comparison.
"We would expect life sales maybe to improve in 2010 in the order of 10 per cent to 15 per cent, somewhere around that level."
Irish Life & Permanent's life business and its lack of exposure to property developers has helped it avoid the need for state funds and the group reiterated that its capital position was strong.
It said it did not expect to participate in the government's "bad bank" plan to cleanse the banking system of tens of billions of euros in risky commercial property loans.
Irish Life, which is Ireland's biggest life assurer and fund manager, will hold an extraordinary general meeting this year to get approval for a new holding company which would allow it to separate its banking arm from its insurance business.
The Government has signalled it wants a "third force" in its beleaguered financial sector to counter the dominance of Bank of Ireland and Allied Irish Banks.
"There will clearly be ... a need for restructuring in the Irish (banking) industry," said McCarthy. "We are quite willing to participate in that and we are open to consider all options."
Irish Life halted merger talks with the EBS earlier this year while it waited to see the outcome of the "bad bank" plan.
Reuters/Bloomberg