IL&P reports €220m pre-tax loss for first half of year
Rising funding costs and impairment charges to cover loan arrears also transformed last year’s first-half operating profit of €300m into an operating loss of €51m for the first six months of this year.
The group’s management – chief executive Kevin Murphy and finance director David McCarthy – said while second-half performance will likely be in line with the first half; 2009 should represent the peak for much of its problems, including mortgage arrears concerns.
The group raised its total impairment charge to €189m for the first half of this year; it stood at €82m for the whole of 2008. Of that, €98m covered mortgage arrears in the Irish market. A “significant increase” in arrears cases here, during the first half, resulted in 6,122 being in arrears after 90 days, out of a total mortgage portfolio of 188,000.
Mr Murphy said that the controversial decision by IL&P’s banking arm – Permanent TSB – to up its variable mortgage interest rate by 0.5%, last month, shouldn’t have any further negative effect on mortgage arrears levels going forward.
While still profitable, first-half operating profit at IL&P’s life and pensions business fell by 52%, on a year-on-year basis, to €75m. Its retail banking arm, however, fell from an operating profit of €124m at the halfway stage in 2008 to a loss this year of €132m.
However, management said that its lending remains at a low-risk status.
New lending levels amounted to €700m for the first half – with no lending going to the corporate sector (including the SME market and/or property developers).
Meanwhile, €1.1bn came in via deposits in the first half and 21,000 current accounts were opened between January and the end of June; with a total of 40,000 new accounts likely to be opened across the full year.
IL&P’s share price rose by 8c – or just under 3% – to €4.06 yesterday.
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