IL&P shrinks first half losses by €40m

IRISH Life & Permanent (IL&P) managed to cut its first half losses by over €40 million — to €10m — with management saying the group is on course for sustained recovery.

However, the group’s retail banking arm — Permanent TSB — continued to make heavy losses (albeit marginally down, on a year-on-year basis) and the level of arrears amongst its mortgage customers increased by 28%, on a like-for-like basis, during the first six months of the year.

That latter development now means that roughly 9,000 out of the bank’s 180,000 mortgage customers are in arrears — an increase mainly driven by the overall rise in the country’s unemployment levels.

Overall, the 80% fall in IL&P’s first half operating loss — from €51m to €10m — was boosted by recovery in the life assurance business; which saw a 40% year-on-year increase in operating profit to €118m.

On a pre-tax basis, IL&P’s group loss fell from €220m to €32m. Bad debt provisions fell by 21% — to €39m — and the group’s overall loan book fell by 2% in the first half of the year.

Permanent TSB made an operating loss of €131m, compared with last year’s first half loss of €132m.

The group’s chairwoman Gillian Bowler said that while the second half of the year may not simply replicate the positivity of the first, “real progress” is being made towards stabilising the business and positioning it for ongoing recovery.

Group chief executive Kevin Murphy added that the life business should continue to perform well during the remainder of the year and continue to carry the group on its recovery path. He added, however, that the Permanent TSB arm will make further losses in the second half.

Mr Murphy added that 80% of IL&P’s 2010 refinancing round is complete and that another €1.3 billion to €2.8bn will be raised.

Overall, yesterday’s headline figures flew in the face of initial market expectations with analysts having anticipated a widening in operating losses to around €92m, rather than a significant reduction.

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