IL&P expects narrowing of losses

IRISH Life & Permanent (IL&P) has said that it expects to see a significant narrowing in full-year operating losses for 2010.

In its latest trading update, the financial services group yesterday said that it expects “operating earnings for the year to be significantly better than 2009”, when it posted an operating loss of €196 million.

While IL&P’s retail banking arm – Permanent TSB – continues to be loss-making, its life assurance division is profitable and has been growing during the year. That business was the main driver in IL&P managing to cut its first half losses by over €40m, to €10m, earlier this year.

Management stated – in yesterday’s update – that continued weakness in domestic demand, coupled with the disruption in the debt markets has “made for challenging operating conditions for the group’s businesses”.

However, it added: “The recovery in the life and investment business is well-established and the banking business continues to progress its key priorities for funding, impairments and profitability.”

IL&P’s bad debt provisions fell by 21%, year-on-year, in the first half of the year and the group is now anticipating that its full-year impairment charge – for Permanent TSB – will be down by between 10% and 15%.

However, it added that early mortgage arrears cases (those unpaid under 90 days) have “levelled off” since May, in line with the general trend in unemployment, but that cases over 90 days continue to rise.

“Arrears in consumer finance continue to decline in both the over-90 days and under-90 days categories. The UK mortgage book is performing in line with expectations and its arrears experience continues to outperform the UK buy-to-let sector, overall,” yesterday’s statement added.

The group is expecting to see operating profits in its life business to show full-year growth of around 70%; but it also expects its banking business result to be “broadly in line with the prior year, absent any material developments”.

Last year, Permanent TSB – which is hoping to strengthen through the acquisition of the EBS Building Society, for which it is one of two final bidders – made an operating loss of €270m.

A fall of 10% in operating costs, in 2009, is expected to be followed by a fall of 4% for this year.