Pension profits decrease to €96m
The profitable life business is listed by IL&P as discontinued operations, due to it being bought out by the Government under the €1.3bn transaction due to be completed in the next fortnight. This will facilitate the formation of the Irish Life Group.
Therefore, the last set of IL&P accounts, published yesterday, are skewed by ongoing losses at its struggling banking arm, Permanent TSB. This showed an after-tax loss of €424m for 2011, up from a total loss of €321m for the previous year.
Group chairman Alan Cook said trading conditions were “challenging” across all of the group’s business segments.
On the banking side, impairment charges to cover loan losses were up by €1bn to €1.4bn with 12% of the Irish residential mortgage book in arrears. That equates to nearly 21,000 mortgages, with owner-occupier mortgages accounting for nearly 17,000 of those. The figure for IL&P equates to an industry average of 9.2% of Irish mortgages currently being in arrears.
At the end of 2010, only 12,200 of Permanent TSB’s Irish mortgages were in arrears.
Mr Cook said the group’s acquisition of Irish Nationwide’s €3.6bn deposit book early last year had “helped to offset significant outflows of corporate assets”.
While the Government is intent on selling on Irish Life in due course, the future for Permanent TSB is less clear. The troika is set to have the final say in its fate, as it looks for a further shrinking of the Irish banking sector.
Despite the problems with its mortgage book — much of which is comprised of non-profitable tracker accounts — Permanent TSB has a strong capital base. Mr Cook said he was confident of it retaining a “meaningful” position in the market.
The pending reshuffle following the government buyout will see former group chief executive, Kevin Murphy head up the new Irish Life and David McCarthy chair the business, while Jeremy Masding has already been appointed chief executive at Permanent TSB.
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