EBS expects to complete sale despite €250m pre-tax loss

EBS lost a massive €250 million before tax in the first half of 2010 due to bad debt charges on its loans.

The group suffered write-offs of €275m between loans going across to NAMA and on the remainder of its loan book.

Excluding the NAMA losses, the group would have made a pre-tax loss of €93.1m for the six months ended June 2010.

Assets totalling €157m have so far been transferred to the bad bank, and the group is on target to have the process completed by the year end.

The average discount to date of all of the transfers on bad property loans has come to 38.8% and the society has another €658.6m in loans waiting to transfer.

EBS said it is making strong progress on the strategic direction of the business and expects to have a sale in place by the year end.

As for the core mortgages side of its business, the group said the pace of increase in non-performing loans in the first half of this year has slowed.

Nevertheless the level of non-performing loans has gone up from 5.2% to 6.85% of the group’s 80,000 plus mortgages. Of those, 4,950 are three months or over in arrears while close to 2,700 are between a month and three months behind in their repayments.

Chief executive Fergus Murphy said 52% of cases in arrears have repayment arrangements in place.

Due to falling house prices, 27% of accounts are in negative equity, equal to 7.55% of outstanding loans.

Despite pressure on borrowers due to falling incomes and rising unemployment, the group has taken just 58 homes under its control.

Just 23 were repossessed, 14 were voluntarily handed back by buyers and 21 were simply abandoned.

On the trading side, the group’s total income for the year at €70.8m was down over 14%, due mainly to increased funding costs.

During the first half of the year, the EBS accounted for 24.95% of the new mortgages written in Ireland in the first six months of 2010 and it attracted 20% in new net savings.

Mr Murphy said the figures showed the strength of the brand even in the current difficult trading environment.

The cost reduction programme will save €20m between 2008 and 2010, while 126 jobs have been made redundant in the core business since 2008, involving a 19% staff reduction.

In summary, Mr Murphy said: “We continue to make good progress in stabilising the business and we are determined that a viable EBS will continue to play an important role in the financial services market in Ireland.”


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