NAMA board set to forecast modest profit

THE board of the National Asset Management Agency (NAMA) is expected to forecast a modest profit of “several hundred million euro”, when it publishes the first official business plan for the toxic loan agency’s likely performance over the next decade in the coming days.

Although no formal date has been given, NAMA is expected to release its first business plan later this week, once it receives approval from Finance Minister Brian Lenihan.

In the organisation’s basic blueprint document, last October, the Government projected a €4.8 billion profit for the body. The pending business plan is expected to outline a number of scenarios that could make up its performance over the next ten years.

According to one analyst: “There are so many variables and, ultimately, all depends on the acquisition costs of future loans and it’s likely that future haircuts will be more severe. It’s currently too early in the overall process to come up with a long-term assessment. What is likely, though, is that the original projection of a €4.8bn profit will be pulled back.”

In a research note published yesterday, Bloxham Stockbrokers echoed that sentiment.

“In the worst case scenario, NAMA will end up losing €200 million, triggering the requirement to impose a levy on the sector. In the next scenario, a profit of several hundred million is planned, while in the most optimistic assessment, a profit of “several billion” is projected. However, the Government is unlikely to make the profit of €4.8 billion projected in the October business case, the note said.

Meanwhile, it has been suggested in some areas of the media that only around 20% of the first tranche of NAMA-bound loans are producing income, despite previous assurances that the percentage would be around double that. Nearly €16bn of loans were transferred to NAMA in the first wave and a second tranche of €13bn worth of loans are due for transfer imminently.

Fine Gael’s finance spokesperson, Michael Noonan has reiterated the call for fresh management at the main banks (both at board level and on lending and audit committees), saying that the possibility of NAMA now actually losing money, rather than making a profit, is a “further example of less than full information coming from the banks to the Government”.


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