Equity slump to hit IL&P earnings

EARNINGS for Irish Life & Permanent are expected to be severely dented by the falling equity markets when, next month, the bank announces results for the year to the end of December.

Dolmen Securities analyst Stuart Draper, who predicts a dividend yield of 5.5%, profit before tax of €366m, and a price earnings ratio of 8.6 times earnings for 2003, said the current guidance given by the company is to expect 10% growth in underlying Irish and British operating earnings.

“Adjusting the 2001 actual Irish and UK operating earnings of €220.8m for the unit linked management fee variance of €29.5m and also for Church & General’s equity portfolio negative variance of €8.1m gives last year’s underlying Irish and UK operating earnings of €258.4m.

“Growing this by 10% gives underlying Irish and UK operating earnings of €284.2m, which then must be adjusted for the 2002 equity portfolio negative variance of €16m at Church & General, and also for the €90m unit linked management fee variance given by the company in its most recent trading statement. This leaves us expecting €178.2m of operating earnings, or 66c in operating eps for 2002,” he explained.

Mr Draper rates the share a buy.

Meanwhile Irish Life & Permanent said that, in line with best practice, it proposes to adopt the Association of British Insurers’ statement of recommended practice, or SORP, in respect of its life assurance activities for the purposes of its 2002 financial statements. This will not impact the overall profit after tax figure reported for Irish Life’s life operations.