AKC News // IL&P chief's doubts on housing action

The chief executive of Ireland's biggest mortgage lender, Irish Life & Permanent has said he is not persuaded the Government needs to intervene to re-invigorate the housing market.

Speaking on RTE radio, Denis Casey said the bank was not seeing any signs of stress in the mortgage book. He said the Irish housing market was working through a period of adjustment and an 'artificial stimulus' would not make much difference.

He was speaking after IL&P reported a drop of 7% in profits for the first half of this year, as sales in its life division fell and lending growth slowed.

Pre-tax operating profits were €300m, better than expected, but the group lowered its outlook for the full year, saying it now saw a 10% drop in profits. First-half operating earnings per share were down 7% to 95.7 cent. The group will pay an unchanged interim dividend of 22.5 cent.

Profits were hit by a sharp fall in its share of profits from insurance group Allianz Ireland - from €18m a year earlier to €2m. Pre-tax profits at Permanent TSB were up 12% to €124m, but profits in the insurance and investment division dropped by around 30% to €97m.

Chief executive Denis Casey described the performance as 'robust', adding that some parts of the group were performing more strongly than others in a weak market.

He said lending by Permanent TSB had fallen due to weaker demand for loans and the bank's decision to focus on core markets. New lending dropped by 19% to €5.1 billion and the group said this trend would continue in the second half. Life sales fell 16% to €294m, as falling stock markets affected demand.

Mr Casey said there were 'no signs of stress' in its portfolio of residential mortgages, though it had put more resources into monitoring this area. IL&P said arrears at the end of June were little changed compared with the end of 2007.

IL&P shares closed up 36 cent at €5.79 in Dublin this evening.

Source: RTÉ Business http://www.rte.ie/business/2008/0827/ilp.html

Date : 27-08-2008