Irish Life & Permanent plc (IL&P) today issued a trading update and said lending demand in permanent tsb’s core lending sectors - - home mortgages and consumer finance - - continues to be weak and new advances for the full year will be approximately 80% lower than in 2008. The group said dependence on ECB (European Central Bank) borrowings "has been significantly reduced and currently amounts to €7bn, down from €12bn at the end of June 2009."
IL&P said retail deposits are expected to grow approximately 20% for the year. Strong growth is also being recorded in Irish corporate deposits after the general outflow, out of Ireland, of overseas deposits, particularly UK, early in 2009. However, the increased deposit funding has however come at a higher cost given the highly competitive nature of the deposit market at present.
In the Irish residential mortgage book, the group says arrears continue to rise but the rate of growth has moderated. Arrears cases, over 90 days due, increased by 3% in both September and October versus an average monthly increase of 8% to August. The amount of over 30 to 90 days due cases are broadly unchanged from June 2009.
In the bank’s UK residential mortgage business, Capital Home Loans (CHL), the over 3 months due arrears cases at the end of October were over 20% below the peak in March 2009 while the over 1 to 3 months due cases remain broadly flat.
IL&P says CHL’s arrears experience to end September 2009 is consistent with, but better than, the buy-to-let sector as a whole.
Impairment provisions for the second half of the year are expected to be broadly in line with the first half. The higher level of provisioning in 2009 will add to the total impairment provisions for the three years to 2011, giving an estimated total of between €800m and €900m.
IL&P said the Retail and Corporate divisions of Irish Life Assurance are both experiencing weaker demand but Irish Life Investment Managers (ILIM) continues to perform strongly, following the general market recovery.
Overall life sales (APE basis) for the year are expected to be down by approximately 35% on 2008.
"Retail investors remain cautious with a low appetite for investment products while reduced SME profitability and cashflows have contributed to lower pension volumes. Employment growth and salary increases are the principal drivers of sales in the Corporate division and adverse trends in both of those drivers account for the expected reduction in sales in 2009," the statement says.
ILIM expects to receive gross inflows of about €1.7bn for the year reflecting its strong investment performance and its leading position in the market.
The life new business margin (APE basis) for the year is expected to be in the range of 9-10% (2008:15.1%) with ILIM’s margin at 6-7% (2008:11.4%).
Interim Management Statement
