EBS, the Educational Building Society, which was founded in the 1930s to provide housing loans for teachers, today reported a loss of almost €80m in 2009, after providing about €200m for bad debts.

EBS said its underlying business performed well, with profits up 33% from the previous year to €96m. But a loan impairment charge of €195m meant the society made an after-tax loss of €79m. Around €83m of this charge was linked to assets which are being transferred to the State toxic loans agency NAMA (National Asset Management Agency).

Commenting on the results the chairman of EBS Philip Williamson said “Our main objective since the financial crisis began has been to work to stabilise the Society, secure our future and ensure that we emerge in good shape to continue delivering for our members. This would not have been possible without the support of Government for which we are deeply appreciative. Despite all the challenges I am heartened by the fact that EBS is continuing to play an increasingly important role in the mortgage and savings market in Ireland. This is why EBS was first established and the Board and management are committed to our policy of delivering good value products and services to our members.”

The EBS said its core business performed well in 2009 with total income up 12% to €193m and operating profits up 33% to €96m. However, the impact of heavy impairment charges of €195m in relation to previously written loans has resulted in the society incurring a post tax loss of €79m for the year.

The Financial Regulator has recently determined that EBS has a capital requirement of €875m and the Government has made a commitment to provide this capital in a manner consistent with EU State aid rules.

Commenting on the future outlook for EBS chief executive Fergus Murphy said “2010 marks 75 years of EBS serving the needs of its members and is also set to be another very challenging year for the Society. By end June of this year we will submit our plan to restructure the business to the EU and this will include a review of all options on the future strategic direction of the Society. We believe that EBS has a crucial role to play in ensuring a strong competitive marketplace in the Irish Financial Services market.

The transfer of assets to NAMA is expected to result in further loan losses. As a result further impairments will be necessary and funding costs will continue to be high due to the high cost of retail and wholesale funding and the cost of the new Government guarantee scheme. We will continue to execute our successful market strategy for both mortgages and savings while managing our costs down further to reflect our new operating environment.”

The society said it has increased its share of new mortgage business and its share of the savings market. It said it reduced costs by 9% to just over €82m.

EBS also paid the Government €7.9m as part of the bank guarantee scheme.