The Irish Independent reports that Irish Life & Permanent could swing to pre-provision losses for the first half of the year as the €60m cost of the government guarantee wipes out trading profits, stockbroker NCB warned yesterday.

The commentary on the guarantee's earnings drag come a day after IL&P confirmed that it had raised €250m of unguaranteed funds, marking one of the first unguaranteed raisings from an Irish financial. In a note to clients yesterday, NCB analyst Ciaran Callaghan said he expected next week's results announcement from IL&P to show pre-provision losses of €10m for the first half against profits of €57m a year earlier. "Income levels (for 2010) are set to be significantly impacted by the cost of the ELG (guarantee) scheme, which we estimate at €60m," he added.

NCB is expecting a further €177m of impairments in IL&P's Permanent TSB banking division, bringing total banking losses for the half-year to €187m, against €132m losses a year earlier.

The bleak predictions came as analysts digested the implications of IL&P's recent fundraising.

In a note to clients, stockbrokers Bloxhams stressed that there had been "no comment on cost except that the net cost was lower than guaranteed funding".

"I wouldn't get too excited about it as it wasn't of benchmark size (c €500m-€1bn) and we don't know the pricing details," an analyst from another brokerage said, while one of his peers said the issue was "good, but too small to make a dent".

The Irish Independent also reports that CRH, Ireland's biggest company, has suffered its largest share slump in more than two decades after issuing a dramatic profit warning, mainly due to a slowdown in its US division.

Shares closed down 17pc at €11.70 as the market reacted with dismay to its outlook for the remainder of the year.

While its first-half results were broadly in line with expectations, the outlook provided by the company took the market by surprise, with brokers scurrying to revise down their year-end forecasts.

CRH, the world's second largest building materials group, said it was dealing with a "continuing flow of disappointing economic data'' from the US and worries over a double-dip recession. It also said there was no sign of bottoming out yet in the Irish property market and the Irish business has recorded an operating loss in the first half.

Asked about the slowing US economy and the pricing competition in that market, chief executive Myles Lee said: "Hopefully it's a once-in-a-generation event."

He said the share price slump was exacerbated by the low volume of trading in equity markets in recent weeks.

Strong balance sheet

Even at €11.70 the market didn't seem in a hurry to buy back into the company. "Despite the fall in the share price, we see no need to rush into buying the shares,'' said analysts.

However, the company has a strong balance sheet and "recovery potential'', its analysts added.

The huge plunge in the share price is the latest setback for CRH shareholders this year, who are dealing with a 34pc year-to-date share price decline. Providing some compensation is that the dividend is being maintained at 18.5c a share.

The problems for the company arise in its American materials divisions, which produces concrete, asphalt and gravel and operates in 44 states across the US.

Since putting out a trading statement in July, this business has deteriorated, said CRH.

"Our American materials business has experienced weaker-than-expected volumes and more competitive pricing due to lower-than-anticipated levels of commercial construction and pullbacks in state budgets,'' said the company's outlook.

The impact of all this is a radical change to its earnings forecasts. Originally the company was forecasting earnings in the second half of 2010 would beat 2009, but this is now being dispensed with.

Instead full-year earnings before interest, tax, depreciation and amortisation (known as EBITDA) will drop by 10pc compared with 2009. In fact, in the first six months the company's pre-tax profits dropped to just €25m, down from €108m.

Cost reduction

The company is now expected to get even more aggressive on cost reduction and asset sales across its portfolio are also on the cards.

However, Mr Lee cautioned that the company would stick with most of its businesses despite the problems and only sell off significantly underperforming units.

The company has rejected suggestions that it should reduce its US exposure and delve deeper into Asian markets, particularly China.

"It is tough to make money in that part of the world,'' said chief operating officer Albert Manifold.

He said the benefit of acquisitions in the US and Europe was "early paybacks''.

The company spent €86m on acquisitions in July and August on six transactions, including one in China.

The Irish Times reports that more than half of the loans that will be moved to the proposed “good” bank that State-owned Anglo Irish Bank plans to create will be outside Ireland, according to a spokesman for the bank.

Anglo plans to split €36 billion in loans remaining after transferring €36 billion to the National Asset Management Agency (Nama) between a good and bad bank.

The proposal, which has yet to be approved by the European Commission, involves the creation of a new bank with loans of between €10 billion and €15 billion, and an an asset company with impaired loans of about €20 billion which will be run down over time.

The spokesman said that, given the state of the Irish, British and US economies in which the bank was operating, less than 50 per cent of the loans to be transferred to the new good bank will be in Ireland.

“The assumption would have to be that the lower-quality portfolio would be in Ireland,” he said.

Accountants KPMG have been retained to carry out the loan-by-loan due diligence of Anglo’s non-Nama loans to determine which are to be moved to the good bank – known internally as “BankCo”.

The firm is screening the non-Nama loans to determine the best performing loans to be moved to the good bank, which Anglo hopes to establish by the end of 2011.

Chief executive Mike Aynsley said in an internal circular prepared for a management briefing that the bank had identified between €10 billion and €15 billion of performing loans that satisfy “filters” established to screen loans for the good bank.

“We cannot afford to transfer loans to BankCo that are in any way marginal and therefore have the capacity to require further State aid should they deteriorate,” he said.

Anglo had previously planned to create a good bank with between €12 billion and €15 billion in loans but Mr Aynsley told staff this month the final transfer sum could be closer to €10 billion.

The bank has recruited consultants Oliver Wyman, which has analysed loan quality at AIB and Bank of Ireland, to review Anglo’s governance, risk and supervisory systems after they assessed the bank’s overall finance structures.

The Irish Times also reports that AIB, the largest lender to SMEs, is targeting business customers of Bank of Scotland (Ireland), who are looking for a new bank following the decision of its UK parent company, Lloyds, to exit the Irish market.

AIB has begun a three-week advertising campaign focused on attracting SME customers of BoSI by the end of the year when the British bank closes to deposits, current accounts and new lending.

Denis O’Callaghan, AIB’s head of retail banking in Ireland, said the bank had the capacity to lend to new SME customers from BoSI and was willing to work with struggling new business customers.

“If a customer can demonstrate a path to viability then we are happy to talk to them,” he said.

The bank has agreed to lend €3 billion this year and again in 2011 under the Government’s recapitalisation deal, he said, and had provided some €1.1 billion in loans to SMEs in the first half of the year.

AIB has set up a dedicated phone line to deal with queries from BoSI SME customers and has increased services in its branches and 15 business centres to deal with switching BoSI customers.

Mr O’Callaghan said not all BoSI customers would look for working capital or overdrafts, but might need current account, cheque and cash facilities for businesses.

Some 12,000 business customers are affected by Lloyds’ decision to withdraw from Ireland.

AIB has €13 billion in loans to SMEs out of total loans of about €35 billion across the sector.

The Irish Examiner reports that the number of college graduates leaving the country for work has doubled to proportions last seen in the mid-1990s as student leaders accuse the Government of failing to stem a major brain drain.

The Union of Students in Ireland said billions of euro of investment in education from primary to third level will end up benefitting the Australian, Canadian and other economies where hundreds of graduates are now moving in the hunt for jobs every week.

The provisional figures from a Higher Education Authority (HEA) survey of last year’s graduates in March and April show that almost one-in-10 of last year’s honours (level 8) degree recipients is working overseas. The 9% figure is up from 5% a year ago, more than double the rate for 2007 graduates, and the same as those of 1996 graduates.

With just over 40,000 students getting a level 6, 7 or 8 award last year, the figures suggest more than 100 people a week took up work abroad in the nine months after graduation, along with equivalent numbers who qualified here in previous years and thousands more looking for jobs overseas.

USI president Gary Redmond said the Government could stop the outflow of high-skilled talent by expanding work placement schemes that allow graduates keep social welfare payments, while building up experience. "They could also meet employers halfway by paying the equivalent of welfare payments and asking companies, who might not otherwise afford to take on graduates, to match it. Plenty of small and medium sized businesses looking to expand could do so with such a scheme.

"A year or two ago, it was mostly people like architects, engineers and quantity surveyors leaving Ireland, but now those with a much wider range of qualifications are walking into jobs abroad.

"Some will inevitably come back but many will start families and homes elsewhere and be lost to this country forever," he said.

A spokesperson for Enterprise Minister Batt O’Keeffe said emigration during the recession in the 1980s resulted from slow restoration of order to public finances but the Government’s tough decisions will lead to quicker recovery. "The Employer Job (PRSI) Incentive Scheme will create up to 10,000 new jobs in one year by saving employers taking on a worker unemployed for six months or more €3,000, and the minister is examining how barriers to graduates or others taking up offers of job placements can be removed," he said.

The figures emerge as competition for third level places intensifies, with Leaving Certificate students getting higher points than in any previous year and points needed for most courses up from 2009, as school leavers feel the squeeze from applicants seeking to boost their job chances.

While graduate unemployment at 7% is more than double the rate for 2007 graduates, it is down from 10% a year ago and just over half the national jobless rate of almost 14%. But the 45% of graduates working here or abroad nine months after finishing college is down from 50% a year ago and 55% for the class of 2007.

COLLEGE GRADUATES WORKING ABROAD:

* Class of 2009 – 9%

* 2005 – 5%

* 2000 – 7%

* 1995 – 10%

* 1987 – 23%

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