NAMA makes a €714m loss -- and likely to lose more
NAMA has made a loss of €714m in its latest quarterly results, due to declining property prices. But the losses are set to rise even further once the numbers are finalised, the Irish Independent understands.
The agency was hit with a €1bn impairment charge in the quarter as the commercial and residential property markets continued to decline. NAMA uses its valuation date as November 2009 and using that as the starting point, the market has continued to slide.
Under accounting rules, NAMA is forced to mark its assets to market prices. The impairment charge published yesterday is unaudited and is seen as a 'work in progress' as of the end of March this year.
Indications are that it will rise further once the final figures are nailed down by the NAMA board and an audit is done by the Comptroller and Auditor General.
NAMA claims that the losses don't impact on its long-term chances of making a profit. The agency will be in existence for at least another decade, it is estimated. It only has 23pc of its loans now performing, meaning that most developers aren't able to properly service their loans, principle and interest.
Negotiations are currently under way to restructure many of these, which should increase the number of performing loans.
Also disclosed by the latest results are:
- NAMA board fees since it was established come to €591,000. The organisation is also paying fees to outside consultants and tax advisors.
- As of December 31, 2010, an estimated €4.6bn of eligible assets had not transferred due to legal issues and appeals by the banks. "This residual portfolio is due to transfer in 2011,'' said NAMA.
- It has cash balances of €837m, which may be used to fund future lending for the housing market.
- Some €240m has been lent out directly to developers in order to finish off projects and for working capital.
Frank Daly, NAMA chairman, said the agency had identified those it could work with, while moving others into an enforcement process.
"We've seen the results of that in recent weeks and I expect we'll see further decisive action in the weeks ahead," he said.
"It should be stressed that the only motive behind decisions taken on enforcement is to maximise the return to the taxpayer and where all other viable options have been exhausted."
He added: "I would also emphasise that a majority of the debtors are working co-operatively.''