Friday 28 October 2016

Nama nets profit of €571m in nine months

Peter Flanagan and Colm Kelpie

Published 21/01/2016 | 02:30

Nama's chief executive Brendan McDonagh
Nama's chief executive Brendan McDonagh

The National Asset Management Agency (Nama) made a profit of €571m for the first nine months of 2015 and had generated almost €9bn in cash over the course of the year, its latest quarterly accounts show.

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The agency also repaid about €5.5bn in senior debt over the 12 months, bringing the total amount redeemed so far to €22.1bn, or 73pc.

The carrying value of Nama's loan portfolio at the end of September, net of cumulative impairment provision of €3.3bn, was €9.6bn.

The agency said the carrying value at the end of September includes assets sold as part of Project Arrow and Project Jewel transactions.

Nama chief executive Brendan McDonagh expects that the agency will achieve a surplus of €2bn by the time it winds up, which is up from a profit of €1.75bn signalled earlier last year.

He said the agency also expected to bring two major loan portfolios to the market this year, each with a par value of around €3bn.

Mr McDonagh had been speaking at the plans for a €7.5bn development programme for 20,000 new homes and almost 4m sq feet of new commercial space in Dublin. The agency said it would dedicate up to €5.6bn in total funding to the residential programme, with peak funding expected to be €1.8bn.

The agency said most of the work will be completed by Nama's appointed wind-down date of 2020 and that it would look at options to complete any residual activities left at that stage.

In the first nine months of the year, Nama redeemed €4.5bn of its senior bonds and a further €1bn in the final quarter of the year.

The Nama board wrote to Finance Minister Michael Noonan in the middle of last year warning that the interest rate on its senior debt was moving toward negative.

Negative interest rates mean, in effect, that lenders end up paying borrowers to hold loans. In this case that would mean the banks paying Nama interest on debt the agency owes.

However, as reported in this newspaper last year, the minister directed that to avoid the problem, Nama take "appropriate steps to ensure that in the event six month Euribor is negative, a negative rate will not apply to the notes and, in so far as possible, to ensure that the notes remain eligible as collateral for Eurosystem monetary policy operations."

However, Nama has committed to repaying 80pc of its senior debt by the end of next year and 100pc by 2017-18.

The quarterly accounts also show that Nama has provided more than €1bn in development funding for projects in Ireland and has targeted new commercial office space and residential development in Dublin and other locations.

The agency also noted that between 2014 and September 2015, Nama funded the commercial delivery of over 2,000 new residential units in the greater Dublin area.

"The Nama board recently announced an initiative to fund on a commercial basis the residential delivery of an additional 20,000 units by end-2020 through Nama funding," the accounts show. The accounts also note that Nama expected to achieve its 2015 social housing delivery target of 2,000 units.

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