IL&P expected to face first-half losses
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".