Monday 22 January 2018

IL&P shares slump by 8pc over possible €100m hike in impairments

Laura Noonan

SHARES in Irish Life & Permanent (IL&P) dipped by as much as 8pc yesterday after it emerged the bancassurer's 2010 impairment charges will be "between €80m and €100m" higher than previous guidance.

The extra charges mark a significant hike in the €320m to €340m of impairment charges analysts had pencilled in based on guidance given in mid-November.

In a statement released just after 2.30pm, IL&P attributed the extra impairments to a "deterioration" in economic conditions in late 2010 that hit property valuations.

"We have accordingly reviewed our 2010 provisioning assumptions for the peak to trough fall in residential property prices and for commercial property valuations," the statement added.

It is understood that IL&P's is now factoring in a 43pc fall in property prices from peak to trough, against previous assumptions of 40pc.

Repayments

The plc gave no indication that there had been any deterioration in its experience of repayments on either mortgage or business loans advanced by its banking subsidiary Permanent TSB.

IL&P's share price nosedived in trading shortly after the announcement, hitting a low of 85c at 3.17pm.

It later recovered to close at 90c, down 3c or 4pc on the day.

In a note to clients, Davy's banking analyst Emer Lang said the higher impairments "come as little surprise", pointing out that IL&P's property market assumptions had been significantly below peers.

Bank of Ireland is pencilling in a 45pc peak to trough fall in prices, while KBC believes prices will fall as much as 50pc from their highs.

IL&P also announced that it would publish its full-year results on March 2, before the next round of stress tests at the end of March.

The results will show impairment charges above 2009's €376m level and are also expect to reveal a fall in life insurance sales, following a market-wide 6pc fall in life and pension sales.

Irish Independent

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