Saturday 25 November 2017

NIB's commercial property loan losses almost €1bn

Laura Noonan

Laura Noonan

LOAN losses at National Irish Bank's commercial property book are running at close to €1bn after the lender booked another chunk of hefty impairments in the three months to September.

Figures released yesterday show Danske Bank's Irish offshoot lost €468m in the nine months to September, marginally better than the €496m lost in the first three quarters of 2009.

The bulk of the losses in both periods stemmed from massive impairment charges, which NIB deputy chief executive Kevin Gallen said would "remain at high levels over the coming quarters" despite having peaked in the first half of the year.

The figures for the nine months to last September included €504m worth of impairments, with more than 80pc of these relating to the commercial property book.

Mr Gallen last night confirmed that the €3.3bn commercial property had now taken cumulative impairments of €1bn, implying a haircut of 30pc across the portfolio.


The figure is starkly better than the 50pc plus discounts the National Asset Management Agency (NAMA) has been applying to commercial property loans it's buying from Irish banks.

"About 75pc of our commercial property exposure is to commercial investment properties, so the overall quality of our book is better because those tend to have a rent roll," Mr Gallen stressed. The 2010 impairments also include some charges for general commercial loans, and NIB yesterday confirmed it had carried out 33 receiverships in the past 13 months. NIB's mortgage book is also in a far healthier state than most Irish banks, with less than 250 accounts in arrears at the end of September.

"The important thing is that the number of impaired mortgages hasn't increased," Mr Gallen said, adding that NIB's 1.3pc impairment rate compared very positively to the market's 4.6pc rate. At NIB's last results outing in August, owner Danske said the Irish bank would turn a profit by 2012. Asked about those predictions last night, Mr Gallen said there were a "lot of factors" outside the bank's control.

"What is in our control is costs," he said -- pointing to the group's restructuring programme, which will see about 30 of NIB's 58 branches closed.

Irish Independent

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