Morning business news - August 1Thursday 01 August 2013 12.56
AIB BOSS SAYS LEVEL OF STRATEGIC DEFAULTING COULD BE MORE THAN 20% OF THOSE IN ARREARS - AIB has reported a loss after tax of €758m for the six months to the end of June. That compares to a loss of €1.054 billion in the same period last year. Its interim results statement, the bank said it was seeing signs of improvement in the housing market in Ireland. It also said that total impaired mortgages increased from €7.9 billion at the end of December to €8.5 billion at the end of June. But it noted that the rate of new impairments has decreased when compared to last year.
The chief executive of AIB has said the level of strategic defaulting at the bank could be in excess of 20% of those in arrears. David Duffy said some of those mortgage holders were choosing to pay other debt and some were expecting some kind of deal coming down the tracks. "As we've got into the mortgage book in greater detail, some people are choosing not to pay. That's escalated to levels comfortably in excess of 20% of the book," he said. "We've seen situations where people are paying other unsecured debt. It's not a sustainable choice if people want to stay in their homes,'' he added.
David Duffy said the bank would pursue any options available to it, including repossessing properties as a last resort. "A lot of people in this country are working incredibly hard to pay their mortgage. If there are those who have chosen not to, nobody can live rent free."
The CEO said the bank had completed a ''considerable number'' of debt write downs where individuals were clearly not in a position to be able to pay their debt regardless of term or model. He said they would continue to do writedowns on an individually merited basis.
On the Anglo Irish Bank tapes, Mr Duffy said he found their content to be ''very disappointing'', but he said he would like to see the focus directed towards the recovery of the country rather than issues which happened five years ago. He said AIB has tapes and records which are being retained securely and if a banking inquiry requested them to be handed over, the bank would comply.
MORNING BRIEFS - Danske Bank has reported a loss before tax of €17.4m on its Irish operations in the second quarter to the end of June. Impairment charges stood at €15.4m while total income increased to €15.7m.
*** The manufacturing sector here recorded modest growth in July for the second month in a row, according to the Investec Purchasing Managers Index. New orders returned to growth following four successive months of decline. The overall index came in at 51 - up from 50.3 the previous month. Anything over 50 signals expansion in a sector.
*** There were mixed messages coming from China on its manufacturing sector. The government's official PMI index, which surveys large state-owned companies, increased from 50.1 in June to 50.3 in July. But the HSBC PMI survey, which looks at smaller firms, fell from 48.2 to 47.7 - its lowest level in 11 months.
*** A close ear will be kept on the pronouncements of Bank of England governor Mark Carney today for any hints of action following the bank's monthly meeting. Carney took up the role last month and surprised investors at his first meeting by warning them not to price in an interest rate hike any time soon. Rates in the UK have been at 0.5% for four and half years now. The bank's QE measures have been on hold for nine months now too.
*** Mario Draghi is expected to leave the main rate at a historic low of 0.5% when the ECB meets today. The US Federal Reserve left rates unchanged and sent out more mixed signals at the end of its two day policy meeting last night. The Fed had been expected to ease off on its stimulus measures starting in September but in a statement it simply said that the US economy is recovering but still needs support.