Irish Life & Permanent has predicted that its pre-tax operating profits for this year will be 30% lower than last year.
In a trading update, the bank also said it did not plan to pay a final dividend to shareholders. Chief executive Denis Casey said 'husbanding our cash is a prudent and appropriate course of action'.
Listen to an extended interview with chief executive Denis Casey by Emma McNamara
Mr Casey said the fall in profits would be 15% when its exposure to three nationalised Icelandic banks was stripped out. The bank had said it was exposed to €92m of debt issued by the Icelandic banks, adding that it there was likely to be a charge for this amount to the 2008 accounts.
But the IL&P chief said it would have lower impairment charges than some other banks because it had not lent money for residential or commercial property development. He said the company expected an impairment charge of between 0.6% and 0.8% of loans over the next three years combined.
The bank said it could absorb these charges without the need to new capital from external sources.
The bank said that while the Government's guarantee scheme had improved its access to funding, interest rates on money markets remained 'stubbornly high'.
IL&P said it had taken a cautious approach to new lending, which it expected to grow by around 5% this year. It said its priorities were mortgages for home buyers and personal loans for its customers. It has stopped commercial property lending in Ireland and 'severely curtailed' residential investment property lending.
Overall sales in the group's life division are expected to fall by up to 25%, with profits lower than previously expected. Permanent TSB profits are expected to be slightly ahead of previous guidance.
Shares in the company, which rose after the statement, eventually ended down 16 cent at €1.91 in Dublin.
