IL&P SETS MORE ASIDE FOR BAD LOANS - Irish Life and Permanent has reported an operating loss of €51m for the first half of its year. That is down from a profit of €300m in the same period a year earlier. Its bank business performed badly, with more having to be set aside for bad loans in mortgages and consumer finance.
The group's chief executive Kevin Murphy says the group's banking business saw operating losses of €132m due to a significant increase in loan impairment provisions made to cover potential bad loans and higher funding costs for the bank. This compares to operating profits of €124m the same time last year. The bank's impairment charges rose to €180m, which he described as a conservative long-term estimate of how much bad debts the bank can expect to go through over the new few years. Mr Murphy predicts that IL&P over the next three years will see bad debts of €700m, which is in line with most market expectations.
On mortgage arrears, Mr Murphy says the bank saw arrears growing quite rapidly in the latter part of last year and the early part of this year. However, he says the pace of arrears is now showing signs of slowing as the pace in the rate of growth in unemployment is also slowing down. He says the bank is likely to see arrears peak by the end of the year or early next year.
On NAMA, the IL&P CEO says that the agency is a very sensible solution to the country's problems. He says it is a global solution as the country needs good, viable banks as soon as possible and the current NAMA proposal would generate that scenario very quickly. He adds that, hopefully, it will cost nothing over the long-term with the prices set at long-term values.
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GLANBIA PROFITS DOWN IN DIFFICULT CONDITIONS - Glanbia says its profit after tax fell by 30% to €30m, and its earnings per share fell by over 21% in the first half of its financial year. Its revenue was down over 14% to €944m.
Glanbia's chief executive John Moloney says the sustained downturn in the global economy led to weakening consumer confidence, while international dairy prices are sharply down on 2008. However, he adds that he thinks milk prices have reached a bottom and he sees some slow recovery in the near future. He says that today's results reflect the first time loss in the commodity milk processing business in Ireland, as well as highlighting the very strong performance in the international strategic businesses the group has been developing.
Farmers claim that it is costing them more to produce milk than they are currently getting for it, and Mr Moloney says that before Glanbia can increase the money it pays to farmers, the milk market will have to recover. He adds that no major improvement will occur until next year. He says to put things into context, the European Dairy Regime, which has been in existence for the past 25 years, has been fundamentally changed and Glanbia will have to operate in a more open markets unless there is a political move to reverse those decisions.
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MORNING BRIEFS - Operating profits at Paddy Power fell by 26%, from €45m to €33.5m in the first six months of its financial year. The company says it has increased its market share, that some sporting events did not go its way in the early part of the year and that its online business now makes up two thirds of group profits.
*** Tullow Oil's profit after tax fell 83% to £21m sterling.
*** Ben Bernanke was confirmed yesterday as chairman of the Federal Reserve for a second term. He will earn $190,000 or about €132,000. In comparison and before his 10% pay cut last October, our Central Bank governor John Hurley was on almost €369,000. Mervyn King, head of the Bank of England, was paid £290,000 sterling last year - that is €331,000. The last Fed chairman, Alan Greenspan, is now commanding six figure sums on the after dinner speech circuit.
*** On the currency markets, the euro is trading at $1.4292 cents and 87.59 pence sterling.
