Irish Life & Permanent has sharply increased its estimate of potential loan losses at its Permanent TSB banking business.
In a statement this evening, IL&P said it expected to set aside €1.4 billion linked to Permanent TSB loans in its 2011 financial results, more than treble the €420m figure in 2010.
Almost all of the increase is due to its Irish mortgage loans. The bank is now setting aside money in all cases where mortgage holders are more than 90 days behind with repayments, in line with new Central Bank guidelines.
The bank has also taken account of an expected bigger drop in house prices - 55% below peak levels, compared with its previous 43% estimate.
At the end of 2011, 11.5% of Permanent TSB home loans were more than 90 days in arrears, up from 6.8% at the end of 2010. The latest figure is also above the 9.2% figure for the whole market recently announced by the Central Bank.
IL&P said its tier one capital ratio - a closely watched indicator of its capital levels - was 18.3% at the end of 2011. This figure includes the increased impairment figure and gains from a bond exchange earlier in the year.
IL&P is due to give more details when it published full financial results sometime in April.
IL&P also announced today that it has appointed Jeremy Masding as a director of the group and a director of its banking subsidiary Irish Life & Permanent plc, which trades as PTSB. Mr Masding joined the group when he was appointed chief executive of PTSB.
