March 3 (Bloomberg) -- Irish Life & Permanent Plc posted an operating loss as it set aside more money to cover bad loans at its mortgage unit after real-estate prices plunged.
The 313 million-euro ($426 million) loss compared with a profit of 53 million euros in the year-earlier period, the Dublin-based lender and life insurer said in a statement today.
“In 2010, I expect the banking businesses’ results to be broadly similar to 2009,” said Chief Executive Officer Kevin Murphy. “I anticipate a significant improvement in the life businesses’ profitability.”
Like rivals Bank of Ireland Plc and Allied Irish Banks Plc, bad debts at Irish Life are rising after the economy shrank and real-estate prices fell by half from their peak in early 2007. The company put aside 343 million euros to cover bad loans in Ireland, compared with 189 million euros a year earlier. Allied Irish set aside 5.4 billion euros last year, it said yesterday.
Irish Life rose 1.9 cents, or 0.6 percent, to 2.98 euros in Dublin. The stock has declined 9.7 percent this year, giving the company a market value of 824 million euros.
Irish Life has restructured its business, creating a new holding company that may allow it to split its banking and life businesses. Irish Finance Minister Brian Lenihan is seeking the creation of a new banking group that may involve Irish Nationwide Building Society, EBS Building Society and possibly Irish Life’s banking business.
The restructuring “was an important exercise in readying the group to participate in the consolidation of the financial services marketplace in Ireland, on which we expect to see progress this year,” Irish Life said.
Murphy said the lender may return to profit in 2011 after arrears in the Irish mortgage book peak this year. The increase in arrears slowed to about 3.5 percent a month in the second half of the year, compared with 8 percent in the first half.
“We’d hope to see some improvement on the profitability side” this year, Murphy said on RTE radio in Dublin today. “We expect to return to profit in 2011.”
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