Nama reports €247m profit for 2011

Wed, Jul 25, 2012, 01:00

The National Asset Management Agency (Nama) made a net profit of €247 million in 2011 after taking an impairment charge of €1.27 billion to cover bad loans.

Publishing its second annual report today, the agency said it made an operating profit, before loan impairment charges, of €1.28 billion last year, compared €305 million in 2010.

As property prices continue to fall, the agency said last year’s impairment charge of €1.27 billion brought the total level of impairment on the agency’s loans to €2.75 billion, equivalent to over 9 per cent.

The report said the agency had acquired €74 billion in bank assets, some €2.8 billion of which was added in 2011, and had generated cash income of €8.4 billion up to July of this year.

The agency said it had approved asset sales totalling €9.2 billion since its inception, with total sales completed of €5 billion by end of May this year, and that a further €2 billion was in the pipeline.

Nama, which was set up to remove toxic assets from the banks' balance sheets, bought commercial property loans with a face value of €74 billion from the country's lenders for €32 billion.

However, Irish commercial property prices have fallen by 66 per cent since their September 2007 peak, according recent estimates.

The agency said its impairment charge followed a rigorous review of expected cashflows from loans held by Nama-managed debtors, which was also subject to independent scrutiny by external advisors and the Comptroller & Auditor General.

Chief executive Brendan McDonagh insisted the agency was making the best possible return on its loans.

"Cash flow generation is vitally important for Nama and remains very strong," Mr McDonagh said. "The task before us is significant, but I am optimistic that Nama will succeed in doing the job set out for it."

At a briefing today, Mr McDonagh said the losses showed the overall state of the property market but that the crash was bottoming out in Dublin.

“I think it’s reflective of the market conditions that we are involved in, primarily the declines in the Irish market,” he said. “But it’s not all bad news. We have unrealised surpluses on our books - we’ve a number of debtors and assets where we expect that we would get a profit when they are sold. Primarily from overseas assets.”

The agency also published a breakdown of the location of the property assets securing its loans which showed that 90 per cent of its €17.5 billion Irish property portfolio is located in or close to counties with large urban centres, such as Dublin, Cork, Limerick and Galway.

The Irish portfolio includes close to €11 billion in property located in Co Dublin and €2 billion located in Co Cork. Nama’s €11 billion portfolio in Britain includes approximately €6 billion located in London, the report indicated.

Fianna Fáil finance spokesman Michael McGrath claimed the profit figures did not tell anything.

"This measure doesn’t really tell us a whole lot,” he said. “Nama is a vast agency and its financial success in managing a loan book with a value of €74 billion can only really be gauged towards the latter part of the agency’s 10 year life span.”