Irish Life expects to meet profit targets

Ireland's biggest mortgage lender Irish Life & Permanent said this morning its operating profit this year should meet analysts' estimates.

Analysts expect the company to report operating profit of €563 million ($880 million) in 2008, according to Irish Life's website, citing an average of 10 estimates.

However, it admitted that new lending in the first quarter was down 15 per cent due to the slowdown in residential mortgage lending.

New business levels were also down in the first quarter, falling 20 per cent when compared with the same period in 2007. This fall would "create some pressure" on new business margins, according to Irish Life.

Irish Life said it had increased rates on a range of loan products – including variable and tracker mortgages – in response to the credit crisis.

It said mortgage arrears at the end of March remained at just 0.14 per cent and that no adverse credit trends were emerging. Combined sales in the lender's retail and corporate divisions were down 10 per cent in the first quarter, with a sharp fall in investment bonds being only partially offset by an increase in pension sales.

Irish Life said that arrears in Capital Home Loans, its British mortgage business were running about half the level of the sector as a whole.

"The strength of our life and pensions business together with the action we have taken in our banking business to mitigate the impact of the credit crunch should, outside of significant changes in conditions, leave group operating earnings broadly in line with current mean consensus," Irish Life said in a statement.

Additional reporting Bloomberg