Nama made €49m loss in first quarter due to Covid-19 impact on economy

State agency earned €226m in cash in the three months to the end of March from selling loans and property, and repayments from borrowers

Nama recorded a loss of €49 million for the quarter – against a €41 million profit over the same period last year. Photograph: Cyril Byrne / The Irish Times

Nama recorded a loss of €49 million for the quarter – against a €41 million profit over the same period last year. Photograph: Cyril Byrne / The Irish Times

 

Covid-19 uncertainty left the National Asset Management Agency (Nama) with a €49 million loss for the first three months of the year, according to figures published on Wednesday.

The State agency’s report for the first quarter of 2020 shows that it earned €226 million in cash over the three months ended March 31st from selling loans, property and repayments from its borrowers.

Nama recorded a loss of €49 million for the quarter – against a €41 million profit over the same period last year – to reflect the uncertainty resulting from the impact of the coronavirus pandemic on property markets.

“The Covid-19 pandemic continues to impact all markets and the full effects remain unknown,” Nama warned the Minister for Finance Paschal Donohoe in a formal submission with the quarterly accounts.

“Owing to prevailing market uncertainty, a scarcity of transaction completions and a lack of visibility as to how long the market disruption will continue, it is not currently possible to conclude that the full impact of Covid-19 is reflected in Nama’s reported position.”

The note added that the agency is using all measures under its control to try to mitigate the pandemic’s financial and other consequences.

Nama bought Irish bank’s property loans for €31.8 billion in 2010 and 2011 in a bid to save the lenders from insolvency in the wake of a financial crash.

By the end of March, the agency had generated €45.5 billion in cash and repaid €32.7 billion borrowed to fund the loan purchases.

At the end of June Nama returned €2 billion to the Exchequer. This was the first tranche of an expected surplus of €4 billion for the State over its lifetime.

It intends paying over the balance of the surplus next year and in 2022 “subject to market conditions”.

In May, Nama repaid €56.1 million to private investors who put €49 million into the agency’s parent company in 2010. This cleared the last of its liabilities and paved the way for the organisation to begin paying its surplus to the State.

Nama laid its quarterly accounts before the Oireachtas on Wednesday just as the State’s financial watchdog, the Comptroller and Auditor General (C&AG), produced a special report on the agency confirming that it was meeting many objectives.

House building

“A key objective set by Nama was, by 2020, to redeem the debt of €31.8 billion issued for the loans it acquired from the participating credit institutions,” a C&AG statement said.

“Nama has achieved this target, and from 2014 on, was significantly ahead of the repayment profile implied by the interim repayment targets it set.”

The C&AG also noted that the Government subsequently asked Nama to support office building in Dublin and to aid the State in tackling the housing crisis.

The C&AG said that by May of this year, building was under way on 86 per cent of the land that Nama controlled in the capital’s docklands.

Nama met its own target of providing 2,000 council houses by the end of 2015. By the end of 2018, it had provided 2,445 homes to councils and approved housing bodies.

In November 2015, Nama pledged to provide 20,000 homes for sale on sites it controlled between 2016 and 2020. The agency now expects that figure to reach 13,000 by the end of next year.

The C&AG pointed out this meant Nama would provide 65 per cent of the houses a year later than it intended.

Nama agency argues that this calculation should include more than 8,000 other homes likely to be built on land sold by Nama debtors or receivers.

“However, this is not a like-for-like comparison, because such units were not included when the original target was set,” the C&AG said.