Nama on course for €4bn surplus, Investec says

Asset manager raises house price growth forecasts for this year and next

The National Asset Management Agency is likely to post a €4 billion lifetime surplus to the exchequer as the property market continues to recover from the crash, according to Investec economist Philip O'Sullivan.

Investec said last October that Nama would likely deliver a surplus of €3 billion, at a time when the State agency was forecasting a figure of €2.5 billion.

While Nama recently upgraded its target to match Investec’s project, Mr O’Sullivan has increased his estimate again in a report on the Irish economy, published on Tuesday.

“Nama’s core equity is already just north of €3 billion,” Mr O’Sullivan said, adding that Nama had an “unrecognised surplus” of €469 million as of the end of last year, following a review of loan impairments, and that this would be recognised as profit over the remainder of the agency’s lifetime.

“We believe that Nama will generate additional attractive surpluses from its investment programme,” Mr O’Sullivan said. “We now believe that Nama will deliver a surplus of €4 billion to the exchequer.”

Earlier this month, Nama reported a €1.5 billion surplus for 2016, its sixth consecutive year of net income. The agency, which was set up in 2009 to take over risky commercial property loans from the country’s banks, is on track to repay the remaining €500 million of its original €30.2 billion of senior debt by the end of this year.

Meanwhile, Investec has raised its Irish residential property price growth forecasts for this year and next by 1 percentage point to 7 per cent and 6 per cent, respectively. It left its economic growth estimates, as measured by gross domestic product, unchanged at 4.6 per cent for 2017 and 4 per cent for next year.