IPM Irish Life&P.Gp

RNS Number:0633F
Irish Life & Permanent PLC
23 June 2006


Irish Life & Permanent plc
Pre-close Trading Statement June 2006

Irish Life & Permanent plc issued the following trading statement ahead of its
closed period for the 6 months to June 30th 2006.

Overview

The environment in which the group is operating continues to be positive as the
Irish economy is performing strongly with rapid employment growth and rising
incomes underpinning strong domestic demand. As yet there has been little direct
impact from maturing SSIA policies and savings accounts.

Our banking business is enjoying exceptional growth with new lending
significantly ahead of, and new current account opening exceeding, last year's
record levels.

Equally our life assurance business has seen a very strong first half trading
with investment bond, protection and pension sales significantly ahead of the
prior year.

This volume growth - with improved life margins and, as expected, reduced
banking margins - is on target to deliver strong operating earnings growth for
the period.

Sales


Banking Business

Gross new lending for the group for the first six months of 2006 is expected to
increase by almost 50% over the first half of 2005 with the total loan book
growth comfortably in excess of 25% year on year.

The main driver of this growth is new residential mortgages in Ireland which is
expected to record over Euro4bn of new lending in the first six months ( 2005:
Euro2.5bn), well ahead of market growth. Both consumer and commercial lending are
also experiencing strong demand with combined new lending of over Euro1bn, up over
50%. New lending at Capital Home Loans, the group's UK mortgage company, is also
expected to be over Euro1bn, just ahead of the first six months of 2005.

A major focus of the bank in the first half has been the acquisition of new
customers through our competitive current / checking account offering. We expect
to have opened over 30,000 of our new current accounts in the first six months,
notwithstanding the competitive response in the market. Current account balances
are expected to show high teens growth year on year.

Life Business

Life sales in Ireland (excluding investment sales by ILIM) are expected to grow
by circa 30% for the half year.

The Retail Life division sales are running strongly ahead - 30% plus - buoyed by
sales of investment bonds - particularly property bonds - and protection
business related to mortgages. The Corporate Life division is expected to
deliver first half sales growth of over 25% reflecting strong growth in existing
schemes from expanding employment and wage growth as well as new business gains.

Institutional inflows into ILIM, the group's fund management business, are
expected to exceed Euro1bn for the first six months - 40% up on the prior year.

Earnings


Banking Business

Bank revenues are expected to show mid-teens growth in the first six months on
the back of the growth in net interest income and an improved treasury result
compared to the first half of 2005.

With regard to the net interest margin, the significantly higher new business
levels which required higher levels of wholesale funding, coupled with basis
risk within the bank as interest rates have trended upwards, combined to produce
an expected margin for the full year which may be some 2 to 3 basis points
behind our initial guidance of 117 bps for 2006. Much of the contraction in
margins from the 2005 full year level of 129 bps will come through in the first
six months. Despite this net interest income growth for the full year is
expected to be in double digit percentage over 2005 levels.

Cost growth is running circa 6% and the level of impairment provisions is
expected to be broadly in line with the prior year as credit quality remains
excellent.

These trends leave us on course for mid-twenties percent growth in bank
operating profit for the full year.

Life Business

We expect to report very strong growth in our new business earnings for the
first half due to higher volumes and improved margins. The life margin
(excluding ILIM) for the first six months is expected to be slightly ahead of
the upper end of our guidance of 19 to 20 % principally due to a favourable
product mix. The full year margin we expect to come back in line with guidance
as lower margin products compete to attract SSIA monies.

The contribution from the existing book of life business should be broadly in
line with previous guidance.

These trends should translate into strong life operating profit growth in the
first half moderating to low teens growth for the year as a whole.

The two "below the line" items impacting the life business embedded value are
the effect of investment market movements on future fee income and on asset
values and the impact of interest rate changes on the risk discount rate and
economic assumptions. As of this week the pre-tax investment impact ("short term
investment fluctuations") was broadly neutral while the effect of an increase of
circa 70 basis points in medium term interest rates since the year end would
result in a negative of Euro20m to Euro25m pre-tax in the half year embedded value.


Associated Business

Allianz (Ireland), which carries on non-life insurance and in which the group
has a 30% interest, is expected to achieve earnings for the half year within the
range previously guided.

Outlook

The strength of the economy in general and the labour and the housing markets in
particular are positive for both our banking and life businesses, as is the
impact of maturing SSIA funds.

We are optimistic for the outcome for the year as a whole but would expect some
slowdown in the rate of growth in the second half of the year given the
exceptionally strong comparative performance in the second half of 2005.

We are very satisfied with the progress made year to date and are on course to
meet our targets for the full year.

Details of today's analyst conference call on this pre-close trading statement
are set out below together with company contact details.

Analyst Conference Call

David Went, Group Chief Executive and Peter Fitzpatrick, Group Finance Director
will host a conference call for analysts at 12.00 BST on Friday 23rd June 2006.

To join the conference call, please dial in to the relevant number below 5
minutes before and ask for the Irish Life & Permanent Call
Irish participant number (01) 655 0185
UK participant number (0) 20 7365 1832
US participant number 718 354 1157
Other participants +353 1 655 0185

Call Replay Facility

An instant replay of the conference call will be available two hours after the
call. This service will be available until 5.00pm on 30 June. The telephone
numbers and access code are:

Irish participant number (01) 659 8321
UK participant number (0) 20 7806 1970
US participant number 718 354 1112
Other participants +353 1 659 8321

Pass code for the replay 9254046#

Contact details

David McCarthy, Group Chief Financial Officer Tel: +353 1 856 3050

Barry Walsh, Head of Investor Relations Tel: +353 1 704 2678

Ray Gordon, MRPA KINMAN Consultants Tel: +353 1 6788099



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