IPM Irish Life&P.Gp

    RNS Number : 0844X
  Irish Life & Permanent PLC
  19 June 2008
   

    Irish Life & Permanent plc    
    Pre- close period Trading Statement 

                                    12.00pm June 19 2008

    Irish Life & Permanent plc issued the following trading statement ahead of its closed period for the six months to 30 June 2008. 

    Overview

    The Group continues to demonstrate resilience and strength in difficult market conditions arising from the continuing global "credit
crunch" and a lower level of economic growth in Ireland.

    Overall the Group's life and pensions business is performing well although new business volumes for the first six months are expected to
be down on what was a very strong performance in the first half of 2007, when the majority of SSIAs matured. Given the strength of our
distribution channels we would expect our life business to out-perform the market and gain further market share.

    The bank is well advanced in its plans to refinance the long term debt maturing in the third quarter of 2008, replacing it with
collateralised term funding. Across the Group capital levels remain robust.

    Group pre-tax operating profits for the year are expected to be down mid to high single digit percent from the record result of EUR590m
in 2007.

    Sales

    Life Business
    While pension and protection sales for the first half are expected to be slightly ahead of 2007 levels bond sales have fallen sharply
reflecting general market conditions. 

    Life sales* (excluding investment sales by ILIM) are expected to be down by mid-teens percent in the first half of 2008 from the record
high level of sales in the first half of 2007 which saw the maturity of some 70% of SSIA contracts.

    Full year life sales are expected to be down by circa 10%.

    Our asset management business, ILIM, continues to grow strongly and is expected to have inflows of over EUR1bn in the first half and is
on track to achieve inflows of EUR2.5bn for the full year.

    Banking Business
    The Group is adopting a cautious approach to balance sheet growth in the bank as credit markets remain dislocated and credit spreads
stay at their current elevated levels. Gross new lending is expected to be down by high teens percent for the first six months.

    Loan book growth will be slightly ahead of target at the half year as the committed funding of pipeline applications is completed but
will moderate in the second half of the year as new lending is concentrated on the bank's key residential mortgage and consumer lending
franchises. Other areas of lending, such as residential investment property, are being curtailed. Overall balance sheet growth for the year
is expected to be low single digit percent.

    The success of the bank in building its retail franchise and in attracting new current account customers continues apace and at current
run rates we would expect to add circa 50,000 new customers this year.

    Operating Profit 

    Life Business
    The contribution from new business is expected to show a decline of circa 20% reflecting both lower sales volumes and margins (at just
ahead of 16%) while the combination of positive experience variances and assumption changes, along with an increase in the expected return,
will drive increased earnings from the in-force book. This would leave pre-tax life operating profit* for the full year 2008 down by a low
single digit percent on 2007.

    The Group has targeted circa EUR25m (10%) of cost reductions across the life business which will reduce underlying cost growth for the
year to about 2% [after adjusting for the positive IAS 19 movements in 2007].

    Pre-tax life operating profit for the first six months of 2008 is expected to be down by over 10% on the corresponding period in 2007,
the difference from the expected full year result reflecting the timing in the recognition of assumption changes.

    Banking Business
    Bank earnings for the full year 2008 are expected to be down by low teens percent on the prior year on the assumption that current
funding conditions persist for the remainder of the year.

    The net interest margin for 2008 is expected to be in the region of 100 bps [2007: 117 bps] reflecting the impact of increased funding
costs.

    Credit quality across the bank's loan book continues to be strong. The number of arrears cases in our Irish residential mortgage
portfolio is broadly unchanged from the record low at December 2007.  In those portfolios where we have historic loss experience - our
consumer finance lending in Ireland and Capital Home Loans in the UK - we are adopting a cautious and prudent approach to collective
provisioning and as a result are guiding a total impairment charge for the year of between 7 and 8 bps.

    As with the Life business, the bank is taking action to cut costs with the intention of holding underlying cost growth to circa 3% for
the full year.

    Earnings for the first half of 2008 are expected to be ahead of the prior year courtesy of the (previously reported) exceptional gain of
EUR29m arising from the disposal of the bank's gilt portfolio in the first quarter.  

    Associated business
    The group has a 30% share in the non-life insurance business of Allianz (Ireland). That business continues to see downward pressure on
premium rates and its predominantly fixed interest investment portfolio is showing interest rate driven mark to market losses. Based on
current investment conditions the group's share of Allianz's earnings in 2008 - which would include the unrealised losses - is expected to
be between EUR20m and EUR25m.


    * Life sales on an APE basis; life Operating Profit on an Embedded Value basis.
    Balance Sheet

    Funding
    The large proportion of the loan book which is represented by high quality residential mortgages has provided the bank with flexibility
in raising both short and longer term funding. 

    At the short term end we have been successful in broadening funding sources and for the longer term funding our principal requirement
for 2008 is to refinance circa EUR3bn of debt maturing in the third quarter. We have made very good progress in this regard and will have a
substantial portion of this funding completed by 30 June with the balance expected to be funded shortly thereafter.

    Capital
    The group will continue to report strong capital ratios at the half year with an expected capital ratio of 9.9% (all Tier 1) for the
bank. The life minimum solvency requirement is expected to be covered 1.6 times.

    In an environment of reduced balance sheet growth across the group, our capital requirements will be lower than in previous years and
can be satisfied by internal resources, net of dividend payments.

    Circa EUR250m of Tier 2 debt capital matures in 2008. We would expect to need to refinance some EUR150m of this in 2008 and are
currently well advanced in achieving this in the market.

    Life embedded value
    The falls in investment markets and the increased strength of the euro year to date will result in a negative investment variance
("short term investment fluctuations") currently estimated at circa EUR170m. The bulk of this variance represents a reduction in the present
value of future fee income from unit-linked funds as a result of the falls in unit values.







    Disclaimer - Forward Looking Statements
    This document may contain forward-looking statements with respect to certain plans and current goals and expectations relating to the
future financial condition, business performance and results of the Irish Life & Permanent group. By their nature, all forward-looking
statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of the Irish Life
& Permanent group including, amongst other things, Irish domestic and global economic and business conditions, market related risks such as
fluctuations in interest rates and exchange rates, inflation, deflation, the impact of competition, changes in customer preferences, risks
concerning borrower credit quality, delays in implementing proposals, the timing, impact and other uncertainties of future acquisitions or
other combinations within relevant industries, the policies and actions of regulatory authorities, the impact of tax or other legislation
and other regulations in the jurisdictions in which the Irish Life & Permanent group and its affiliates operate. As a result, the Irish Life & Permanent group's actual future financial
conditions, business performance and results may differ materially from the plans, goals, and expectations expressed or implied in these
forward-looking statements.


    Trading Statement - Analyst Conference Call

    Denis Casey, Group Chief Executive and Peter Fitzpatrick, Group Finance Director will host a conference call for analysts, today
Thursday 19 June, at 14.30 (Dublin time).

    To join the conference call, please dial in to the relevant number below 5-10 minutes before and ask for the Irish Life & Permanent
call
        
        Irish participant number      (01) 655 0186
        UK participant number        (0) 20 7138 0814
        US participant number        718 354 1157
        Other participants               +353 1 655 0186


    Replay Facility
    A replay of the conference call will be available two hours after the call. This service will be available until 21.00 on 26 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        6241735�



    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




    The 2008 Interim Results announcement will take place on Wednesday 27 August 2008.

This information is provided by RNS
The company news service from the London Stock Exchange
 
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