Irish Life & Permanent Plc (IPM), Ireland’s biggest mortgage lender, declined 13 percent in Dublin trading, the most in two weeks, after raising its forecast for loan losses.
Irish Life fell 60 cents to 3.82 euros, its biggest drop since Nov. 3. The Dublin-based company today said it will set aside between 800 million euros ($1.19 billion) and 900 million euros to cover loan losses in the three years to 2011, up from its previous estimate of 700 million euros.
Chief Executive Officer Kevin Murphy said on an analyst call that raising the loan impairment forecast was “prudent” given the decline in commercial property values. The company has about 2.4 billion euros of commercial property loans. Arrears on home loans continued to rise in Ireland as unemployment soars and the economy suffers its worst recession in eight decades.
Irish commercial property prices have plunged 53 percent from peak 2007 levels, according to a Jones Lang LaSalle Inc. report. House prices have dropped by a quarter, Irish Life said Oct. 30.
The company said mortgage and consumer lending remains “weak” and new loan advances will probably drop by 80 percent this year, it added.
Its net interest margin, a measure of lending profitability, will be between 0.8 percent and 0.85 percent, worse than an earlier forecast of 0.9 percent.
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