Nama eyes end of loan provision

Nama expects that it may no longer need to make impairment provisions because property prices have recovered rapidly.

Chief executive Brendan McDonagh said yesterday that the agency “is reasonably confident” that the era of making provisions against its portfolio of loans is drawing to a close.

“I would think we would be reasonably confident that we have reached the end of the road in terms of impairments and that there are also room for write backs as the situation improves,” he told a media briefing.

Nama takes a “conservative” approach in writing down the value of its assets, but market conditions have improved considerably, he added.

The comments indicate that Nama is on course to beat its own targets and return a healthy profit when it closes for good in 2020.

But the agency said yesterday it was sticking to its previous projection that it would generate €1bn surplus when it had fully wound down in 2020.

Several banks this year have written back impairment charges, as property prices have soared. That has helped boost lenders’ profits.

Nama revealed that its 2014 impairment charge had fallen to only €137m from the huge €914m it had put aside the previous year. The agency has made total provisions since its inception of €3.5bn. Writing back even a small part of those charges would significantly increase the agency’s level of profits over time.

Chairman Frank Daly said that for “too long” big numbers in Ireland had meant bad news. Nama’s numbers were now “good news”, he said.

The lower impairment charge helped Nama report a net profit of €458m in 2014, almost double €214m profit it recorded in the previous year. Last year marked one of its busiest to date for selling loans and property. Disposals totalled €7.8bn, meaning the agency has in all sold €21bn loans since 2010.

The agency was formally set up in 2010 and its purpose became helping cleanse a large chunk of the soured commercial property loans held by Irish banks.

It said yesterday it had crossed significant milestones toward reaching targets in 2018 when it plans to have paid back all senior debt it paid out to the banks for their discounted loans. It hopes to have redeemed junior debt by 2020 when it is set to close.

To date it has redeemed €19.35bn of its senior debt, or 64% of the total, by selling off loans and property assets.

Finance Minister Michael Noonan said there were concerns the €43bn in assets that Nama had acquired from the banks would end up in the nations’ debt.

But it was “now clear” that both Nama and IBRC would now report profits.

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