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Slump in property prices dent NAMA hopes for 10-year profit

The National Asset Management Agency (NAMA) said it made a profit in the first half of 2013, but is only expected to break even over the course of its 10-year existence.

However, Michael Noonan, the Republic of Ireland’s Finance Minister Michael Noonan said he thinks that the State’s bad bank could end up handing |profits back to taxpayers in its later years if property prices “continue to rise”.

NAMA made a profit in the first-half of the year, but warned it faces “potentially |serious consequences” because it is struggling to hold onto staff.

NAMA has lost 28 staff so far this year, equal to around 10pc of the total head count, and the “exodus” is likely to continue, its chief executive, Brendan |McDonagh, has told the Dail's Public Accounts Committee.

It's happening at a time when the agency needs to boost its own staff by as much as 220 to cope with the transfer of new loans from IBRC, he said.

He did not say how much of a profit NAMA made so far this year, but said details will be sent to Mr Noonan over the coming days, he said.

Property prices have fallen 25pc since NAMA was set up in 2009, but the market is now stabilising, Mr McDonagh told the committee.

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The board of NAMA is no longer forecasting that the agency will make a €1bn profit over its life, Mr McDonagh said.

The agency now expects only to break even, he said.

The forecasts have been hit by falls in property prices since NAMA was established, but it expects to gain from rising rental income, he said. NAMA now |expects to generate €6bn in |rents over its 10-year existence, instead of the €2bn first thought.

NAMA paid €32bn to buy loans with a face value of €74bn when it was set up. It is earmarked to close in 2020.

Mr McDonagh said the agency expects to raise €39bn in cash from asset sales and rental and other incomes.

It must repay €30.9bn in |senior debt owed to the banks |it originally bought the loans from, as well as €3.5bn in interest plus cover its costs for 10 years, he said.

Some NAMA assets, in particular loans backed by sites |in out-of-the-way parts of |Ireland with a total value of €900m may never be sold, |but could end up being handed over to the Office of Public Works or another state agency, he said.

NAMA chairman Frank Daly told the committee that the agency could still generate |a profit over its lifetime, |depending on the performance of the property market.