Croesus/The Investor's View:Bank of Ireland issued a keenly awaited preclose trading update on Tuesday. Normally such updates are not given as much attention as an actual results announcement, but amid the current credit market turmoil, any fresh news is carefully pored over by analysts and investors alike.

Bank of Ireland maintained full-year guidance for low double-digit earnings per share (EPS) growth for its fiscal year to the end of March 2008.

Brokers are forecasting EPS in the range of 160 cents to 163 cents, with the higher end of this range equating to growth of 12 per cent. The group's capital and funding positions remain strong and reassurance was provided on a number of specific issues.

With regard to funding, the bank said 80 per cent of its loan book was funded by customer deposits and term funding with a maturity of more than one year. The company has no direct exposure to the US subprime market and its indirect exposure is less than €10 million.

At its conference call, management clarified that if the current level of market dislocation persisted to year- end, its guidance regarding EPS growth would be at the lower end of a double-digit percentage range.

Asset quality in Ireland and Britain remained excellent, although rising interest rates and competition had put pressure on margins in Britain.

The share price barely reacted to the statement, reflecting the harsh reality that investors are now more concerned about prospects beyond March 2008. In particular, international investors are worried about the Irish property market.

Such negative sentiment is partly driven by the deepening US housing slump. News this week that the glut of unsold homes in the US had reached an 18-year high highlights the fact that the bottom of the US housing cycle is not yet in sight.

While there is no linkage between the housing market in the US on the one hand and in Ireland and Britain on the other, the ongoing US housing slump bolsters the negative sentiment of international investors towards Irish property.

First-half results from housebuilder McInerney will have done little to negate this bearish sentiment.

Prior to the release of these results, expectations were that its sales in Ireland would total 950 units this year. However, sales this year have been slower than expected and management is now guiding total sales of just 700 units - 30 per cent lower than 2006 sales of 1,025.

On the positive side, profit margins have been maintained and volumes are expected to recover to 850 Irish units next year.

The news from Britain was better, where first-half unit sales rose by 66 per cent to 446 units. This is in line with expectations and the group is on target to complete about 1,500 units for the full year.

This would represent a 50 per cent increase on 2006 and management believes it can complete 2,000 units in 2008.

Britain is rapidly becoming a more important market for McInerney and this is reflected in the profit contributions expected in the future. In 2006, Irish housebuilding generated profits of €49 million compared with the €22 million earned in Britain. For 2007, British profits are forecast at €39 million and are expected to exceed Irish profits of €32 million.

For 2008, the relative importance of the British market is expected to increase further, to the extent that it could be generating close to two-thirds of total profits.

British developments will therefore have a big impact on McInerney's future share price.

Full-year results to the end of June 2007 from British housebuilder Barratt Developments provide mixed signals. Completions increased by 17 per cent to 17,168 units, with an average selling price of £172,800 (€246,644), up 4.2 per cent on the previous year.

Profits after tax of £300 million were in line with consensus expectations.

Barratt had previously indicated that it expected the cumulative impact of interest- rate increases to begin to bite in the second half of 2007.

However, management noted that the recent credit squeeze had "further affected customer sentiment and pressure on lending institutions has led to a tightening of lending criteria and mortgage availability".

The fundamentals remain strong though, with demand continuing to exceed supply, and the British government remains intent on supporting the sector by accelerating land availability.

For Irish housebuilders, the caution regarding the impact of the credit squeeze on short- term prospects is worrying.

In a nervous market, the McInerney share price slumped 21 per cent after the release of its results, meaning it has almost halved in value so far this year. It is now trading on a price earnings ratio of almost six times' earnings, which discounts a lot of bad news.

However, until current uncertainties are resolved, the shares are likely to stay in the doldrums.