The National Asset Management Agency (Nama) recorded a loss of €1 million in the first half of the year, it said today.
The agency published its annual statement for 2011 and the quarterly report to the end of June.
In its quarterly statement, the agency said it recorded a profit of €6 million in the first half of this year, but this was offset by a loss of €7 million, which included significant setup costs in advance of the first loans being acquired on March 30th.
The agency said 29 per cent of its loan portfolio was performing at the end of June.
It earned €94 million in the second quarter on a portfolio of €16.4 billion. It said interest on Nama securities cost €14 million, expenses were €9.6 million and the mark-to-market negative movement on hedging derivatives and foreign exchange movements cost €64 million.
“It is important to note that this is a mark-to-market movement on the derivative valuations in accordance with international accounting standards and of course these figures will, over time, increase and decrease in line with market movement in interest rates,” the statement said. As such it is not a permanent or indeed a cash loss for the period.”
Nama generated €130 million in cash from operating activities in the second quarter. Some €117 million of this was interest paid on loans by borrowers.
The main cash outflow for the second quarter period was €47 million advanced to borrowers to complete projects and fund working capital.
The agency said it had injected €8.5 billion of liquidity into the Irish banking system by the end of June.
In its annual statement, the agency outlined its key priorities for next year. These include the completion of the review of due diligence and the assignation of final valuations to eligible assets before February 2011.
It will also extend direct contacts with debtors who owe the banks €50 million or more. It said arrangements will be put in place for the participating banks to manage the debtors owing less than this threshold.
Nama plans to introduce strategies to help viable debtors and initiate enforcement proceedings against debtors who are deemed not to be viable.
The board of Nama has set a target of repaying 25 per cent of borrower debt by end 2013. It said it expects significant progress to be achieved next year after the major borrowers’ business plans have been approved.
Nama chairman Frank Daly said the agency made strong progress during the second quarter as it completed the acquisition of the first tranche of loans from the largest developers and began directly managing those loans for the first time.
“The impact has been very positive as we ensured that borrowers prioritised debt servicing by introducing diversion of rental income to Nama charged rent accounts.”
Chief executive Brendan McDonagh said the agency had detailed objectives for dealing with debtors. “Based on our experience of engagement with borrowers to date we expect that the majority of borrowers will see the benefit of co-operating fully with us to achieve the best commercial outcome,” he said. “But where they don’t or won’t, Nama will have no option but to start enforcement proceedings against them.”
Minister for Finance Brian Lenihan said the report showed that Nama is functioning well, with transparency and sound governance. “The reports published today illustrate how far the agency has come in a relatively short time.”