UPDATE 2-Irish Life H1 earnings fall, core business steady
(Recasts adding analyst comment, share price)
DUBLIN, Aug 27 (Reuters) - Irish Life & Permanent (IPM.I) reported a 7 percent fall in first-half earnings and cut its 2008 guidance, but said it had no need to approach shareholders for extra capital.
This, along with the performance of its core units, helped boost its shares 7.5 percent in Dublin by 0933 GMT, to 5.8 euros, versus a 0.4 percent dip in the Irish market. That however, was still about 75 percent below a peak at around 23 euros in February 2007.
Its London shares rose almost 10 percent.
The insurance and banking group reported on Wednesday pre-tax operating profit of 300 million euros ($441 million) for the six months to end-June, compared with an average forecast of 291 million euros in a Reuters survey of four analysts.
One main reason for the fall in operating profit was the reduced contribution of insurer Allianz Ireland, it said. Allianz, in which IL&P holds a minority stake, contributed only 2 million euros versus 18 million in the first half of 2007.
The operating profit for the group's core life and banking businesses came in at 299 million euros, only slightly below the corresponding 2007 result of 304 million, it said, despite a sharp downturn in the Irish economy since then.
"Some parts of the group are performing much more strongly than others in what is a relatively weak market overall," Chief Executive Denis Casey said in a statement.
Irish Life & Permanent (IPM.L) forecast full-year group operating profit would fall around 10 percent, compared with its earlier guidance for a percentage fall in the mid to high single digits.
The group's capital position remained strong and asking shareholders for extra funding was not on the company's agenda, Finance Director Peter Fitzpatrick said. "Rights issues just aren't going to be a feature," he told reporters.
CAPITAL FLEXIBILITY
"After all the doom and gloom that has come through on Irish banks and the Irish economy in general, the fact that IL&P came out roughly in line with market consensus ... was seen as a positive," one Dublin-based trader said.
"Things are still tough, there is no doubt, but there is nothing cataclysmic, there is no need for a rights issue," the trader added.
Analysts at brokerage Davy said they were likely to trim estimates due to increased risks, but noted the "very strong statement of confidence" the group made about its capital.
"The outlook statement is understandably cautious," Davy said.
IL&P also said it had surplus capital in its life business which it could access via reinsurance financing or securitisation.
"This provides the group with significant capital flexibility to withstand whatever the current economic cycle may throw at us," it said.
The group said its permanent tsb banking unit experienced slowing lending due to weaker demand and more targeted lending.
"We've taken prudent steps in respect of monitoring our mortgage portfolio but we are not seeing any signs of stress," Casey said.
IL&P said its interim dividend remained unchanged at 22.5 euro cents per share and it expected to maintain its full-year dividend. (Editing by Sue Thomas/Rory Channing)
