The National Asset Management Agency has increased its projected lifetime surplus from €2.3 billion to €3 billion.
Nama, the state’s bad bank, reported an after-tax profit of €1.5 billion for 2016, its sixth consecutive year of profitability.
Last year Nama generated €5.4 billion in cash including €5 billion realised from the sale of loans and property. Total cash generated from 2010 to the end of 2016 totaled €38.1 billion, including €32.2 billion from asset disposals.
Brendan McDonagh, chief executive of Nama, said 2016 had been a year of significant achievement for the agency.
“We have raised our projected terminal surplus from €2.3 billion to €3 billion on the assumption that conditions in the Irish property market will remain supportive over the years to 2020.
Advertisement
“It is important to emphasise that achievement of this surplus will depend on our ability to extract maximum value from the residual portfolio which is secured by many low-value assets which require extensive workout,” Mr McDonagh said.
He added that there was potential the agency could deliver more profit by the time it was wound down but emphasised that it had initially expected to break even.
Nama’s strong cash generation allowed it to redeem senior debt totalling €5.5 billion during 2016. It has now redeemed €29.7 billion of the €30.2 billion senior debt originally issued.
Nama issued senior and junior debt to offload €74 billion worth of risky property loans from the balance sheets of the domestic banks over 2010 and 2011 following the financial crash.
The agency said it expected to redeem the remaining 2 per cent of senior debt by the end of 2017, three years ahead of schedule.
Advertisement
Frank Daly, chairman of Nama, said it proved its doubters wrong with the pace of debt redemptions, which he said had benefitted the economy.
“Later this year, Nama will redeem the last €500 million of its original €30.2 billion of senior debt. Elimination of this state-guaranteed contingent liability for Irish taxpayers is a significant achievement for Nama and one that few thought possible when Nama was established in late 2009. More importantly it is a significant plus for our country,” he said.
“The progress that was made in reducing our senior debt by two thirds, or €20 billion, over the past three years contributed enormously to a stabilisation and reduction in the funding cost of Ireland’s debt,” Mr Daly added.
Michael Noonan, the finance minister, congratulated Nama for the progress they had made in rebuilding the Irish property market by releasing assets. The “first run” of assets released to the market by Nama would always be seen as a bargain in hindsight, he said, but doing so was “absolutely essential” to begin the process of restoring the market to normality.
Mr Noonan said the industrial sector was the first to recover, followed by the commercial property sector. The residential property market had been worst affected but was beginning to recover.
Advertisement
Nama successfully delivered more than 2,300 homes for social housing by the end of 2016, with more than €300 million invested in the repair and purchase of homes which have been leased or sold to approved housing bodies and local authorities, Nama said.
The agency added that it had reduced the number of ghost estates it had inherited from 332 in 2010 to 11 by the end of March 2017.
Mr Daly said Nama was preparing for the commission of an investigation into the sale of Project Eagle, the portfolio of property loans in Northern Ireland sold to Cerberus for about €1.43 billion.
He said the agency welcomed the inclusion in the terms of reference of a commitment to engage commercial and financial expertise in the course of its work.
Two reports by the comptroller and auditor general and the public accounts committee were critical of the price obtained for the portfolio.
Advertisement
Mr Daly said Nama would co-operate fully with the inquiry and added that there was no suggestion of criminal activity or wrongdoing by Nama.