Overview
Our priority is to navigate through these difficult times … working with all stakeholders including government … and to lay the foundations for recovery and return of better times.
The combination of major upheavals in credit markets, falling investment values and a sharp weakening of the Irish economy made 2008 a hugely challenging year for the group. These factors resulted in a significant decline in group earnings in 2008.
The group’s banking business, in common with the sector overall, faced significant funding challenges in 2008. The group welcomed the timely intervention by the Irish government in September when it introduced its funding guarantee scheme for the Irish banking sector. The bank’s loan book grew modestly but saw an acceleration in the level of arrears and impairments as economic conditions deteriorated.
The life assurance activities of the group delivered a strong operating result in 2008. However the embedded value of the life business fell by circa 20% principally due to the impact of falling investment markets and asset values.
Notwithstanding the difficult business and financial conditions in 2008 the group continued to maintain its strong capital position through the year in both its core businesses, reflecting the low risk nature of its unit-linked life business and the preponderance of residential mortgage lending in the bank’s loan book.
Given the systemic challenges faced by the banking sector the group is continuing to work with government to address these challenges and their implications for group strategy.
