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ISEQ turns positive but gains small

Friday, August 17 12:45:52

The ISEQ turned positive this morning though gains were small in weak trading volumes and lack of leads.

By 12:30, the ISEQ was up 9.47 points to 3,176.96.

Brokers this morning took a look at the Irish economy and our beleaguered banking system, tempering optimism with the reality that, while progress has been made in both, there's still a long way to go.

Home loan arrears will rise from 13.4pc by value in the first quarter of this year to an eventual peak of 16.5pc and, if Ireland's banking sector is to return to "normal", this will have to be sorted out, according to a report from Davy this morning.

It noted that the number of owner occupiers in 90+ days arrears rose to 10.2pc or 78,000 in Q1 2012, up sharply from 4.1pc or 32,000 in Q1 2010. Arrears rates for BTL (buy to let) mortgage loans (which account for close to 25pc of total mortgage lending) are running at much higher rates, over two times the owner occupier rate, based on banks' non-performing loans.

"Short-term indicators of the likely path of 90-day arrears rates can be derived from Residential Mortgage Backed Securities (RMBS). This data suggest that early stage arrears formation has now levelled off, albeit at high rates. However, existing early stage arrears still suggest the headline 90+ day rate will continue to rise in 2012. The RMBS data also highlight a concerning trend where the rate at which arrears convert into longer-term arrears appears to be rising."

Shares in banks went nowhere this morning.

Shares in Independent News and Media fell 1c to E0.18. Australian group, APN News and Media, in which Ireland's Independent News and Media is the biggest stakeholder with a 39pc stake, lost Aus319m (E269m) in the first half of this year amid speculation it will be broken up and sold off.

APN's CEO Brett Chenoweth has ruled out a break-up of the company amid speculation in the markets its largest shareholder is pressuring the company to sell assets, reports in the Australian and New Zealand press said this morning.

There has been talk in the markets that APN has discussed a break-up at board level, with 29.51 per cent stakeholder INM said to be applying pressure on the company to sell assets to relieve its debt pile. INM sold its South African business last month to pay down debt.