Permanent TSB’s interim results on Thursday showed a healthy increase of €2.5 billion in its deposits in the first six months of this year. The report on the results stated that this included a €1.9 billion deposit by a Government institution.
This was a related-party disclosure given that Permo is more than 99 per cent owned by the State. The institution in question was the National Treasury Management Agency.
Similarly, Bank of Ireland’s recent interim results showed the NTMA had increased its deposits by€500 million to €1.8 billion.
Was this just routine housekeeping by the NTMA? Where did these funds come from? What interest rate is the NTMA getting from the banks?
The NTMA wouldn't comment on the deposits or its reasons for placing them with Bank of Ireland or Permo.
The agency is clearly holding a lot of cash on behalf of the State right now to fund our exit from the EU-IMF bailout programme at the end of the year.
It is thought to have up to 18 months’ worth of funding in place to help the State pay its bills post-bailout.
This would be a mix of drawdowns from the Troika and the €5 billion in funding secured in March from the sale of a 10-year bond.
It also has responsibility for the National Pension Reserve Fund, which is currently being morphed into a strategic investment fund to help boost economic activity here. The new Irish Strategic Investment Fund has about €6.4 billion in its coffers.
Wherever the NTMA has switched the money from, AIB, Bank of Ireland and Permo, which all number the State as a shareholder, won’t complain if they get a slice of the action.
The more deposits the better from their point of view.
INM positions itself for digital growth
What's next for Independent News & Media? Vincent Crowley, its chief executive, said yesterday it was "operationally geared" for growth, having turned in an operating profit for the first half of 2013.
The media group has almost completed the €26 million cost-saving exercise it calls “Project Resolute”, Crowley said – the biggest savings being the €14.4 million it has shaved off its payroll. Though “efficiencies are an ongoing thing, you never stop in that regard”, it has no new targets for cuts in mind right now.
So what about growth prospects? For a company that remains lumbered with €290.6 million in debt and still has to complete its financial restructuring, it might seem odd to talk about expansion. Yet this is an industry in transition, so extending its digital tendrils beyond the base line of digital publishing has to be part of its strategy.
“The whole banking deal is predicated on projections and forecasts for five years, and within that we have carved out a reasonable sum of money particularly over the next couple of years to invest in digital,” said Crowley. “That will manifest itself primarily in investing in people and investing in technology.”
It has integrated its print and online teams on the editorial and the commercial sides of the business and completed consumer research on an Independent.ie paywall. This week it made a significant appointment in the shape of Fiona O’Carroll, a former executive at Houghton Mifflin Harcourt, who is now INM managing director of digital. INM has given O’Carroll “overall responsibility for the development and implementation of INM’s business activities across its various digital platforms and channels - existing and new”.
The newest INM digital interest is its shareholding in ClickandGo.com, an online travel agent with a strategic alliance to Aer Lingus, which joins CarsIreland.ie and two Northern Ireland-based operations, jobfinder.co.uk and propertynews.com, in an INM digital vertical. Then there’s the daily deals venture GrabOne, which is trying to ramp up a deals business on the retail side via the GrabOne Store.
More additions to the INM digital stable are possible in the medium term. "We do have some cash to invest," said Crowley.
Analysts differ on Power's odds of success
There were some interesting contrasts in the immediate reaction of analysts to Paddy Power's interims this week. The listed bookmaker warned of currency headwinds, a result of the weakening Australian dollar, and said returns in the opening weeks of the second half had been hit by "unfavourable" sporting results, such as Andy Murray's Wimbledon victory and a good Galway for punters. Punters usually emerge skint from Ballybrit, so it is likely the bookies will have their revenge next year.
Besides, as group’s chief executive Patrick Kennedy has pointed out in the past, the sports results pendulum tends to swing one way and then the other. Paddy Power’s job is to ensure that it is managing that risk by laying the right odds, something at which it is a past master.
The currency issue is beyond its control, but the company is confident it can maintain growth in Australia. Over the longer term, it appears to be making good inroads into its latest market, Italy, where it is likely to break even next year.
Nevertheless, analysts reacted by rowing back on their forecasts. Davy, which has been less bullish than some of its peers about the stock since earlier this year, ranked it as an “underperform” – a sell broadly speaking –– following the publication of interims on Wednesday.
That being said, the Dublin firm pointed out that Paddy Power remains the highest quality company in its sector “by some distance” and said its key quality, the ability to adapt to market changes quicker than its rivals, remains. Its rationale is as much tied to analysts David Jennings’s and Simon McGrotty’s belief that the overall sector is likely to deliver lower returns over the next few years as it is to anything else.
Rival broker, Goodbody, said the results highlighted that the underlying trends remained positive for the group but agreed that the outlook for the rest of the year was poorer than analysts generally agreed it would be and pointed out that this was down to sporting results, which are temporary. Goodbody recommended the stock as a buy and said any share price weakness will represent an attractive entry point.
There was some merit in this, as the price fell almost 6 per cent to €56.50 on Wednesday morning. But it came back on Thursday to close at €61.54, a 9 per cent gain, and was €60.85 at last night’s close. However, it’s worth pointing out that Goodbody is Paddy Power’s broker.
