THIS WEEK:IF YOU'RE in Cork this week, you might like to pop into the Crawford Gallery on Emmet Place, where the exhibition of some of AIB's paintings starts today. After all, for beleaguered shareholders, feasting the eyes on a painting by Jack B Yeats, Paul Henry, or Sir John Lavery might be their only way of extracting some value out of their investment.
Thirty-nine paintings will be on view from today for four weeks. Thereafter, 12 paintings will remain in the gallery, while the other 27 will go on loan for 18 months. The collection has a value of €5 million, indicating that, while AIB may have recklessly copied Anglo Irish Bank when it came to lending to property developers, it was more discerning when it came to its art collection.
Indeed, the bank’s total art collection is worth at least €10 million, while Anglo Irish Bank’s portfolio of paintings was deemed to be worth less than €1 million in total. However, while AIB may have had a canny eye when it came to buying art, it is still struggling with its loan book. An update on its performance is due at the end of the month.
Governing Council of ECB to meet, but mortgage cut unlikely
WITH THE Governing Council of the European Central Bank (ECB) set to meet on Thursday, cash-strapped homeowners might be hopeful of a further rate cut to bring down their monthly mortgage repayments.
However, such a scenario is unlikely, says Alan McQuaid, chief economist with Bloxham Stockbrokers. Pointing to the fact that ECB president Mario Draghi (right) gave no hints that a rate cut was on the cards at last month’s meeting, McQuaid expects that the bank will want to see how last week’s long-term refinancing option (LTRO) plays out before making a move.
“My own call is that we’ll see a rate cut in the second quarter,” he says, adding that if the ECB does push rates down by a further 25 basis points to 0.75 per cent, “it won’t go beyond that.”
While the 400,000 or so homeowners on tracker rates might be disappointed, any moves by the ECB are unlikely to impact on those on variable rates, given that lenders have shown a reluctance to pass on rate cuts.
Steady as she goes for ICG
IRISH CONTINENTAL Group (ICG) chief executive Eamonn Rothwell is expected to reveal that the company is in rude health when he presents annual results on Thursday.
NCB Stockbrokers analyst John Sheehan expects the ferry company’s 2011 results to be “basically unchanged” from 2010, with further improvement on its cash position.
“The freight business will be up, the tourist car business down and the balance sheet is in very good shape, although it does have to contend with very high fuel prices,” he says, adding that he is forecasting Ebitda of €49 million and Ebit of €29 million.
ICG has been one of the few Irish corporates to keep paying dividends throughout the downturn, and Sheehan expects a payment of 67 cent at year end to bring 2011’s total dividend up to €1.
Regarding its share price, Sheehan describes it as being a “bit of a laggard”, but expects that when the recovery comes, ICG’s earnings will benefit. “We think it’s attractive. You’re getting a dividend yield of 6.5 per cent from a company that has almost no debt and, by the end of year, will have net cash,” he says, putting a target of €20 on the share price.