Irish Life & Permanent predicted a strong rise in 2007 profit today but shares in the insurance and banking group slid 11 per cent as it warned of a drop next year if the global credit crisis is prolonged.
"The group's life and investment business has once again enjoyed tremendous growth in revenues - buoyed by strong demand for pensions in particular - and operating profit growth is expected to be mid-twenties percent for the year," Irish Life said in a trading update.
The group, which has benefited from a thriving Irish economy that is now slowing as the property market cools, had said in August it expected to report full-year operating profit growth of over 20 per cent.
That too was an upgrade to the guidance given in June when the company also raised its projection, forecasting percentage growth in the high teens versus low-to-mid teens previously.
But like other Irish financial stocks, shares in Irish Life & Permanent (IL&P) have been hard hit this year after the global credit crunch compounded worries over the impact on earnings growth of an end to Ireland's decade-long property boom.
The stock, which had already lost over a third of its value since the start of the year, was trading a further 11.7 per cent lower at €11.80 by 12.42pm.
Ireland's banking stocks tumbled over 5.0 per cent in its wake, helping drag the overall Irish market 3.7 percent lower.
IL&P said if current funding costs for banks remain at their "present extraordinarily high levels" until the end of March before settling at 40 basis points above European Central Bank (ECB) interest rates, 2008 group operating earnings could be "flat or slightly ahead" of the expected 2007 outcome.
"However were current elevated rates to prevail right through the first half of 2008, and then rebase at 40 bps (basis points) over ECB, the impact on group earnings could be high single digit percent negative," it warned.