Irish Nationwide posted a loss of €243 million ($318 million) after the building society set aside €464 million to cover potential losses from bad loans made to property developers and a dramatic contraction of its loan book hit its income.

The company's 2008 operating profits were €260 million, but the society's total assets fell 10% to €14.4 billion.

Irish Nationwide's loan book also dropped 15% to just under €10.5 billion, with much of this due to the fall in the value of sterling.

The society has been hit by its heavy exposure to commercial property lending, which accounts for almost 80% of total loans. The group's commercial loan book now stands at €8.1 billion, with residential loans standing at €2.2 billion.

The firm's results statement said the society had reserves of €1.2 billion to absorb further charges from bad loans and had €2.2 billion of debt that was due to be paid back this year. It also disclosed that it plans to finance the repayment through securitizing loans, reducing its loan book, and issuing new bonds.

The society is covered by the government's guaranty scheme, but said its ability to continue operating is dependent on continuing government support.

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