Permanent TSB ‘has strong future’ despite mortgage arrears figures hike

PERMANENT TSB — which yesterday reported a significant increase in mortgage arrears levels since the turn of the year — has a “strong, viable and sustainable future”, according to its management.

A trading update published by parent group Irish Life & Permanent (IL&P), revealed that arrears cases (90+ days) among PTSB’s residential mortgage customers were up 17% to 13,500 during the first four months of 2011 from the previous quarter.

Early arrears cases — less than 90 days — rose from 4,800 to 5,000 over the same timeframe. The bank said consumer finance arrears are “stable”, but that its British mortgage book “continues to trend downwards”.

Its loan impairment charges this year are expected to remain in line with the 2010 provision of €420 million, with total impairments expected to amount to €1.2 billion over the next three years.

Rising inflation and further ECB interest rate hikes are expected to keep mortgage arrears levels in decline over the coming months, however, while demand for new mortgages from PTSB continues to be very weak.

Yesterday’s group trading update also stated that sales of IL&P’s life assurance and investment products in the year-to-date are up 20% on a like-for-like basis.

Speaking after the group’s annual general meeting, IL&P chairman Alan Cook said PTSB can have a strong and viable future and can provide healthy competition to the two larger pillar banks.

However, he gave no timeframe on a possible sale of IL&P’s life and pensions business, but did say the disposal is “probably an inevitability”. He said IL&P should take “all reasonable steps” to raise as much as possible of its €4bn capital requirement by its own means.

He stressed that management will push for the best deal for the group, its shareholders and the state.

IL&P’s share price — which is down about 95% over the past 12 months — rose by nearly 6% yesterday to 13c.