Bank ‘turns a corner’ after cutting after-tax loss

State-owned Permanent TSB made an after-tax loss of €261m in 2013 compared with €996m the previous year, helped by one-off gains in pension liabilities and deferred tax assets.

The operating loss before exceptional items and including impairment charges was €977m for the 12-month period, which is unchanged from 2012. The loss before tax was €668m compared with €919m last year.

The operating loss before exceptional items and impairment charges was €48m in 2013 compared with €86m the previous year.

Speaking to reporters, the bank’s chief executive, Jeremy Masding said: “Our key message is that Permanent TSB bank is turning the corner. I’m delighted to be able to confirm that the Permanent TSB Strategic Business Unit, effectively our customer-facing business, is now trading profitably.”

Impairment charges were €929m last year compared with €891m the previous year. Mr Masding attributed the higher charge to increase loan loss provisions following the Central Bank’s balance sheet assessment last year.

Mortgage arrears have now peaked and are stabilising, he added.

It has €33.3bn of gross loans of which 74% are performing. Provisions are €4.1bn, which gives it a coverage ratio of 47%.

Under the bank’s restructuring plan, it is proposed it is split into a good bank; an asset management unit (AMU) and a separate UK division. According to Mr Masding, this plan has now been tweaked. The AMU will remain with the good bank as part of its core division. Non-core Irish assets, including a €2.1bn commercial real estate loanbook and Springboard with roughly €465m of mortgage loans, will be put up for sale this year.

It’s €7bn UK business, CHL, will be put up for sale when the Irish assets have been divested, said the CEO.

Mr Masding said he had not been in talks with either Ulster Bank or the Department of Finance about forming a ‘third banking force’. His focus was on returning the bank to profitability and making it a viable entity, he said.

PTSB will become an “investable entity” over the next few years, he added.

It had a total capital ratio of 14.8% at the end of December and a core tier one ratio of 13.1%. The loan to deposit ratio is 150% compared with 191% at the end of 2012.

The net interest margin, a key indicator of profitability is 0.82% for the group and 1.03% for the good bank, well below the 2% Bank of Ireland reported last month.