PTSB makes €4m group-wide profit

Permanent TSB made a group-wide profit of €4m before bad debt charges and exceptional items for the first six months of the year. 

The performance is a significant turnaround from the massive losses posted over the past five years.

Most of the improvement stems from the 65% fall in impairment charges of €149m for the first half of the year, compared with €430m for the same period in 2013. However, there was also an improvement in PTSB’s topline performance.

Total operating income was €159m for the six months, compared with €119m in 2013.

The net interest margin, which is a key indicator of profitability, increased to 140 basis points.

PTSB chief executive, Jeremy Masding, said the bank needed to have a net interest margin of between 175 basis points and 200 basis points.

The core bank, which consists of the PTSB’s good bank and asset management unit, could achieve that target in the near term, he said. The group, which includes a non-core division would reach the target over the medium term, he added.

The bank increased its mortgage lending by 362% to €180m. It accounted for 13% of mortgage lending over the first six months, compared with 3% in 2013.

Mr Masding said despite the improved outlook for the economy, he was maintaining the 2017 timeframe for the bank to return to outright profitability. “I don’t like to get ahead of myself.

“Today is a major step in the right direction, but we’re still loss-making and heavily loss-making,” he told reporters at a press briefing. “I think I’ll still stick to 2017 and if we over-deliver, I’m sure the minister and the taxpayer will be delighted.”

PTSB is 99.2% state-owned. Its specialist mortgage platform, Springboard, which has a loanbook of roughly €466m will be sold within the next six to eight weeks as part of its deleveraging programme, said Mr Masding.

The bank’s gross loan book is €17.1bn of which 69% are performing loans. So far, it has offered 24,000 restructuring solutions to customers in arrears. Of the customers who take up these solutions, 92% stick to the agreed terms.

Overall, the number of arrears cases fell by 14% during the January to June period, and is down 17% from its peak. PTSB is currently undergoing the ECB’s comprehensive assessment of the banking system.

Over the next six weeks, there will be much deeper engagement with the two bodies. He does not expect the bank will have to raise new capital following the exercise.

He expects this set of results will prompt more intense negotiations with the European Commission over the bank’s restructuring plan, although he declined to say when a decision was likely to be made.