Permanent TSB made ‘strong’ action on loan arrears

Permanent TSB has made “strong progress” in managing levels of loan arrears among its mortgage customers since the turn of the year, the bank said yesterday.

In a trading update —covering the first quarter of 2015 — PTSB said conditions continued to improve during the first three months of the year and that a further reduction in arrears levels, in both home loans and buy-to-let segments over the crucial 90 day or more timeframe, was evident. It added that such arrears cases are now 37% lower than at their peak level in August 2013.

Owner-occupier mortgage arrears over 90 days now amount to 9.9% of the mortgage book (down from 10.7% as of the end of 2014) and buy-to-lets amount to 12.8%; down from 13.6%.

“The group has seen lower levels of new defaults in the period, compared to the first quarter of 2014, and management expects this trend will continue to the second quarter of 2015 and beyond,” said PTSB.

Yesterday’s update further noted that retail deposit balances at the group’s core bank continued to increase during the quarter. Growth in current accounts also continued, with more than 10,000 new accounts being opened during the three-month period.

Furthermore, new mortgage draw-downs rose 16% when measured on a year-on-year basis, and term lending showed growth of over 50% on the corresponding period last year.

PTSB said the Central Bank’s new mortgage lending restrictions will impact the bank’s lending volumes, but that management is continually monitoring and exploring initiatives aimed at increasing new business. It said it remains confident of further growth and meeting its 1.7% net interest margin target by 2018.

PTSB received formal approval from Brussels last week for its restructuring plan, which will see it streamlined into a core domestic bank and sell around €5bn of non-core assets.