The programme was initiated last year to compensate customers who tried to switch from a fixed-rate homeloan to a tracker mortgage but did so without being told they could not if they had first changed to a variable rate product.
Group chief executive Jeremy Masding, speaking at the publication of PTSB’s annual results yesterday, said the bank set aside €140m to deal with this problem and has paid out €40m to date, but would not speculate on the entire cost when charges, other cases, and potential fines are added to the bill after the Central Bank’s tracker review runs its course in an estimated 12 months or more.
PTSB yesterday reported its first underlying profit (before exceptional items) in eight years.
However, although that €26m was an improvement from a pre-exceptional loss of €39m in 2014, it was still short of some analyst estimates and was marred by €460m in exceptional items.
Those costs — the bulk of which covered losses on non-core asset sales, but also the €52m spent on buying out part of the State’s stake in the bank — ultimately boosted PTSB’s overall pre-tax losses, last year, from €48m to €434m.
On the back of that, PTSB’s share price fell by over 7% yesterday to €2.80 — nearly 40% down on its placing price last year.
Mr Masding said he remains confident that PTSB can “survive and thrive” and can up its share of the Irish mortgage market from 13% to 18% by 2018, even though lending growth is far slower than at its main rivals Bank of Ireland and AIB.
Last year saw PTSB grow its overall lending by 6% and its mortgage lending by just 2%, while its big two rivals saw growth of around 30%.
While he said the bank should have done better last year, Mr Masding said the fact there was some level of growth shows PTSB still has “relevance” in the mortgage lending market.
“I’m confident we can improve this year and, indeed, we must,” he said.
He added that putting sustainable solutions in place for mortgage arrears customers (long-term arrears cases declined by 9% last year, short term arrears were down by 21% while non-performing loans dropped by 27%, or €2.2bn) and further strengthening the group’s balance sheet show the overall progress that has been made.
He also expressed satisfaction with the bank’s branch network, saying 77 seems like “the right number” and could prove to be a competitive advantage.
“There’s much still to be done and further challenges to be met, but we have made a good start and are in a good position.”
Mr Masding hinted at a delayed sale of the remaining element of PTSB’s non-core UK-based mortgage business, Capital Home Loans, for which it has a June deadline.
More challenging market conditions in the UK and the Brexit factor mean PTSB is likely to seek an extension to its UK sale deadline until after Britain votes on its EU membership on June 23.
However, management said it is “continuing to explore options to deleverage” in the UK.
Mr Masding said candidates have been identified for vacant chief financial officer and chief risk officer roles, with appointments awaiting ECB approval.