Shares in Permanent TSB climb 5% on new lending

Shares in Permanent TSB rose 5% after it told shareholders it had taken on new business and improved its profitability in the early part of the year.

The mortgage lender, which is 75% owned by the Government, is one of the most troubled of the Irish lenders to have survived the banking bust. It sold off loans it held in Britain last year but still carries a huge amount of non-performing Irish mortgage loans on its books.

Like its rivals, it has also made significant provisions for redress after overcharging its tracker mortgage customers.

Analysts hailed the update — which revealed it increased a key measure of profitability —its net interest margin rose to 1.8% from 1.59% at the end of last year. It reported lending volumes had climbed by a market-beating 63% from a year earlier. Its capital reserve ratio also rose, to 15.1% in the first quarter from 14.9% at the end of the year.

“Given the strength in new business lending growth, PTSB’s net loan book stabilised at €18.7bn. We are confident that a contracting loan book will no longer be a drag on profitability as it has been for long period of time,” said Merrion Capital’s Darren McKinley. The broker raised its price target to €3.30.

Emer Lang at Davy Stockbrokers said its new business lending and an increase in net interest margin were the “key features”.

“Intense regulatory scrutiny of NPLs [non-performing loans] is keeping this topic high on the agenda for banks and investors alike. As we expected, it remains too early for PTSB to give any indication of a target level of NPLs or timescale for their reduction — €5.85bn or 28% of loans at end-2016, of which 50% are in forbearance treatments,” she said.