New Permanent TSB CEO Eamonn Crowley has pledged there is a future for the mortgage bank in lending to small firms but said the fallout from Covid-19 crisis will be “significant” as it again faces some sort of increase in home loan arrears when the payment breaks for 10,000 customers come to an end.
Mr Crowley said all banks face the same challenges from lower-for-longer interest rates and the economic effects from the pandemic, but insisted there were opportunities too as Permanent TSB lends to SMEs.
Nonetheless, the bank which is 75% owned by the Government faces substantial pressures. “We will have to deal with an increase in arrears. We will also have to deal with a significant falloff in new lending volumes. And in this respect, we have guided that new lending volumes for 2020 may be 50% lower than 2019 but that has yet to be tested,” he said.
Permanent TSB next updates the market at the end of July when, Mr Crowley said, it will have a better idea how many of the 10,000 accounts with payment breaks will go back to paying in full, or not.
He said extending the payment breaks beyond six months involved regulatory issues, and the lender was operating under the current agreement that customers could avail of extending the payment breaks of three months to six months.
There was a small pickup in mortgage applications but house prices would fall this year, as experts like the think tank ESRI have predicted, he said.
Mr Crowley who was the long term chief financial officer under the previous CEO, Jeremy Masding talked about his ambition for the bank at the start of his tenure in the top job.
He said the bank would learn from its mistakes in which Permanent TSB was fined €21m by the Central Bank for its part in the industry-wide tracker mortgage scandal.
The bank will continue to invest in digital banking and reduce its cost-income ratio by seeking out new income streams, such as lending to SMEs, and there was “no radical plan” in focusing on costs alone, he said.
“While we have a slightly higher mountain to climb than other banks, everybody in the banking sector still has the same challenge”, Mr Crowley said of the bank’s long term future.