Shares in Permanent TSB, which have shed more than half their value this year, rose to their highest level since before the UK referendum, as pressure appeared to ease for it to quickly dispose of a large UK loan book worth £2.3bn (€2.74bn).
After posting a net first-half profit of €80m, PTSB said it increased its capital for the first time since the onset of the financial crisis nine years ago.
Impairment write backs of €61m and a gain of €29m from the sale of a share in Visa Europe boosted the results.
Net interest margin, a measurement of profitability, rose to 1.43% from 1.12% last year.
Ever since the Government sold an initial 25% stake last year, the timetable for the disposal by PTSB of its UK loan book, which it must sell under the terms of its restructuring plan, has been under scrutiny.
Its shares slump has also excited the possibility of a bidder emerging for the whole bank.
With the UK loan book hedged against the drop in sterling, analysts said the financial pressure to sell the UK loan book had eased.
Amid the uncertainty sparked by Brexit vote, PTSB yesterday said that it still planned to sell the UK loan book when it got the right price.
The shares gained almost 5% to 217c, close to the level on the day of the June 23 referendum.
They have, however, slumped almost 53% this year, reflecting the pressures facing PTSB as rivals slashed their standard variable mortgage rates.
Darren McKinley, analyst at Merrion Capital, said he would not rule out the possibility of an “opportunistic” buyer emerging for PTSB.
The broker has a ‘buy’ recommendation, with a price target of 300c.
PTSB said though it faced challenges it was nonetheless better placed to focus on growing the business.
Philip O’Sullivan, chief economist at Investec Ireland, said PTSB was holding out to get a good price for the UK loan book, and that there may be an appetite from institutions to buy the book when the dust settles from the Brexit vote.
PTSB chief executive Jeremy Masding said the Government should be in no rush to sell up the rest of its 75% stake in the bank.
“If Mr Noonan asked me today, I’d say ‘don’t do a deal’. There are organic opportunities in this organisation to grow intrinsic value,” he told reporters.
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