Losses narrow at PTSB but Masding is still cautious
Published 20/08/2014 | 02:30
Permanent TSB Chief Executive Jeremy Masding has said he isn't naive about the significant challenges that still face the State-owned lender.
He was speaking as PTSB announced that its operating losses had narrowed 62pc in the first half of the year.
The bailed-out bank also reported a 65pc fall in impairment charges, a 14pc drop in long-term arrears and a 362pc surge in mortgage lending.
Mr Masding reiterated, however, that taxpayers were not likely to get back the full amount of money that was ploughed into the bank.
The Irish taxpayer injected €4bn into Permanent TSB to keep it afloat following the property crash. Since then, its Irish Life arm was sold for about €1.3bn.
Finance Minister Michael Noonan said the bank could be returned to private hands earlier than expected, although Mr Masding said 2017 remained the deadline for returning the group to profitability.
"I'm not naive. We are still reporting losses," Mr Masding said.
"I don't like to get ahead of myself. We're still loss-making and heavily loss-making. Today is a major step in the right direction.
"There's a lot of bridges between now and then. I think I'll still keep to 2017 and if we over-deliver, I'm sure the minister and the taxpayer will be delighted."
Announcing its first half results, PTSB said operating loss before exceptional items fell 62pc to €171m, compared with €449m in the same period last year.
Underlying operating profit was €4m for the group and €13m for the core bank.
Impairment charges dropped 65pc to €149m, compared with €430m in the first six months of 2013.
Mortgage lending increased 362pc to €180m, while there has been a 14pc fall in the number of customers in arrears of more than 90 days.
It also said it has offered more than 24,000 restructurings for mortgage customers in arrears.
Mr Masding described the results as a "small step to becoming viable and valuable."
"In short we're delivering what we promised to the troika and the shareholder back in 2012," he said.
"We continue to rebuild the group into a sustainable retail banking franchise."
The 99pc State-owned lender is seeking approval from Europe to split itself up to move problem loans off its balance sheet but is still awaiting a decision on a revised restructuring plan submitted to the European Commission last year.
Mr Noonan said PTSB has demonstrated that the bank is continuing to improve and has made significant progress in delivering key elements of its restructuring plan.
"It is likely to be an investable proposition well ahead of our original timetable given the significant improvements made by management and the continued improvement in the Irish economy," he said.
Stockbroker Davy said the results showed the bank was making further progress, while Goodbody said profitability could be attained earlier than projected.
"We had been forecasting break-even at the pre-provision level, so while income is a little better than anticipated, costs are much higher than we expected," said analysts Eamonn Hughes and Colm Foley.
"However, the impairment charge is about €100m+ lower than we anticipated, which if rolled forward, may help in attaining profitability earlier than the prior 2017 timelines."
What's happening at Permanent TSB?
- Underlying performance improved €278m on the first half of last year
- Impairments fell by €281m
- Deposits have increased to €14.5bn, with market share now at 13pc
- Current account balances have increased by about €250m.
- Mortgage draw-downs have jumped €180m, up 362pc on same period last year.
- Operating loss cut by 62pc.
- Net Interest Margin up 6bps.
- Impairment charges down 65.3pc
- ECB funding down a further 15.9pc
- Capital position at 12.7pc.
- Staff costs cut by €3m - or 4pc - compared with June 2013
Mortgages and arrears
- 73pc of residential mortgages in the Republic are home loans, with 57pc trackers
- 27pc are buy-to-lets with 85pc of those trackers.
- More than 80pc of those in arrears are engaging with the lender
- Bank claims 88pc who engaged are offered sustainable solutions
- 24,000 restructure offers made by end of June
- Long-term arrears cases down 14pc in the first half
- There were 25 repossessions in the first half of the year. There were 50 last year.