Permanent TSB chief warns IT revamp may hit payment of dividend
Permanent TSB's chief executive, Jeremy Masding, signalled an investment in the bank's creaking digital infrastructure may come at the expense of the payment of the first dividend since the financial crisis
Speaking after the partially-nationalised lender's annual general meeting in Dublin yesterday, Mr Masding said the board must consider "what is the best use of cash" and claimed an "investment in the business" may take priority over a return of cash to shareholders.
He added that while there is still an "aspiration" to reinstate the dividend by 2019 - on the back of the 2018 financial year results - he stressed "there is a lot of water to go under our bridge" before a final decision is made.
Mr Masding pointed out that Bank of Ireland is investing €800m-€900m to overhaul its software. "They are big numbers, so if in time we had to ask the same question of the board, that would be my first priority, not necessarily paying the cash back to the shareholders."
His comments followed another stormy AGM as shareholders vented their anger at the bank's long-running tracker mortgage debacle.
PTSB's new chairman, Robert Elliott, the UK-born corporate lawyer and former partner of Linklaters, who succeeded Alan Cook, said "there was a genuine effort going on to try and restore the bank and fix its problems".
"When you hear it in the raw, it is disconcerting," he admitted.
Most of the discontent from the relatively small number of attendees in the Ballsbridge hotel's largest ballroom, centred on the bank's failure to apply the correct tracker mortgage rate.
One investor and customer claimed the interest rate error had added €50,000 to her home loan repayments and said she feared the final cost could top €100,000.
Another shareholder and consumer activist, Brendan Burgess, highlighted that PTSB focused its attention on challenging rulings by the ombudsmen in the High Court and then the Supreme Court before it was ordered to establish a redress scheme for affected borrowers.
As the complaints continued to rain down on the board, Elliot and Masding repeatedly issued apologies for past misdeeds and emphasised management has learnt from previous mistakes.
Yet the annual venting of grievances came as the bank posted strong first quarter results, beating market expectations and setting the stage for a return to growth.
Mr Masding said figures, which showed new mortgage lending grew by 63pc on the same period last year, outpacing the broader market's growth of 39pc, had delivered a "fillip" to staff. But he warned the volume of impaired loans, which account for 28pc of the bank's book, remains a key challenge. He said, "we can't claim to be a long term viable institution with a NPL ratio that high."