Thursday 21 September 2017

Permanent TSB to look at selling off customer mortgages that are in deep arrears

Permanent TSB. Photo: Steve Humphreys
Permanent TSB. Photo: Steve Humphreys
Donal O'Donovan

Donal O'Donovan

State owned Permanent TSB said it will look at potentially selling off customer mortgages that are in deep arrears during 2017.

At the end of 2016 PTSB had soured loans of €5.9bn including mortgages in arrears, the bank said today.

Around 65pc of those problem home loan customers have agreed a debt restructuring deal with the bank. That leaves customers with debts of €2.6bn, made up of loans where the house is on the way to being sold of repossessed or where there is little or no engagement from customers, the bank said.

The bank said it will look at options to deal with €1.5bn of mortgage debt classed as ‘untreated’, which it said is mainly due to a lack of customer engagement and/or unaffordability. Those option could include debt right-offs, known as “charge off” in bank jargon, or selling on the loans.

“We will assess various options available to us including Hold, Sale and Charge-Off. We will update the market on progress in a timely manner.”

The State controlled lender suffered an overall loss of €266m after tax last year, despite a return to operating profits in 2016.

The majority State owned lender had reported a return to profitability for the first time since 2007 at the end of June. Financial results today show headline profits, before exceptional items were €188m for 2016. However, negative exceptional items of €414m, understood to be linked to the impact of a £2.29bn loan-book sale to the US private equity fund, Cerberus Capital Management, in November, saw PTSB swing to an overall loss.

On a positive note, new lending was up 14pc to €591m, benefiting from a growing mortgage market. Net interest margin, a key measure of banks’ viability, grew to 1.48pc, but remains below the lender’s peers,

"The Bank is continuing to deliver its operational turnaround successfully and at pace. In doing so, we delivered a strong operating performance with significant trading profitability and the completion of a three-year deleveraging programme of over €9 billion that now allows us to focus exclusively on delivering profitable growth.

Looking forward, we can build on a great franchise, a loyal customer base and a talented group of committed people. We have all the foundations for success so we must now deliver sustainable value for our customers and our owners – we are confident we will do that,” CEO Jeremy Masding said.

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