Business Irish

Friday 20 October 2017

PTSB forecasts 10pc return for its good bank unit

Permanent TSB on St. Stephens Green.
Permanent TSB on St. Stephens Green.
John Mulligan

John Mulligan

Permanent TSB has forecast a 10pc return on equity for its good bank unit by 2017 under a plan to return it to private ownership.

In a presentation to investors, the state-owned nstitution said it aimed to deliver a 5pc return on equity by 2017 when its distressed mortgages were included in the arithmetic.

News agency Bloomberg, which first reported the details of the presentation, said that Permanent TSB sounded an upbeat tone in its remarks.

It told investors that Ireland's economy was improving, with positive signals from the property and jobs markets.

"Investors are well positioned to benefit from improved consumer sentiment," it said.

The bank confirmed last October that it expected to return to profitability by 2017.

In the first half of 2013, Permanent TSB made a pre-tax loss of €131m compared with a loss of €587m in the first half of 2012. Operating losses before exceptional items in the first six months of 2013 were €449m, down from €457m in the first half of 2012.

Permanent TSB plans to return the good portion of its bank to full or partial market ownership by 2017, the presentation given to investors last week confirmed.

That would include seeking opportunities to attract a "strategic or capital markets investor early in the planning period", it said.

The good portion of the bank has about €15bn of loans and the marketing process could kick off in the second half of this year.

Permanent TSB also intends to begin selling parts of its €10bn non-core unit, which includes its UK residential mortgage loan book. That UK loan book is likely to be sold over a period of three years.

OPTION

Permanent TSB is headed by Jeremy Masding. He had considered closing the business but he and the board believed the "least worst" option was to keep it going.

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 €1.3bn.

Last October, the IMF said that the bank was "returning to profit rather slowly" but that it was not "beyond hope".

Permanent TSB is hoping to gain approval by April from the European Union for its restructuring plan. Mr Masding had hoped last summer that the plan would have been approved by the end of 2013.

The bank was the country's biggest mortgage lender before the bust.

Irish Independent

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