Saturday 10 December 2016

Shortage of housing hits Permanent TSB

Paul O'Donoghue and Donal O'Donovan

Published 11/11/2015 | 02:30

Photo: Niall Carson/PA
Photo: Niall Carson/PA

Over three-quarters of the 1,372 mortgage customers who were incorrectly overcharged by Permanent TSB have received some form of redress, the bank has said.

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Yesterday, the bank published a trading update for the nine months ending 30 September that showed a slowdown in growth in recent months, following a strong start to the year. That was blamed on the mortgage market, where lending remains relatively muted.

Mortgage draw-downs have trended broadly in line with the same period last year "in a market which has not grown as fast as expected," the bank said.

Term lending draw-downs are up 34pc year-on-year albeit from a low base.

PTSB said that was down to a "short-term supply lag" in the housing market, with limited supply of new homes effectively putting a lid on lending activity despite the wider economic recovery.

"The growth in the Irish economy is providing a strong backdrop for the group's targeted return to sustainable profitability," the bank said.

"At the same time, challenges remain in the form of increasing costs of meeting higher regulatory standards, limited housing supply resulting in constrained growth of the mortgage market and over supply and volatility in the UK mortgage asset market."

The trading update was the first since the bank admitted that at least 1,372 customers were due to be compensated by Permanent TSB after it failed to inform them that they would be penalised for changing their mortgage terms by being blocked from moving to a tracker-rate deal down the line.

Permanent TSB has promised refunds of the amounts overcharged, compensation and up-front payments of €50,000 and €25,000 to 61 people who may have lost homes or properties as a result of the bank's actions.

It said its financial performance improved further in the third quarter of the year "to deliver in line with expectations with improving Irish macroeconomic performance contributing to continued reductions in loan losses".

Balances

The bank also said that current account balances were up by 6pc compared to the end of 2014 with retail deposit balances at €11.2bn, in line with expectations.

The bank aims to have deleveraged the remainder of its £2.4bn UK mortgage portfolio by June 2016.

Permanent TSB said that operating expenses for the second half of the year will be higher than the first half due to the payment of the bank levy, which will cost the lender €27m.

Net interest margin, a key measure of profitability that the bank aims to increase to 1.7pc by 2018, rose to 1.26pc, helped by lower rates paid to depositors, taking the nine-month average to 1.07pc.

Shares in Permanent TSB closed up 3.7pc at €4.20, having been up as much 6pc early in the day.

Irish Independent

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