Wednesday 18 September 2019

Permanent tsb boss's warning on stimulus

Caution: Jeremy Masding says stimulus leaves European banks at a disadvantage
Caution: Jeremy Masding says stimulus leaves European banks at a disadvantage

Donal O'Donovan and Ellie Donnelly

Permanent tsb chief executive Jeremy Masding has warned that negative ECB rates and further stimulus will pile pressure on all European banks and is leaving them at a disadvantage versus peers elsewhere.

US banks earn money when they keep funds with their central bank while eurozone banks are charged, he said. That gives US lenders more scope to invest in their digital infrastructure and M&A, he added.

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Ptsb is among the most exposed banks here if the ECB cuts its main refinancing rate because it will mean an automatic cut for the €9.6bn of its mortgages - 57pc of all its lending - that track the official rate.

Majority State-owned Ptsb reported profit before tax and exceptionals of €42m for the six months to 30 June, a 42pc fall year-on-year.

Profits were whittled down by exceptionals including €14m in respect of its restructuring programme and a €3m charge related to its €21m fine from the Central Bank's investigation into the tracker mortgage scandal.

New lending was up €700m - rising 22pc year-on-year, and the lender's share of the mortgage market was 14.7pc, up from 13.8pc one year ago.

Speaking after the results, Mr Masding said lack of new and second-hand houses had constrained lending growth.

The bank is approving home buyers faster than they can find homes to buy, he said.

The bank itself had boosted that stock of homes for sale - with 1,400 properties sold over the last 18 months after being surrendered by borrowers in arrears or repossessed.

PTSB has moved through two phases since its bailout - those of saving the bank and fixing the bank, he said. It is now poised for a third phase of profitable growth, he said.

The bank reported growth across home loans, personal loans and SME lending.

It has cut its stock of non-performing loans, but the bad loan ratio of 10pc remains double a target set by European regulators. Further bad loans sales are likely, and €300m of once problem loans are in the process of becoming "cured" in the next 18 months, the bank said.

Irish Independent

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