Monday 23 July 2018

Permanent TSB turns first profit in a decade as bidders circle €3.7bn loans

Permanent TSB chief Jeremy Masding defended its track record
Permanent TSB chief Jeremy Masding defended its track record

Gretchen Friemann and Ellie Donnelly

Over a dozen bidders are expected to submit non-binding offers for Permanent TSB's €3.7bn portfolio, including soured residential mortgages, early next month as the State-backed bank attempts to decisively grapple with its stock of non-performing loans (NPLs).

Over the past financial year the State-backed lender has chipped €600m off its stack of soured exposures.

NPLs still account for 26pc of the overall loan book, meaning PTSB remains one of the worst banks on this front in Europe. Speaking at the lender's annual results presentation in Dublin yesterday, after PTSB posted its first profit in a decade, senior executives at the bank stressed the sale of 18,000 buy-to-let loans and owner-occupier mortgages, remained at an early stage and refused to set a time frame on the deal.

However, Investec analyst Owen Callan said conclusion was unlikely until "well into the second half of the year".

PTSB's chief financial officer, Eamonn Crowley, emphasised the bank has no indication at this stage of the price bidders are prepared to pay for the portfolio of troubled mortgages, which are split between €2.8bn of home loans, including €900m of split mortgages, and a further €900m of buy-to-let loans. He said the bank has "benchmark pricing on the loans internally" and external consultants "provided us with the confidence to launch Project Glas" [as the portfolio has been dubbed] and added the improving economy had sharpened the appetites of investors.

PTSB has declined to provide details on the provisions or amount of capital set aside to cover Project Glas, a figure that would indicate the minimum price the bank is prepared to accept for the impaired loans. Mr Callan said it is likely to be set at close to €2bn or 50pc-60pc of the mortgages' face value.

CEO Jeremy Masding said the bank had no plans at "this stage" to restrict the sale to buyers that are regulated by the Central Bank of Ireland.

He also defended PTSB's track record, arguing that despite persistent doubts about its post-bailout future, it is "an important piece of the financial services landscape".

He claimed the 2017 full-year financial results, which show a profit after tax of €40m, represented the "tip of the iceberg" for PTSB's commercial potential. PTSB now holds a 12.6pc share of the hard-fought new mortgage market, after a 77pc increase in lending last year.

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