Sunday 22 April 2018

PTSB can be a real force in banking - Masding

Jeremy Masding
Jeremy Masding
Colm Kelpie

Colm Kelpie

Permanent TSB can cement its position as a "real competitive force" in the Irish banking industry, chief executive Jeremy Masding has said.

As the bank recorded mortgage lending growth of just 2pc last year and lending growth overall of 6pc, Mr Masding accepted it should have done better but vowed that the bank will be able to improve its market share.

PTSB shares fell sharply after the bank's first annual pre-exceptional profit in almost a decade was marred by a lack of write back provisions and disappointment in the pace of mortgage lending. The bank reported a profit before exceptional items of €26m for 2015, versus a €39m loss a year earlier.

Mr Masding said he was confident that the bank's customer loan drawdowns would improve this year.

"We should have done better last year and we have to get to a place where, without compromising credit quality, we get to a place where we have the 13pc to 17pc market share that we are targeting as part of our investor story.

"We are targeting that by 2018. Credit quality is important to me. I'm not going to chase volume just for the sake of it. I have the team that can develop the propositions. It wasn't good enough last year but I'm confident that over time we can cement our position as a real competitive force in the Irish banking industry."

PTSB said its net interest margin, a measure of profitability it aims to increase to 1.7pc by 2018, rose to 1.12pc for the year as a whole but was at 1.3pc at the end of the year and expected to improve. The 75pc State-owned bank also recorded a €35m impairment charge on its loans, compared to a €42m writeback in 2015. PTSB shares were down 10.6pc to €2.70 by mid-afternoon yesterday.

The majority State-owned bank said the group had completed the sale of the vast majority of its non-core loans last year, with the remaining commercial property non-performing loans sale due to close in the coming weeks. The bank said it has also transferred the performing commercial property loans to the core bank from January.

The sale of £2.5bn of loans held by the UK business was also completed last year, along with the associated entity and operating platform.

As of the end of last year, the Group's Common Equity Tier 1 capital ratio increased to 15pc and 17.1pc on a fully loaded basis and transitional basis, respectively.

Analysts highlighted a number of challenges including the bank's relatively high regulatory costs, constrained mortgage market growth and the timing and cost of selling off its UK business as part of a restructuring plan agreed with the European Commission.

"We are encouraged by the positive underlying performance, we believe provision write backs are coming in time, but there are questions over sustainable Return on Equity capability and required capital levels," Investec analyst John Cronin said.

Emer Lang, an analyst at Davy Stockbrokers, said the results show that its underlying performance has continued to improve, led by the net interest margin (NIM) and lower cost.

Meanwhile, the bank's annual report also shows that the bank's former chief financial officer was entitled to a payment in lieu of notice of €402,500.

(Additional reporting Reuters)

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