Sunday 22 September 2019

PTSB shares see-saw as market reacts to new results

PTSB chief Jeremy Masding
PTSB chief Jeremy Masding

Gretchen Friemann

Permanent TSB's shares shot up yesterday after initially falling in the wake of the lender's upbeat third quarter trading statement.

The helter-skelter reaction mirrors the mixed response to the bank's performance.

PTSB's shares initially tumbled over 2pc to €1.97 in the wake of the trading update but by mid-afternoon had ricocheted 1.86pc in the opposite direction to close at €2.05.

Investec's Owen Callan pointed out PTSB's performance is characterised by two very different stories, with investors still worried by "execution risk" the bank faces purging its balance sheet of soured loans.

The long-running tracker mortgage scandal is also grinding on even though the bank claims all of the affected 1,971 customers will be offered redress and compensation by the end of the year.

On the upside, Mr Callan pointed out that "operationally" PTSB is improving, taking an 11.9pc slice of the new mortgage market, versus its 11pc at the half year results in July, moving it closer the mid-teen ranking it occupied in the boom era.

At the nadir of the crisis the bank's market share plummeted to as low as 2pc

The bank also posted a small increase in its net interest margin, a key profit measure, to 1.83p versus 1.81pc at its half year results although that is worse than peers.

Overall, lending growth over the nine months ending on September 30, was up 64pc, while its core equity tier 1 ratio - a barometer of a bank's ability to withstand stress - strengthened to 15.3pc, compared to 15pc at the half-year results.

But it is the possible increase in provision levels and the intensifying competition from peers that continues to generate caution.

As Goodbody analyst Eammon Hughes pointed out, the bank did not provide a new figure for NPLs and delivered what he characterised as a "heavy hint" when it said it would continue to "review its provisioning level in the context of executing the NPL strategy".

PTSB, headed by Jeremy Masding, is 75pc owned by the taxpayer.

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