Wednesday 18 September 2019

Permanent TSB hints of interest rate cut

PTSB boss Jeremy Masding
PTSB boss Jeremy Masding
Donal O'Donovan

Donal O'Donovan

Permanent TSB CEO Jeremy Masding has hinted strongly the bank will cut the interest on some variable rate mortgages, and admitted tracker customers could also see a cut.

The bank chief would not be drawn on the specifics of a variable rate cut, but said it could go ahead even if the ECB cuts its main refinancing rate below zero for the first time.

An  ECB cut below zero - now seen as a realistic prospect - will be passed on to tracker customers Mr Masding said. The average tracker interest rate is 1.28pc at Permanent TSB and trackers make up the bulk of its lending.

A negative ECB refinancing rate would be an issue across the entire Irish banking system, not just for Permanent TSB, Mr Masding said.

Elsewhere, the group reported profit before tax and exceptional items of €42m for the six months to 30 June, a 42pc fall year-on-year.

After exceptional items, the bank reported a profit before tax of €28m for the period, down from €57m when compared to the prior year, according to interim results from the group.

Exceptional items include €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.

The bank's net interest margin (NIM) of 1.82 was 5 basis points higher year-on-year.

NIM is a key barometer of a bank's profitability. The bank said the net interest income was partly offset by reduced income from non-performing loans due to loan sales in 2018 and lower treasury income.

Performing loan income has grown 3pc, however the total performing loan book at 30 June was slightly behind the 30 December 2018, as the pace of repayments exceeded the strength of new business.

Meanwhile, new mortgage lending grew by 18pc year-on-year. The bank now has a 14.7pc market share of drawdowns.

Personal term lending grew by 16pc, when compared to the prior year, while loans to small and medium businesses was also up, though from a low base. 

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