Tuesday 12 December 2017

Permanent TSB to show higher lending

Permanent TSB boss Jeremy Masding
Permanent TSB boss Jeremy Masding

Gretchen Friemann

Permanent TSB is expected to show a small increase in its share of the mortgage market today as the partially-nationalised lender releases first-quarter figures ahead of its annual general meeting in Dublin.

After a painful period of restructuring, the bank has begun a renewed push for growth but its efforts to regain territory face intense competition from resurgent rivals.

PTSB's market share fell to 9.3pc in 2016 from 9.5pc in 2015.

Chief executive Jeremy Masding acknowledged the weaker performance earlier this year, when the bank reported its annual results but argued the "turnaround story" had hampered growth.

Now that PTSB has concluded its restructuring phase, investors are keen to see evidence the bank is gaining traction in the rapidly-expanding mortgage market. The Irish Independent understands the bank, which remains 75pc owned by the taxpayer, will show marginal progress on this front.

Others are more sceptical. Eamonn Hughes, an analyst with Goodbody Stockbrokers, argued the lender should aim for a market share of 12-12.5pc over the next two years, given the relatively strong performance from the larger banks. But in a report published yesterday he predicted PTSB's foothold on the market is likely to come under pressure given industry-wide mortgage drawdowns for the first three months of the year rose by 39pc or €1.39bn, compared to the same period in 2016.

He said PTSB "must approach or beat" that figure to "hold its own".

Analysts are also pencilling in an improvement on a key profit measure, with last year's sale of the non-core UK loan books expected to deliver a higher net interest margin.

Investec is forecasting net interest margin (NIM) - the difference between what PTSB receives on lending and what it pays out on savings - will reach 1.7pc to 1.75pc in the first quarter.

For the full year it expects NIM to hit 1.77pc - below rivals but a significant improvement on its 2016 number of 1.46pc.

While PTSB's AGM last year was dominated by anger over the tracker mortgage debacle - an issue that has bedevilled the bank in recent years. Stubbornly high levels of bad loans may dominate proceedings this year.

Analysts are predicting a decline of €200m to €300m on the bank's €5.9bn non-perfoming loans over the first quarter, although Masding is likely to remain tight-lipped on the bank's final clean-up strategy.

Investors may draw comfort from the easing of another sources of anxiety - the level of provision for the tracker mortgages scandal, which Invstec describes as sufficient.

The bank's share prices of €2.50 remains well below its listing price of €4.50.

Irish Independent

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