Permanent TSB chief executive Jeremy Masding said on Wednesday that it was now time for the bank to "grow" after years of dealing with pre-crash legacy issues that threatened its viability.
PTSB made an after-tax profit of €80 million in the first six months of 2016, a major turnaround on a year earlier when it recorded a loss of €410 million.
This was the first group profit recorded by the bank since 2007, the year before the global financial crash. It is also generating capital again for the first time in nine years.
Mr Masding said it “settled the argument about whether we can survive” and proved that “we can thrive”.
He said the bank was positioned to “focus on our commercial agenda and to grow the business”.
Permanent TSB, which is 75 per cent owned by the State, recorded an impairment writeback of €61 million in the six-month period, an improvement of €85 million on a year earlier.
Mortgage lending rose by 4 per cent year-on-year to €211 million while its non-performing loans reduced by €400 million from December 2015 to €6.2 billion.
Its net interest margin, excluding guarantee fees paid to the Government, increased by 31 basis points to 1.43 per cent.
The bank said its cost-income ratio “remains elevated” at 87 per cent due to regulatory cost pressure.
PTSB’s fully loaded core equity tier 1 ratio increased by nine percentage points to 15.9 per cent, demonstrating that the bank is well capitalised.
The writebacks included €26 million in relation to a better underlying net performance, reflecting “sustained loan cures”. They also included €35 million resulting from an adjustment to house price inflation assumptions.
But the group expects an impairment charge in the second half of the year, arising from its underlying performance.
This is mainly due to the quantum of writebacks from loan cures “moderating” and it returning to a normalised impairment flow, the bank said.
PTSB’s first-half performance was also aided by a gain of €29 million from the sale of a share held in Visa Europe.
Regulatory costs increased by €19 million as a result of its contribution of €9 million to the Single Resolution Fund and €10 million to the deposit guarantee scheme.The Irish bank levy of €27 million will be paid in October.
PTSB said talks with the European Commission on extending the deadline for the sale of its non-core £2.3 billion CHL mortgage book in the UK are under way. This loss-making book was to have been sold by the end of June but the sale was postponed due to the impact of the UK's EU membership referendum on market activity.
