Shares in Permanent TSB rose by 2.7 per cent in Dublin yesterday as the group announced an underlying profit of €1 million for the first six months of this year and a surplus of €9 million for its core retail bank.
However, PTSB recorded a loss of €431 million when exceptional costs of €432 million were taken into account. These related to a €380 million net loss on its deleveraging of certain assets and a €52 million hit on the repurchase of contingent convertible capital notes from the State as part of its recent capital-raising exercise, which saw it return to a full listing on the Irish stock market.
The results were released a day ahead of schedule due to the announcement by PTSB of a mortgage redress programme for 1,372 customers, following an enforcement investigation by the Central Bank of Ireland.
This will result in customer compensation payments amounting to a minimum of €35 million and fines from the regulator of up to €20 million.
The issues relate to the incorrect setting of interest rates for certain customers of PTSB and Springboard Mortgages, a former subsidiary of the bank, between 2006 and 2011.
Legacy costs
The bank’s total operating income rose by €13 million year-on-year to €172 million in the first six months of 2015. Total operating expenses declined by €34 million to €147 million due to a lower provision for legacy legal and compliance costs.
An impairment charge of €24 million left it with a profit before exceptional costs of €1 million for the six months to the end of June. Its net interest margin improved to 100 basis points (1 per cent) from 90 basis points a year earlier.
Its Irish retail banking business reported a profit before exceptional items of €9 million, compared with a loss of €104 million in the same period of last year.
PTSB’s Irish retail deposits fell by €200 million to €11.4 billion when compared with the end of 2014. Current account balances at the end of June rose to €2.7 billion when compared with the €2.6 billion held at December 31st last.
New mortgage lending rose by 5 per cent year-on-year to €187 million, while term lending increased by 44 per cent when compared with the first half of 2014.
Net loans to customers were €22.9 billion at the end of June, down €4.3 billion on December 2014 due to the sale of Irish commercial real estate loans and UK mortgages.
PTSB's chief executive Jeremy Masding said the results showed that PTSB was "making progress" in returning to "sustainable profitability".
Significant milestone
He described the group’s underlying profit – its first since 2007 – as a “significant milestone” for the bank that “augurs well for the future of the institution, which is 75 per cent owned by the State.
“There is a long way to travel but we are making good progress in delivering innovation and strong competition to the Irish retail banking market and a sustainable, profitable, attractive banking business for our shareholders,” Mr Masding said.
PTSB’s share price closed in Dublin at €5.15. The bank is due to publish its full interim results today.
