PTSB must deal with non-performing loans before it can pay dividend, CEO says

Financial institution increases new mortgage lending by 61 per cent in first quarter

PTSB opened about 10,000 new current accounts in the first quarter of this year, while total new lending volumes rose by 64 per cent. Photograph: Nick Bradshaw

PTSB opened about 10,000 new current accounts in the first quarter of this year, while total new lending volumes rose by 64 per cent. Photograph: Nick Bradshaw

 

Permanent TSB needs to get “momentum” in dealing with its sizeable book of non-performing loans (NPLs) before it will be able to pay a dividend, its chief executive Jeremy Masding said onWednesday.

Speaking to media on the fringe of its AGM in Dublin, Mr Masding noted that there was a “dividend blocker” in place by regulators that prevents it from making a payment to shareholders in the absence of action on its NPLs.

“We really need to get momentum in the eyes of the regulator in terms of that [the dividend blocker],” he said.

PTSB has not paid a dividend since the crash in late 2008 but has indicated that it intends to resume payments to shareholders in 2019.

Some 28 per cent of PTSB’s loans are classed as non-performing and the regulator is pressing the bank to deal with this issue. “28 per cent not sustainable,” Mr Masding said, adding that PTSB would present its plan to reduce this number in the third quarter of this year.

Mr Masding expressed his satisfaction at PTSB’s mortgage lending data in the first quarter. This showed new mortgage lending rising by 63 per cent, well ahead of the 39 per cent rise in the overall market.

Improved share

This gave the bank an improved share of 10.4 per cent of new mortgage lending. “I still say we’re leaving money on the table...we have plenty of opportunities,” Mr Masding said. “We’re making good strides and I would hope to maintain that performance through the year and over the next few years to build out on it as we get our confidence back.”

He expects total mortgage lending in the Republic to be between €7 billion and €7.5 billion this year.

At the lender’s agm, PTSB’s new chairman, Robert Elliott, described PTSB’s failure to apply the correct tracker rate to mortgage customer accounts as a “sorry episode” in its history.

He was responding to criticism to from shareholder and investment adviser Brendan Burgess, who said the bank had attracted borrowers in the past through “tricks and deception” and then “exploited” them as customers, before using “clever legal arguments” to later defend its actions.

In a trading update, PTSB said it opened about 10,000 new current accounts in the first quarter, while total new lending volumes rose by 64 per cent.

The bank was “profitable and capital generative”, the trading update added.

Its net interest margin, a key measure of profitability, was up 21 basis points at 1.8 per cent when compared to the end of last year.