PTSB books €429m impairment charge
Figure reveals challenge still facing bank as it seeks to tackle mortgage arrears
Of the overall impairment figure, €236 million related to home loans in the Republic and €102 million to buy-to-let investment properties. Photograph: Frank Miller
Permanent TSB bank, which is more than 99 per cent owned by the State, booked a €429 million impairment charge on its non-performing mortgage loans in the first half of this year.
This was €5 million less than in the same period of 2012 but highlights the scale of the challenge still facing the bank as it seeks to tackle its mortgage arrears. Of this figure, €236 million of the impairment related to home loans in the Republic and €102 million to buy-to-let investment properties. The home loans impairment was up 82 per cent on the first six months of 2012 although the buy-to-let charge was down 18 per cent.
PTSB chief executive Jeremy Masding indicated that the bank had begun to make inroads into its buy-to-let arrears, with the percentage of cases in default declining to 18.8 per cent from 19.3 per cent a year ago. However, the level of arrears in home loans continues to rise with 15 per cent in arrears of 90 days or more compared with 12.6 per cent a year earlier.
PTSB said it had offered just over 4,000 long-term solutions to its mortgage customers in arrears in the year to date. It has agreed 2,800 split mortgages with customers in default, which involves part of the loan being warehoused while the customer services the rest of the loan. PTSB made an after-tax loss of €141 million for the six months to the end of June, down from €565 million for the same period of 2012.
This improvement was due to “technical accounting issues” as the bank benefitted from a €327 million writeback relating to a decision to close its defined-benefit pension scheme and move towards a defined-contribution model.
The savings achieved on its pension costs helped the bank to achieve payroll savings of 8 per cent and meet the direction issued earlier this year by Minister for Finance Michael Noonan to reduce these costs by 6 to 10 per cent.
On a segmented basis, PTSB’s so-called “good bank”, which is involved in lending and deposit taking, made an underlying loss of €39 million in the first half of the year. Its asset management unit, which is managing its mortgage arrears in Ireland, made a loss of €329 million.
The bank’s non-core unit, which comprises mortgages in the UK and commercial real estate here, recorded a deficit of €90 million in the six months. PTSB’s operating income rose by 3 per cent to €119 million while its net interest margin increased by six basis points to 0.82 per cent. Operating expenses rose to €138 million from €135 million.
PTSB repossessed 72 private dwelling homes in the first half of the year relating to cases where mortgages could not be repaid.