PTSB, which has not paid a dividend since before the financial crisis, has secured approval from financial regulators to return to making payouts.
Shares in the bank surged 6.7 per cent in Dublin to give it a market valuation of €913.9 million.
The timing has come as a surprise. Sources said earlier this year that it would be the end of next year at the earliest before the Central Bank would consider lifting a long-standing “dividend blocker” at the company.
“The removal of the dividend blocker is a landmark event for PTSB. It acknowledges the enormous progress which has been made by the bank over the past decade,” said Eamonn Crowley the bank’s chief executive, in a statement on Friday.
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“It reflects the fact that PTSB now occupies a key position in the Irish banking landscape, and it significantly enhances the investment case for existing and potential investors in the bank. This progress has been hard won.”
A spokeswoman for the bank declined to say whether its board would consider paying out a dividend next year on 2023 earnings.
PTSB, in which Irish taxpayers hold a 57.4 per cent stake, is alone among the State’s three surviving bailed-out banks in not having returned to paying dividends since the 2008 crash, having consistently delivered sub-par profit returns as its balance sheet shrank dramatically over more than a decade.
However, the bank’s prospects have been transformed as a result of its purchase of much of Ulster Bank’s loans and rising official interest rates since the second half of last year. PTSB has acquired a total of €6.75 billion of mortgages, small business loans and 25 bank branches from Ulster Bank, as the latter retreats from the Irish market.
The bank has also lowered its level of non-performing loans from a post-crisis peak of 28 per cent to 3.3 per cent, through mortgage restructurings and loan portfolio sales.
Still, PTSB shares had declined 13 per cent in the 12 months before Friday’s announcement. Larger peers AIB and Bank of Ireland had advanced 14 per cent and 6 per cent, respectively, over the same period, fuelled by having much larger levels of excess cash on deposit with the Central Bank, currently earning an annual rate of 4 per cent.
While the regulatory “dividend blocker” was only technically introduced in 2016, PTSB, which received a €4 billion bailout during the financial crisis, had not been in a position to even consider paying dividends in the eight years before that.
Former PTSB chairman Robert Elliott, who stepped down in March after six years, passed away last week after a long illness, at the age of 71.
“Robert was a dedicated custodian of PTSB throughout his term as chairperson and beyond,” said Mr Crowley. “He was instrumental in the progress the bank had made over the past decade; his impact on the organisation, and on those who were lucky to know him as a colleague and friend, will be felt deeply for many years to come. Our thoughts and condolences are with his family and friends during this sad time.”
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