Permanent TSB claims progress on profitability

Permanent TSB said yesterday it was making "continued" progress towards achieving group profitability with its net interest margin "rising steadily".

This emerged in a trading update issued less than 48 hours before the results of the European Central Bank’s stress tests are published. The update covers the period from January to September.

PTSB said it would announce its response to the results of the comprehensive assessment on Sunday. The bank is expected to fail the tests, with a capital shortfall of between €800 million and €1 billion.

The bank said mortgage approvals to the end of September were up 123 per cent with drawdowns increasing by 212 per cent. Its market share from new mortgages is now estimated at more than 13 per cent compared with just 1.6 per cent at the end of 2012.

The bank said new personal term lending is up 17 per cent year on year.

The bank, which is 99.2 per cent owned by the State, said total deposits have risen by more than 9 per cent on levels at the end of 2013 and are up 3 per cent on the six months to the end of June.

It has also opened 88,000 current accounts since launching this initiative in 2013.

In addition, it has achieved accelerated deleveraging through redemptions and asset sales, including the disposal this week of Springboard, its subprime mortgage book.

PTSB said its impairments continue to reduce. “In line with the trend in previous periods the gradual expansion of net interest margin and net interest income is continuing despite reductions in the yield on tracker mortgages, arising from reduced ECB rates,” it said.

The bank said its underlying arrears levels “continue to be managed down” in each of the loan portfolios within its asset management unit.

Arrears of 90 days or more are down 24.7 per cent from peak and 23.1 per cent in the year to date.

The bank said it expects the provision for impairment charges in the second half to be “significantly reduced” from the levels in the first half of the year.

“The group saw a net provision release in the third quarter,” it added.

Commenting on the update, PTSB chief executive Jeremy Masding said: "This contains further good news on impairment provisions and confirms the progress we are making towards delivering sustainable profitability and achieving key deleveraging goals."