Permanent TSB shares rise 3% following trading update

Shares in Permanent TSB rose 3 per cent to €2.60 in Dublin yesterday after reporting a better-than-expected net interest margin (NIM) in a trading update.

PTSB said its NIM, which is a key measure of profitability, increased to 1.44 per cent in the third quarter from 1.43 per cent in the first half of the year.

The bank said that as a result of the sale of its remaining CHL mortgage book in the UK, and its improved NIM in the third quarter, it now expects the group NIM to be “marginally higher” in the second half of the year compared with the first six months.

PTSB said new mortgage-lending drawdowns increased 12 per cent in the third quarter when compared with the equivalent period last year.

Constrained supply

It noted the overall mortgage market size still remained below "normalised levels". The constrained supply of housing in Ireland continued to drive competition in the market, the bank said.

Last month, Permanent TSB agreed the sale of its UK loan book to US fund Cerberus and expects the transaction to be complete by the year end.

“The sale achieves our aim as set out at the time of our capital raise in 2015 of simplifying the group to focus on Irish retail and SME banking; as a consequence the group will equal the core bank going forward.”

Permanent TSB said its loan impairments were down by €300 million compared with the end of last year, and that it continued to execute a strategy of long-term forbearance for customers. “Having completed the non-core deleveraging programme, the group is now focused on strengthening and growing its core retail and SME banking franchise in Ireland while maintaining an active portfolio-management approach to all its businesses,” the bank said.

“Sustainable shareholder value creation continues to be the governing test for any acquisition or further disposals,” it added, while noting challenges remain in the form of constrained housing supply, increasing regulatory costs and the potential negative impact of Brexit.