PTSB ‘en route to closure’ on €700m of mortgages in arrears

Bank’s full-year results for 2016 show after-tax loss of €266 million

Permanent TSB chief executive Jeremy Masding said the bank had a “bias not to do repossessions”. Photograph: Dara Mac Dónaill

Permanent TSB chief executive Jeremy Masding said the bank had a “bias not to do repossessions”. Photograph: Dara Mac Dónaill


Some €700 million worth of non-performing mortgage loans (NPLs) across 1,560 accounts at Permanent TSB are “en route to closure” through a legal process, the bank’s chief executive Jeremy Masding warned yesterday.

In addition, about 4,000 mortgage account holders have yet to receive a determination from the bank on their untreated loan arrears. This includes a “hard core” of 1,500 account holders who have refused to engage with the lender.

Mr Masding refused to rule “anything in or anything out” in terms of what solutions might be used to deal with these customers, although he had a “bias not to do repossessions”.

“When we set out to deal with these NPLs in 2012, we always believed that there would be residual cohort of cases that couldn’t be treated,” he said. “As part of the next phase of our NPL strategy we will address all the options as we must reduce the overall level of NPLs in the banks.”

Cost base

Mr Masding said the bank would update the market on this issue in a “timely manner”. He said it was important to deal with the matter because the bank had to “keep lots of capital against them [the loans]” and this affects its cost base.

“We have just started this work,” he said.

Mr Masding was speaking on the fringe of Permanent TSB’s full-year results, which showed an after-tax loss of €266 million for 2016. This compared with a loss of €425 million in 2015, a year when it booked exceptional costs of €460 million. The group has not made a profit since 2007.

Last year’s loss included €414 million in exceptional costs related to the completion of its deleveraging programme, with the sale of its remaining businesses in the UK, and other restructuring costs.

The bank, which is 75 per cent owned by the State, said it made a “headline” profit before exceptional items and tax of €188 million. This included a €29 million gain on the sale of its stake in Visa Europe.


It also announced that it wouldn’t be able to pay a dividend based on its 2017 earnings, with the payment pushed out to 2019. This was due to regulatory uncertainties in relation to the treatment of NPLs and risk-weighted assets.

PTSB said its new customer lending increased by 14 per cent year on year to €591 million, while its non-performing loans reduced by €700 million or 11 per cent from December 2015, to €5.9 billion. It achieved a 9.1 per cent share of new mortgage lending last year.

Its fully-loaded core equity tier one ratio remained “robust” at 14.9 per cent.

Some 30,000 new customers were acquired in the period, while PTSB’s net interest margin, excluding State guarantee fees, increased by 0.36 per cent to 1.48 per cent. The group’s adjusted cost-income ratio reduced by nine percentage points to 65 per cent.

PTSB’s annual report showed that Mr Masding received an increase of 11 per cent, or €50,000, in his total remuneration last year. This brought his earnings to €502,000.

The bank’s share price closed down 2.5 per cent at €2.73 in Dublin yesterday.