PTSB’s Covid-19 loan loss provisions rise to €87m

Bank continues to monitor impact of Covid-19 on borrowers

Permanent TSB said total new lending for the first nine months of the year was down 23 per cent at €900 million. Photograph: Alan Betson

Permanent TSB said total new lending for the first nine months of the year was down 23 per cent at €900 million. Photograph: Alan Betson

 

Permanent TSB (PTSB) booked a further €17 million of loan loss provisions in the three months to the end of September, as it continued to monitor the impact of Covid-19 on borrowers. This brings the total set aside so far this year to €87 million.

The mortgage lender said in a trading update that its new lending rallied 30 per cent in the quarter from the previous three months, which had marked the height, to date, of the State’s coronavirus lockdown.

Still, total new lending for the first nine months of the year was down 23 per cent at €900 million. The bank’s mortgage market dipped for the whole period to 14.9 per cent, from a rate of 15.2 per cent recorded for the first half.

For the full year, the bank forecasts that new lending will amount to 70 per cent of 2019’s €1.7 billion of business, which is an improvement from its previous guidance of 60 per cent.

Analysts and Davy and Goodbody Stockbrokers said the tone of the update was more upbeat than expected, following similar better-than-expected trading statements from Bank of Ireland and AIB last week.

PTSB, led since June by chief executive Eamonn Crowley, granted 10,700 mortgage payment breaks under an industry-wide initiative between March and September, covering €1.6 billion of loans, or 10 per cent of the total book.

By the end of September, 13 per cent of loans subject to the relief measure remained on payment holidays - equating to 1.3 per cent of the total mortgage portfolio. These figures are in line with what Mr Crowley had predicted a month ago.

Last week, PTSB announced the sale of €1.4 billion pool of boom-time buy-to-let mortgages where borrowers are only required to make interest payments until the loans mature.

The measure, which will ultimately see the loans refinanced with bond market investors, is designed to release €200 million of expensive capital. However, the sale of the performing, if potentially risky, loans will lead to its remaining level of non-performing loans rising to 7.7 per cent from 7 per cent.

“The duration of the Covid-19 pandemic and its impact on the economy remains unpredictable, the recent Government announcement, placing further restrictions on the country presents continued uncertainty,” said Mr Crowley. “However, I am confident of the bank’s ability to remain resilient, to continue to build trust with our customers and compete in our core markets of personal mortgages, personal lending and SME lending.”

Goodbody Stockbroker analyst Eamonn Hughes said his estimate that PTSB will set aside €188 million of provisions for bad loans this year “probably looks a little too high”, given that the bank has only felt the need to take an €87 million charge for the first nine months of the year.