Permanent TSB makes decent progress through third quarter

Permanent TSB Group updated the market on its trading for the nine months ended 30 September on Wednesday, reporting that its business and financial performance had continued to trend in line with market expectations, as it maintained profitability, retained capital above regulatory requirements, reduced non-performing loans, and increased new lending.

The London-listed firm said that in September, it completed the inaugural €300m MREL issuance, which it said positioned its well to meet its overall requirements by January 2021.

It noted that both Moody's and DBRS had upgraded the bank's credit ratings in 2019, representing “significant progress”, adding that it had now returned to investment grade status for the first time since 2011.

“We continue to make progress on our key priorities, improving our risk profile and being positioned well to deliver for our customers and shareholders,” the Permanent TSB board said in its statement.

Total new lending volumes for the period increased 19% year-on-year to €1.2bn, which the board said supported the bank's performing loan book growth in the third quarter.

Its market share of new mortgage lending was 15.5% for the year-to-date, up from 14.7% at both the end of the first half and the third quarter of 2018.

Net interest margins were 1.82%, which was in line with the first half and up five basis points on the third quarter of the prior year.

Non-performing loans reduced by 35% to €1.1bn at the end of September, from €1.7bn at the end of June, following the sale of €0.5bn of non-performing loans - the Glas Tranche II - on a capital accretive basis.

Permanent TSB’s non-performing loan ratio was now reduced to below 7%, from a peak of 28%, with the bank saying it remained committed to reducing the ratio to a mid-single digit in the medium term.

The company’s pro forma common equity tier 1 ratio, on a fully-loaded basis, was reported to be 14.7%, post the sale of the Glas Tranche II.

“[The] sale of properties in possession [is] progressing strongly, with [around] 1,700 properties sold into the market since 2017,” Permanent TSB added in its statement.