PTSB said its share of the mortgage market crept higher in the second quarter from recent lows as it returned to offering competitive rates, while its pretax profit for the first six months of the year almost tripled to €75 million.
PTSB’s mortgage market share had plunged to 13.4 per cent in the fourth quarter of last year from 15.5 per cent a year earlier, as switching activity in the market declined and the bank refused to compete as aggressively as AIB and Bank of Ireland on pricing. This is because it currently has to set aside more expensive capital against home loans than its rivals.
However, it has since moved to cut rates, resulting in its share edging slightly higher to 13.5 per cent in the second quarter and a “strong pipeline of activity”, PTSB said on Thursday. It comes as the smallest of the three remaining domestic banks in the State is working on reducing the perceived riskiness of its loan book – a legacy of the arrears crisis – in the eyes of regulators on an accounting basis.
PTSB’s surge in profits was helped as the bank released €20 million of bad loan loss provisions, compared to a €9 million charge it took for the same period last year. It also went from booking €29 million of exceptional costs a year ago, relating to the migration of loans acquired from Ulster Bank, to posting a €2 million exceptional gain for the first half of this year.
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Net interest income rise by 4 per cent on the year to €311 million as loans to customers increased to €21.3 billion from €20.1 billion. However, its net interest margin – the difference between the average rates at which it funds itself and lends on to customers – fell by 0.02 percentage points to 2.27 per cent as it upped deposits pricing to win customers. Its deposit base increased by €600 million in the first six months to €23.6 billion.
Interest-bearing deposits grew by €1.1 billion or 21 per cent from December, while non-interest-bearing deposits reduced by €0.5 billion, or 3 per cent, it said.
The bank’s chief executive, Eamonn Crowley, unveiled its future dividend policy, after regulators moved late last year to lift a shareholder distributions blocker that had been imposed during the financial crisis.
“The bank’s ambition is to recommence shareholder distributions over the medium term subject to available surplus capital, regulatory and shareholder approval. It is anticipated the bank will recommence with a modest distribution, building towards a target pay-out ratio of up to circa 40 per cent of [net profit] through the medium term,” it said.
Turning to the outlook, the bank has signalled that it will be releasing loan loss provisions this year compared to previous guidance that it would book a charge.
PTSB agreed in the middle of July to sell to a portfolio of mainly deep-in-arrears mortgages with a gross value of €348 million to a group comprising US private equity giant Apollo and loan servicing firm Mars Capital.
The deal will reduce its non-performing loans (NPL) ratio to 1.7 per cent, below the European average of 1.9 per cent.
The banks ratio had stood at 3.3 per cent in December, and peaked at 28 per cent before the bank sold a number of problem loan portfolios to get its NPLs ratio down to acceptable levels for regulators.
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