PTSB first half profit falls 50% amid loan sales, tracker fine

Permanent TSB’s (PTSB) pre-tax profit fell by 50 per cent in the first six months of the year, as the bank lost income on restructured loans sold late last year and it had to put aside additional money to cover a Central Bank fine relating to the tracker mortgage scandal.

Profit for the period came to €28 million, PTSB said in a statement on Thursday. That compares to €57 million reported by the company for the same period last year.

PTSB, led by chief executive Jeremy Masding, off-loaded €3.4 billion of non-performing loans (NPLs) last year, with €1.3 billion of these assets comprising restructured loans making cash payments that ended up being refinanced on the international bonds market in November.

The group’s net interest income reduced 6 per cent on the year, from €193 million, as a result.

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The bank’s profits were also dented as it took a €5 million charge against impaired loans during the reporting period, though its NPLs ratio remained broadly unchanged at 10 per cent from the end of December. It aims to cut the level in half over the medium term. Further loan sales are expected.

Still, performing loans income grew by 3 per cent, as PTSB continued to manage its funding costs, resulting in its net interest margin - the difference between the average rates at which it raised finance and lends on to customers - rising by 0.05 percentage points to 1.82 per cent.

Tracker mortgages

PTSB was fined €21 million in May for it is handling of the tracker mortgage issue, which resulted in more than 2,000 of its customers being denied their right to a cheap mortgage linked to the European Central Bank (ECB) rate as far back as 2008. The bank said that it set aside a final €3 million to cover the fine this year, having previously provided for most of the penalty.

The bank, which has offered buy-to-let borrowers in default a chance to surrender their properties in recent years in exchange for having the shortfall on their loans written off, sold 1,400 units in its possession over the last 18 months, it said. At the end of June, it continued to hold 882 properties in possession, with 372 of these currently for sale.

PTSB’s so-called other income line, mainly relating to gains on property sales and treasury activities, fell by 45 per cent on the year to €12 million.

New mortgage lending grew by 18 per cent at the bank in the first half, outperforming market growth of 11 per cent. PTSB’s share of drawdowns in the period came to 14.7 per cent.

"Whilst the mortgage market in Ireland continues to grow steadily, it remains competitive. We continue to manage our offering carefully by maintaining price discipline and credit underwriting standards," it said.

Mr Masding said that PTSB’s “underlying franchise and business remains strong, and well positioned to capitalise on market opportunities.”