The bank achieved full-year profitability in the previous year, marking a significant milestone for the institution. This positive outcome has greatly boosted the confidence of the CEO, Eamonn Crowley, who expressed optimism that the bank is closer to being able to distribute dividends to its shareholders for the first time since the financial crisis in 2008.
Crowley remarked, “People and businesses are starting to recognize our brand and reputation,” following the recent announcement of the bank’s half-yearly results. The CEO expressed hope that the positive results would encourage more customers to choose their services, stating, “Our intention is to actively engage in business and we anticipate an increase in customer applications. We believe there is potential to divert business from other lenders, and we are now effectively competing in that market.”
Dividend payments were prohibited ever since PTSB (formerly Irish Life & Permanent) was taken over by the government in 2011, necessitating a €4 billion bailout. Presently, the State owns a majority stake of 57% in the bank after a recent share sale.
Last year, PTSB acquired €5.2 billion of performing Ulster Bank mortgages, and more recently, the bank completed the acquisition of a portion of Ulster Bank’s micro-SME loans and its Lombard Asset Finance business. The integration of Ulster Bank’s assets resulted in a 67% increase in PTSB’s lending to SMEs.
Crowley emphasized the bank’s desire to be recognized as a viable option for business lending, stating, “We aim to be included in the consideration for prospective business loans.” He also highlighted that the bank’s results demonstrate its ability to generate sustainable returns, a crucial factor for the future issuance of dividends, although he refrained from providing a specific timeline for dividend distribution. He stated, “We are closer to the end of this journey than the beginning, but sustainable profits have to materialize, and today’s results prove our capability to generate sustainable returns.”
Regarding the government’s stake in the bank, Crowley stated that he would “wait and see” if further share sales were planned. The recent sale in June, which reduced the State’s ownership to just over 57%, was viewed as a positive development by the CEO. He added, “The government will decide when and if to proceed with additional share sales. It remains their choice.”
Permanent TSB reported a pre-tax profit of €26 million, a significant improvement compared to the pre-tax loss of €36 million in the same period of the previous year. The increase in net interest income by 92% year-on-year to €298 million, attributed to interest rate hikes and the acquisition of Ulster Bank assets, was a key driver of this growth.
The bank also achieved significant progress in its lending activities, with “strong” new lending totaling €1.4 billion in the period, a 36% increase compared to the previous year. The market share for mortgages rose to 23.1% from 16.3% in June 2022. Additionally, the bank observed a 20% increase in new consumer term lending, with 80% of these loans originating from their digital channels. However, SME lending experienced a decline by 14% in the first half of 2023, with the total SME loan book reaching approximately €1 billion following the integration of Ulster Bank’s assets.
The bank also saw improvements in its non-performing loans, recording a €71 million decrease compared to June 2022, bringing the total value to €700 million. Furthermore, the bank’s underlying net interest margin, a crucial indicator of profitability, increased by 88 basis points compared to the same period last year, reaching 2.29c. However, underlying costs also witnessed a 21% rise to €228 million, attributed to the expansion of the bank’s operations and the associated increase in staff and customer numbers.
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