TIDMIL0A TIDM73HR
RNS Number : 0608Z
Permanent TSB Group Holdings PLC
29 August 2018
0700hrs 29 August 2018
PERMANENT TSB GROUP HOLDINGS PLC
2018 HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018
Permanent TSB Group Holdings plc ("PTSB", "the Bank") today
reports its half year results for 2018.
Key Points:
-- Profit Before Tax of EUR57 million increased by 33% compared
to EUR43 million for the first half of 2017
-- New lending volumes increased by 50% to EUR585 million compared to the first half of 2017
-- Residential Mortgage Market Share increased to 13.8% from 12.6% for full year 2017
-- Net Interest Margin (NIM) reduced marginally by three basis
points to 1.77% from 1.80% at year-end 2017
-- Non-Performing Loans (NPLs) reduced by EUR0.2 billion to EUR5.1 billion in the first half
-- Sale of EUR2.1 billion of NPLs announced in July which, when
completed in Q4, will reduce the NPL ratio down to 16% from 25%
-- Fully Loaded Common Equity Tier 1 (CET1) ratio of 13.4%. The
expected final outcome of the ECB's TRIM exercise and the
completion of Project Glas sale are expected to decrease the ratio
by 50 basis points in the second half.
Jeremy Masding, Chief Executive, said:
"In the first half of 2018, we continued to maintain strong
momentum in new lending recording close to a 50% increase
year-on-year. We have increased our market share in mortgage
lending while maintaining pricing discipline and making process
improvements to deliver a better customer experience. This has been
achieved against the backdrop of an increasingly competitive
market.
Whilst our underlying business continued to show progress, we
have also made significant progress in reducing the level of NPLs
following the announcement of a EUR2.1 billion sale at the end of
July. In addition, we continue to maintain capital levels
comfortably above the required regulatory minimum which positions
us well for investment, profitable growth and the continued
reduction in NPLs over the medium term.
We are very close to completing the rebuilding of the Bank so
that we can focus solely on competing in the Retail and SME
markets. In summary, our goal is that by early 2019 we will have
built a Retail and SME Bank that is focused on delivering the right
outcomes for its customers and quality earnings for its
shareholders - the Bank Of Choice."
Business & Financial Performance
-- Total New Lending volumes grew by 50% to approximately EUR585 million.
o Mortgage Lending grew by 51% which outperformed the market
growth of 22%. Mortgage market share increased to 13.8% compared to
12.6% for full year 2017.
o Consumer Lending increased by 42% to EUR61 million. 54% of
Consumer Lending payouts were from Voice and Digital channels.
-- NIM decreased by three basis points to 1.77% from 1.80% at
year-end 2017. This was primarily due to reduced income from the
sale and maturities of certain Treasury Assets and reduction in
income recognised from NPLs. The second half NIM trajectory is
expected to remain stable.
-- Other Income of EUR41 million comprises Net Fees and
Commissions of EUR19 million, a Net Trading Gain of EUR9 million
and Other Operating Income of EUR13 million. Other Income increased
by EUR23 million compared to the first six months of 2017. This is
mainly due to a EUR10 million gain as a result of the closure of
certain derivative contracts during the first half and a EUR15
million gain as a result of the sale of a portion of the Treasury
Asset portfolio.
-- Operating Expenses (excluding Bank Levy and Regulatory
Charges) increased by EUR14 million to EUR158 million. This is
mainly due to an additional provision of EUR15 million in relation
to legacy mortgage issues.
-- Regulatory Charges amounted to EUR18 million and remained
unchanged from 2017. Bank Levy of EUR23 million expected to be paid
in the second half of the year.
-- Impairment Charge amounted to EURnil million (under IFRS 9)
reflecting stable economic conditions. Impairment Charge for the
first half 2017 amounted to EUR6 million.
Balance Sheet
Customer Balances
-- Customer Deposits amounted to EUR17.1 billion (86% from
Retail Deposits and Current Accounts), remaining stable from
December 2017 and representing 83% of Total Funding.
-- Gross Loans amounted to EUR20.3 billion (including NPLs of
EUR2.1 billion which were held for sale at the end of first half)
reducing by EUR0.3 billion (1%) from December 2017. This was
primarily due to repayments and redemptions exceeding new lending
in the period. The Bank expects to return to net lending growth in
2019.
Non-Performing Loans And Properties In Possession
-- NPLs reduced by EUR0.2 billion to EUR5.1 billion from
December 2017 primarily due to Cures and the targeted Voluntary
Surrender programme undertaken on the Buy-To-Let portfolio.
-- On 31 July, the Bank announced the sale of EUR2.1 billion of
NPLs which, when complete, will further reduce the Bank's NPLs to
EUR3.0 billion. As a result, the NPL ratio will fall significantly
to 16%. The transaction is expected to complete in the fourth
quarter this year.
-- PTSB continue to manage the remainder of its NPL portfolio
and is committed to reducing the NPL ratio to single digit in the
medium term, as per regulatory guidelines, whilst protecting
capital.
-- PTSB currently holds approximately 1,900 properties in
possession at the end of July 2018 which it primarily acquired
through the targeted voluntary surrender programme on the
Buy-To-Let portfolio in 2017. Approximately, 500 properties were
sold in the last 18 months and over 350 properties year-to-date to
July 2018. We expect to sell the majority of these properties
through various arrangements over the next 12 months.
Funding
-- Strong liquidity position with Net Stable Funding Ratio at
114% and Liquidity Coverage Ratio at 156%.
-- MREL indicative target set at 25.8%; issuances manageable at
approximately EUR1 billion over the next three years.
Capital
-- Transitional CET 1 Ratio decreased to 16.2%(1) from 17.1% at
31 December 2017 whilst the Fully Loaded Ratio decreased to
13.4%[1] from 15.0%. This is mainly due to the partial embedding of
TRIM and transition to IFRS 9 (Fully Loaded only) offset by H1
Profit.
-- Risk Weighted Assets (RWAs) increased to EUR11.2 billion from
EUR10.6 billion at the end of 2017 mainly due to partial embedding
of TRIM (c.EUR0.7 billion) offset by a reduction in the loan
book.
-- Subsequent to 30 June 2018, and following the sale of EUR2.1
billion of NPLs, RWAs of approximately EUR1.3 billion will be
derecognised at completion.
TRIM Update
-- The Bank has received communication from the ECB indicating
the conclusion of the bilateral Targeted Review of Internal Models
(TRIM) exercise. Based on the communication received, it is
expected the implementation of the review will increase RWAs by an
incremental approximate EUR1.7 billion in the second half bringing
the total impact from TRIM to approximately EUR2.4 billion in
2018.
-- Consequently, the pro forma CET1 ratio, after including the
impacts from completion of NPL sale (Project Glas) and incremental
TRIM, will decrease by approximately 50 basis points.
Medium Term Target
-- During July 2018, the Central Bank of Ireland announced an
increase in the Countercyclical Capital Buffer (CCyB) from 0% to
1.0% effective from July 2019. As a result, the Bank will be
required to hold an additional capital buffer equivalent to 1% of
its RWAs from that date. Despite this, the Bank's medium term
target remains unchanged at 12% on a Fully Loaded basis.
-- The Bank remains confident that it is adequately capitalised
for profitable growth and to deliver the NPL reduction
strategy.
Ends
For further information, please contact:
Investors and Analysts Media
Eamonn Crowley Rajesh Manirajan Ray Gordon
Chief Financial Officer Head of Investor Relations Gordon MRM
eamonn.crowley@permanenttsb.ie rajesh.manirajan@permanenttsb.ie ptsb@gordonmrm.ie
+353 1 669 5354 +353 1 669 5622 +353 87 241 7373
Note on forward-looking information:
This Announcement contains forward-looking statements, which are
subject to risks and uncertainties because they relate to
expectations, beliefs, projections, future plans and strategies,
anticipated events or trends, and similar expressions concerning
matters that are not historical facts. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors, which may cause the actual results, performance or
achievements of the Bank or the industry in which it operates, to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. The forward-looking statements referred to in this
paragraph speak only as at the date of this Announcement. The Bank
undertakes no obligation to release publicly any revision or
updates to these forward-looking statements to reflect future
events, circumstances, unanticipated events, new information or
otherwise except as required by law or by any appropriate
regulatory authority.
[1] Includes profits earned in H1 2018 which are subject to
regulatory approval.
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END
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