Mortgage cases cast shadow on PTSB return to profit

Permanent TSB yesterday reported an underlying profit of €1m for the first half of 2015.

However, the bailed-out bank’s first profit since 2007 was overshadowed by confirmation that at least 22 of its customers had lost their homes as a result of overcharging by the State-owned bank. In all, close to 1,400 customers were affected.

A scheme to redress customers was announced yesterday, which includes payments of up to €50,000 for those worst hit.

The bank’s wider financial position was boosted in the first half of 2015 by lower levels of mortgage arrears and an increase in new lending.

The latest profit compared to a loss of €171m a year earlier. Exceptional one-off items mainly resulting from a sell-off of non-core assets under a restructuring programme agreed with the European Commission totalled €432m in the period.

That included a €52m financial hit associated with the bank’s repurchase from the State – in reality an early loan repayment – of so-called contingent convertible capital notes.

Shares in Permanent TSB were up 2.7pc at €5.15 after the results were announced. Shares in Permanent TSB were sold at €4.50 each in April when the State cut its stake to 75pc.

The bank is the smallest of Ireland’s three remaining domestically owned banks and last to return to profit after the financial crisis.
“There is still a long way to travel but these results show we are making progress in returning the group to sustainable profitability,” chief executive Jeremy Masding said in a statement.

The mortgage lender will release its full earnings report today. It had to publish its preliminary results a day ahead of schedule because of the announcement of the mortgage redress scheme.

The bank, in which the Government cut its stake to 75pc in April through a €400m share sale, trimmed its operating expenses by 19pc year on year to €147m. Impairment charges fell by 83pc to just €24m, reflecting the shedding of non-core assets and the recovery in house prices that underpin its mortgages.

Net interest margin, a key measure of profitability that the bank aims increase to 1.7pc by 2018, rose by 10 basis points in the first half of the year to 1pc.
Its fully loaded core tier 1 ratio increased to 13.4pc from 12.4pc.

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