REG - Permanent TSB Group - Trading Statement

Permanent TSB groupAnnouncement

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RNS Number : 7167G  Permanent TSB Group Holdings PLC  30 April 2025

30 April
2025
 

Permanent TSB Group Holdings plc ('the Bank')

TRADING STATEMENT - Q1 2025 UPDATE

Comment by Eamonn Crowley, Chief Executive:

"PTSB recorded a strong start to 2025 with all key financial metrics in Q1
tracking well against plan.

Our core mortgage business entered the year with a strong pipeline and we
recorded a share of new mortgage drawdowns in Q1 of over 20%, continuing the
momentum we showed through 2024. Meanwhile new Business Banking lending was up
25% year-on-year, with our SME business having a particularly good start to
the year.

We are translating our refreshed strategy into action and continue to build
our competitive presence as the Challenger Bank in the Irish market.

Our funding and capital positions remain strong and notwithstanding heightened
uncertainty associated with the global picture on international trade and how
this might impact Ireland, we remain confident about the prospects for our
business in 2025."

KEY HIGHLIGHTS (all comparisons Q1 2025 vs. Q1 2024 unless otherwise stated)

·     Total operating income c. 5% lower

·     Net interest margin (NIM) of 2.03% for Q1

·    Total operating expenses down c. 4% or down c. 1% on an underlying
basis. We remain on track to meet our FY 2025 target of €525 million

·     Asset quality remains strong with a €1 million impairment charge
in Q1

·     Market share of new mortgage lending over 20% 1  (#_ftn1) in Q1
versus 16.4% for FY 2024

·     New Business Banking lending (SME and Asset Finance) up 25%

·     Total gross loans rose to €22.0 billion up c. 1% since year end

·     Customer deposits of €24.9 billion, an increase of c. 3% (€0.8
billion) since year end and c. 7% YoY

·     The Bank maintains a strong capital position with a CET1 capital
ratio of 15.3% 2  (#_ftn2)

·     On track to submit our IRB model application to the Central Bank of
Ireland in Q2

FINANCIAL PERFORMANCE (all comparisons Q1 2025 vs. Q1 2024 unless otherwise
stated)

Income

Net interest income in Q1 has reduced 9% as the effects of lower interest
rates on our margin offset higher average interest earning assets. The net
interest margin (NIM) in Q1 was 2.03% which compares with 2.31% for the
equivalent period last year.

 

The reduction in NIM primarily reflects the impact of lower interest rates
across our lending and treasury assets and higher term deposit balances. NIM
is 7bps lower than the Q4 2024 figure of 2.10%, driven by ECB rate cuts and
the mortgage rate reductions announced by the Bank in January. Recent deposit
rate reductions by the Bank which became effective from April 2(nd) will help
negate the effect of further downward movements in base rates. As such we
still expect NIM to exceed 2.0% for the year.

Net fees and commissions were up 38% in Q1. As signalled previously, while
this reflects positive momentum in underlying activity it is primarily due to
last year's changes in current account pricing.

Operating expenses

Total operating expenses were down c. 4% in Q1 with underlying costs ex
regulatory charges down c. 1%. Critically we remain on track to meet our cost
target of €525 million for the year. The cost income ratio on an underlying
basis was c. 76% in Q1 compared with 74% in FY 2024.

 

The Bank's voluntary severance scheme is at an advanced stage and when
combined with management actions and natural attrition, we continue to expect
a reduction in staff numbers of c. 300 in 2025.

Other cost reduction initiatives as part of our Strategic Business
Transformation (SBT) programme such as offering a fully online mortgage sales
and service journey are progressing and will enable us to both improve
customer and colleague experiences while continuing to reduce costs in
absolute terms.

Asset quality

Economic conditions in Ireland are supportive of our business and asset
quality remains strong. Non-performing loans at end March 2025 were unchanged
relative to the year end and represented c. 1.7% of gross loans. The Bank
booked a small €1 million impairment charge in Q1.

The Bank will continue to closely monitor the impact of US trade tariffs on
the Irish economy, however notwithstanding heightened uncertainty, PTSB is
well provisioned and coming into 2025 had modelled more conservative
impairment scenarios than consensus.

BALANCE SHEET & BUSINESS PERFORMANCE

Customer loans

Total gross loans on the balance sheet rose to €22.0 billion at end March
2025 up c. 1% relative to the €21.8 billion at end December 2024. Growth was
c. 2% YoY on a like-for-like basis when adjusted for Glas III loans 3 
(#_ftn3) sold in July 2024. As drawdowns in H2 are typically stronger than H1,
this positions the Bank well for an acceleration in YoY loan growth through
2025.

Our share of new mortgage drawdowns in Q1 was over 20%, building on the
momentum we showed through last year and up significantly when compared with
Q1 2024 (13.4%). Green mortgage lending accounted for 41% of all new loans in
the quarter as we supported customers in their transition to a low-carbon
economy. The reduction in mortgage fixed rates that were announced in
mid-January continues to support our effort to maintain our competitive
presence in the market while securing a very high level of retentions on our
back book.

Meanwhile we continue to make strong progress in diversifying our income with
new lending in Business Banking up 25% to €100 million in Q1, with our SME
business having a particularly good start to the year.

Funding and liquidity

Customer deposits of €24.9 billion at end March 2025 were €0.8
billion or c. 3% higher than end December 2024 and c. 7% higher YoY. This
underpins the Bank's position to support its lending ambitions throughout the
remainder of 2025. The growth recorded in Q1 was largely in retail term
deposits, although we are encouraged by the modest increase we also saw in
current account and corporate balances as the Bank successfully acquired new
customers.

We recently announced a 0.5% reduction in rates on certain personal and
business fixed term and variable deposit products, including our one-year
fixed term product which reduced from 2.75% to 2.25%. These were the first
changes to PTSB's deposit rates since May 2024.

The loan to deposit ratio of 87% and liquidity coverage ratio of 270% at end
March 2025 provide the Bank with a strong liquidity position and a secure
funding source for future growth in lending volumes.

Capital

The Bank's Common Equity Tier 1 (CET1) ratio at end March 2025 remains strong
at 15.3% and is comfortably above our regulatory minimum. This is in line with
the pro-forma figure disclosed for 1(st) January 2025 which includes the
expected application of CRR3 and compares with 14.7% at end December 2024.

The Bank's leverage ratio at end March 2025 was 6.9%, compared with 7.1% at
December 2024 and remains very strong for a bank with our residential mortgage
exposure.

As previously indicated, we are committed to optimising our MREL and capital
stack over the coming years given the potential for efficiencies this could
generate, particularly given that the Bank has returned to investment grade
status.

OUTLOOK

The Bank has had a positive start to the year and guidance remains in line
with prior market communications.

As regards our IRB model application, as previously indicated we are on track
to submit our application to the Central Bank of Ireland in the second
quarter.

 

- Ends -

 

For further information please contact:

 Scott Rankin                                                      Triona Carroll

 Investor Relations                                                Corporate Affairs & Communications

 Email: scott.rankin@p (mailto:scott.rankin@ptsb.ie) tsb           Email: triona.carroll@p (mailto:triona.carroll@ptsb.ie) tsb
 (mailto:scott.rankin@ptsb.ie) .ie (mailto:scott.rankin@ptsb.ie)   (mailto:triona.carroll@ptsb.ie) .ie (mailto:triona.carroll@ptsb.ie)

 Phone: +353 87 001 0504                                           Phone: +353 87 069 6348

 
 

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  (#_ftnref1) Based on BPFI data for Q1 2025

 2  (#_ftnref2) Includes application of CRR3 impact effective 1 January 2025

 3  (#_ftnref3) Glas III, a portfolio of non-performing loans were included in
loans until June 2024 when they were moved to held for sale

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