REG - Permanent TSB Group Permanent TSB PLC - Trading Statement

Permanent TSB groupAnnouncement

30/10/2025 07:00

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RNS Number : 4085F  Permanent TSB Group Holdings PLC  30 October 2025

 

 

30th October
2025
 

Permanent TSB Group Holdings plc ('the Bank')

TRADING STATEMENT - Q3 2025 UPDATE

Comment by Eamonn Crowley, Chief Executive:

"The Bank delivered a strong performance in the third quarter, with continued
momentum across all our key business lines. Relative to last year, our deposit
book has grown 7%, our mortgage book is up 4%, and our Business Banking book
is up 11%.

Our new mortgage lending year to date is up 64% to €2.1 billion and we
expect revenue growth to return in the coming quarters as we benefit from
continued loan growth and improved margins. Operating expenses were marginally
lower for the first nine months and are on track to reduce to our full year
target of €525 million. In addition, our liquidity and capital positions
remain strong, with our CET1 ratio at 15.5% at the end of September.

Our guidance for 2025 remains unchanged, as does our intention to restart
dividend payments to our shareholders next year, subject to financial position
and required regulatory and other approvals. We are also confident of our
ability to deliver sustainable returns for our shareholders as evidenced by
our updated return on tangible equity (ROTE 1 ) targets of c. 9% in 2027 and
c. 11% by 2028."

KEY HIGHLIGHTS

(all comparisons 9 months to Sept 2025 vs. 9 months to Sept 2024, unless
stated)

·     Total operating income 4% lower

·     Net interest margin (NIM) of 2.01%

·     Total operating expenses marginally lower and we remain on track to
reduce costs to our full year 2025 target of €525 million

·     Asset quality remains strong with no impairment charge

·     Total gross loans rose to €22.4 billion, up 3% since year end and
4% year-on-year (YoY)

o  New mortgage lending up 64% to €2.1 billion with a new flow share of
over 20% 2 

o  New lending in Business Banking (SME and Asset Finance) up 11%

o  Enhancements to our consumer term lending proposition

·     Customer deposits of €25.4 billion at end September, an increase
of 5% (€1.3 billion) since year end and 7% YoY

·     The Bank maintains a strong capital position with a CET1 capital
ratio of 15.5%

o  Following our recent SREP review, our Pillar Two requirement has reduced
25bps. This equates to 14bps at CET1 level reducing our CET1 requirement to
10.69%.

o  Our IRB mortgage model review is progressing with the Central Bank of
Ireland and we will update the market when appropriate

·     Inaugural €300 million Green Tier 2 bond issued with a coupon of
3.875%

 

UPDATE ON GUIDANCE AND TARGETS

 

·     Our guidance for 2025 remains in line with prior market
communications

·     Reaffirming our 2027 ROTE target of c. 9% with a new medium-term
target of c. 11% for 2028 (prior to any potential benefit from ongoing IRB
mortgage model review process)

FINANCIAL PERFORMANCE

 (all comparisons 9 months to Sept 2025 vs. 9 months to Sept 2024 unless
stated)

Income

 

Net interest income for the first nine months reduced 6% as the effects of
lower interest rates on our margin offset higher average interest earning
assets. The net interest margin (NIM) was 2.01% for the first nine months and
compares with 2.02% in the first half of 2025.

 

The Bank's NIM has stabilised as the carryover effect of falling ECB rates on
our assets is offset by an easing in the average cost of term deposits, and a
benefit from maturing fixed rate mortgages refinancing onto higher rates.
Given this, we expect NIM to exceed 2.00% for the year as guided.

 

Net fees and commissions were up 9% in the first nine months and as signalled
previously, this growth primarily reflects one-off factors. In addition, net
other income contributed €7 million (€4 million equivalent in 2024) of
non-recurring revenue primarily due to favourability on foreign currency
associated with customer transactions and a hedging gain related to our Tier 2
liability management exercise. On a combined basis, total non-interest income
was up 14% YoY.

 

Operating expenses

 

Total operating expenses were marginally lower in the first nine months with
underlying costs ex regulatory charges up c. 1% reflecting a temporary
increase in investment costs in the quarter. 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. 77% in the first nine months and the Bank remains
focused on reducing this in the coming years.

 

The Bank's voluntary severance scheme when combined with management actions is
expected to reduce staff numbers by c. 300 in 2025 (excluding graduate
intake). Staff numbers at the end of September were 3008, a reduction of 239
since year end.

 

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. Consequently, the Bank recorded a nil impairment
charge in the first nine months. Non-performing loans at end September 2025
were €3m lower relative to the half year point and represented c. 1.7% of
gross loans.

 

The Bank will continue to closely monitor the impact of US trade tariffs on
the Irish economy, however notwithstanding heightened uncertainty, PTSB has
seen no deterioration in its asset quality and remains well provisioned.  As
previously indicated, the review of our IFRS9 models continues.

 

BALANCE SHEET & BUSINESS PERFORMANCE

Customer loans

 

Total gross loans on the balance sheet rose to €22.4 billion at end
September 2025, up 3% year to date (YTD) and 4% YoY.

 

Our share of new mortgage drawdowns over the first nine months was over 20%,
which is within the range that we are targeting. Green mortgage lending
accounted for 44% of all new loans in the first nine months as we supported
customers in their transition to a low-carbon economy.

 

We recently announced reductions of 0.15%-0.2% on a range of fixed-rate
mortgage products where the loan to value is between 80%-90%. This will help
us remain competitive in the first-time buyer market, the segment which makes
up the majority of new mortgages being written in Ireland currently.

Meanwhile we continue to make progress in diversifying our income, with new
lending in Business Banking, which includes both SME and Asset Finance
lending, up 11% YTD and growth in the book also of 11% YoY.

 

We also announced major enhancements to our consumer term lending proposition
which demonstrates our ambition to grow our consumer finance book
significantly in the coming years. The new rates are amongst the most
competitive in the market and include a market-leading rate of 5.99% for loans
from €25,000. The new proposition also provides a more simplified and easier
to follow loan offering which customers can easily assess and apply for, and
the digital application experience for PTSB customers is transformed.

 

Funding and liquidity

 

Customer deposits were €25.4 billion at end September 2025, up 5% YTD
(€1.3 billion) or 7% YoY. Following a very strong performance in H1,
deposit growth slowed in the quarter. This was in line with expectations with
term deposits and current accounts both seeing modest growth in the quarter.

 

We recently announced further changes to our term deposit rates which took
effect from 1 October 2025. The Bank's 1-year and 6-month fixed-term deposit
accounts decreased by 0.25%, to 2.00% and 1.25% respectively. The Bank's
5-year fixed-term deposit increased by 0.50% to 2.00%, and the 3-year
fixed-term deposit increased by 0.40% to 2.00%.

 

Our liquid assets were €7.3 billion at end September 2025 up from €6.5
billion at year end, with 69% of this representing debt securities.

 

The loan to deposit ratio of 87% and liquidity coverage ratio of 283% at end
September 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 September 2025 remains
strong at 15.5% and is comfortably above our regulatory minimum. The Bank's
leverage ratio at end September 2025 was 6.7%, compared with 7.1% at December
2024 and remains very strong for a bank with our residential mortgage
exposure.

 

Following our recent SREP assessment, our Pillar Two requirement has been
reduced by 25bps. This equates to 14bps at CET1 level reducing our CET1
requirement from 10.83% to 10.69%. This is a welcome development and reflects
the Bank's improving risk profile.

 

We remain 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. In this regard,
we were particularly pleased with the issuance of our €300 million Green
Tier 2 bond in October which priced with a coupon of 3.875% and a spread c.
165bps lower than our previous Tier 2 issuance. The transaction was a record
11.5 times oversubscribed, the highest recorded level for a European bank euro
denominated Tier 2 bond. We also had a very successful take-up on our tender
offer for our €250 million Tier 2 notes that had a call date in May 2026.

OUTLOOK AND MEDIUM-TERM TARGETS

 

Trading conditions remain positive and our guidance for 2025 remains in line
with prior market communications. As regards our IRB model application, this
is progressing with the Central Bank of Ireland and we will update the market
when appropriate.

 

Today, we are also issuing an update to our medium-term financial targets,
extending them out to 2028. In summary, our 2027 ROTE target of c. 9% remains
unchanged and this is now expected to rise to c.11% in 2028.

 

The principal drivers behind ROTE expansion in 2028 are: income growth driven
by higher volumes and NIM widening; a decline in cost/income ratio; and
further benefits from refinancing the Bank's debt stack. As previously
indicated, these targets are based on current capital models. They also assume
the Bank returns to paying dividends each year, subject to financial position
and required regulatory and other approvals, starting from a modest base and
building to a 40% payout ratio over time.

 

Updated medium-term targets

                    2027         2028
 NIM %              2.20%-2.25%  >2.30%
 Cost/Income ratio  c. 62%       <60%
 Cost of risk       <20bps       20-25bps
 ROTE %             c. 9%        c. 11%

 

***

 

Analyst conference call

 

Eamonn Crowley, CEO and Barry D'Arcy CFO will host a conference call today at
10.00 Irish Time/GMT for 30 minutes.

To participate in the Conference Call, register using the link below:

https://www.netroadshow.com/events/login/LE9zwo3jkZc7aP4NPdoxhrgNaTlnCwqDzoG
(https://www.netroadshow.com/events/login/LE9zwo3jkZc7aP4NPdoxhrgNaTlnCwqDzoG)
 

Alternatively, operator Assisted Dial-In:

Ireland (Local): 01 6917842

United Kingdom (Local): +44 20 3936 2999

United Kingdom (Toll-Free): +44 808 189 0158

Global Dial-In Numbers
(https://url.de.m.mimecastprotect.com/s/l--rCDqGD2F55qO5S5hZujh92o?domain=netroadshow.com)
 

Access Code: 086492

 

Replay will be available until Thursday, November 06, 2025 at:

UK (Local): 020 3936 3001

USA (Local): 1 845 709 8569

Access Code: 823873

 

 
***

 

For further information please contact:

 Scott Rankin                                                      Triona Carroll

 Head of 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  Return on tangible equity is profit attributable to shareholders (excl.
all exceptional items) divided by notional equity (average RWAs * CET1 of c.
14%)

 2  Based on BPFI data for Q1-Q3 2025

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