Permanent TSB made a loss before tax of €36m during the first half of the year as costs at the bank rose nearly €30m year-on-year amidst its €7.6bn acquisition of Ulster Bank's retail, SME and asset finance business.
The loss compares to the €9m deficit this time last year, and the bank said losses during H1 were closer to €2m -- down from €4m a year ago -- when excluding one-time outlays of €36m from its dealings with the exiting NatWest-owned bank.
New lending at PTSB rose 22% to €1bn, including new mortgage lending of €900m (+21%), although the bank's share of the new mortgage shrunk from 17.5% to 16.3% despite the introduction of green and lower-cost fixed-rate mortgages for new customers
Lending to SMEs totalled €70m, a rise of 67% year-on-year, while new consumer term lending of €50m represented an increase of 6%. Total income has risen 7% over the past year, with the lender's underlying net interest margin up two basis points to 1.74%.
PTSB has seen 70,000 new current and deposit account openings in 2022 ahead of the exits of Ulster Bank and KBC Bank Ireland, more than double (+130%) the number of accounts opened with the bank this time last year.
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PTSB staff now work in over 40 Ulster Bank branches, and the bank has launched a number of pop-up branches, to deal with the growing tide of customers switching banks. The bank is also in the midst of a recruitment drive to ensure staffing levels can meet demand.
"We have reached another significant milestone on our transformation journey with the approval of the Competition & Consumer Protection Commission (CCPC) together with the Bank's shareholders to complete the acquisition of approximately €7.6bn of the Ulster Bank Retail, SME and Asset Finance business in the Republic of Ireland," said Eamonn Crowley, CEO of PTSB.
"While subject to regulatory approval, all parties are working towards completing the acquisition of the performing non-tracker residential mortgage business of Ulster Bank in Q4 2022 and it is currently anticipated that the acquisition of the 25 branches, Business Direct (micro-SME) and Lombard (Asset Finance) businesses will complete in Q1 2023, but in all cases no later than 30 June 2023.
"We are continuing to attract tens of thousands of new customers to Permanent TSB, opening c.70k new deposit and current accounts throughout the first half of the year, an increase of c.130% when compared to the same period last year.
"Customers are also increasingly choosing our digital account opening process, with 69% of new current accounts being opened via the Permanent TSB app in June, evidence of the investment the Bank has made to further enhance digital services for customers."
PTSB delivered an operating loss of €11m during H1, up from a €1m loss in H1 2021, while net interest income rose 2% year-on-year, reflecting additional interest income from net loan book growth that offset higher costs of excess liquidity, and few bad loans following a €400m sale late last year.
A net interest margin of 1.41% was nine basis points lower than the 1.5% margin taken by the bank a year ago, again reflecting costs of excess liquidity, with an underlying net interest margin to 1.74%, and the bank expects NIM to remain at that level for the rest of the year during the Ulster Bank transaction.
Income from fees and commissions rose 27% to €19m as transactional activity recovered following the removal of Covid-19 restrictions, but underlying costs rose 12% to €189m, including a higher depreciation charge of €24m.
The bank paid a €9m impairment due to continued house price growth, and the €36m in net exceptional costs consist of €35m related to Ulster Bank, €6m in restructuring costs and €7m in gains from the release of provisions held in relation to legacy deleveraging transactions.
PTSB had total customer deposits of €20bn at the end of June, up €900m from December, as current account balances rose 13% to €8bn, and the bank now has a loan to deposit ratio of 72%.
Its total performing loan book is now €14.1bn, up €200m from December, while non-performing loans total €771m or €46m or 6% lower than at the end of 2021. Looking ahead, PTSB expects total operating costs for the year to increase 14%, ahead of previous guidance of 12%.
