TIDMIL0A
RNS Number : 2078R
Permanent TSB Group Holdings PLC
27 February 2019
27 February 2019
PERMANENT TSB GROUP HOLDINGS PLC
2018 FULL YEAR RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER
2018
Permanent TSB Group Holdings plc ("PTSB", "the Bank") today
reports its annual results for 2018.
Key Points:
-- Profit Before Exceptional Items and Tax of EUR94 million, an increase of 45% year-on-year
-- Total new lending volumes increased by over 40% to EUR1.5 billion compared to 2017
-- 15.1% Residential Mortgage Market Share, up from 12.6% in 2017 and 9.6% in 2016
-- Net Interest Margin (NIM) reduced marginally by two basis
points to 1.78% from 1.80% at year-end 2017
-- Non-Performing Loans (NPLs) reduced by 68% from EUR5.3
billion in 2017 to EUR1.7 billion at 31 December 2018 with NPL
ratio now at 10%
-- The Bank has strong funding and liquidity positions with System Funding now reduced to zero
-- Proforma Fully Loaded Common Equity Tier 1 (CET1) ratio of
14.0% following the completion of the NPL transactions in February
2019, which included the closure of Project Glas
-- As agreed between the State and the European Commission, the
Bank has now fully exited its 2015 EU Restructuring Plan
Jeremy Masding, Chief Executive, said:
"2018 was a transformational year for Permanent TSB. It was a
year in which the Bank exited its Restructuring Plan, demonstrated
its profitability, grew market share further and dealt decisively
with its legacy NPL issue. In addition, the Bank eliminated the
last of its System Funding that, at one stage in 2011, made up
approximately 40% of its resources.
Accordingly, the Bank proved, beyond doubt, it is a viable, well
capitalised, competitive Retail and SME banking player and, that
its underlying business and franchise are strong.
As we move into 2019, notwithstanding the geopolitical
uncertainties mainly caused by Brexit, we remain positive. We
believe we have a clear vision and strategy, and we are on the
right path towards building an organisational culture that will
deliver sustainable shareholder value and right customer
outcomes".
Business Performance
-- New Current Account openings of 38,000. Current Account
balances increased by 12% to EUR4.1 billion
-- Retail Deposit balances remained broadly in line with 2017
-- Total New Lending volumes grew to EUR1.5 billion in 2018 from EUR1.0 billion in 2017
-- Mortgage Lending grew by 43% (compared to a market growth of
20%) significantly outperforming the market. As a result, mortgage
market share increased to 15.1% compared to 12.6% in 2017
-- Consumer Lending increased by 36% to EUR122 million with the
majority of Personal Loan applications now originating through
Digital and Voice channels
-- The Bank's Net Promoter Score[1] remains within the top 2
Banks in the market through 2018, No.1 in the fourth quarter
-- Digital activity increased 38% year-on-year; greater than
10,000 In App Term Loan applications in Q4 (since Aug '18)
Financial Performance
-- NIM of 1.78% decreased by two basis points from 1.80% in
2017. This is primarily as a result of lower interest income from
the Treasury Asset portfolio and NPLs, offset by improvements in
the cost of funds
-- Total Operating Income of EUR442 million remained broadly in
line with 2017, with lower Net Interest Income being offset by an
increase in Net Other Income which benefited from gains resulting
from the sale of a portion of the Treasury Assets and the closure
of a legacy treasury structure
-- Operating Expenses, including Bank Levy and Regulatory
Charges, of EUR331m remained broadly in line with the prior year.
Strong focus on cost management, with approximately EUR25 million
of savings, has enabled further investment in people, processes and
technology across the Bank
-- Impairment Charge of EUR17 million is reported under IFRS 9.
As permitted, this is not directly comparable to 2017 as the prior
year has not been restated for IFRS 9. The 2018 charge is in line
with expectations
-- Exceptional Items of EUR91 million, primarily consists of
EUR66 million of NPL deleveraging costs and a EUR20 million
provision for legacy tracker related issues
Balance Sheet
Customer Balances
-- Customer Deposits amounted to EUR17.0 billion, unchanged from
December 2017 and represent 87% of Total Funding
-- Gross Loans amounted to EUR16.9 billion, reducing by EUR3.6
billion (18%) from December 2017 primarily due to the deleveraging
of NPLs through Project Glas and Project Glenbeigh
-- Performing Loan book recorded a modest growth in the second half of 2018
-- Loan To Deposit ratio was 93%, improving from 108% in 2017
primarily reflecting a decrease in Net Loans
Non-Performing Loans
-- NPLs reduced by EUR3.6 billion (68%) to EUR1.7 billion
primarily resulting from the successful execution of Projects Glas
and Glenbeigh, together with both the voluntary surrender programme
for Buy-To-Lets and cures. As a result, the Bank's NPL ratio has
significantly reduced to 10% from 26% at 31 December 2017
-- PTSB held approximately 1,200 properties in possession at 31
December 2018, a reduction of 33% compared to 1,800 properties at
31 December 2017. The Bank primarily acquired these properties
through the targeted voluntary surrender programme on the
Buy-To-Let portfolio. Approximately 500 properties were taken into
possession in 2018 and 1,100 properties were sold, with a further
126 sold year to date 2019. We expect to sell the majority of these
properties through various arrangements over the next 12
months.
Funding And Capital
-- ECB Funding has now been reduced to zero
-- Strong funding and liquidity position with Net Stable Funding
Ratio at 120% and Liquidity Coverage Ratio at 160%
-- The Bank's Proforma CET1 ratio, on a Fully Loaded and
Transitional basis, decreased to 14.0% and 17.0% respectively when
compared to 15.0% and 17.1% at 31 December 2017
-- The decrease in these ratios were primarily due to both an
increase in Risk Weighted Assets (RWAs) arising from the ECB's
Targeted Review of Internal Models (TRIM) and the impact of IFRS9
transition
-- However, the negative impacts were offset by capital
generated during the year through profits earned and the release of
RWAs from NPL disposals (an additional 1.7% in CET1 capital on a
Fully Loaded basis)
-- The Bank's reported CET1 ratio at 31 December 2018, on a
Fully Loaded and Transitional basis, was 12.2% and 14.7%
respectively
Guidance And Outlook
-- Performing Loan book is expected to grow in 2019
-- While Gross Interest Income will be lower resulting from the
deleveraging of NPLs in 2018, NIM is expected to remain stable
-- NPL ratio is expected to continue to reduce towards mid-single digit in the medium term
-- Operating Expenses are expected to remain broadly flat,
strong management of the cost base and savings from non-recurring
projects are expected to be utilised for Digital Transformation in
the medium term
-- The mortgage market is expected to grow over the medium term.
While the market remains competitive, efficient distribution and
disciplined pricing, coupled with a strong intermediary
proposition, positions us well for the future
-- The Irish economy remains supportive with strong employment
growth and a growing housing market translating to robust customer
demand for credit. However, the eventual Brexit outcome, and the
impact it would have on European economies, including Ireland,
remains uncertain. We have undertaken steps to mitigate the risks
arising from Brexit and we will continue to monitor developments in
the coming months
Ends
For further information, please contact:
Investors and Analysts Media
Eamonn Crowley Nicola O'Brien Ray Gordon
Chief Financial Officer Investor Relations Gordon MRM
eamonn.crowley@permanenttsb.ie nicola.o'brien@permanenttsb.ie ptsb@gordonmrm.ie
+353 1 669 5354 +353 1 669 5283 +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] Recommendation Net Promoter Score (NPS) - it is an index
ranging from -100 to 100 measuring the willingness of customers to
recommend a company's products or services to others based on the
Red C research report commissioned by the Bank to December
2018.
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END
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