TIDMIL0A TIDM73HR
RNS Number : 5408X
Permanent TSB Group Holdings PLC
05 May 2021
7.00 AM 05 May 2021
Permanent TSB Group Holdings plc ('the Bank')
Interim Management Statement - Q1 2021 Update
"The Bank has been extremely resilient since the onset of the
Covid-19 pandemic, evident from business performance which
continues to grow and trend very positively following a strong
quarter four 2020. The Bank's mortgage drawdown volumes in quarter
one were c. 30% higher than the same period last year and mortgage
applications and approvals are also materially ahead versus the
prior year.
We have also recently announced our commitment of EUR50 million
in additional investment in the Bank's technology infrastructure
and digital capability, as well as the launch of our digital
current account. This builds on the existing EUR100 million
multi-year investment programme, as the Bank prepares for a
significant expansion of customers and services over the coming
years, bringing an enhanced digital experience for customers.
We remain focussed on our ambition of becoming Ireland's best
personal and small business bank. As an Irish brand with people and
community at the heart of our approach, we are very confident in
our ability to continue to grow and provide real choice and value
for customers in the Irish market.
Negotiations are continuing with NatWest in relation to
acquiring certain aspects of Ulster Bank's Retail and SME business.
Until these negotiations have concluded there can be no certainty
that an acquisition will occur or on what terms. Any agreement
reached will need to provide certainty and clarity for associated
customers and employees, be supportive to the overall commercial
position of Permanent TSB and value accretive for our shareholders.
"
Eamonn Crowley, Chief Executive
Key Points:
-- Strong new lending of EUR0.4 billion YTD; 22% higher compared to Q1'20
-- Increased mortgage market share to 17.9% ([1]) , up from 14.7% at March 2020
-- Net Interest Margin (NIM) of 1.56%
-- Continued cost discipline with operating costs remaining in line with prior year
-- Customer deposits of EUR18.3 billion, increased 2% (EUR0.3
billion) in the first quarter of 2021
-- Non-performing loans (NPLs) of EUR1.1 billion at 31 March
2021 remain in line with balances reported at December 2020; the
NPL Ratio remains at 7.6%
-- The Bank maintains a strong capital position; fully loaded
CET1 capital ratio of 15.6%, an increase of 50 basis points on
December 2020 CET1 ratio of 15.1%
Business Performance
New mortgage lending of EUR0.4 billion grew by 30% year-on-year
(YoY), outperforming the mortgage market which grew by 7%. Market
share of mortgage drawdowns grew from 15.3% at December 2020 to
17.9% at March 2021 (Q1'20 14.7%). Whilst the mortgage market in
Ireland is estimated to grow 13% from EUR8.4 billion in 2020 to c.
EUR9.5 billion[2] in 2021, it remains competitive. We continue to
manage our offering carefully by maintaining price discipline and
credit underwriting standards.
The Bank is working in partnership with the Strategic Banking
Corporation of Ireland (SBCI), providing EUR50m in low-cost loans
under the Irish Government's Future Growth Loan Scheme for SMEs.
Having received applications significantly in excess of the EUR50m,
we are currently working with these customers as they proceed to
drawdown. While the prolonged level 5 restrictions in Ireland has
had an impact on consumer and business activity, the planned phased
re-opening of the economy over the coming months has increased
consumer and business sentiment with firms being more optimistic,
seeing new opportunities emerging.
We continue to make progress in our multi-year technology and
digital programme, successfully delivering an upgrade to the Bank's
core platforms and making significant improvements to digital
services via the mobile App and web portal. From May 2021 we will
deliver the current account opening via the App, a new digital
process which will allow customers to apply for a current account
online in less than 10 minutes, a seamless on-boarding journey for
customers. The Bank recently announced its intention to increase
its total investment in technology infrastructure and digital
capability by an additional EUR50 million to circa EUR150 million,
which will allow the Bank prepare for a significant expansion of
customers and services over the coming years, bringing an enhanced
digital experience for customers.
Income
Net interest income decreased by 10% in the first quarter of
2021, when compared to the same period in 2020. This reflects lower
income post the performing loan sale transaction (Glenbeigh II) in
quarter four 2020, together with lower treasury income as a result
of the low interest rate environment. The net interest margin of
1.56% includes a 20 basis points cost related to excess liquidity
due to the proceeds received from the performing loan sale
transaction (Glenbeigh II) and elevated customer deposits. The Bank
expects to increase NIM to in excess of 1.60% in 2021, as we
continue to lend and actively manage deposit costs. Fees and
commission income is lower when compared to the prior year, as
re-entering level 5 restrictions had an impact on transactional
activity in January, however since then fees and commissions have
returned to pre Covid-19 levels.
Costs
The Bank continues to maintain tight control over the
administrative cost base while investing in transformation and
absorbing cost inflation. Operating expenses are in line with the
prior year, with lower administrative costs being offset by higher
depreciation & amortisation. The voluntary redundancy scheme,
which concluded in quarter one 2021, will result in circa 300 FTE
exits commencing in May and continuing through the course of
2021.
Balance Sheet
Customer deposits of EUR18.3 billion at 31 March 2021 are EUR0.3
billion higher than 31 December 2020, reflecting an increase in
current accounts to EUR6.1 billion. The loan to deposit ratio of
77% at the end of March 2021 provides the Bank with a strong
liquidity position and significant potential to lend.
The total performing loan book of EUR13.8 billion at 31 March
2021, is in line with the total performing loan book at 31 December
2020 with new business being offset by repayments and redemptions.
Non-performing loans of EUR1.1 billion at 31 March 2021 are in line
with balances at 31 December 2020, where organic cures were offset
by new defaults. We continue to take a prudent approach to
provisioning, maintaining post model adjusted ECL allowances, in
light of the material level of government supports still in place
for businesses and households. Macroeconomic assumptions impacting
credit impairment will be reviewed in quarter two, with any updates
required reflected as part of the half-year credit impairment
process.
The Bank continues to support and engage with all customers who
require assistance as a result of the Covid-19 pandemic. All
Covid-19 mortgage payment breaks have now expired. At the end of
quarter one, 5% of payment break customers (c. EUR100m) have
required further forbearance measures resulting in reclassification
to stage three. The Bank anticipates that a further 4% (c. EUR80m)
of expired mortgage payment break customers are likely to require
additional forbearance measures.
Capital
The Common Equity Tier 1 (CET 1) ratio on a fully loaded basis
increased by 50 basis points to 15.6% at 31 March 2021 compared to
15.1% at 31 December 2020. The movement reflects the benefits from
prudential add backs on intangible assets.
The CET1 ratio on a transitional basis of 17.8% at 31 March 2021
reduced from 18.1% at 31 December 2020, regulatory requirement for
CET1 on a transitional basis is currently 8.94%[3]. The Total
Capital ratio on a transitional basis was 19.8% at the end of March
2021, regulatory requirement for Total Capital on a transitional
basis is currently 13.95%3.
Capital remains strong and having assessed a range of scenarios,
the CET1 ratio will remain above the Bank's minimum regulatory
requirements.
- Ends -
For Further Information Please Contact:
Nicola O'Brien, Head of Investor Relations |
Nicola.obrien@permanenttsb.ie | +353 87 148 2275
Leontia Fannin, Head of Corporate Affairs and Communications |
Leontia.Fannin@permanenttsb.ie | +353 87 973 3143
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] Based on BPFI data as at 31 March 2021
[2] Source: Davy's
[3] Regulatory requirements for both CET1 and Total Capital on a transitional basis excludes P2G
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