TIDMIL0A TIDM73HR
RNS Number : 1244E
Permanent TSB Group Holdings PLC
26 February 2020
0700hrs 26 February 2020
PERMANENT TSB GROUP HOLDINGS PLC
2019 FULL YEAR RESULTS FOR THE TWELVE MONTHSED 31 DECEMBER
2019
Permanent TSB Group Holdings plc ("PTSB", "the Bank") today
reports its annual results for 2019.
Business and financial performance continues to trend in line
with market expectations as the Bank increases p rofitability,
grows new lending, maintains cost discipline, retains capital above
regulatory requirements and reduces Non Performing Loans
(NPLs).
The Bank continues to support its customers by delivering net
mortgage growth for the first time in over a decade. In addition,
it has successfully grown other products and services, including an
enhanced digital offering. The Bank continues to make progress on
key strategic priorities, improve its risk profile and position
itself strongly to deliver for customers and shareholders.
Key Points
-- Profit Before Tax of EUR42 million, an increase of EUR39 million year-on-year.
-- Total New Lending volumes increased by 14% year-on-year to
EUR1.7 billion, supporting the Bank's performing loan book growth
in 2019.
-- Market Share of New Mortgage Lending of 15.5%, up from 15.1% at December 2018.
-- Net Interest Margin (NIM) of 1.80%, increased by two basis
points from 1.78% at year-end 2018.
-- Non-Performing Loans (NPLs) reduced by 38% to EUR1.05 billion
at December 2019; NPL Ratio is now 6.4% and the Bank remains
committed to a mid-single-digit NPL ratio.
-- Pro-forma Common Equity Tier 1 (CET1) ratio (on a Fully Loaded basis) of 15.0%(1) .
-- Pillar 2 Requirement (P2R) remains unchanged at 3.45% and the dividend restriction remains.
-- Sale of Properties in Possession is progressing strongly,
with c. 400 properties in stock at 31 December 2019.
1. CET1 Ratio Post Glas II Completion in February 2020
"Our strong performance in 2019 reflects the attractiveness of
our customer offering and the progress we are making in growing our
business while managing costs rigorously. The Bank continues to
outperform the market for new mortgage lending and thereby
increasing its market share; The Bank's rewards-based Explore
current account continues to attract new customers; and its
Personal Term Lending and SME Lending continue to grow.
Our ongoing digital investment programme is delivering
significant benefits, with customers responding very positively to
the range of digital enhancements we have introduced. There is much
more to come and the Bank has a strong platform to deliver
sustainable shareholder value as the Bank of Choice in the Irish
retail and SME banking market."
Jeremy Masding, CEO
Business Performance
-- New Current Account openings of 34,000; Current Account
balances increased by 10% to EUR4.7 billion.
-- Retail Deposit balances remained broadly in line with 2018.
-- Total New Lending volumes grew 14% to EUR1.7 billion in 2019 from EUR1.5 billion in 2018.
-- New Mortgage Lending grew by 13% year-on-year to EUR1.5
billion, outperforming market growth of 10%.
-- As a result, full year 2019 market share of drawdowns was
15.5%. Whilst the mortgage market in Ireland continues to grow
steadily, it remains competitive. The Bank continues to manage its
offering carefully by maintaining price discipline and credit
underwriting standards.
-- Personal Term Lending grew by 15% year-on-year to EUR140
million. Digital adoption is improving customer experience; for
example, Term Lending through our direct channels is up 31%
year-on-year, representing more than 35k online Term Loan
applications. SME lending also grew year-on-year, albeit from a low
base.
-- The Bank now has more than 360k active customers using its
mobile App for their banking requirements; an increase of 44% on
2018 with more than 63 million successful account log-ins. In
August 2019, the Bank launched end-to-end Credit Card applications
through the mobile App providing a third channel of choice.
-- The Bank's Net Promoter Score is joint 1st in the market for
2019, with Customer Care and Value being the positive drivers.
Financial Performance
-- Profit Before Tax of EUR42 million, an increase of EUR39
million year-on-year, with Underlying Profit Before Tax of EUR74m,
meeting the objective of improving quality of earnings.
-- NIM of 1.80% increased by two basis points from 1.78% in
2018. Lower interest income from the Treasury Asset portfolio and
the deleveraging of NPLs has been offset by further improvements in
the cost of funds.
-- Operating Expenses, excluding Bank Levy and Regulatory
Charges, and net of reinvestment, of EUR283 million reducing by 1%
year-on-year. Decisive actions are being taken continuously to
build an efficient and effective operating model. Strong focus on
cost management, with approximately EUR20 million of underlying
savings in 2019, enabling the required investment in people,
processes and technology across the Bank. Regulatory charges of
EUR47 million remained flat year-on-year.
-- Impairment Charge of EUR10 million is reported under IFRS 9.
Underlying loan book continues to perform well reflecting the
quality of the portfolio and the current macroeconomic
environment.
-- Exceptional Items of EUR32 million consist of EUR16 million
of Restructuring and Other Charges as well as EUR16 million of NPL
Deleveraging costs associated with the Glas Tranche II Sale.
-- The Central Bank of Ireland's investigation into tracker
mortgages at PTSB came to a close in 2019. The Bank has paid a fine
of EUR21m. As the Bank had made relevant provisions in prior years,
the financial impact in the 2019 financial accounts, included in
exceptional items above, is EUR3m.
Balance Sheet
Funding And Liquidity
-- The Bank's funding position continues to remain strong. All
funding and liquidity metrics are well above regulatory
requirements.
-- Customer Deposits increased by 1%, amounting to EUR17.2
billion, which represents 95% of Total Funding.
-- In September, the Bank completed its first 5 year senior
non-preferred (SNP) MREL compliant EUR300 million bond at mid swaps
+ 255 basis points (equating to 2.15%) which is callable in year 4.
The order book was over-subscribed with more than 50 investors
participating. The overall MREL issuance target is in the region of
c. EUR0.8 billion to be in place before 1 Jan 2021.
-- Standards & Poor's, Moody's and DBRS have upgraded the
Bank's credit ratings in 2019; we have now returned to Investment
Grade status for the first time since 2011.
Performing Assets
-- The Performing Loan book of EUR15.3 billion at December 2019,
an increase of 1% on the Performing Loan Book at December 2018, as
the strength of new business outpaced the repayments on the loan
book. Asset yield remains above 2%, despite the maturity of higher
yielding Treasury Assets and reductions made to certain fixed rate
mortgage product pricing.
-- The Bank currently has 17% of the Performing Mortgage Book
paying Interest Only (the majority of which are Buy-To-Let
balances). The Bank is engaging with some customers in relation to
these Interest Only Mortgage Loans; to determine credible Capital
Repayment Plans as a means of assessing loan status; the programme
is at an early stage of maturity; further detail will be provided
at H1 2020.
Non-Performing Loans And Properties In Possession
-- NPLs reduced by EUR0.6 billion to EUR1.05 billion following
the sale of EUR0.5 billion of NPLs (Glas Tranche II), announced in
September 2019, together with organic cures of c. EUR0.1 billion,
bringing the NPL ratio to 6.4%.
-- The remainder of the NPL portfolio is actively managed, and
the Bank is committed to meeting a mid-single digit NPL ratio, as
per prudent balance sheet management and regulatory guidelines,
whilst continuing to protect capital.
-- At 31 December 2019, the Bank held c.400 properties in
possession, with 80 actively for sale. The majority of the
properties in possession are as a result of a targeted BTL
voluntary surrender programme. The Bank is satisfied with the
progress made to date and expects to sell the majority of
properties through various arrangements over the next 12
months.
Capital
-- The Bank's Pro-forma CET1 ratio, on a Fully Loaded and
Transitional basis, increased to 15.0%(1) and 18.0%(1) respectively
when compared to pro-forma CET1 ratio of 14.0% and 17.0% at 31
December 2018.
-- The increase in the ratios is primarily due to a net increase
in organic profits and a decrease in Risk Weighted Assets (RWAs)
arising from the deleveraging of NPLs.
-- The Bank's reported CET1 ratio at 31 December 2019, on a
Fully Loaded and Transitional basis, was 14.6% and 17.6%
respectively.
-- In view of a number of emerging risks such as the management
of the remaining NPL balances and the Interest Only Mortgage
portfolio, the Bank will continue to adopt a prudent approach to
Capital Management and improve its Total Capital Position over
time.
1. CET1 Ratio Post Glas II Completion in February 2020.
Guidance And Outlook
-- Performing Loan book is expected to continue to grow in 2020
as we focus on quality customer service and retention.
-- The Bank is expected to grow Consumer Finance and offer new propositions to SME customers.
-- Gross Interest Income will be lower as a result of NPL
deleveraging; however, with continuous management of cost of funds,
we expect NIM to remain stable in the medium term.
-- NPL ratio is expected to meet mid-single digit guidance.
-- Operating Expenses are expected to remain broadly flat in
2020, where strong management of the cost base will deliver
underlying savings from efficiency initiatives, together with
non-recurring projects, will be utilised for Business and 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 environment for the
banking sector remains challenging, with ongoing competitive
pressures and a demanding regulatory agenda. The increased
political certainty around Brexit will be welcomed across the
business community. We have undertaken steps to mitigate
risks arising from Brexit and we will continue to monitor
developments in the coming months as the UK's future trade
relationships with the EU become more apparent.
Ends
For Further Information Please Contact:
Eamonn Crowley | Chief Financial Officer |
Eamonn.Crowley@Permanenttsb.ie | +353 1 669 5354
Nicola O'Brien | Head of External Reporting and Investor
Relations | Nicola.O'Brien@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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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