TIDMPTSB
RNS Number : 1761R
Permanent TSB Group Holdings PLC
25 October 2023
25 October 2023
Permanent TSB Group Holdings plc ('the Bank')
Trading Statement - Q3 2023 Update
Comment by Eamonn Crowley, Chief Executive:
'The Bank continued its positive business and financial
performance in the third quarter of the year and so remains in a
strong position to continue to support our customers, the Irish
economy and our shareholders. Central to this performance has been
our strong capital and liquidity positions, growth in the customer
deposit base and increased income. Asset quality remains robust and
we continue to take a measured approach with respect to the impact
to our customers of ECB interest rate rises.
Our investment into our recently announced new brand name, PTSB,
visual identity and customer promise, 'Altogether More Human',
represents our intentions to differentiate ourselves as a full
service bank and our commitment to bring the best of technology and
the best of our people together, putting customer needs at the
heart of what we do and ultimately deliver a better banking
experience for all.'
Key Points:
-- The Bank maintains a strong capital position; fully loaded
CET1 capital ratio of 13.8%; regulatory CET1 capital ratio
14.1%
-- New lending to September of EUR2.2 billion across all product lines[1]; 9% higher YoY
-- New business mortgage market share of 20.7%[2] compares to 16.9% at September 2022
-- Net Interest Income 93% higher YoY due to changed interest
rate environment, loan book growth and the migration of the Ulster
Bank loans
-- Net Interest Margin (NIM) of 2.31%, 92 bps higher YoY
-- Operating expenses remain in line with management
expectations, with the cost income ratio of 64[3]%, 25% lower
YoY
-- Customer deposits of EUR22.7 billion, an increase of c. 5%
(EUR1.0 billion) since December 2022 and c. 9% (EUR1.9 billion)
since September 2022
-- Non-performing loans (NPLs) of EUR0.7 billion and the NPL
ratio of 3.3% at September 2023 are in line with December 2022
-- New brand name launched together with new visual identity and
customer promise in mid-October 2023
PTSB Brand Repositioning
On 14 October 2023, the Bank announced a major overhaul of its
brand and business, reflecting our position as a full-service,
customer-focused personal and business bank. The move reflects the
much larger scale and business diversification of the bank, our
customer focus and growth ambitions for the coming decade.
Key elements of the change include a new brand name, PTSB, and
visual identity, together with the introduction of a new customer
promise, Altogether More Human, which represents the bank's
commitment to putting customer needs at the centre of how we plan,
design and deliver for them. An initial investment of EUR5m has
been made into customer research, the development and roll-out of a
new visual identity, together with a customer promise and a
national advertising campaign. Further investment is planned to
modernise PTSB locations, including the Bank's nationwide branch
network, over the next 18 months.
The Bank has also invested in improving its customer experience
and has put in place a number of initiatives to further support
customers, including the introduction of a host role in all 98
branches and the establishment of a vulnerable customer support
team, as well as partnering with O'Cualann Co-housing Alliance to
enable the development of social and affordable homes across the
country.
Most recently we have introduced 'PTSB Protect', a new feature
to our banking app which will help prevent customers falling victim
to fraudulent scams.
Business Performance
The Bank has continued its strong performance with total new
lending growing 9% year-on-year. New mortgage lending of EUR1.8bn
grew 11% year-on-year while the mortgage market was down 10% over
the same period. This growth is supported by the strength in our
mortgage proposition, together with mortgage switching activity
which continued in the market into Q1'23 as customers sought rate
certainty. While new mortgage lending across fixed products
continues to be c. 97% of YTD total new mortgage lending, with
fixed rate Green mortgage lending accounting for 27%, we have
observed a change in customer behaviour, where some customers
maturing from a fixed rate are now opting for a variable rate for
the first time in a number of years.
Market share of mortgage drawdowns reached 20.7% in September
2023, which was 3.8 ppts higher than the September 2022 market
share (16.9%). Notwithstanding this growth, the switcher portion of
the mortgage has reduced materially since end Q1'23, which will
lead to lower year-on-year growth in new mortgage lending than that
observed in FY 2022. The mortgage market in Ireland is estimated to
reduce by c. 11% from EUR14.1 billion in 2022 to c. EUR12.6
billion[4] in 2023.
Income
Net interest income has increased by 93% year-on-year; with
gross interest income increasing by 115% year-on-year due to
organic loan book growth, the migration of the remaining Ulster
Bank Mortgages, Micro-SME and Asset Finance portfolios, and the
changed interest rate environment. The net interest margin of 2.31%
has increased by 92bps year-on-year; benefitting from the changed
interest rate environment and increased loan book volumes. Net fees
and commission income performance remains strong, in line with
prior year, as we continue to support our higher customer base.
Costs
Operating Expenses at September 2023 remain in line with
expectations as we support a larger number of colleagues with cost
of living challenges, absorb higher levels of depreciation from
prior year investments, and complete key investment initiatives,
while making underlying savings to support the cost base.
Balance Sheet
Customer deposits of EUR22.7 billion at 30 September 2023 are
EUR1.0 billion higher than 31 December 2022, primarily due to a c.
6% increase in current account balances to EUR9.5 billion, retail
deposits have grown by 4% to EUR12.1bn. Despite the elevated cost
of inflation and the higher interest rate environment the overall
deposit market has grown by 2.6%[5] in 2023. However, this is down
from 4% over the same period in 2022 indicating that the pace of
growth is slowing.
Approximately 71% of the Bank's total customer deposits at 30
September 2023 are covered under the Deposit Guarantee Scheme
('DGS'), in line with balances at 31 December 2022. The loan to
deposit ratio of 94% and liquidity coverage ratio of 206% at the
end of September 2023 provides the Bank with a strong liquidity
position and a secure funding source for future growth in lending
volumes.
The total performing loan book of EUR20.9 billion at 30
September 2023 is c. EUR1.8 billion higher than the total
performing loan book at 31 December 2022, as a result of the former
Ulster Bank Micro-SME migration in February 2023 (EUR0.2bn),
additional Mortgage migration in May 2023 (EUR0.9bn), Asset Finance
migration in July 2023 (EUR0.5bn), and new mortgage lending
exceeding repayments and redemptions (EUR0.2bn). Asset Quality
remains strong with Non-Performing Loans of EUR0.7 billion at 30
September 2023, in line with balances at 31 December 2022. While
the global macroeconomic environment remains volatile, the Irish
economy continues to record strong growth levels with no notable
deterioration in the asset quality of the Bank's loan book evident
to date.
Capital
Capital Ratios (%) September December
2023 2022
CET1 (Fully Loaded) 13.8% 15.2%
---------- ---------
CET1 (Transitional) 14.1% 16.2%
---------- ---------
Total Capital (Fully
Loaded) 19.5% 21.3%
---------- ---------
Total Capital (Transitional) 19.8% 22.3%
---------- ---------
Leverage Ratio (Fully
Loaded)[6] 7.0% 7.7%
---------- ---------
The Bank's Common Equity Tier 1 (CET1) ratio at 30 September
2023, on a fully loaded basis, remains strong at 13.8%, 140 bps
lower than 31 December 2022 of 15.2%, reflecting the higher Risk
Weighted Assets following the migration of the Ulster Bank
Micro-SME, the remaining Mortgages and Asset Finance portfolios
during the year.
The CET1 ratio on a transitional basis of 14.1% at 30 September
2023, reduced by 210 bps from 16.2% at 31 December 2022. This
reduction is primarily driven by the annual transitional phase-in
of prudential filters in addition to the migration of Ulster Bank
loans. The minimum regulatory requirement for CET1 on a
transitional basis is currently 9.44%[7].
The Total Capital ratio on a transitional basis was 19.8% at 30
September 2023. The minimum regulatory requirement for Total
Capital on a transitional basis is currently 14.45%.
The Bank's Leverage ratio on a fully loaded basis at 30
September 2023 was 7.0%, down from 7.7% at December 2022.
2023 Outlook
The Bank remains in a strong position to continue to support our
customers, the Irish economy and our shareholders, with the
guidance on key performance indicators for FY23 remaining broadly
in line with prior market communications. Changes in mortgage
customer rate choice plus a lower level of market growth than
previously expected in retail deposits are factored into our FY23
expectations. Asset quality continues to perform well and capital
remains strong, having assessed a range of scenarios, the CET1
ratio will remain above the Bank's minimum regulatory
requirements.
The Bank will provide updated guidance for the medium term at
its FY23 Annual Results.
- Ends -
For Further Information Please Contact:
Denis McGoldrick Leontia Fannin
Investor Relations Head of Corporate Affairs and Communications
Email: denis.mcgoldrick@permanenttsb.ie Email: Leontia.Fannin@Permanenttsb.ie
Phone: +353 87 928 5645 Phone: +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] Includes new lending in PTSB Asset Finance
[2] Based on BPFI data as at 30 September 2023
[3] Cost Income ratio is calculated as Operating Expenses (excl.
Regulatory Charges and Exceptional Items) divided by Total
Income
[4] Source: Goodbody
[5] Source: CBI Table A.1 - Summary Irish Private Sector Credit
and Deposits (Aug'23)
[6] The Leverage ratio is calculated by dividing Tier 1 capital
by gross balance sheet exposures (total assets and off balance
sheet exposures).
[7] Regulatory requirements for both CET1 and Total Capital on a
transitional basis excludes P2G
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END
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