LONDON (Alliance News) - Irish financial services provider Permanent TSB Group Holdings PLC on Wednesday reported a rise in profit in a "transformational year" as its exited its restructuring plan.
The Dublin-headquartered company reported its pretax profit almost being wiped out, decreasing to EUR3 million from EUR52 million in 2017. The lender's underlying profit - which excludes exceptional items - increased to EUR94 million from EUR65 million.
In 2018, Permanent TSB booked EUR91 million in non-recurring exceptional items, up from EUR13 million in 2017. The costs in 2018 primarily consisted of EUR66 million for deleveraging non-performing loans and a EUR20 million provision for legacy issues.
Permanent TSB's total operating income was flat at EUR442 million. The lender's operating expenses of EUR331 million were broadly flat on the year before.
The lender's net interest margin ended 2018 at 1.78%, down from 1.80% the year before. Permanent TSB's return on equity in the year doubled to 4% from 2%.
The lender's CET1 ratio decreased to 14.7% in 2018 compared to 17.1% in 2017. Permanent TSB's risk-weighted assets increased 13% to EUR11.99 billion.
The lender decreased its non-performing loans significantly to EUR1.7 billion from EUR5.3 billion the year before.
Permanent TSB's total net loans & advances to customers in 2018 decreased 14% to EUR15.89 billion from EUR18.37 billion ion 2017. Total customer account balances increased slightly to EUR17.02 billion.
Permanent TSB reported EUR1.16 billion of gross new lending in 2018 compared to EUR1.03 billion in 2017. The lender now has a 15.1% market share of residential mortgages in Ireland, up from 12.6% in 2017 and 9.6% in 2016.
Permanent TSB's mortgage lending increased by 43%, compared to market growth of 20%, with consumer lending growing by 36% to EUR122 million.
"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 non-performing loan 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," said Chief Executive Jeremy Masding.
For 2019, Permanent TSB is expecting its performing loan book to increase but its gross interest income will be lower as a result of further deleveraging of non-performing loans.
The lender does, however, expect its net interest margin to remain "stable"
Permanent TSB's operating expenses are expected to remain broadly flat in 2019, with any savings on non-recurring costs to be put into the lender's "digital transformation" in the medium term.
The lender believes the Irish mortgage market is expected to grow in the medium term but will remain "competitive".
Permanent TSB said the Irish economy will remain "supportive" but the impact of Brexit remains uncertain. The lender did note it has taken steps to "mitigate the risk" arising from Brexit.
Masding added: "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."
Shares in Permanent TSB were down 3.3% Wednesday at EUR1.524.
