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Permanent TSB Expects Net Interest Margin To Increase In Second Half

Thu, 10th Nov 2016 08:55

LONDON (Alliance News) - Irish bank Permanent TSB Group Holdings PLC said Thursday it improved its net interest margin in the third quarter, but warned that its regulatory costs are disproportionate to its size.

Permanent TSB reported that its net interest margin improved to 1.44% in the third quarter to September 30, up from 1.43% at its interim results. The bank said this was due to early redemption of some bonds and a continued reduction in deposit costs. Permanent TSB said it expects its net interest margin to be "marginally higher" in the second half than the first half of the year.

Permanent TSB also noted that new mortgage lending drawdowns in the third quarter increased 12% on a year-on-year basis, although it said the overall mortgage market size in Ireland remains below normalised levels.

The bank said its total operating expenses are still on track to be lower in the second half of the year than the first. However, it said regulatory costs continue to be disproportionate to the company size, having contributed EUR27 million in respect of the Bank Levy in October and EUR10 million to the Deposit Guarantee Scheme in November.

"The group continues to trade in line with expectations. We remain on track to achieve our guidance for the second half for operating expenses and impairments. [Net interest margin] is expected to be marginally higher than our previous guidance for the second half as a result of the sale of the residual non-core UK assets and a better Q3 performance," said Permanent TSB.

"Sustainable shareholder value creation continues to be the governing test for any acquisition or further disposals. Nevertheless, challenges remain in the form of constrained housing supply in Ireland, increasing regulatory costs and any potential negative impact on the Irish economy resulting from the UK referendum outcome," added the bank.

Shares in Permanent TSB were untraded at EUR2.51 Thursday.

By Adam Clark; adamclark@alliancenews.com