28 Jul 2015 08:30
Permanent TSB Group Holdings plc
Embargo 08:30am 28 July 2015
Results for H1 2015:
Permanent TSB Group Holdings plc ("PTSBGH" or "the Group"), has published its preliminary results for the six months ended 30 June 2015. The full Interim Report will be published at 7:00am on Wednesday 29 July.
These preliminary results are being published today, a day ahead of schedule. The early publication is considered to be required as a result of an announcement being made this morning by the Group on the commencement of a Mortgage Redress Programme (MRP) following an Enforcement Investigation by the Central Bank of Ireland.
The Group will announce details of the MRP later this morning.
H1 2015 Highlights:
· Group records an underlying profit* of €1m. This marks the Group's first profit since 2007 and represents an improvement of €172m over the same period in 2014. The Core Bank reported a profit of €9m
· Net Interest Margin ("NIM"), excluding ELG fees, improved by 10 basis points to 100 basis points; Q2 NIM was 117 basis points. The Core Bank reported a NIM of 131 basis points
· ROI residential mortgage NPLs (balances) reduced by c.9%; over 90 days in arrears cases reduced by 15%
· The total number of customers in Late Arrears now stands at c.40% fewer than the peak recorded in 2013 - representing over 10,000 customers who are no longer in late arrears.
· Fully Loaded CET 1 ratio increased by 1.0% to 13.4%
· New business volumes are improving
*Defined as profit excluding the impact of exceptional items (€432m) which primarily included losses on deleveraging and repurchase of the Contingent Convertible Capital Notes ("CoCo") from the Irish State.
Group Chief Executive Jeremy Masding Comments:
"These results show we are making progress in returning the Group to sustainable profitability. We delivered a further improvement in our underlying financial performance in the first half of 2015.
The Group reported a small pre-exceptional profit for the period which is a significant milestone and augurs well for the future.
There is still a long way to travel but we are making good progress in delivering innovation and strong competition to the Irish retail banking market and a sustainable, profitable, attractive banking business for our shareholders."
New Business Volumes:
Irish Retail Deposits reduced marginally by €0.2bn to €11.4bn from €11.6bn at 31 December 2014. Current Account balances grew to €2.7bn from €2.6bn at 31 December 2014.
New Mortgage Lending was up 5% to €187m (H1 2014: €178m). Term Lending also increased by 44% compared to H1 2014.
Key Financial Highlights:
Group Income Statement
€m | H1 2015 | H1 2014 | Change | |||
Total Operating Income | 172 | 159 | 13 | |||
Total Operating Expenses | (147) | (181) | 34 | |||
Pre-Impairment Profit/ (Loss) | 25 | (22) | 47 | |||
Impairment Charge | (24) | (149) | 125 | |||
Profit/(Loss) Before Exceptional Items | 1 | (171) | 172 | |||
Exceptional Items (Net) | (432) | - | ||||
Loss Before Tax | (431) | (171) | ||||
Jun 2015 | Dec 2014 | Change | ||||
NIM (Before ELG) | 100bps | 90bps | 10bps | |||
The Group reported a significant improvement in its performance for the first half.
Group Loss Before Exceptional Items improved by €172m from €171m loss in H1 2014 to €1m profit as Group Total Operating Income grew and Total Operating Expenses and Impairment Charges fell.
The Core Bank - the Group's Irish retail banking business - reported a Profit Before Exceptional Items of €9m (H1 2014: Loss Before Exceptional Items of €104m).
Group NIM improved to 100bps (FY2014: 90bps) primarily driven by reduction in cost of funds across deposits and other funding sources; Core Bank NIM improved to 131bps (FY2014: 121bps)
Group Total Operating Expenses reduced by €34m from H1 2014 to €147m primarily due to a lower provision charge for "Legacy Legal and Compliance Related Costs".
Group Impairment Charges reduced by €125m from H1 2014, as a result of continued improvement in the arrears experience and lower levels of new defaults.
Group Exceptional Items for the period consist of a €380m net loss on deleveraging and a €52m loss on the repurchase of the Contingent Convertible Capital Notes ("CoCo") from the Irish State.
Group Balance Sheet
€bn | June 2015 | Dec 2014 | Change |
Net Loans | 22.9 | 27.2 | (4.3) |
Treasury Assets | 5.9 | 7.2 | (1.3) |
Assets Held For Sale | 1.1 | 1.0 | 0.1 |
Other Assets | 3.8 | 0.9 | 2.9 |
Total Assets | 33.7 | 36.3 | (2.6) |
Customer Deposits | 19.6 | 20.4 | (0.8) |
Wholesale Funding | 7.3 | 7.6 | (0.3) |
ECB Funding | 3.7 | 4.9 | (1.2) |
Other Liabilities | 0.8 | 1.1 | (0.3) |
Total Liabilities | 31.4 | 34.0 | (2.6) |
Total Equity (incl. AT1) | 2.3 | 2.3 | - |
Total Equity and Liabilities | 33.7 | 36.3 | (2.6) |
Net Loans To Customers were €22.9bn at end June, a reduction of €4.3bn compared to end December 2014 mainly as a result of the sale of €1.5bn of Irish Commercial Real Estate ("CRE") loans and £2.5bn of UK mortgages. The Loan-to-Deposit ratio reduced to 122% from 138% at end December 2014.
Other Assets include consideration receivable on the previously announced £2.5bn CHL sale which is completing at the end of July (P&L impact taken at 30 June 2015).
The Group also announced a further sale of €0.5bn of Irish CRE loans on 9 July 2015. This sale is expected to close later this year.
Late Arrears (> 90 Days By Cases) reduced by a further 14% with respect to Home Loan customers and 18% with respect to Buy-to-Let customers when compared to December 2014. The number of customers in both Early (90 Days By Cases) arrears has declined to lower than the industry average. The total number of customers in Late Arrears now stands at c.40% fewer than the peak recorded in 2013 - representing over 10,000 customers who are no longer in Late Arrears.
Customer Deposits have reduced by €0.8bn to €19.6bn at end June compared to end December 2014 mainly due to maturities of Institutional Deposits. Retail Deposits have remained broadly stable in light of carefully-planned measures we took to reduce our cost of funds.
The Group's Funding mix has continued to improve. 64% of the Group's funding requirement is now satisfied through Customer Deposits. ECB funding was further reduced to €3.7bn at end June (31 December 2014: €4.9bn).
The Common Equity Tier 1 capital ratio increased to 13.4% and 15.4% on a Fully Loaded and Transitional basis respectively (31 December 2014: Fully Loaded - 12.4%, Transitional - 14.2%).
Mortgage Redress Programme
The Mortgage Redress Programme (MRP) being established following an Enforcement Investigation by the Central Bank of Ireland. The purpose of the MRP is to address the position of customers who lost their contractual rights to a tracker rate mortgage principally between 2006 and 2011 (1,152 customers of permanent tsb) or who were on an incorrect rate (220 customers of Springboard Mortgages Ltd) as a result of failures by permanent tsb and Springboard respectively.
The cost of this programme consists of the Redress cost and the Compensation payments, which may rise somewhat depending on the outcome of appeal cases which may be taken by impacted customers. Further costs may arise from, for example, fines and professional fees. The Group has made a provision for this in its financial statements and the Board considers the level of provision to be appropriate.
Results Briefing
The Group will host a presentation for Analysts on Wednesday 29th July starting at 08.00am Irish Standard Time; this will also be webcast.
Further details of the webcast and the conference call can be found in the Group's corporate website www.permanenttsbgroup.ie
Further Information:
Investors and Analysts: |
Glen Lucken Group Chief Financial Officer Glen.Lucken@permanenttsb.ie +353 1 669 5354
Rajesh Manirajan Head of Investor Relations rajesh.manirajan@permanenttsb.ie +353 1 669 5622
|
Media: |
Ray Gordon / David Clerkin Gordon MRM ptsb@gordonmrm.ie +353 87 241 7373 (RG) +353 87 830 1779 (DC)
|
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 Company 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 Company will not undertake any 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.
ends