IL0A.L Regulatory News (IL0A)

EMBARGO 07:00 10 November 2015

PERMANENT TSB GROUP HOLDINGS P.L.C.

Q3 TRADING UPDATE

Permanent TSB Group Holdings p.l.c. (the "Group") today reports its trading update.

Key points include:

· NIM (excluding ELG fees) has increased to c.107bps (Core Bank: 136bps)

· Cost Income Ratio at the end of Q3 has reduced year-on-year

· Impairment Charge reduced further

· New lending is constrained by limited growth of the mortgage market

· Arrears levels declined further in Q3

· Capital levels remain well above minimum regulatory requirement

· 76% of cases identified in Mortgage Redress Programme (MRP) now redressed

Core Bank

Irish Retail Deposit balances at €11.2bn are in line with expectations. Current Account balances were up by 6% since 31 December 2014.

Mortgage drawdowns have trended broadly in line with the same period last year in a market which has not grown as fast as expected albeit we see this as a short-term supply lag. Term Lending drawdowns have trended positively and are up 34% year-on-year albeit from a low base.

Core Bank's NIM improved to 136bps for the nine months ended at 30 September.

Group Operating Performance

NIM (excluding ELG fees) increased to c.107bps for the nine months ended at 30 September (Q3 NIM was 126bps). This is primarily due to the impact of accelerated deposit rate cuts in line with the market trend. The Group expects to report further improvement in NIM for the full year 2015, absent any other market or industry factors in the last quarter of the year.

The Cost Income Ratio has reduced when compared to the first nine months of last year as a result of higher Income and lower Operating Expenses. However, Operating Expenses for the second half of 2015 will be higher than the first half, as flagged at the Interim Results, due to the payment of the Irish Bank Levy of c.€27m in October. Whilst the exact amount is not known yet, the Group is also expecting to make a sizable contribution to the Bank Recovery and Resolution Directive (BRRD) Fund later this year.

The Impairment Charge reduced further resulting from a decline in arrears levels. In line with the H1 results, the Group expects to report a significantly lower underlying Cost of Risk compared to the medium-term target of 40bps.

The Group continues to monitor closely the value of its underlying collateral as measured by the CSO Residential Property Price Index. Whilst the Group notes a year-on-year improvement of 8.9% to September 2015 and a peak-to-trough index of -34.6%, it will maintain a cautious approach to model-based provision release based on observable and stable trends.

Non-Core Business

The Group completed the sale of €0.5bn of CRE NPLs in October which it announced in early July and also expects to settle the majority of the remainder of the Irish Non-Core assets (predominantly Geared Property Loans) by the end of 2015. Residual loans of c.€0.4bn (gross) will transfer to the Core Bank from 2016, as previously indicated.

The Group aims to have deleveraged the remainder of its £2.4bn UK mortgage portfolio by June 2016, in line with the EU Restructuring Plan commitments. However, there is currently congestion in the market with similar portfolios for sale which may impact on the timing of the transaction.

Asset Quality and Arrears

Cases in arrears (Home Loan and Buy-to-Let) in 1-90 and >90 days further declined in Q3. NPLs remained broadly similar to H1. However, Treated NPLs as a percentage of Total NPLs has increased.

Mortgage Redress Programme

1,372 cases were identified in the Mortgage Redress Programme announced on 28 July 2015 and as at the end of October approximately 76% of those cases have been redressed.

Funding and Liquidity

The funding mix at the end of Q3 has improved further. Customer Deposits now account for c.67% of the Group's funding requirement, with Retail Deposits contributing c.53%. System Funding was c.17% of the funding mix. Liquidity Coverage Ratio remained comfortably above the regulatory minimum level.

Capital

Following the capital raise earlier in the year, the Group remains well capitalised above the minimum regulatory requirements.

Outlook

The growth in the Irish economy is providing a strong backdrop for the Group's targeted return to sustainable profitability. At the same time, challenges remain in the form of increasing costs of meeting higher regulatory standards, limited housing supply resulting in constrained growth of the mortgage market and over supply and volatility in the UK mortgage asset market.

The Group's financial performance has improved further in Q3 to deliver in line with expectations with improving Irish macro-economic performance contributing to continued reductions in loan losses.

Ends

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 Group 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 Group 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.