IL0A.L Regulatory News (IL0A)

08 November 2017 07:00

PERMANENT TSB GROUP HOLDINGS PLC (the "Bank")

Trading Update for the Nine Months Ended 30 September 2017 (Unaudited)

Key Points:

· The Bank is trading in line with expectations

· 16% increase in new Current Account openings year-on-year

· 64% growth in new lending volumes year-on-year. Residential Mortgage Market Share at 11.9%

· Net Interest Margin increased by two basis points to 1.83% from 1.81% in H1 2017.

· €500 million of five year Residential Mortgage Backed Securities (RMBS) placed at a cost of approximately 0.10%

· Pro-forma Fully Loaded CET1 ratio improved to 15.3%1 compared to 15.0% at H1 2017

· Pro-forma Transitional CET1 ratio improved to 17.4%1 compared to 17.1% at H1 2017

Business and Financial Performance

During the first nine months of the year, over 30,000 new Current Accounts were opened which is an increase of 16% year-on-year.

New lending volumes increased by 64% year-on-year. Residential Mortgage Lending grew by 65% year-on-year outperforming market growth of 32%2. As a result, the Bank's market share of drawdowns increased to 11.9%2. Consumer and SME Lending also grew by 56% year-on-year albeit from a low base.

NIM increased by two basis points to 1.83% from 1.81% in H1 2017 primarily as a result of the continued reductions in Cost of Funds.

Operating Costs were in line with expectations as we continue to focus on tight cost management.

Balance Sheet

Customer Deposits of €17.1 billion have marginally increased from €16.9 billion at H1 2017 as a result of growth in Retail Deposits and Current Account balances. In addition, we continue to diversify our funding mix. In October, the Bank successfully placed €500 million of five year Residential Mortgage Backed Securities at a cost of approximately 0.10%.

Net Loans amounted to €18.6 billion and remain unchanged from H1 2017. Whilst the Tracker mortgage book is paying down at approximately 4% (annualised), the Variable and Fixed mortgage book grew by 1% (annualised) in the first nine months of the year.

Non-Performing Loans ("NPLs")

During the third quarter, NPLs continued to reduce mainly due to improvement in new defaults and favourable cure trends. We expect this trend to continue for the rest of the year.

We outlined our strategy on NPLs at the Interim Results which is to reduce our NPL ratio to a high single digit percentage over the medium term. We continue to execute this strategy and are satisfied with the progress made.

While the impairment trend during the quarter was favourable to expectations as a result of better underlying performance, we continue to review our provisioning level in the context of executing the NPL strategy.

We will provide a further update on the progress of the NPL strategy to the market in Q1 2018.

Capital

Pro-forma Common Equity Tier 1 (CET 1) ratio on a Fully Loaded basis and Transitional basis increased to 15.3%3 and 17.4%3 respectively compared to 15.0% and 17.1% at H1 2017. The Bank's regulatory minimum CET 1 capital requirement is 11.45%, measured on a Transitional basis.

The Bank continues to work with the authorities on the Targeted Review of Internal Models ('TRIM') process. There is no further update at this juncture; we will update the market when the Review is concluded.

Tracker Mortgage Review

The Bank continues to make progress on the Central Bank's industry wide Tracker Mortgage Review. 1,971 customer accounts have been identified as impacted under the tracker issue. All are now on the correct interest rate. 1,448 of these impacted customers have now been fully redressed and compensated and the remaining customers will receive redress and compensation before the end of next month (31 December).

The Bank will continue to support the Central Bank in its independent assessment. We continue to review the provision associated with this review and, at present, we believe it remains appropriate.

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 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.