Permanent TSB Group - Trading Statement

30 April 2025                                                                                                                             

Permanent TSB Group Holdings plc ('the Bank')

Comment by Eamonn Crowley, Chief Executive:

"PTSB recorded a strong start to 2025 with all key financial metrics in Q1 tracking well against plan.

Our core mortgage business entered the year with a strong pipeline and we recorded a share of new mortgage drawdowns in Q1 of over 20%, continuing the momentum we showed through 2024. Meanwhile new Business Banking lending was up 25% year-on-year, with our SME business having a particularly good start to the year.

We are translating our refreshed strategy into action and continue to build our competitive presence as the Challenger Bank in the Irish market.

Our funding and capital positions remain strong and notwithstanding heightened uncertainty associated with the global picture on international trade and how this might impact Ireland, we remain confident about the prospects for our business in 2025."

KEY HIGHLIGHTS (all comparisons Q1 2025 vs. Q1 2024 unless otherwise stated)

·     Total operating income c. 5% lower

·     Net interest margin (NIM) of 2.03% for Q1

·    Total operating expenses down c. 4% or down c. 1% on an underlying basis. We remain on track to meet our FY 2025 target of €525 million

·     Asset quality remains strong with a €1 million impairment charge in Q1

·     Market share of new mortgage lending over 20%[1] in Q1 versus 16.4% for FY 2024

·     New Business Banking lending (SME and Asset Finance) up 25%

·     Total gross loans rose to €22.0 billion up c. 1% since year end

·     Customer deposits of €24.9 billion, an increase of c. 3% (€0.8 billion) since year end and c. 7% YoY

·     The Bank maintains a strong capital position with a CET1 capital ratio of 15.3%[2] 

·     On track to submit our IRB model application to the Central Bank of Ireland in Q2

FINANCIAL PERFORMANCE (all comparisons Q1 2025 vs. Q1 2024 unless otherwise stated)

Income

Net interest income in Q1 has reduced 9% as the effects of lower interest rates on our margin offset higher average interest earning assets. The net interest margin (NIM) in Q1 was 2.03% which compares with 2.31% for the equivalent period last year.

The reduction in NIM primarily reflects the impact of lower interest rates across our lending and treasury assets and higher term deposit balances. NIM is 7bps lower than the Q4 2024 figure of 2.10%, driven by ECB rate cuts and the mortgage rate reductions announced by the Bank in January. Recent deposit rate reductions by the Bank which became effective from April 2^nd will help negate the effect of further downward movements in base rates. As such we still expect NIM to exceed 2.0% for the year. 

Net fees and commissions were up 38% in Q1. As signalled previously, while this reflects positive momentum in underlying activity it is primarily due to last year's changes in current account pricing.

Operating expenses

Total operating expenses were down c. 4% in Q1 with underlying costs ex regulatory charges down c. 1%. Critically we remain on track to meet our cost target of €525 million for the year. The cost income ratio on an underlying basis was c. 76% in Q1 compared with 74% in FY 2024.

The Bank's voluntary severance scheme is at an advanced stage and when combined with management actions and natural attrition, we continue to expect a reduction in staff numbers of c. 300 in 2025.

Other cost reduction initiatives as part of our Strategic Business Transformation (SBT) programme such as offering a fully online mortgage sales and service journey are progressing and will enable us to both improve customer and colleague experiences while continuing to reduce costs in absolute terms.

Asset quality

Economic conditions in Ireland are supportive of our business and asset quality remains strong. Non-performing loans at end March 2025 were unchanged relative to the year end and represented c. 1.7% of gross loans. The Bank booked a small €1 million impairment charge in Q1.  

The Bank will continue to closely monitor the impact of US trade tariffs on the Irish economy, however notwithstanding heightened uncertainty, PTSB is well provisioned and coming into 2025 had modelled more conservative impairment scenarios than consensus.

BALANCE SHEET & BUSINESS PERFORMANCE

Customer loans

Total gross loans on the balance sheet rose to €22.0 billion at end March 2025 up c. 1% relative to the €21.8 billion at end December 2024. Growth was c. 2% YoY on a like-for-like basis when adjusted for Glas III loans[3] sold in July 2024. As drawdowns in H2 are typically stronger than H1, this positions the Bank well for an acceleration in YoY loan growth through 2025.

Our share of new mortgage drawdowns in Q1 was over 20%, building on the momentum we showed through last year and up significantly when compared with Q1 2024 (13.4%). Green mortgage lending accounted for 41% of all new loans in the quarter as we supported customers in their transition to a low-carbon economy. The reduction in mortgage fixed rates that were announced in mid-January continues to support our effort to maintain our competitive presence in the market while securing a very high level of retentions on our back book.

Meanwhile we continue to make strong progress in diversifying our income with new lending in Business Banking up 25% to €100 million in Q1, with our SME business having a particularly good start to the year.

Funding and liquidity

Customer deposits of €24.9 billion at end March 2025 were €0.8 billion or c. 3% higher than end December 2024 and c. 7% higher YoY. This underpins the Bank's position to support its lending ambitions throughout the remainder of 2025. The growth recorded in Q1 was largely in retail term deposits, although we are encouraged by the modest increase we also saw in current account and corporate balances as the Bank successfully acquired new customers.

We recently announced a 0.5% reduction in rates on certain personal and business fixed term and variable deposit products, including our one-year fixed term product which reduced from 2.75% to 2.25%. These were the first changes to PTSB's deposit rates since May 2024.

The loan to deposit ratio of 87% and liquidity coverage ratio of 270% at end March 2025 provide the Bank with a strong liquidity position and a secure funding source for future growth in lending volumes.

Capital

The Bank's Common Equity Tier 1 (CET1) ratio at end March 2025 remains strong at 15.3% and is comfortably above our regulatory minimum. This is in line with the pro-forma figure disclosed for 1^st January 2025 which includes the expected application of CRR3 and compares with 14.7% at end December 2024.

The Bank's leverage ratio at end March 2025 was 6.9%, compared with 7.1% at December 2024 and remains very strong for a bank with our residential mortgage exposure.  

As previously indicated, we are committed to optimising our MREL and capital stack over the coming years given the potential for efficiencies this could generate, particularly given that the Bank has returned to investment grade status.

OUTLOOK

The Bank has had a positive start to the year and guidance remains in line with prior market communications.

As regards our IRB model application, as previously indicated we are on track to submit our application to the Central Bank of Ireland in the second quarter.

- Ends -

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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.