The new chief executive of Permanent TSB has confirmed the bank will continue to accept applications for mortgage and loan repayment breaks from those in financial difficulty due to the coronavirus crisis until the end of September, following the authorisation of an extension by the European Banking Authority.
But Eamonn Crowley, who the bank earlier announced would succeed Jeremy Masding as CEO, said it was not possible for the bank to offer individual breaks of more than six months in duration due to regulations.
"What we have over the next four to six weeks we have a lot of customers who availed of the first payment break who will roll onto the second payment break," he said.
"Some customers for example may be able to go back to full capital and interest, other customers may avail to continue to pay partially an amount of their mortgage and others will avail of the full payment break."
"But the six month limit is something set down by regulation."
He said it was too early to predict how many customers would fall into long-term arrears once the payment breaks expired, or what impact this would have on the level of bad-loan provisions the bank would need to set aside.
The new CEO said the bank is starting to see small numbers of borrowers who had payment breaks move back to repaying capital and interest again, but it would have a better idea by the end of July about the numbers who had moved from a first to a second break and the impact on impairments.
Mr Crowley also ruled out any possibility of the bank waiving interest due on mortgages and loans that received a payment break, citing the increased costs faced by the bank in offering the forbearance measures and in dealing with the fallout from the Covid-19 pandemic.
"We also have to have cognisance of all customers in the bank, not just the customers that are availing of the payment break and indeed ensure that in some way the bank is recovering costs associated, but not all costs by the way, but all the costs associated with the payment breaks, together with the potential for credit loss in this area," he stated.
Mr Crowley said the issue of reducing costs would continue to be on his agenda, but savings were being reinvested in the bank's digital offering.
He also signalled that the bank could in the future look to derive more of its income from fees and charges, as its current level of fee income is lower than that of competitors.
"We have a situation where we have an opportunity by way of how we think about fees," he said.
"But that opportunity has to be balanced on the basis that we are providing a service to customers and we are providing value to customers, so that they are happy to pay it."
He also said that the bank needs to do more business as its cost income ratio is still quite high, and it would continue to look to growing its presence in the SME lending and mortgage markets in order to do this.
On house prices, Mr Crowley declined to speculate to what extent they might fall due to the coronavirus crisis, but also said "it seems reasonable to suggest that house prices will reduce."
Mr Crowley also outlined how he would continue to ensure that the bank is customer focused in its approach and could continue to learn the lessons of the past.
"In more recent years the bank has not always lived up to our heritage and this was evident and well documented in the results of the tracker mortgage examination, which we closed with the Central Bank of Ireland in 2019," he said.
"The organisation has learned a lot from the examination and I am going to work very hard to ensure the mistakes of the past are not repeated."
"I want to foster a positive consumer focused culture within the bank and I strongly believe that maximising the return to customers will lead to maximising the return for shareholders over the long-term. I’ll be talking about this a lot more over the coming months, and I will be matching the talk with action."
He said Covid-19 had created a challenge for the bank and the community it serves and the fallout would be significant.
"We’ll have to deal with an increase in arrears, we’ll also have to deal with a significant fall off in new lending volumes," he said, referring to the bank’s guidance that new lending could be 50% lower this year than last year.
But the said that while he is realistic about the challenges, he is optimistic about the opportunities, and PTSB is in a really good position to support the recovery.
He added that the bank's business model will need to evolve and digital will play an every increasing role in its service offering.
"That said the importance of providing a personal service for our customers cannot be overstated," he claimed.
"At the end of the day, a successful business is built on meaningful and trusted relationships and I am committed to combining the best of our digital offering with that of our long history of personal service."
Mr Crowley, who is currently the bank's chief financial officer and an executive director on its board, will take over as CEO with immediate effect.
Mr Masding said he will remain as a board member until his departure from the company on July 1.
He was the longest serving of any of Ireland's current bank chief executives after his appointment in early 2012 when PTSB was in severe crisis following the banking crash.
Eamonn Crowley held a number of senior executive roles before joining Permanent TSB in 2017.
These included chief financial officer of Bank Santander Poland and chief operating officer of AIB's Central and Eastern Europe Division.
Permanent TSB chairman Robert Elliott said that over the last three years, Eamonn has made an enormous contribution to the bank in his role as CFO, and as a member of its executive committee and board.
"Given his breadth of experience and in-depth knowledge of the bank, I have no doubt that he will successfully lead Permanent TSB through the current Covid-19 crisis and beyond," the chairman added.
Permanent TSB said that pending the appointment of a new CFO, Mr Crowley will continue to perform the bank's chief financial officer duties.
It said the CFO recruitment process has started.
The Minister for Finance and Public Expenditure and Reform has welcomed today's appointment of Eamonn Crowley as Permanent TSB's new chief executive, following an extensive selection process.
"Since his appointment as chief financial officer in May 2017, Mr Crowley has played a key role in securing the future of Permanent TSB. In this regard, most importantly, the strength of the balance sheet and the commercial performance of the bank have improved significantly," Paschal Donohoe said.
The Minister also said that under the stewardship of Mr Masding, Permanent TSB has been transformed into a bank that is once again a major competitor in the Irish banking sector.
"During his time as CEO, the bank has had a number of notable achievements including a return to profitability, a significant improvement in its liquidity and capital positions, the successful re-IPO in 2015, and the exit from its EU Restructuring Plan," he added.
Commenting on today's appointment, Davy Stockbrokers said it was widely expected and will be welcomed by investors as it brings clarity at a challenging time for the banking sector.
"In his position as CFO, Eamonn Crowley has had widespread investor engagement since joining the bank in 2017 and has been instrumental in the key success of non-performing loan (NPL) deleveraging to build balance sheet resilience, which should serve the bank well in the current uncertain Covid-19 environment," the stockbrokers said.
"Understandably, his near-term focus is on navigating the bank and its customers through Covid-19. However, as the country recovers and the longer-term impact of Covid-19 becomes clearer, we expect the focus to shift back towards the rebuild of sustainable profitability," they added.