Permanent TSB has today followed Bank of Ireland and AIB in raising its full-year guidance after higher interest rates boosted its first-half profits and the departure of rivals boosted its market share.
Bank of Ireland and AIB reported bumper profits in recent days, benefiting from higher rates.
The banks were also boosted by the exits of KBC Bank Ireland and Ulster Bank that allowed them to buy billions of euros worth of loans and add hundreds of thousands of new customers.
PTSB has been transformed into a much larger player thanks to a deal with NatWest to buy €6.75 billion of Ulster Bank mortgage and SME loans.
It reported a pre-tax profit of €26m for the six months to the end of June, compared to a pre-tax loss of €36m the same time last year.
The lender said its underlying profit before tax came to €86m for the six month period, compared to an underlying loss of €2m the same time last year.
PTSB said it total gross loan book rose by 42% to €21.1 billion, while it reported total customer deposits of €22.6 billion - an increase of 13% on last year.
It also posted new lending of €1.4 billion for the six month period, up 36% on the first half of 2022.
It reporting a jump of 41% in total new mortgage lending to reach €1.3 billion and said its new mortgage market share rose to 23.1% from 16.3% last year
New SME lending of €60m was 14% lower than the same time last year but PTSB said it has a strong pipeline of SME activity as it moves into the second half of the year.
Supported by the migration of the Ulster Bank micro-SME book in February, its total SME loan book grew by €0.2 billion to €0.5 billion by the end of June 2023.
With the migration of the Asset Finance business in July, PTSB said its total SME book now stands at about €1 billion.
The bank's net interest income of €298m jumped by 92% year-on-year, on the back of higher average customer loan volumes due to the acquisition of the Ulster Bank's assets, a strong underlying business performance and by the changed interest rate environment.
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The European Central Bank has lifted borrowing costs by a combined 425 basis points over the past year.
Its Net Interest Margin came to 2.29%, up from 1.54% in the first half of 2022.
During the six month period, Permanent TSB completed the "transformational" acquisition of about €6.75 billion of Ulster Bank's Retail, SME and Asset Finance business in the Republic of Ireland.
About 88,000 new mortgage and business customers moved to PTSB from Ulster Bank while the bank also saw over 330 staff move from Ulster Bank as part of the deal.
The lender said today it now expects total income to jump by 65% to €680m this year, higher than its previous guidance of €650m further recent European Central Bank interest rate hikes.
The mortgage-focused lender also said it expected its cost/income ratio to improve to under 65% from the prior guidance of below 70%, even with costs expected to be around 25% higher this year.
The Irish state holds 57.4% of Permanent TSB and NatWest has a 11.7% shareholding after they sold a combined 10% stake in the bank in June, the first time since 2015 that the Government has offloaded shares in the lender it effectively nationalised a decade ago.
Eamonn Crowley, Permanent TSB's chief executive said the bank has made enormous progress over the past two years, with greater scale and diversification, an enhanced digital offering, a larger branch network, a bigger team of highly skilled and committed colleagues, and many more customers than before.
"Our first half performance shows real momentum in our business as we return to sustainable profitability, evidenced by our underlying profit before tax of €86m. We continued to support our customers with new lending of €1.4 billion; an increase of 36% year-on-year," he said.
"Despite a challenging economic backdrop, we look forward to the remainder of the year with confidence. We are committed to supporting our customers in the face of cost of living pressures. We are and we will deliver on our ambition to provide real competition in the Irish retail and SME banking market," the CEO added.
Stronger player
Eamonn Crowley told Morning Ireland that the bank was now a much stronger competitor in the retail banking market with a 40% increase in its mortgage book.
"Our mortgage market share this year is up to 23%. So, we lent one in four mortgages for the first half of the year," he explained.
Mr Crowley said the bank was starting to see a shift to variable rate mortgage products which he said was reflective of a more normalised interest rate environment following close to a decade of ultra-low rates.
He said there had also been a movement by tracker mortgage customers towards fixed or variable rate products.
Interest rates on both mortgages and deposits would be kept under review, he said.
Mr Crowley defended the bank's position on deposit rates saying Permanent TSB offered some of the most competitively priced products in the market.
"We've proactively moved rates four times this year and we will keep them under review. Deposit customers are important to us and we will ensure that we provide the best offer," he said.
The CEO said Permanent TSB would be open to applications from customers of non-bank lenders - including those who have had their loans restructured.
Many of these are paying vastly higher rates on their loans than those offered by the main lenders.
"Once they meet certain credit crtieria, the main one being evidence that they can repay their loan and that typically is evidence over a 24 month period," Mr Crowley explained.
He said the bank was intent on keeping all of its branch network intact, including the 25 branches that it recently acquired from Ulster Bank giving it national coverage.
"We invested €25m in those branches," he said.
"It's better than seeing an old, closed Ulster Bank to see a vibrant Permanent TSB," Mr Crowley said.
Permanent TSB now has 98 branches around the country.
Shares in the bank were lower in Dublin trade today.
