LONDON: Permanent TSB Group Holdings plc (PTSB), one of the leading retail banks in Ireland, announced its annual results for the year ended 31 December 2023, showing a significant improvement in its profitability, capital and market share.

The bank reported an underlying profit before tax of €166 million, up from €45 million in 2022, and a profit before tax of €79 million, down from €267 million in 2022, which included a one-off gain from the acquisition of the retail and business banking businesses of Ulster Bank.

The bank’s capital position remained strong, with a fully loaded CET1 capital ratio of 14.0% and a regulatory CET1 capital ratio of 14.3%, well above the minimum requirements. The bank also received a positive outcome from the 2023 Supervisory Review and Evaluation Process (SREP), which lifted the prohibition on dividend payments and identified the bank as an Other Systemically Important Institution (O-SII), requiring an additional capital buffer of 50 basis points from 2025.

Permanent TSB bank’s total new lending amounted to €2.8 billion, in line with the previous year, as the growth in business banking and consumer finance loans offset the lower new mortgage lending, which was affected by the overall decline in the new mortgage market. The bank’s new business mortgage market share increased to 19.2%, up from 18.5% in 2022.

The bank’s net interest income rose by 71% year on year, due to the changed interest rate environment, loan book growth and the migration of the Ulster Bank loans. The bank’s net interest margin (NIM) improved to 2.32%, up from 1.54% in 2022.

The bank’s underlying operating expenses increased by 25% year on year, to €495 million, in line with management expectations, reflecting the costs associated with the integration of the Ulster Bank portfolio, the opening of 25 new branches and the hiring of additional staff. The bank’s cost income ratio improved to 66%, down from 84% in 2022.

The bank’s asset quality remained robust, with non-performing loans (NPLs) of €0.7 billion and an NPL ratio of 3.3%, in line with 2022. The bank’s cost of risk was low, at 4 basis points, reflecting the favourable macroeconomic conditions and the strict underwriting criteria.

The bank’s outlook for 2024 is positive, as it expects to continue to support its customers, the Irish economy and its shareholders. The bank expects its net interest income to be broadly in line with 2023, as the higher lending yields will be offset by the higher cost of funds. The bank expects its operating costs to increase by a mid-single digit percentage, as it continues to invest in the business and manage the impacts of inflation. The bank expects its cost of risk to be around 10 basis points, as the asset quality remains strong and the economic outlook remains supportive. The bank expects its capital ratio to remain well above the minimum requirement, and plans to announce a distribution policy in the second half of 2024.

Eamonn Crowley, Chief Executive, said: “Our results demonstrate real momentum through a robust financial performance, driven by income growth, a strong deposit franchise and good asset quality.

2023 was a very significant year for PTSB as we supported customers with new lending of €2.8bn, while also successfully completing the integration of Ulster Bank businesses, including: 330 former Ulster Bank colleagues; over 65,000 mortgage customers; an Asset Finance Business, a Private Banking Team and a Business Banking book.

In October, we announced a major overhaul of our brand and customer positioning for the first time in over 20 years, with PTSB becoming the new brand name for the Bank and the introduction of a new customer promise ‘Altogether more human’. This repositioning reflects our ambitions as a full-service personal and business bank and our focus on changing customer needs.

Looking to the year ahead, we remain in a strong position to build on the momentum of 2023 as we continue to grow our business, invest in our customer, colleague and community experience, while delivering sustainable returns for our shareholders.”

Permanent TSB Group sells Buy-To-Let loan portfolio to Citibank NA London