Permanent TSB’s Loss Widens as Gains From Debt Buy-Backs Dwindle

Permanent TSB Group Holdings Plc, the Irish lender owned by the government, said its annual loss more than doubled as dwindling gains from buying back its own debt outweighed a decline in provisions for bad loans.

The net loss widened to 999 million euros ($1.29 billion) in 2012 from 424 million euros in the year-earlier period, the lender, formerly known as Irish Life & Permanent Plc, said in a statement today. Gains from buying back debt securities at a discount shrank to 224 million euros from 1 billion euros, and impairments fell by almost 40 percent to 891 million euros.

“The foundations have been laid to build a profitable bank,” Jeremy Masding, chief executive officer for the past 13 months, said in today’s statement. “The group today is unrecognizable from its position at the start of 2012.”

The annual results are the first since the government bought Permanent TSB’s insurance arm in June for 1.3 billion euros. The sale helped the bank complete a 4 billion-euro recapitalization ordered in 2011 by the nation’s central bank as loan losses soared after the country’s domestic real-estate bubble collapsed. The government last month sold the insurance unit, Irish Life Group Ltd., to Great-West Lifeco Inc., Canada’s second-largest insurer.

About 21 percent of Permanent TSB’s Irish buy-to-let home loans were at least 90 days in arrears on Dec. 31, compared with 16 percent in June, Permanent TSB said. The proportion of owner-occupier loans in arrears rose to 15 percent from 11 percent, it said.

Mortgage Provisions

Provisions for losses on Irish mortgages shrank by more than 50 percent to 508 million euros from 1.17 billion euros in

2011. Commercial real-estate provisions rose to 320 million euros from 179 million euros, the company said.

Irish banks’ bad loans soared following the collapse of the nation’s real estate market and tripling of the unemployment rate since 2007. The jobless rate stood at 14.1 percent in February, according to the central statistics office. Houses prices have tumbled by half from their 2007 peak, the Central Statistics Office said today.

The government decided in April to split Permanent TSB into three units under a plan that still needs European Commission approval. It wants to create a viable consumer lender, an asset-management unit to run down so-called uneconomic loans, and another unit for its U.K. mortgage loans.