Permanent TSB Net Interest Margin Rises as It Cuts Deposit Rates

  • PTSB says expects further improvement in NIM in rest of year
  • PTSB targeting a return to sustained profitability by 2017

Permanent TSB Group Holdings Plc’s net interest margin widened in the third quarter, as a recovering Irish economy paves the way for the mortgage lender’s return to what it calls sustainable profit.

Net interest margin, the difference between the average rate at which it borrows and lends on to customers, rose to 1.26 percent in the third quarter as the bank cut the interest rates it pays on deposits, the Dublin-based lender said in a statement Tuesday. The company reported a first-half NIM of 1 percent.

PTSB expects further improvement in the margin for the remainder of 2015, “absent any other market or industry factors in the last quarter,” it said.

PTSB, 75 percent state-owned, said in July it’s targeting a return to sustained profitability by 2017. Ireland’s other two surviving bailed-out banks, Bank of Ireland Plc and Allied Irish Banks Plc, returned to underlying profit last year for the first time since 2008, as Ireland’s economy continues to recover from its worst recession on record.

Led by Chief Executive Officer Jeremy Masding, PTSB said its loan-loss charge declined again in the third quarter, as arrears fell, without giving a figure. The bank’s first-half charge fell 84 percent to 23 million euros ($24.7 million).

“PTSB’s third-quarter interim management statement confirms that its performance continued to improve during 2015, with the NIM trajectory running ahead of expectations,” Emer Lang, an analyst with Dublin-based securities firm Davy, said in a note. She rates the stock outperform.

PTSB shares rose 3.2 percent to 4.18 euros in Dublin at 8:17 a.m, giving the company a market value of 1.9 billion euros.

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