PTSB shares rise 4% as it predicts growth in the mortgage market

PTSB shares surged more than 4% in late afternoon trading as the lender gave an optimistic outlook for the rest of the year following the disposal of non-performing loans while it also predicted increased activity in the mortgage market.

In its half year results, the bank said competitive pricing during the latter stage of the first half of the year has contributed to a “strong” pipeline of mortgage activity for the second half of the year especially with fewer competitors in the market since Ulster Bank and KBC exited the Republic.

“Where the market itself is contracting, we’re growing,” said PTSB chief executive Eamon Crowley.

However, Mr Crowley also noted the chronic lack of homes on the market and said “we do see a need for more supply.”

Portfolio of rooms

The lender, which is the smallest of the three main banks operating in the Republic, also said it is now in a position where it is able to generate capital after it sold a portfolio of non-performing loans in recent weeks which has freed the bank to around €2bn worth of new mortgage lending.

PTSB agreed the sale of the non-performing loan portfolio in a deal with Mars Capital and certain funds managed by US-based vulture fund Apollo Global Management.

“The legacy portfolio that we carried coming out of the crisis has been deleveraged,” said Mr Crowley.

“In the past, unfortunately the way we generated capital was by deleveraging. That was the path we had to go through to ensure that this bank survived,” said Mr Crowley.

He added that there he does “not envisage any further non-performing loan sales at this moment” and he is “happy” with the current level of the loans in arrears managed by the lender.

Dividends

Mr Crowley said the “challenger” bank also plans to pay out dividends to shareholders for the first time in around 15 years but added that the payout will likely be in 2026 based on 2025 profits.

In its interim results, the PTSB posted profits before tax of €75m, up €50m compared to the same period a year earlier, fueled by a high interest rate environment and fewer competitors on the market.

However, a 20% rise in operating expenses led to a slip in underlying profits, which fell to €82m, down by €4m on the same period in 2023.

PTSB’s operating expenses increased by €41m to €245m due to the transfer of assets and staff from Ulster Bank.

Mr Crowley said he expects these operating costs to decrease over time through the natural ebb and flow of staff numbers and added that the lender currently has no plans to implement a voluntary redundancy scheme.

PTSB’s slice of the mortgage market in the Republic is now 13.5% and it serves around 1.2 billion customers, a large chunk of which were transferred to PTSB from Ulster Bank.

“We remain confident that the acquisitions and investments we have made, and continue to make, are putting us in a strong position to continue to further grow and diversify our business and deliver sustainable returns for our shareholders over time,” Mr Crowley said.

Earlier this week, Bank of Ireland posted €1.1bn in profits before tax in the first six months, underpinned by a high interest rate environment and a more swollen loan book following the acquisitions of mortgages from KBC.

AIB will post its interim results on August 2.