Permanent TSB Group (PTSB) H1 2024 earnings summary

Executive summary

• Profit before tax reached EUR 75 million in H1 2024, up EUR 50 million year-on-year, driven by higher net interest income, strong deposit growth, and a EUR 20 million impairment release.

• Deposit base grew by over EUR 1 billion year-on-year to EUR 23.6 billion, supported by competitive deposit products and rate increases.

• Net interest income increased by 4% year-on-year to EUR 311 million, with net interest margin at 2.27%.

• Operating expenses rose 20% year-on-year, mainly due to higher staffing and investment, resulting in a cost income ratio of 73%.

• Mortgage market share declined to 13.5% due to reduced switcher activity, but pipeline up 60% since May rate cuts and strong H2 outlook.

Financial highlights

• Total operating income rose 4% to EUR 336 million; fee and commission income stable year-on-year.

• Underlying profit was EUR 82 million, down EUR 4 million year-on-year, mainly due to higher operating expenses.

• Impairment release/write-back of EUR 20 million, cost of risk at minus 19 basis points.

• NPL ratio reduced to 1.7%, now below European average, following portfolio reclassification and sale.

• CET1 ratio at 14.9% (pro forma), up 90 bps since December 2023.

Outlook and guidance

• Expect mid-single digit cost growth for full year 2024, with ongoing efficiency initiatives.

• Net interest margin guidance of 2.20–2.30% for the next 24 months; medium-term targets reaffirmed: NIM c.2.30%, cost/income ratio c.60%, RoE c.10%, CET1 >14%.

• Distribution policy announced, targeting a 40% payout ratio over the medium term, with first dividend likely in 2026 based on 2025 profits.

• IRB model review ongoing, expected to provide capital flexibility post-2025.

• FY'24 trending in line with expectations; cost of risk for FY'24 now expected at c.-10bps, upgraded from previous guidance.