Permanent TSB’s first quarter trading in line with expectations
Permanent TSB Group has said in a trading statement today that trading has been in line with expectations and that it was profitable over the first quarter of the year. But the bank said it may not generate the return on equity of around 10% by 2018 it had flagged to investors just a year ago, citing increased external risks.
“The group’s financial performance will be impacted by external factors such as increasing regulatory costs, a more modest growth outlook in the mortgage market and a sustained low interest rate environment,” PTSB said.
“These factors, coupled with uncertainty around the timing of the sale of residual UK assets, mean that the group may not generate a Return On Equity of around 10% by 2018 as previously guided,” it said.
The group’s new mortgage lending grew by 4% during the period though there’s no reference to any planned reduction in mortgage rates for customers in the light of AIB and KBC moves on rates earlier in this week.
But it noted that the increase was constrained by limited growth in the mortgage market as a result of the lack of housing supply. Mortgage approvals fell 14% in Ireland over the first quarter of the year.
Permanent TSB also said that tighter financial regulation will add up to €35m to its cost base this year.
It warns that factors such as higher regulatory costs, more modest mortgage lending growth than expected, a sustained low interest rate environment combined with continued uncertainty as to when it can sell its UK mortgage loans, mean the Group may not generate a return on equity of about 10% by 2018 as set out at its IPO last year.
