Permanent TSB Group (PTSB) H1 2024 earnings summary

Executive summary

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

• Customer deposits grew 4% year-on-year to EUR 23.6 billion, supported by new deposit products and rate increases.

• Net interest income increased 4% year-on-year to EUR 311 million, with net interest margin at 2.27%, slightly down due to higher funding costs.

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

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

Financial highlights

• Net interest income: EUR 311 million (+4% YoY); operating income: EUR 336 million (+4% YoY).

• Profit before tax: EUR 75 million (+EUR 50 million YoY); underlying profit: EUR 82 million.

• Total operating expenses: EUR 274 million (+20% YoY); cost income ratio: 73% (up 10ppts YoY).

• CET1 ratio (pro forma): 14.9% at June 2024, up 90bps since December 2023.

• Impairment release of EUR 20 million, cost of risk at minus 19bps.

Outlook and guidance

• Expecting mid-single digit cost growth for full year 2024, with a focus on efficiency and cost reduction.

• Net interest margin guidance of 220-230bps for the next 24 months, with slight downward pressure in H2 2024.

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

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

• Management expects continued profitability and capital strength, with a strong pipeline in mortgages and business banking for H2 2024.