1st Mar 2023 10:40
(Alliance News) - Permanent TSB Group Holdings PLC on Wednesday said its annual outturn was helped by rising interest rates, with the lender also expecting the takeover of Ulster Bank Ireland DAC assets to boost its fortunes in 2023.
Permanent TSB, majority-owned by the Irish Treasury, said its net interest margin improved to 1.54% in 2022 from 1.51% in 2021. It put this down to increased yields on its tracker mortgages, due to interest rate hikes by the European Central Bank. This type of mortgage has variable rates which track central bank base rates.
Permanent TSB swung to a pretax profit of EUR267 million from a loss of EUR21 million in 2021. Total operating income rose 13% to EUR409 million from EUR361 million.
Net interest income alone climbed 16% to EUR362 million, helped by rate hikes and the integration of the Ulster Bank performing-loan assets in the second half of 2022.
Permanent TSB in November completed part of the acquisition of Ulster Bank Ireland's performing non-tracker residential mortgage business.
Looking ahead, it said: "Net Interest Income is on course to continue growing due to loan book growth, the changed interest rate environment and from the elimination of costs associated with carrying excess liquidity when yields were negative. The EUR6.7 billion of Ulster Bank DAC assets are expected to generate EUR170 million in gross interest income (excluding discount unwind) in 2023."
Permanent TSB expects operating costs to rise 15% in 2023. Total operating expenses were 17% higher at EUR344 million in 2022 from EUR295 million in 2021.
Shares were 0.3% lower at EUR2.58 each in London on Wednesday morning.
The Irish government had a more than 99% stake in the lender in 2011, this was then reduced to just below 75% as a result of a stake sale in 2015.
The Irish Treasury's holding in the bank was diluted to just above 62% last year, after Permanent TSB issued 90.9 million shares, just under a 17% stake, to NatWest Group PLC as part of the Ulster Bank Ireland mortgage business deal.
By Eric Cunha, Alliance News news editor
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