Trading Statement

permanent tsb Group Holdings plc (ptsbgh or "the Group") - Trading Update

Group reports good progress across key objectives in year-to-date.

· Continued progress towards overall profitability of Group with NIM rising steadily

· Mortgage lending up strongly

· Net impairment provision release in Q3, 2014 (pre-HPI adjustment)

· Accelerated deleveraging through redemptions and asset sales

· Steady deposit growth at reducing rates

17:15 Friday 24th October 2014. Following this week's announcement that it is has agreed the sale of Springboard Mortgages Ltd and associated loans, and in advance of the announcement of the results of the Single Supervisory Mechanism Comprehensive Assessment (CA), the Group issues this Trading Update.

Commenting on the Group's current performance, Group Chief Executive Jeremy Masding said: "This trading update contains further good news on impairment provisions and confirms the progress we are making towards delivering sustainable profitability and achieving key deleveraging goals. In short, the Group has made good progress on its continuing journey towards full profitability."

Key Points:

 Product Performance:

· New mortgage approvals to end September - up 123% year-on-year, with drawdowns up 212% year-on-year

· Market share for new mortgages now estimated at over 13% (from low of 1.6% in Q4, 2012)

· New personal term lending has increased 17% year on year

· Continued success with current accounts - 88,000 current accounts opened since the new launch initiated in 2013

· Total deposits have increased over 9% on end 2013 levels and over 3% on H1 2014. In line with trends in previous periods, both the cost of deposits, and the overall cost of funds has continued to reduce

Profitability:

As described below impairment continues to reduce significantly.

In line with the trend in previous periods, the gradual expansion of Net Interest Margin and Net Interest Income is continuing despite reductions in the yield on Tracker mortgages, arising from reduced ECB rates. The overall improvement in NII is enabled by the continuing trend in both the reduction of the cost of funds and reduction in ELG fees as covered liabilities continue to mature.

Operating expenses are expected to reduce from the elevated levels in H1 2014 which was affected by significant non-recurring items. However, this will be partially offset by costs associated with new business initiatives and increasing costs of regulation.

Arrears and Impairment:

Underlying arrears levels continue to be managed down in each of the loan portfolios within the Group's Asset Management Unit. Over 90 days arrears levels are down 24.7% from peak and 23.1% year to date.

We achieved our MART targets for Q3 2014 and the level of engagement from our customer base remains high.

As a result, we expect the provisions for impairment charge in the second half to be significantly reduced from the levels in H1 2014, which were in turn 65% lower than H1 2013. Notwithstanding that the Group has maintained a conservative peak to trough fall assumption of 55% for Irish Residential Property prices, the Group saw a net provision release in the third quarter.

In future periods this positive trend is anticipated to continue, driven also by improving macroeconomic indicators, particularly the improvement in the residential property prices and reducing levels of unemployment.

Funding and Liquidity:

ECB borrowings are now more than two thirds lower than their peak level in 2011 and reduced by over a quarter from the level at the end of 2013. This has been enabled by, from end 2013:

· Deposit growth of €1.7bn;

· €0.9bn reductions in debt securities held;

· €0.7bn reductions in NAMA bonds; and

· Ongoing reduction in total loan book levels.

With that, the Loans-to-Deposits Ratio for the Group has continued to reduce and at c135% is 16ppt reduced from end 2013 and 6ppt reduced from H1 2014.

The Group expects to be fully compliant with incoming Liquidity Coverage Ratio requirements under Basel 3, as implemented under the Capital Requirements Directive IV (CRDIV).

Deleveraging:

In line with the Group's stated policy of deleveraging non-core assets, it has completed significant deleveraging in the current year, with gross loans on a constant currency basis down €1.2bn, 3.6% since 31 December 2013. In addition to providing additional liquidity, these sales also created a net improvement to the Group's regulatory capital position:

· September 2014: Sale of a portfolio of €235m of Residential Mortgage Backed Securities.

· September 2014: Disposal of a €222m (Stg£172m) tranche of UK based loans. In addition CHL has had repayments and redemptions of Stg£204 million for the year to the end of September 2014.

· October 2014: Agreement on sale of the subsidiary Springboard Mortgages Ltd, a wholly owned subsidiary of the Group, which focussed on non-conforming mortgages in the Irish market. The par value of the loan book was €468 million, with over 70% of these loans being non-performing (4% of the Group non-performing loans at 30 June 2014).

As a result, the sale of all of the assets classified as held for sale at 30 June 2014 have now been completed.

Further preparatory work has been undertaken in relation to the CRE portfolios and we expect that a tranche/tranches of this portfolio will be brought to market in the near future.

SSM Comprehensive Assessment:

The Group will announce its response to the results of the SSM Comprehensive Assessment by press release on Sunday 26th October.

Contact Details

Glen Lucken, Group Chief Financial Officer

Tel: +353 1 669 5145

Media:

Ray Gordon

Gordon MRM

[email protected]

Mobile +353 87 2417373

Note on forward-looking information:

This Announcement contains forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements referred to in this paragraph speak only as at the date of this Announcement. The Company will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority.

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