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Ireland's permanent tsb targets dividend return by 2019
March 8, 2017 / 8:55 AM / 9 months ago

Ireland's permanent tsb targets dividend return by 2019

DUBLIN, March 8 (Reuters) - Ireland’s permanent tsb (PTSB) will target a resumption of dividend payments from 2019 after it reported a rise in full year pre-exceptional profits on Wednesday due to improved lending and writebacks of bad debts.

Ireland’s recovering banking sector, which required the most expensive state rescue in the euro zone following a property crash a decade ago, has recently begun to pass another milestone as profitable lenders return cash to shareholders.

State-owned Allied Irish Banks last week became the first domestic-owned bank to announce a resumption of dividends. Royal Bank of Scotland’s Irish unit Ulster Bank has also recommenced payments to its parent group and Bank of Ireland plans to do so next year.

PTSB, the smallest of Ireland’s three remaining domestically owned lenders, completed a deleveraging programme required under its state bailout last year and has always been a couple of years behind its rivals as result, CEO Jeremy Masding said.

“Given the recent uncertainties created by the regulatory environment, in particular, in relation to the treatment of NPLs (non performing loans) and RWA (risk-weighted asset) intensity, we will not be able to meet the target of a dividend from 2017 earnings,” the bank said in a statement.

“We remain committed to returning capital to shareholders and are guiding to dividend payments from 2018 earnings, in 2019.”

The 75-percent state-owned mortgage lender posted a pre-exceptional profit of 188 million euros, up from 26 million euros a year ago, just over a third of which was generated by clawing back money put aside for bad loans.

Mortgage lending grew 14 percent year-on-year, just below the industry average but up from a disappointing growth of 2 percent during 2015 and Masding said the trends he was seeing were “really positive”.

Its stock of non performing loans fell by 11 percent year-on-year to 5.9 billion euros. It said given the high regulatory focus on bad loans across the euro zone, the bank would examine ways of refreshing its strategy in 2017 including holding, selling or declaring that loans are unlikely to be collected.

“2016 has proved a pivotal year for permanent tsb,” Davy Stockbrokers wrote in a note.“ ”With a refocus on its Irish franchise delivering a much-improved underlying trading performance, this leaves the bank well placed to pursue its sustainable commercial and profitable growth ambition. (Reporting by Padraic Halpin; Editing by Keith Weir)

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