Permanent TSB falls into loss as a result of €75m in bad loans

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Permanent TSB (PTSB) fell into financial loss for the first half of the year as the mortgage bank set aside €75 million to account for a large expected surge in bad loans as a result of the COVID-19 financial turmoil.

The mortgage bank stated that they had a €54 million net loss for this first half of the year in 2020, as opposed to the €21m in profits that the mortgage bank had for the same first half of the year back in 2019, it stated in their report published on Tuesday.

Eamonn Crowley, the newly appointed group chief executive back in late June of this year remained optimistic. Although stating that the financial hardships posed by the current pandemic are random in both intensity and timespan, the bank will remain to serve its customers and communities.

The economic catastrophe resulting from COVID-19 has led to 10,500 PTSB mortgage holders requesting temporary payment breaks and a general slowdown of home loans activity. 10% of PTSB’s total mortgage book or €1.6 billion have taken advantage of mortgage breaks.

Mr. Crowley remains optimistic about his company’s financial security, pointing to roughly half of the company’s borrowers coming out of the 3-month payment break are not asking for another 3-month extension. These statistics fit the larger industry trend regarding mortgage break extensions.

There has been a lower amount of business activity as a result of the pandemic ravaging the nation in March. This had led PTSB’s total amount of new lending to fall 16% to €600 million in the first half of the year. The statistics from July paint a more positive picture for PTSB, and the mortgage bank is expecting that the total lending for the year will only be 40% lower than 2019’s €1.7 billion.

This expected prediction is a little bit better from the bank’s prediction back in May. At that time earlier in the year, PTSB predicted the full year’s amount of new lending to fall by at most 50%.

PTSB states that the economy reopening, the decline in unemployment, the government’s stimulus program, and the housing market’s resilient nature paint a brighter economic picture than beforehand for the rest of the year.

The mortgage bank did have their reserves fall from 15% to 13.9% as a result of the bad loans and the current losses. PTSB’s loans were still deemed as performing assets during the current period.

The ratio for PTSB’s capital ratio stayed well above the minimum required percentage of 8.49%. Financial regulators have loosened the capital requirements in recent times to make sure that banks are hoarding as much reserves and can lend to people in need during the current pandemic.

This article was written by Ian, an intern at Irish Mortgage Brokers and from the USA.