permanent tsb Group - Strong new business momentum; Project Glas reduced in size with alternatives being explored

Davy Research
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Permanent tsb Group (PTSB) started 2018 with a strong new business performance as mortgage lending increased by 63%, with a 14% market share of new lending, albeit net interest margin (NIM) was somewhat weak at 1.76%. The decision to reduce Project Glas to €2.2bn (from €3.7bn previously) is sensible as it enables its sale to proceed at a time of ongoing strong investor appetite for Irish non-performing assets. Alternative options are under consideration for the remainder of the original portfolio, which, in our opinion, may result in a more benign outcome than an outright sale. We are unlikely to make material adjustments to our forecasts arising from Q1 and retain our ‘Neutral’ rating owing to the non-performing loan (NPL) sale process and the slightly weaker-than-anticipated Q1 NIM.