PTSB has priced in the economic impact of 10-15 per cent US tariffs being imposed on European goods in forecasting potential bad loan losses for the coming years, according to its new chief financial officer (CFO).
Barry D’Arcy, who was promoted to the CFO role at the bank last week from the role of chief risk officer, said that it would probably be the end of this year before the effect of potential tariffs will be felt by the Irish economy.
Still, Ireland is well positioned to deal with the fallout from US tariffs, given the ongoing strength of the domestic economy and government finances, he told reporters after PTSB reported full-year results on Tuesday.
PTSB last year freed up €39 million of unused loan-loss provisions that were taken during the cost-of-living crisis, helping the bank double pretax profit in 2024 to €159 million.
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The group continues to have a store of more than €90 million of provisions for potential future losses on loans – booked under an accounting rule called IFRS 9 – where borrowers are currently meeting payment obligations, executives said.
US President Donald Trump’s blanket 25 per cent tariffs on goods from Mexico and Canada took effect on Tuesday and he has threatened a similar level of charges on European Union (EU) imports. The Republic exports €75 billion of goods to the US annually, of which €58 billion is manufactured by drug companies.
PTSB’s increase in earnings last year was helped by rising fees and commissions and one-off charges declining by almost two-thirds to €21 million.
Net interest income fell to €612 million from €620 million as official interest rates declined, it said in a statement on Tuesday. PTSB has a much smaller level of excess deposits earnings interest at the Central Bank than its larger rivals Bank of Ireland and AIB.
PTSB’s plan to lower the perceived riskiness of its mortgage book – or lower its risk weighted assets – with the approval of regulators is progressing and that it plans to make a submission on the matter to the Central Bank by the end of June.
Analysts see this freeing up as much as €270 million of expensive capital reserves on PTSB’s balance sheet.
Chief executive Eamonn Crowley confirmed the bank will likely return to paying dividends next year for the first time since the onset of the 2008 financial crisis.
He said PTSB also plans to start talks with the Government and UK lender NatWest, parent of Ulster Bank, on potentially using some surplus cash in 2025 to buy back some of their shares.
Irish taxpayers continue to own 57 per cent of PTSB as a result of a crisis-era bailout. NatWest owns 11.7 per cent, having received shares in 2022 as part payment for Ulster Bank loans.
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Mr Crowley said PTSB will need “to balance” shareholder distributions with investing in growth – at a time when analysts are concerned about the ongoing relatively small scale of PTSB. The bank has a loan book of a little over €21 billion.
PTSB outlined new financial targets running out to 2027, including having a net interest margin of 2.2 per cent, in line with last year’s outturn but down from 2.3 per cent in 2023, and lowering operating costs to €500 million and delivering a return on tangible equity of 9 per cent.
The bank’s running costs rose 5 per cent last year to €531 million. However, it confirmed last month that it is cutting about 300 jobs – or almost 9 per cent of its 3,359 staff at the end of December.
The bank’s return on tangible equity – a key measure of profitability – was 7.5 per cent last year. Analysts see a figure between 8 and 10 per cent as a sign of a healthy bank.
Mr Crowley said that does not have any plans to follow up with another voluntary redundancy scheme in the coming years, but that natural attrition will ultimately result in the workforce declining. He noted that about 200 of the employees are fixed-term contractors.
The bank’s share of new mortgage lending rose to 20.2 per cent in the third quarter, compared to 13.4 per cent for the same period last year, it introduced a more competitive offering.
