In This Article:
Release Date: March 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Permanent TSB Group Holdings PLC (ILPMY) reported a strong financial performance for 2024, with a reported profit before tax of 159 million, double that of 2023.
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The company's customer deposits increased by 5% to 24.1 billion, showing a robust growth trend over the past three years.
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The mortgage market share recovered strongly in the second half of 2024, reaching 20.2%, indicating a return to normal levels.
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The business banking book grew by 11% to EUR 1.1 billion, with significant growth in SME lending by 28%.
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The company has made significant investments in digital transformation, resulting in increased digital channel usage and improved customer experience.
Negative Points
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The mortgage market share for the year was lower than the previous year, indicating some challenges in maintaining market position.
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Total operating expenses increased by 5% to 531 million, leading to a deterioration in the cost-income ratio by 8 points to 74%.
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Net interest income declined by 1% due to reduced margins, reflecting falling ECB rates and higher deposit costs.
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The company faces a less favorable interest rate environment, which may impact revenue growth in the near term.
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There is uncertainty regarding the timing and impact of the IRB model review, which could affect capital distribution plans.
Q & A Highlights
Q: Could you discuss your thoughts on income growth and the balance sheet mix, particularly regarding mortgages and SME consumer lending out to 2027? A: Unidentified_1: We anticipate loan growth of 4 to 5% this year, with a mix of mortgage portfolio growth at 3 to 4% and higher growth in business banking, SME, and asset finance. Consumer finance will also see steady growth. Unidentified_2: Regarding AT1 levels, we are evaluating whether it will be necessary to utilize it in 2025, considering our current ratio and requirements.
Q: What are your interest rate assumptions for medium-term guidance out to 2027? A: Unidentified_2: We assume deposit rates will fall to 2% by July and remain flat through 2027. This forms the basis for our interest rate forecasts.
Q: On capital, assuming favorable outcomes on risk models, how will you allocate the boost between dividends, buybacks, and organic growth? A: Unidentified_1: We will consider dividends, directed or proportional buybacks, and retaining capital for growth. The exact proportion will depend on the capital usage required, which is not yet known. We expect to grow our loan book faster than others due to our positioning in the mortgage market and other lending areas.