Permanent TSB Reports Q1 2025 Trading Update
Why we think this is neutral
The Q1 2025 trading update from Permanent TSB shows a mixed performance. While the bank's funding and capital positions remain strong, total operating income declined by around 5% year-over-year, indicating weaker revenue growth. The bank also faces some heightened uncertainty related to global trade and its potential impact on the Irish economy. However, the bank's asset quality remains strong, and it is making progress in diversifying its income with growth in business banking lending. Overall, the update paints a balanced picture, with both positive and negative factors, resulting in a neutral sentiment assessment.
Key Points
- Total operating income c. 5% lower in Q1 2025 vs Q1 2024
- Net interest margin of 2.03% in Q1 2025 vs 2.31% in Q1 2024
- Total operating expenses down c. 4% in Q1 2025
- Asset quality remains strong with €1 million impairment charge in Q1 2025
- Market share of new mortgage lending over 20% in Q1 2025 vs 16.4% in FY 2024
- New Business Banking lending (SME and Asset Finance) up 25% in Q1 2025
- Total gross loans rose to €22.0 billion, up c. 1% since year-end
- Customer deposits of €24.9 billion, up c. 3% (€0.8 billion) since year-end and c. 7% year-over-year
- CET1 capital ratio of 15.3% at end March 2025
Summary
Permanent TSB Group Holdings plc has reported its Q1 2025 trading update, highlighting a 5% decline in total operating income compared to the same period last year. However, the bank's funding and capital positions remain strong, with a CET1 capital ratio of 15.3% and a loan-to-deposit ratio of 87%. The bank also saw growth in new business banking lending, up 25% year-over-year. While the bank faces heightened uncertainty related to global trade and its potential impact on the Irish economy, its asset quality remains strong with a small €1 million impairment charge in Q1.