Permanent TSB Group (LON:PTSB) management said 2025 marked a “transformational year” as balance sheet growth, cost reduction, and regulatory approval for updated mortgage IRB models strengthened the bank’s capital position and competitive flexibility, despite pressure from a lower interest-rate environment.
2025 lending and balance sheet growth
Chief Executive Eamonn Crowley said the bank lent a total of €3.4 billion in 2025, its highest annual level in 18 years, with about 17% of lending in non-mortgage categories. Deposits increased 6%, or €1.5 billion, as the bank emphasized the role of current accounts and low-cost funding in its strategy.
- Mortgage book: up over 3% (CFO Barry D’Arcy said the performing mortgage book rose 3.5% to €20.4 billion)
- Business Banking portfolio: up 9%
- New mortgage lending: €2.9 billion with 20% market share (up from about 16% in 2024)
- New Business Banking lending: €450 million, up 4%, including a 10% increase in new SME lending (asset finance flat)
In consumer lending, management said the segment remains about 1% of the loan book, but activity increased following a September refresh that included lower rates, a simplified product set, and an easier online process. D’Arcy said average weekly applications were up 25% and drawdowns up 63% since the refresh.
Income, margins, and profitability
Total operating income fell 3% year-over-year in 2025, which management attributed to lower ECB and mortgage rates and higher average deposit costs. However, executives described a “game of two halves,” with income rising 3% in the second half versus the first half as margins stabilized and volume growth supported net interest income.
Net interest income was €590 million, down 4%, with higher deposit costs cited as the main headwind. D’Arcy said the bank’s average rates paid on term deposits and interest-bearing deposits were lower in the second half compared with the first half, and management expects some benefit as higher-priced deposits in the 2.75%–3% range roll off.
The bank reported a net interest margin (NIM) of 203 basis points for the year (in line with guidance of greater than 200), and a Q4 exit NIM of 208 basis points. Guidance for 2026 is for NIM of greater than 210 basis points, based on an assumption that the ECB deposit rate remains at 2% through the year.
Profitability metrics presented on an underlying basis showed:
- Underlying profit before tax (before exceptional items): €175 million, down 3% from 2024
- Return on Tangible Equity (RoTE): about 7.3%
- Equivalent EPS: €0.206
Net fees and commissions rose 5% to €58 million, driven mainly by current account income. Management also cited work to manage outgoing payment costs and referenced developments including final implementation of SEPA Instant and the expected launch of Zippay in Ireland. Other income was €7 million, up from €5 million, which management linked to customer-related FX and hedging gains mentioned previously in a Q3 statement.
Costs, restructuring, and operating efficiency
Operating costs declined 2% to €519 million, beating prior guidance of €525 million. D’Arcy said regulatory charges were €25 million, helped by no charge for the Deposit Guarantee Scheme. The cost-income ratio increased by one point to 75%, though management said it improved through the year and was closer to 74% in the second half.
Exceptional items totaled €47 million, above the €32 million guided at the half-year stage. The bank recorded €35 million for a voluntary severance scheme and €12 million for other non-core items, including early costs related to its formal sales process.
Headcount reductions were a key contributor to cost actions. Management said the bank delivered a reduction of 329 FTEs in 2025 to 2,918, exceeding an initial commitment to reduce by 300. D’Arcy said the voluntary severance program is expected to generate annualized savings of around €21 million, with less than half realized in 2025 and the remainder expected to benefit 2026 results. In the Q&A, executives said many voluntary severance participants were longer-tenured staff.
Asset quality, capital, and IRB model approval
Asset quality remained strong, with the bank recording an impairment release of €39 million, its fifth consecutive annual impairment release. Management said the outcome reflected a benign macro environment and the completion of a review of IFRS 9 mortgage models, including staging, LGD, and PD models. Total provision stock ended 2025 at €320 million (or 1.4% of loans), down from €392 million (or 1.8%) the prior year. The NPL ratio fell to 1.4%. Guidance for 2026 is for a nil/zero impairment charge.
On capital, management emphasized the impact of regulatory approval for new and updated mortgage IRB models. Crowley described the approval as “transformational,” and D’Arcy detailed that, on a pro forma basis, applying the new models reduced mortgage risk weights materially. The company said the pro forma mortgage risk weight would fall to 30.7% at end-2025, representing around a 9 percentage point decline over one year when combined with the CRR3 effect. D’Arcy said this translated into a pro forma reduction in RWAs of over €900 million, equivalent to about €130 million in capital.
Reported CET1 was 15.9% at year-end, rising to 17.5% on a pro forma basis incorporating the new IRB models and a loan sale. The bank’s 2026 SREP requirement was stated as 10.69%, and management reiterated a 14% CET1 target, noting in Q&A that the SREP demand had reduced by 25 basis points versus prior years.
Management said it does not plan to recommend additional distributions at this time due to the ongoing formal sales process and takeover-rule constraints, even as it noted that sustainable returns and distribution capacity are higher following IRB approval.
Dividend return and medium-term targets
The board proposed a final dividend of €10 million, or approximately €0.018 per share, described as the bank’s first dividend since 2008 and its first as a standalone business. Management characterized the payment as an important milestone after an extended period under dividend restrictions.
Looking ahead, the bank reiterated medium-term targets out to 2028 and provided 2026 guidance within the limits of takeover rules. Management said it expects RoTE to rise to over 9% in 2026 and toward 13% in 2028, supported by a higher NIM, accelerating lending growth, and cost discipline. The bank guided to a 2026 cost-income ratio of less than 70%, with an ambition to reduce it to below 60% by 2028. For credit, it said it is prudently modeling a cost of risk rising toward 20–25 basis points by 2028.
Management also pointed to the Irish mortgage market’s resilience, noting industry mortgage lending reached €14.5 billion in 2025 versus its forecast of €14 billion, and said PTSB took 20% of that market. In Q&A, executives said they were “happy with” the 20% share in a growing market and emphasized that IRB changes provide more optionality in pricing and segment focus, particularly in first-time buyer lending.
About Permanent TSB Group (LON:PTSB)
Permanent TSB Group Holdings plc operates in the retail, and small and medium sized enterprises (SME) banking sectors in the Republic of Ireland. It provides transactional banking, lending, saving, and deposit taking services. The company offers its products and services through branch network, brokers, direct, digital and SME channel. Permanent TSB Group Holdings plc was founded in 1816 and is headquartered in Dublin, Ireland.
