* State-owned lender says deposits continuing to flow in
* Pre-exceptional operating loss narrows to 980 mln euros
* CEO waiting for tracker mortgage deal
By Padraic Halpin
DUBLIN, March 26 Irish bank permanent tsb (PTSB)
has had no fallout from the banking crisis in Cyprus,
the state-owned lender said on Tuesday after reporting that
losses in 2012 shrank by a third, while mortgage arrears rose.
"We've seen no issues so far, we've been through a lot worse
than this and have seen continued inflows," PTSB group treasurer
Kieran Bristow told a news conference.
Cyprus will force losses on uninsured deposits in bank
accounts with more than 100,000 euros as part of a rescue deal
agreed with the European Union.
The decision to make bank depositors take losses marks a
radical departure from the bailout Ireland agreed in late 2010
after the financial crisis when deposits were protected.
But the Cyprus crisis and its bailout has not prompted
outflows from PTSB.
"We saw strong inflows last year, this year and even this
week since the announcement," Bristow said. "They continued to
flow in across our deposit channels - institutional, corporate
and retail," he said.
PTSB, the smallest of Ireland's three remaining
domestically-owned banks, gained approval from the country's EU
and IMF lenders last year to seek out a viable future by moving
bad assets off its balance sheet.
The bank, split from its more profitable life insurance arm
last year, said its full-year operating loss before exceptional
items narrowed to 980 million euros ($1.29 billion) in 2012 from
1.47 billion euros a year earlier.
"WHAT WILL BE WILL BE"
After more than trebling its impairment charges to 1.4
billion euros in 2011, the bank, which is cutting more than 10
percent of its staff and a fifth its branches, trimmed bad debt
provisions to 891 million euros last year.
However its net interest margin, measuring the profitability
of its lending, remained the lowest in the industry at 0.72
percent versus 0.92 percent a year ago, while its
loan-to-deposit ratio was at a still-high 191 percent.
The pace of mortgage arrears growth slowed as the country's
unemployment stabilised just above 14 percent.
But the bank's chief executive Jeremy Masding said arrears
had not yet peaked and the proportion of owner-occupier loans in
arrears for more than 90 days stood at 15 percent at the end of
2012, up from 13.2 percent in June.
That compared to an industry average of 11.9 percent while
21 percent of buy-to-let investors were three months or more in
arrears, again higher than the 18.9 percent reported by the
central bank for the sector as a whole.
A large stock of loss-making mortgages that track the
European Central Bank's low interest rate remain the biggest
drag on profitability. Masding said the so-called "tracker"
loans were costing the bank an "eye-watering" amount without
specifying what that figure was.
The trackers have been moved into an asset management unit,
one of three distinct businesses now being run by the bank.
Masding said he was not expecting any quick decision on the kind
of sector-wide tracker mortgage solution the government was
looking at last year.
Masding said the bank, which aims to turn a profit again
across the three units by the end of 2016, has seen funding
costs continue to fall this year.
"All I can do is try to create as much option value as I can
for our three businesses, manage it over time and what will be