* H1 operating loss 171 mln euros vs 449 mln euros a year
* Impairment provisions on loans fall 65 pct to 148 mln
(Adds detail, CEO quotes)
By Padraic Halpin
DUBLIN, Aug 19 Irish state-owned mortgage lender
permanent tsb (PTSB) cut its first-half underlying loss
by 62 percent but continues to lag behind its main rivals, who
have returned to profit after the country's banking crash.
The smallest and weakest of Ireland's three remaining
domestically-owned lenders posted a 171 million euro ($228
million) loss, with impairment charges on loans falling to 148
million euros, a third of the level reported a year ago.
That compared with a profitable six months for both Allied
Irish Banks and Bank of Ireland, which are
recovering faster from a crisis that saw some banks fail, others
fall into state hands and led Ireland into a three-year EU/IMF
"2014 is set to mark an important milestone as the year in
which we will report a sharp improvement in underlying losses
for the first time since 2008," Chief Executive Jeremy Masding
said in a statement.
"The economic and commercial environment continues to
improve and this provides an increasingly positive backdrop to
the execution of our strategy."
The 99 percent state-owned lender is seeking approval from
European authorities to split itself and move bad assets off its
balance sheet but is still awaiting a decision on a revised plan
submitted to the European Commission last year.
The core "good bank" reported an operating profit of 3
million euros in the first half, PTSB said.
Unlike its more diversified rivals, PTSB's profitability is
dragged down by expensively funded loss-making tracker mortgages
that follow the European Central Bank's low interest rate and
make up two thirds of its loan book.
As a result, the bank's net interest margin - measuring the
profitability of its lending - rose a touch to 0.88 percent,
less than half the level of market leader Bank of Ireland.
Its proportion of homeowners in arrears for more than 90
days fell again to 13.7 percent, from 14.9 percent in December,
while buy-to-let mortgage arrears fell to 15.5 percent.
Ahead of stress tests by the European Central Bank later
this year, PTSB's core Tier 1 capital ratio, a measure of
financial strength, fell slightly to 12.7 percent.
(1 US dollar = 0.7491 euro)
(Editing by David Goodman)