Ireland's PTSB says mortgage lending surges, lays out bad loan plan

DUBLIN, July 26 (Reuters) - Ireland’s permanent tsb (PTSB) said mortgage lending surged 62 percent in the first six months of 2017, as it laid out plans to shrink its stock of non-performing loans by around two-thirds.

Under pressure from regulators, PTSB said on Wednesday it would tackle the 47 percent of non-performing borrowers without a payment plan by offering a range of strategies, including accelerated workout, closures and portfolio sales, rather than forbearance - the temporary postponement of payments.

Those plans are intended to cut the bank’s NPL ratio to a high single digit number over the medium term from what it said was an “unsustainably high” 28 percent of its loan book at the end of June.

“We have a high NPL ratio of 28 percent 10 years after the financial crisis. We now need to think about how we shrink that ratio down because in the long term it is not a signal of a bank’s strength,” Chief Executive Jeremy Masding said in a statement.

After a number of quarters of steady falls, PTSB cut its stock of NPLs by just one percent in the six months to end-June, which analysts at Investec said suggested little or no progress in 2017 so far.

The bank’s shares fell 8 percent to 2.30 euros at 0720 GMT

“Given the near stalling out of current progress, this (the bank’s NPL plan) now takes on even more importance,” Investec Ireland analyst Owen Callan wrote in a note.

The bank’s rising mortgage lending, which grew at almost twice the industry average, increased its share of the rapidly recovering market to 10.8 percent and closer to the 13-17 percent level it targeted to capture by the end of 2018 when it re-listed on the stock exchange two years ago.

The 75 percent state-owned mortgage lender reported a pre-exceptional profit of 53 million euros ($61.7 million), down from 117 million euros a year ago. Last year it clawed back 61 million euros from money put aside for bad loans whereas it booked an impairment charge of 6 million euros this year.

“Momentum is strong going into the second half, I think the business has definitely turned a corner,” Masding told Ireland’s Newstalk radio station. ($1 = 0.8595 euros) (Reporting by Padraic Halpin, editing by Louise Heavens)