The big concern surrounding PTSB is the cost of writing mortgages – still, by far, its main line of business. Photograph: Nick Bradshaw
PTSB, which is 57 per cent taxpayer-owned, was rattled the most, with its stock falling as much as 7.3 per cent, leaving the three directors marginally under water on their investment.
AIB and Bank of Ireland are on track to see underlying profits dip by 15 per cent and 2 per cent respectively this year to €2.19 billion and €1.98 billion following an exceptional 2023, Davy analyst Diarmaid Sheridan calculated in a report published this week. This factors in expected cuts to official interest rates, including deposit rates, which had fuelled outsize earnings at the two largest Irish banks because of the high level of excess cash stored with the Central Bank.
The big concern surrounding PTSB is the cost of writing mortgages – still, by far, its main line of business. Every €100 of mortgages the bank issues has a risk weighting of over 40 per cent, against which it must hold expensive capital. The high risk-weighted assets density results from the bank’s experience of the last cycle when 28 per cent of its mortgages were non-performing. The risk weighing on new Bank of Ireland and AIB mortgages is in the 20s.
Avant Money said it is looking to expand its product and service offerings as it becomes a bank branch, beginning initially with deposits Avant Money said it is looking to expand its product and service offerings as it becomes a bank branch, beginning initially with deposits. It’s an area crying out for competition. Bankinter, with a loan book that slightly exceeds its deposit base, needs customers’ money more than the Irish banks.