Mortgage lending is up, but the market remains subdued due to a lack of supply
Permanent TSB Group has issued a trading statement this morning which confirms the bank has been profitable in the first quarter of the year and is trading in line with expectations, but it warns of significant challenges ahead that will reduce its forecast return on capital over time.
The group’s new mortgage lending grew by 4% during the period though there’s no reference to any planned reduction in mortgage rates for customers in the light of AIB and KBC moves on rates earlier in this week.
PTSB added that "the mortgage market in Ireland continues to be subdued primarily as a result of the constrained supply of housing."
The 75% State owned bank said, "We are satisfied with performance to date and will continue to manage effectively the controllable costs and grow the business."
It warns that factors such as higher regulatory costs, more modest mortgage lending growth than expected, a sustained low interest rate environment combined with continued uncertainty as to when it can sell its UK mortgage loans, mean the Group may not generate a return on equity of about 10% by 2018 as set out at its IPO last year.