Last year PTSB applied to the Central Bank of Ireland seeking approval to use new IRB Mortgage Models – essentially arguing that mortgages on its books are now less risky than after the crash.
The regulator has now approved the new models which will become operational from January 30, 2026.
The likely effect of the change means the bank can lend more with the capital it has and ultimately should help driver greater profits in future. It puts the bank on a more level footing with key rivals AIB and Bank of Ireland.
While approval by the Central Bank had been expected, the timing is a boost to plans to sell the bank, because it provides clarity to would-be buyers relatively early in that process.
Goodbody Stockbrokers analyst Denis McGoldrick said the immediate impact on the bank’s balance sheet was at the lower end of expectations but said it was reassuring that the approval of the new models is completed in the context of planned sale.
PTSB, which is majority State-owned, put itself up for sale last October. Initial formal expressions of interest are expected around the end of this month. So the update comes at an important time.
News in 90 seconds Wednesday 21 January
The bank said the new models will reduce the risk weighting on its total residential mortgage portfolio from a previously reported 36.4pc at the end of June 2025 to a pro-forma c. 32.8pc.
Pro-forma for the impact of the new models, PTSB’s total risk weighted assets (RWAs) at the end of June 2025 would be lower by around €700m.
The bank said application of the new models will materially reduce the capital intensity of PTSB’s new mortgage lending.
“Therefore, the capital benefit will increase over time as the bank grows its new lending volumes – forecast total RWAs will be lower by an estimated 10pc by end 2028 when compared to our medium-term plan.”
PTSB chief executive Eamonn Crowley said the news from the Central Bank was “extremely positive”.
“Today’s announcement is an extremely positive outcome for PTSB which reflects our strategy, prudent credit risk approach and strong asset quality,” Mr Crowley said.
“It is a significant milestone in our ongoing transformation, strengthening our position as a competitive force in the Irish market and enabling further growth and sustainable returns for our shareholders. I want to acknowledge the very constructive engagement with the Central Bank of Ireland throughout this intensive process.”
PTSB shares rose on Wednesday, following the update to the market. Shares touched €3.15 each at one stage, their best level since early December, before falling back somewhat to close at €3.03 each.
source