PTSB anticipated to spotlight key factors of loans takeover
Interest fee commentary, dividends and updates referring to mergers and acquisitions (M&A) will likely be among the many issues to look out for this week when the three pillar banks unveil outcomes for 2021.
ank of Ireland outcomes are out this morning, whereas Permanent TSB and AIB are scheduled to have outcomes out on Wednesday and Thursday, respectively.
Permanent TSB is at present looking for approval from the State’s competitors watchdog to take over €7 billion of mortgages and enterprise loans from Ulster Bank, which is leaving the market.
John Cronin, monetary analyst at Goodbody, stated Permanent TSB will in all probability find yourself speaking lots concerning the Ulster Bank deal “and how transformational it is”.
“I don’t think we are going to hear a whole lot by way of an update, but I think they will emphasise the point around what it will do in terms of profitability,” he stated.
“And we might get a little bit more colour in terms of how management is thinking around how its P&L (profit and loss account) and balance sheet will look post acquisition.”
Earlier this month, the Competition and Consumer Protection Commission (CCPC) advised Bank of Ireland and KBC that their deal to switch €9bn in performing belongings from KBC to Bank of Ireland would have the have an effect on of considerably decreasing competitors within the mortgage market.
It is known the CCPC is looking for cures for its competitors issues earlier than it points its ultimate dedication on the proposed takeover in May.
“On Bank of Ireland’s potential acquisition of the KCB Ireland book, I think investors will be keen to understand [the CCPC investigation] and what kind of remedies Bank of Ireland might have in order to ensure that the transaction can be completed,” Mr Cronin stated.
Mr Cronin additionally believes AIB will reiterate “the strategic benefits” of their acquisition of Ulster Bank’s company and business loans.
When it involves dividends, there’s a chance that AIB and Bank of Ireland will cut up between a money dividend and share buyback.
“One of the reasons why Irish bank stocks underperformed European peers for a period last year was the lack of dividends,” Mr Cronin stated.
“The outlook commentary in relation to future distributions will be a key focus of investor attention.”
On the matter of rates of interest, Diarmaid Sheridan, of stockbrokers Davy, expects the banks to get numerous questions from analysts.
“There is a greater sense that we are at that junction where rates are about to change relative to in the past, so it is certainly an area of a lot more focus. It will be an area which will get a lot of attention,” he stated.
The financial institution’s commentary round lending progress can even be of explicit curiosity, in keeping with Mr Sheridan.
“We look to be well set up in Ireland in terms of beginning to see some loan growth,” he acknowledged.
“The mortgage market did barely higher than we anticipated in 2021 – there’s a good pipeline of approvals within the system.
“There are areas like that which people will look out for in terms of ‘are the banks on an organic basis beginning to look to return to growth?’.”