Permanent TSB half-year results: profit rises 34% ahead of BAWAG vote

A stronger first half for Permanent TSB

Permanent TSB Group Holdings PLC delivered a solid set of half-year numbers, with underlying profit before tax increasing by 34% to €68 million.

The Irish bank benefited from rising income, a wider net interest margin and growth across its loan book. Operating expenses also edged lower, helping the cost-to-income ratio improve by five percentage points.

However, these results arrive against an unusual backdrop. Permanent TSB's board has agreed terms for BAWAG to acquire the entire issued share capital of the bank. Shareholders are due to consider and vote on the board-recommended offer at the Scheme Meeting and extraordinary general meeting on 30 July 2026.

That means investors are assessing both the operational progress and the proposed transaction. The full figures are available in the original company announcement.

Permanent TSB's key H1 2026 figures

Metric	H1 2026	Change or comparison
Underlying profit before tax	€68 million	Up 34%
Reported profit before tax	€57 million	Prior figure not disclosed
Total income	€344 million	Up 7%
Net interest income	€313 million	Up 9%
Net interest margin	2.13%	2.02% in H1 2025
Operating expenses	€270 million	Down 1%
Cost-to-income ratio	71%	Down from 76%
Earnings per share before exceptional items	6.6 cents	Prior figure not disclosed
Return on tangible equity	5.0%	Prior figure not disclosed
CET1 capital ratio	17.7%	17.5% pro forma at December 2025
Total gross loans	€22.9 billion	Up 4%
Customer deposits	€25.6 billion	Up 2%

Underlying profit excludes exceptional items. Permanent TSB recorded €11 million of exceptional costs connected with the formal sale process, reducing reported profit before tax to €57 million.

Higher margins support income growth

Net interest income rose by 9% to €313 million. This is the difference between the interest a bank receives from borrowers and the interest it pays to depositors and other funding providers.

Permanent TSB's net interest margin, or NIM, increased from 2.02% to 2.13%. NIM measures net interest income relative to interest-earning assets and is an important indicator of lending profitability.

The improvement partly reflected lower rates paid on deposit liabilities, particularly as fixed-term balances matured. The bank also benefited as maturing fixed-rate mortgages rolled on to higher prevailing rates.

Lower average European Central Bank rates and mortgage rate reductions announced in January provided some offset. Management expects the ECB's more recent 0.25% rate increase to have a marginally positive effect on second-half income.

Fee and commission income slipped from €31 million to €30 million following a one-off €1 million charge within retail payments. Other income was €1 million.

Lending growth is becoming more diverse

Total gross loans increased by 4% to €22.9 billion, while total new lending rose by 6% to €1.7 billion.

Mortgages remain central to the business. New mortgage lending reached €1.3 billion, giving Permanent TSB an estimated market share of around 19%. Management continues to expect approximately 20% for the full year, supported by what it describes as a strong pipeline.

The more interesting growth came outside the core mortgage operation. New Business Banking lending increased by 18%, while the associated loan book grew by 11% to almost €1.4 billion.

Consumer term lending also doubled to €121 million following the relaunch of the bank's online offering during autumn 2025. This progress supports management's effort to broaden the business rather than relying quite so heavily on residential mortgages.

Green lending increased by 11% to approximately €620 million and represented 48% of new mortgage lending. The bank also provided €43 million of impact lending to business customers during the half and launched a €250 million Impact Lending Fund in July.

Costs move in the right direction

Operating expenses declined by 1% to €270 million. Underlying costs excluding regulatory charges were also 1% lower, while regulatory charges remained unchanged at €25 million.

Excluding those charges, the cost-to-income ratio improved from 76% to 71%. That is meaningful progress, although a ratio of 71% shows that costs still consume a substantial portion of income.

Management plans to generate further savings through tighter control of supplier, third-party and change-related spending, alongside natural staff attrition. Full-time employee numbers were almost 7% below June 2025 levels.

Credit quality and capital remain robust

Permanent TSB recorded a €6 million impairment charge, equivalent to a cost of risk of five basis points. A basis point is one-hundredth of a percentage point.

Observed defaults remained extremely low, according to management. Non-performing loans increased from €308 million at the end of 2025 to €323 million, largely because of a change in the definition of default linked to an internal ratings-based model review. They remained at 1.4% of gross loans.

Total provisions stood at €326 million, including €58 million of model overlays intended to reflect risks not fully captured by standard models. The review of non-mortgage IFRS 9 models is continuing, with implementation scheduled for the second half.

The common equity tier 1 ratio was 17.7%. CET1 is a core measure of a bank's capacity to absorb financial losses. This remained comfortably above Permanent TSB's approximately 10.7% regulatory requirement for 2026.

The bank's minimum requirement for own funds and eligible liabilities, known as MREL, stood at 40.0% compared with a requirement of 28.2%. Customer deposits rose by 2% to €25.6 billion, while the loan-to-deposit ratio was 88%.

What investors should take from the results

The main operational positives are clear: underlying profit grew strongly, income increased, margins widened and expenses declined. Lending growth was spread across mortgages, business banking and consumer finance, while capital and funding levels remained strong.

There are still points to watch. Fee income declined slightly, non-performing loans increased in absolute terms and the cost-to-income ratio remains relatively high despite its improvement. Return on tangible equity was 5.0%, leaving room for the bank to improve the returns generated from shareholders' capital.

In normal circumstances, the full-year outlook would be the central question. Management retained its previous guidance and said the bank remained on track to meet its financial targets, although the announcement did not restate those targets numerically.

Instead, attention now turns to the BAWAG proposal. Permanent TSB's board selected the offer after considering value, certainty, stakeholder interests and long-term strategic fit. The exact outcome remains subject to the shareholder process.

Investors following the transaction can also revisit the earlier Permanent TSB Q1 2026 performance and BAWAG offer update.

Strong numbers, but the shareholder vote takes centre stage

Permanent TSB enters the proposed BAWAG transaction with positive business momentum. Profit, income, lending and deposits all grew during the first half, while cost control and capital strength provided further support.

These figures offer evidence that the underlying bank is improving. Even so, the immediate investment focus is likely to remain on the board-recommended acquisition and the shareholder votes scheduled for 30 July rather than the standalone earnings outlook alone.