Permanent TSB has opened 2026 with a solid set of first-quarter numbers. Revenue is up, lending is growing, costs are better controlled than the headline suggests, and credit quality looks steady. On top of that, the bank is now sitting under a recommended takeover offer from BAWAG Group at 297 cents per share, which changes the lens through which investors will view these results.
The short version: this is a good trading update. It shows the core bank is performing better operationally, even before you get into the takeover angle. That matters because it suggests Permanent TSB is not being sold from a position of weakness.
Permanent TSB Q1 2026 key figures show stronger income, margins and lending growth
| Metric | Q1 2026 | Change |
|---|---|---|
| Total operating income | Not disclosed | Up 10%, or 6% underlying |
| Net interest margin | 2.13% | Up 10 basis points |
| Cost/income ratio | 72% | 4 percentage points lower |
| Impairment charge | Nil | No charge in Q1 |
| Total gross loans | €22.7 billion | Up 3% |
| Customer deposits | €25.6 billion | Up 3% year-on-year |
| New mortgage market share | c. 19% | Targeting c. 20% for full year |
| New business banking lending | Not disclosed | Up 18% |
| New personal term lending | Not disclosed | Up 105% |
| Pro-forma CET1 ratio | 17.9% | Up from 17.5% pro-forma at year-end |
Permanent TSB revenue growth was good, but the underlying detail matters
Total operating income rose 10% in Q1. Strip out timing and one-off effects, and the underlying growth rate was 6%. That is still a respectable number for a retail bank.
The main driver was net interest income, up 9%. This is the money a bank makes on the gap between what it earns on loans and what it pays on deposits and other funding. Permanent TSB’s net interest margin, or NIM, improved to 2.13% from 2.03% a year earlier.
There is a small catch, and it is worth paying attention to. Management says NIM benefited from a one-off catch-up adjustment, with the underlying level closer to c. 2.11%. That is still above last year and still healthy, but it tells you not all of the uplift should be treated as fully repeatable.
The bank says lower rates paid on deposits, especially term deposits, helped margins. It also continues to benefit from older fixed-rate mortgages rolling onto higher prevailing rates. Against that, mortgage rate cuts announced in January 2026 provided some offset.
That mix feels broadly positive. It says margin expansion is not just a fluke, but it also shows the easy gains may not be unlimited if pricing competition in mortgages remains active.
Cost control improved more than the headline suggests, helping the efficiency ratio
Costs were up 6% year-on-year, which on the face of it is not ideal. But the bank says this was mainly due to annual pay increases being awarded earlier in 2026 than in 2025. Adjusting for that timing difference, underlying costs were up just 1%.
That is a much better result. It suggests management is getting a grip on expenses, helped by lower headcount and tighter control of third-party suppliers.
The proof is in the cost/income ratio, which fell to 72% from 76%. This ratio shows how much it costs the bank to generate its income, so lower is better. Permanent TSB is still not cheap enough versus the very best-run banks, but it is moving in the right direction and says it remains on track for a full-year target of below 70%.
Mortgage market share, business banking and personal loans all point to a broader growth story
The mortgage franchise remains the centrepiece. Permanent TSB reported c. 19% share of new mortgage business in Q1 and says it is comfortable with an outlook of c. 20% for the year thanks to a strong pipeline. That is a strong competitive position in the Irish market.
Total gross customer loans reached €22.7 billion, up 3% year-on-year, driven by 3% growth in the core mortgage book. The January mortgage rate reductions appear to have helped with customer demand, especially among first-time buyers, while also supporting retention of existing borrowers.
More interestingly, the bank is not relying on mortgages alone. New business banking lending rose 18%, and new personal term lending jumped 105% after the overhaul of the personal loan range last year. That helped grow the business banking book by 10% and the personal term lending book by 25%.
That diversification matters. A bank with more than one engine of growth is generally in a better place than one tied almost entirely to the mortgage cycle.
Asset quality, deposits and capital strength all look reassuring in Q1 2026
There was no impairment charge in the quarter, which is plainly a good result. An impairment charge is the amount a bank sets aside for loans that may go bad. Zero does not mean zero risk, but it does tell you there was no sign of a material deterioration in the loan book during the period.
Non-performing loans, or NPLs, were 1.4% of gross loans, unchanged from year-end. The bank notes that the absolute number was marginally higher because of a change in the definition of default linked to an internal ratings review, rather than because customers suddenly got into more trouble.
Deposits stood at €25.6 billion, unchanged from December 2025 and up 3% year-on-year. The loan-to-deposit ratio was 88%, while the liquidity coverage ratio was 269%. Those are strong numbers and suggest the funding base remains secure.
Capital is also comfortably strong. The pro-forma common equity tier 1 ratio, or CET1, was 17.9%, comfortably above regulatory minimums. Even after deducting the proposed €10 million dividend from own funds, the bank still looks well capitalised.
What the BAWAG offer means for Permanent TSB shareholders
The recommended BAWAG offer at 297 cents per share is the other big piece of the puzzle. It means investors are not just judging Permanent TSB on standalone Q1 trading. They are also judging whether the deal will complete and whether the offer fairly reflects the bank’s improving position.
These Q1 numbers strengthen the case that Permanent TSB is in decent shape operationally. Higher income, a better margin, improving efficiency, good loan growth and strong capital are not the profile of a bank under pressure. That does not automatically mean the offer is too low or too high, but it does suggest the asset being acquired is performing well.
There is also a strategic point here. Management says ownership by BAWAG could support the next phase of growth and strengthen Permanent TSB’s role in Irish retail banking. That may be true, but for minority shareholders the immediate issue is simpler: the offer price and the path to completion matter most.
My view on Permanent TSB’s Q1 2026 update – positive trading with only a few watchpoints
I’d call this a clearly positive update. The underlying trends are good, and several of them are better than the headline numbers first suggest once you adjust for timing noise. The bank is lending more, earning better margins, and keeping credit problems under control.
The watchpoints are fairly standard. Some income benefits were timing-related or one-off, mortgage competition could cap future margin gains, and the bank itself acknowledges wider international uncertainty. Also, Q1 profit is not disclosed, so investors are working from income, cost and capital indicators rather than a full profit line.
Still, the broad takeaway is favourable. Permanent TSB has started 2026 with momentum, and that gives the BAWAG offer extra significance. Shareholders are looking at a bank that appears to be getting stronger, not weaker, as the takeover process unfolds.
