Approval of IRB mortgage models

Permanent TSB Group Holdings plc ("PTSB" or the "Bank") has been notified by the Central Bank of Ireland that its application to use its new IRB Mortgage Models (the "Models") has been approved. The Models were submitted to the Central Bank on 30th May 2025 and will become operational from 30th January 2026.

The new Models will reduce the Bank's risk weighting on its total residential mortgage portfolio from a previously reported 36.4% at end June 2025 to a pro-forma c. 32.8%. Excluding mortgages on the standardised approach, the reduction in risk weight intensity for the IRB Home Loan book equates to c. 5 percentage points.

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 c. €0.7 billion reducing from c. €10.9 billion to c. €10.2 billion. This would translate to an increase in the Bank's CET1 ratio from the previously reported 15.5% at end June 2025 to 16.6% on a pro-forma basis releasing the equivalent of c. €0.1bn in capital. This is comfortably above PTSB's total CET1 requirement of 10.69%.

Pro-forma impact on CET1 from new IRB mortgage Models

Looking forward, the 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 c. 10% by end 2028 when compared to our Medium-Term Plan. Factoring in this lower path for RWAs, the Bank has made a preliminary estimate of the impact on its 2027 and 2028 ROTE[1] targets as follows:

Impact on medium term ROTE targets

As the implementation of the new Models has generated a once-off capital benefit and will also improve PTSB's annual capital generation, the Board will now assess the impact on the Bank's ICAAP and Medium-Term Plan. We will update the market further on this at our 2025 full year results scheduled for 5th March 2026. In light of positive trading conditions, these financial results are expected to close ahead of current market expectations.

As previously indicated, PTSB also expects to recommend a final dividend to shareholders this year to be paid out of 2025 earnings, subject to financial position and the required regulatory and other approvals. Today's announcement does not have any implications for the quantum of this distribution. The implications for the Bank's future distribution capacity will be considered as part of our assessment of the Bank's ICAAP and Medium-Term Plan.

PTSB CEO Eamonn Crowley said:

"Today's announcement is an extremely positive outcome for PTSB which reflects our strategy, prudent credit risk approach and strong asset quality. 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."

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Analyst conference call

Eamonn Crowley, CEO and Barry D'Arcy, CFO, will host a conference call today at 10.00 Irish Time/GMT for 30 minutes. To participate in the Conference Call, register using the link below:

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[1] Return on tangible equity is profit attributable to shareholders (excl. all exceptional items) divided by notional equity (average RWAs * CET1 of c. 14%)