Hi Sarenco
I am getting ready to speak at ptsb's AGM tomorrow, so that document and your analysis is very interesting.
I have extracted the two pages relating to ptsb's cost of funds on the attached.
There current group cost of funds is 1.44% while their core bank cost of funds is 1.17%. It seems that the reason for the higher group cost is due to a higher cost of funds in the UK, so let's just take the core cost of funds as 1.17% as it probably relates best to trackers. The tracker yield is 1.3%, so they are making a margin on the tracker book before admin costs.
However, I am a bit confused, as the 4th page on the attached shows a net interest margin of -0.3%? They are using the group cost of funds, and not the core cost of funds.
In any event, they are not losing as much as I thought they were.
But, are they losing money at all?
Here are the figures from the presentation
View attachment 474
Let's say that the ECB bought all the trackers from ptsb at their nominal value.
The interest received less interest paid would not change.
They have €15 billion of trackers and €8.5 billion of variable rates. If they lost 63% of their loans, I suspect that their admin and staff expenses would fall significantly. Not by 63% but maybe by 30% - say €100m.
Likewise, if ptsb could increase the rate on trackers by 1%, they would be back in profits.
But it's probably not worth their while giving people a big discount to pay off their trackers early.