DUBLIN (Reuters) - Ireland's Permanent TSB (PTSB) will invest savings from non-recurring projects into improving its digital business, a plan that analysts said will slow earnings recovery at the small Irish lender.
The 75 percent state-owned lender has had to spend the last number of years reducing its level of non-performing loans and resurrecting its mortgage business where new lending ground to a halt following Ireland's banking crisis a decade ago.
It has since cut its non-performing loan ratio to 10 percent of its loan book from 26 percent at the start of 2017 through sales and a securitisation deal and increased its share of the Irish mortgage market to 15.1 percent from 9.6 percent two years ago.
PTSB said on Wednesday that its full-year profit before tax and exceptional items, including a 66 million euro (56.71 million pounds) charge related to its loan deleveraging, rose by 45 percent to 94 million euros (80.77 million pounds), progress Chief Executive Jeremy Masding said amounted to a "transformational year".
With the bank forecasting a continued reduction of its non-performing loan ratio towards the mid-single digits in the medium term, analysts are switching their focus to the bank's cost outlook.
Operating expenses are expected to remain broadly flat again this year, the bank said, as it outlined plans to use savings to improve its digital offering and infrastructure and catch up with larger rivals Bank of Ireland and Allied Irish Banks, who have embarked on major investment projects.
Analysts at Davy Stockbrokers said in a note that the digital investment - together with the lower European Central Bank interest rate outlook - would slow the bank's earnings recovery.
(Reporting by Padraic Halpin, editing by Louise Heavens)