Permanent Tsb Group Holdings Stock

Good morning, and welcome to our 2025 Full Year Results Presentation. I'm joined here today by our CFO, Barry D'Arcy. I'm going to cover the key highlights for 2025 and comment on the wider progress we have made through this first year of our 3-year strategy. I will then take you through how we see the financial performance of the bank evolving over the next few years before handing over to Barry, who will provide a more detailed review of our 2025 results. After this, we would be happy to take your questions.

So if we just turn to Slide 5. 2025 was a transformational year for PTSB. The bank's balance sheet continued to grow as customers responded to the strength of our brand and product offering. We lent a total of EUR 3.4 billion during 2025, and this is the highest level in 18 years, with circa 17% of this lending in nonmortgage lending. Our deposits increased by 6% or EUR 1.5 billion. Our mortgage book grew by over 3%, and our business banking portfolio rose by 9%.

Looking at our key financials, our total income reduced by 3% during the year due to the lower interest rate environment. However, it was a game of 2 halves with income in the second half of the year recovering 3% relative to the first half as margins stabilized, enabling volume growth to drive net interest income.

Our operating costs also reduced by 2%, and I'm pleased to say that we achieved operating cost level of EUR 519 million, which is EUR 6 million less than what we guided a year ago and EUR 12 million less than 2024.

In terms of profitability, our profit before exceptional items and tax was EUR 175 million, which was 3% or EUR 5 million lower than what we recorded in 2024 and this translated into a return on tangible equity at 7.3%. And as you know, we believe the bank is well positioned for this number to materially increase over the next few years.

Moving to capital. Our Core Equity Tier 1 capital level was very strong at 17.5% at year-end on a pro forma basis. And the approval of our IRB mortgage models is transformational for the bank as it significantly enhances our competitiveness and will enable further sustainable business growth and returns for our shareholders now and into the future.

And finally, I'm delighted to announce a proposed final dividend of EUR 10 million or approximately EUR 0.018 per share and this is another important milestone for the bank for a number of reasons. It's the first dividend since 2008. It is the first dividend payment as a stand-alone business and not under the Irish Life banner. It is regulatory approved after an extended period of time when the bank was subject to a dividend restriction or dividend blocker, and it clearly reflects the renewed strength of PTSB.

If we turn to Slide 6. 2025 was a year of real delivery for PTSB. As you can see on Slide 6, we met or exceeded our guidance on every key metric, be it income, costs, impairment, capital or returns.

If we turn to Slide 7. This time last year, I took you through our fresh 3-year business strategy. So I won't dwell on this slide again today. Our ambition is to be Ireland's best personal and business bank through exceptional customer experience. And the overarching goal of our strategy is to deepen customer relationships, diversify our income and differentiate through customer experience. And in parallel, the bank will drive greater operating efficiencies so we can continue to grow and generate sustainable returns for our shareholders.

If we turn to Slide 8. On Slide 8, I would like to give you some sense of how this strategy comes through in the business on a day-to-day basis, and this is behind the headline financials. So a lot of points here, so I'll only pick up a few. In our Own My Home value stream, a key objective for us is to improve our digital mortgage sales and service internally for all our customers. And this would be good for our top line, but also for our cost base as we put more information and decisions into the hands of our customers through an online portal. Mortgage drawdowns through this portal were up 55% in 2025. And we've rolled out features through this portal, including balance availability and statements. And indeed, there are many more features to deliver in due course.

In our Manage My Money value stream, we put a lot of investment into our app, and it is encouraging to see that the benefits of this investment is starting to come through. Customer ratings across iOS and Android have effectively doubled in the past year when measured on a monthly basis. We will continue to push hard on this front as the app is now most -- is how most of our customers interact with us today and it is key to us attracting more current account customers with low-cost funding. And I should also say that our core NPS -- relationship NPS score across consumer banking was up further 2 points to 24 in 2025.

In our Grow & Run My Business value stream, our impact lending was up 16%, and we continue to widen our product footprint, such as the new higher purchase product line for companies at reduced rates, which are quite attractive. And we will also look to enter the PCP market in 2026, which is a very popular route for consumers when buying their car today.

Finally, we've listed a number of achievements that come under the Transform the Bank and Strengthen the Foundations value streams. I will cover the IRB model transformation on the next slide, and I've mentioned the dividend payment already. But I would also point to a 10% reduction in FTEs in 2025 and the progress we've made in embedding sustainability within the bank as evidenced by the upgrade in the CDP rating from a C to a B.

In addition, we are rolling out AI tools across the organization. We have initial AIB capabilities deployed in customer service and operational passes. And we are also targeting advanced solutions in fraud, AML and product innovation. So our AI adoption is progressing steadily with a clear focus on building the foundations needed to scale responsibly. And we continue to explore value-based use cases across priority areas and build our understanding of the benefits from AI tools as they become embedded.

Let me just turn to Slide 9. We've been talking to you about our IRB story for a number of years, and it is fantastic to finally receive regulatory approval to use new and updated models, which better reflect where PTSB is today. As you can see in the chart on Slide 9, the risk weighting on our total mortgage book has reduced dramatically since the end of 2024. The first major reduction reflected the implementation of CRR3 on the 1st of January 2025. And if we pro forma at the end of 2025 number, the risk weight would fall another 4.6 percentage points to 30.7% and that is a significant fall of around 9 percentage points in just 1 year.

We're not going to disclose specific numbers for our IRB book. But you've heard us talk about a risk weight on our new business of over 50% under the previous mortgage model. This has now reduced materially, which provides us with not only higher RAROC levels but increased optionality as to how we might want to compete in the market. As we said on the call in January, when we announced the news, the key point to understand here is that the risk weight and our overall book will continue to reduce in the years ahead as we write new business at lower risk weights and the older loans on the book, which have a higher risk weight roll off. And this fact supports our confidence that the bank's RWAs are now projected to be 10% lower than we originally penciled in our medium-term financial plan.

In recent weeks, we've been working on updating this plan and feeding the new IRB models into our ICAP cycle. This work is not yet complete, but clearly, the bank's sustainable returns and distribution capacity are now a good deal higher than where they were. We are probably looking at a rate closer to the European average of around 50%, other things being equal, rather than the 40%, which is covered in our dividend policy today. However, at this time, we do not plan to make any changes to this policy or recommend further distributions due to the ongoing formal sales process.

If we just turn to Slide 10. So as we leave legacy issues behind us that for so long have held us back as a bank, we believe the PTSB franchise is now well positioned to really show what it is capable of. However, the fortunes of any bank are tied to the economies in which they operate. And PTSB is truly fortunate to operate exclusively in the Republic of Ireland, which has been and continues to be one of the most vibrant and resilient economies in Europe.

And notwithstanding all the geopolitical uncertainty over the past year and indeed over the past week, the Irish economy continues, as I said, to be resilient. And it is notable that our core market of mortgages -- apologies, it is notable that our core market, which is mortgages, new lending in 2025 surprised the upside with mortgage lending reaching EUR 14.5 billion for the year compared with a more conservative forecast of EUR 14 billion. And we took 20% of this larger market, which was in line with our expectations and our objectives.

So if we just turn to Slide 11. We've laid out here our medium-term targets, which are unchanged from what we gave you a few weeks ago, and also our new guidance for 2026. In giving you this new guidance, we are somewhat constrained in what we can disclose due to the restrictions of the takeover panel rules. But looking out to 2028 and underpinning these numbers is an acceleration in lending growth from the current 4% rate, driven by an expansion in the mortgage market and an increase in the net interest margin to 2.3%. And it should be noted, we recorded a margin of 2.3% in 2023. So we regard this as not being overly aggressive. We also aim to keep costs well under control out to 2028, which will enable our cost income ratio to fall significantly to less than 60%.

If you look at asset quality, we continue to see signs -- we continue to see no signs of strain in the book, and we are well provided for, but we prudently model for a cost of risk that moves upwards towards a 20 to 25 basis point range 3 years from now. So we put all this together, we believe we can drive a return on tangible equity towards 13% by 2028. And if you roll this forward a couple of years, we believe that number will be higher than 13% in that sense. So just to mention that.

So I'd like to thank you at this stage. I'll now hand over to our CFO, Barry D'Arcy, who will take you through our financial performance in more detail. Thank you very much.

Thank you, Eamonn, and good morning, everyone. Slide 13 sets out our financial performance for -- during 2025. Total operating income reduced to 3% during 2025, as while our balance sheet grew, our margins reduced reflecting lower ECB and mortgage rates and higher average deposit costs. However, as Eamonn said, it is important to note that income returned to growth in H2 with a rise of 3% relative to H1, and it was only marginally lower on a year-on-year basis.

Total operating costs were EUR 519 million or 2% lower and this outturn was better than the EUR 525 million we had guided. Within this, regulatory charges came in at a lower-than-expected EUR 25 million as we had no charge for the deposit guarantee scheme. Given the gap between income and cost, cost growth, our cost-to-income ratio rose 1 point to 75%, albeit the ratio fell over the course of the year and was closer to 74% in H2. We've recorded an impairment release of EUR 39 million for the full year, reflecting the underlying health of our assets and the completion of a review of our IFRS 9 models for the mortgage book. To note, this is the fifth year in a row that the bank has recorded an impairment release, and this is testament to our low-risk balance sheet and a prudent approach to provisioning.

Exceptional items were EUR 47 million, which is higher than the EUR 32 million we guided at the half year stage. This includes EUR 35 million for the voluntary severance scheme and EUR 12 million for other noncore items, which included some early cost for FSP or formal sales process. Stripping out exceptionals, our underlying profit before tax was EUR 175 million for the period, and our equivalent EPS came in at EUR 0.206 for the year. Meanwhile, return on tangible equity on the same basis was just over 7%. And finally, as Eamonn mentioned at the outset, we are delighted to be able to recommend a final dividend to shareholders of EUR 0.018 per share, our first in 18 years.

On Slide 14, we show our net interest income, which was EUR 590 million for the year, which is 4% lower. The main negative driver behind NII was higher deposit costs. This is a function of higher average volumes relative to last year, particularly in term products and higher average rates. However, I mentioned at our interim results that our costs of our deposits had peaked. And indeed, the average rate we paid on both our term deposits and interest-bearing deposits in aggregate was lower in [Technical Difficulty] hedges in place to manage our IRRBB exposure within risk appetite. As rates came down, recorded gain on hedges linked to our MTNs and Tier 2 instruments, which helps lower wholesale funding costs.

Our asset yield reduced 22 basis points year-on-year as income on our tracker mortgages and cash balances repriced. I'll talk about our lending income in more detail in a minute. Meanwhile, our average cost of funds having been up 3% at the halfway stage fell 4% -- 4 basis points year-on-year when measured after the hedging gain. Our net interest margin was 203 basis points for the year, consistent with our guidance of greater than 200.

Our Q4 exit NIM was 208 basis points, and favorable rollover rates on both the asset and liability side are helping to raise margins as is a positive change in the mix. This puts us in a strong opening position relative to our guidance, which is for a NIM of greater than 210 basis points for 2026. Once again, this guidance is based on the assumption that the ECB deposit rates remain at 2% through the year. The bank's sensitivity to movements in interest rates has reduced materially in recent years and we have shown that latest number on the slide from movements both up and down from here.

Moving to Slide 15. Our new lending performance -- our total new lending was EUR 3.4 billion in 2025, which was up 31%. In mortgages, we lent EUR 2.9 billion, and our market share was a strong 20% compared with the 16% level we recorded in 2024. New lending and business banking, which includes SME and asset finance was EUR 450 million, up 4%. And again, we were particularly pleased with the 10% jump in new SME lending, while asset finance was flat. And in response, we took steps in the fourth quarter to support a better position to compete across the different market segments.

For a number of years, PTSB has not really been an active participant in consumer lending, and it only represents about 1% of our loan book today. However, we expect this to change. The 10% rise in payouts shown here hides what has happened since we refreshed our offering in September with lower rates, a simple product set and an easier online process. Since that refresh, average weekly applications are up 25% and drawdowns up 63%.

On Slide 16, we'll give you some detail on our lending income and our mortgage book, in particular. Our performing mortgage book rose by 3.5% in 2025 to EUR 20.4 billion. Falling rates outweighed the benefit from this volume growth as our margin slide showed. You can see the different effect of falling rates in the chart at the bottom on the left. Our flow yield, which captures new to bank customers during the year was 3.62%, but it was still slightly higher than that for the stock, which was 3.53%. However, an important piece of our lending story is what's happening with our fixed rate maturities.

Here, we have mortgages written when rates were much lower, such as in 2022 and '23, maturing on to higher rates today, and that is providing support to NIM as we go forward. For instance, nearly half of our fixed rate matures in 2026 and '27 and is coming off rates that were closer to 3% rather than the 3.5% for the book overall.

We show you here the latest split of the mortgage book. And as before, fixed rate mortgages make up the majority of our performing book at 74%. The variable component of the book is now 15%, and the ECB tracker portfolio is down to 11% of the book.

On Slide 17, net fees and commissions increased 5% to EUR 58 million, driven mainly by growth in current account income. Unlike our competitors, we charge a flat per monthly fee for our current account and provide a range of other benefits, including 2% cash back each month on your mortgage if that is with PTSB also. Growing this revenue line is not just about growing our customer base and improving cross-sell. It is also about managing our outgoing costs, particularly in the payments area, and this is something that we've been working very hard at. Other developments mentioned include the final implementation of SEPA instant, and we look forward to the imminent launch of Zippay in Ireland, which will make peer-to-peer payments easier between the local banks. Aside from fees and commissions, we also recorded EUR 7 million in other income, up from EUR 5 million last year, and we alluded to these customer-related FX and hedging gains in our Q3 statement.

Moving to Slide 18 and looking at operating costs. These were EUR 519 million for the year, down 2%. This was better than our guidance of EUR 525 million. Regulatory charges came in at EUR 25 million. And excluding these charges, underlying costs were down 1%. Meanwhile, the bank's cost-to-income ratio at 75%. And as I said earlier, there was a reduction from over 76% in H1 to near 74% in H2.

At the start of 2025, we committed to a reduction of 300 FTEs. Through our voluntary severance scheme and natural attrition, we have delivered a reduction of 329 to an overall FTE number of 2,918 for the year. The VS scheme will generate annualized cost savings of circa EUR 21 million per annum, less than half of which came through during 2025. And the carryforward benefit here will help offset general inflationary pressures. We also expect our depreciation charge to be lower this year. There was a one-off element relating to leased assets in 2025. For full year 2026, we're guiding a cost-to-income ratio of less than 70%.

On Slide 19. Asset quality remains strong. And as a result, the bank recognized the EUR 39 million P&L write-back, the fifth year in a row we have done so. The main drivers behind this result were the continued benign macro environment and the conclusion of the review of our IFRS 9 mortgage models. This review covered staging, LGD and PD models and contributed significantly to the EUR 72 million decline you see in the total provision. Our provision stock ended the year at EUR 320 million or 1.4% of loans, down from EUR 392 million and 1.8% the previous year.

Within the total, the main move that took place related to coverage of our Stage 1 loans. We previously held 64 basis points on these loans, which marked us as a significant outlier relative to peers, and this is now reduced to 18 points, which is still marginally more conservative than our peers on a like-for-like basis.

On the other hand, coverage of Stage 3. Our NPLs is now higher than a year ago as part of our provision models program, a new approach to calculating ECL for longer-dated NPLs was developed and now uses a DCF-based formula. This approach resulted in higher coverage levels for NPLs on the books for greater than 3 years. We recently completed a small NPL sale and this also contributed to the reduction in our stock of provisions and a further fall in our NPL ratio to 1.4%. While the transaction completed after the year-end, these loans were held as receivable at the 31st of December '25. The average loan to value on our mortgage book is now 46%, while the figure for new business was 65%. Our review of IFRS 9 models for other loan books is well underway and should conclude later this year.

In terms of guidance for 2026, we continue to believe we are well provided for currently. And again, we would point to a nil or 0 charge for the year.

If I go to Slide 20 next, our approach to scenario forecasting has changed post our IFRS 9 models review, and we're now more in line with the approach taken by our peers. For instance, we now have 4 rather than 3 scenarios for mortgages. What has not changed, however, is that our forecasts are still on the conservative side relative to consensus. Our downside 1 scenario best captures the geopolitical developments that we're seeing play out right now with unemployment rising to 8.5% in 2027 and house prices falling to 8% -- or falling 8%. In the second table, we have provided you with a sensitivity showing how provisions would move if each scenario came to pass.

On Slide 21, looking at our funding and liquidity. The picture here remains the same, that of the bank in a very strong position. You can see here that following over 5% growth during 2025, our balance sheet has now crossed the EUR 30 billion mark, which is a significant threshold from a regulatory perspective. The key driver behind this was customer deposits, which rose 6% year-on-year. And while this was slightly lower than the 7% we reported in the first half, we did flag this would happen after it was a very strong start to the year. Our retail term deposits rose EUR 0.9 billion, and the growth in balances slowed during the year as market rates came down. That meant less cannibalization from our current account balances, which were up 4%.

I said at our interims in August that the average cost of interest-bearing deposits was plateauing. And this, indeed, the figure for H2 came in at 9 basis points lower than in H1. This should continue to fall going forward as our more expensive deposits in the 2.75% to 3% range starts to roll off. Meanwhile, our MREL ratio remains very strong at over 36%, which is well ahead of a requirement. And if we measure this on a pro forma basis using new IRB models, it would be even higher. It's no surprise, therefore, that we are reviewing our issuance needs over the next number of years. For instance, we have EUR 650 million in medium-term notes that have a call date in April 2027, with a coupon of 6.6%. Under normal circumstances, one might look to refinance that toward the end of this year, and such a bond will probably have a 3% handle today given where our rating and spreads are.

On Slide 22, before I take you through our capital, I just want to give you some color on the various changes that have taken place on our RWAs. Eamonn mentioned earlier that the overall weight on our total mortgage book has fallen by almost 9 percentage points since the end of '24. If we pro forma for our new IRB models, that is a combined effect in addition to the movement on CRR3 on the 1st of January and the new models coming into effect 5 weeks ago.

We've mentioned that if we applied the new IRB models to our June 2025 mortgage book, the average risk weight would fall from 36.4% to 32.8% or by 3.6 percentage points. Running this pro forma calculation again at the end of December '25 would reduce this weighting from 35.3% you see in the table here, to 30.7%. That's a reduction of 4.6 points. This translates to a pro forma drop in RWAs of over EUR 900 million or the equivalent of EUR 130 million in capital, and compares with the circa EUR 700 million reduction we spoke about just in January.

If you look at the IRB book on its own, the reduction in average risk weights for the new models is larger at around 6 percentage points. Again, we expect this risk weighting to fall further over time as new lower-risk loans come onto the balance sheet and older, higher weighted loans roll off. For clarity, our core PTSB home loan book is now the only book we have on IRB. All our other loans, be the Ulster Bank mortgages we acquired, our legacy buy-to-let portfolio, our business banking and our consumer lending are now all unstandardized. This makes sense for us, and it's more efficient from a cost perspective, given the relatively small scale of these portfolios.

Looking at Slide 23. Our CET1 was 15.9% at year-end. But on a pro forma basis, building in the benefit from the loan sale and the new IRB models, this would rise to 17.5%. In the chart here, we show the various moving parts in our CET1 over the last 12 months. And you can see that CRR3 and IRB approval have lifted our capital level into a completely new territory.

The greater than EUR 900 million reduction in RWAs from IRB translates into a CET1 gain of 1.5%, while the loan sale added 0.1%. At this level, our CET1 is well in excess of our regulatory requirement with our 2026 SREP requirement of 10.69%. And while we are committed to optimizing our capital structure, as Eamonn said earlier, given the ongoing FSP process, the Board does not plan to recommend further distributions to shareholders at this time.

And so to summarize, we are very pleased with the financial performance of the bank in 2025. Particular highlights for me were the return of revenue growth in H2, the absolute decline we achieved in costs and the very positive developments we saw in relation to our capital.

I'll hand you back to Eamonn now for some concluding remarks, and then we'll open for questions. Thank you.

Thank you, Barry. I would like to finish on Slide 24, to remind you of our guidance for full year 2026 and indeed, the medium-term targets. We see our return on tangible equity rising to over 9% this year and reaching around 13% in 2028. And underpinning this improvement in returns is a rising net interest margin combined with an acceleration in loan growth as the Irish mortgage market grows, and we continue to diversify our lending into business banking.

With tight cost control, we believe our cost income ratio will fall below 70% this year and below 60% in 2028. And lastly, we prudently model for some modest deterioration in the cost of risk from a 0 charge this year to a range of 20 to 25 basis points in 2028.

We believe PTSB is now in a really strong position to compete and win on the Irish market, which is one of the best banking markets in Europe, both from a growth and a structural perspective. In addition, with the bank now in a more level playing field from a capital perspective, we can grow while improving returns we generate for our shareholders.

It's also important to note that 2026 represents our own birthday in that we are 210 years in existence, and we were set up primarily to help customers save and then use -- for the TSB to use those savings in order to help customers buy their own home. Our target, well, not much has changed in our approach since then, except to get a mortgage in 1816, it was a lottery for people who saved. So we have a much more sophisticated credit approval process these days rather than just a lottery. But in that sense, our core purpose and what we operate today around building trust with customers, helping them with their financial needs, helping them with their savings and indeed, helping more than 9,200 customers last year acquire a home has not changed in that sense.

So thank you very much for joining us today, and we would be happy to take your questions. As before and as we mentioned, we restricted in the level of information we can provide about our formal sales process, but also our financial forecast in that sense due to takeover rules. And I should mention as well, once again, our financial advisers, Goldman Sachs are here with us today to ensure that all information we provide is permitted under these rules.

So thank you very much for your attention, and we're happy to take your questions now. So thank you.

Just a couple please, if I may. So one maybe, Barry, just in terms of the interest-bearing deposits. So you gave good color on how the cost of those reduced half-on-half. Maybe if you could provide a guide for 2026? And I guess what level of that continued reduction is supporting the higher NIM guidance?

And then secondly, just on the risk weights and models, is it still your intention to move the Ulster loans on to IRB as presumably there would be a benefit there rather than staying on standardized? And if I could get in one more, maybe, Eamonn, just from a broader perspective in terms of the mortgage market and your own positioning. With the market share at about 20%, what is your level of ambition for that in light of, obviously, the new models?

Thanks, Denis. So on the deposit front, what we've seen, as I mentioned earlier, our rates in previous years at 2.75%, more recently for 1 year and 3% for a 3-year -- more than 2 years ago are starting to roll off. Our current headline rate on term is 2%. We have a very favorable regular saver at 2.25% as well. So what we've seen is we did reduce rates in the fourth quarter. We saw volumes being maintained. It's an area that we keep a very close eye on and look at movements.

But I think the broader piece that we see in the market is that the Irish consumer is in a very strong resilient position and we see those deposits growing, and our ambition there would be to follow the market in effect. So that's something that we'll keep a close eye on.

Regarding the Ulster portfolio and IRB, one of the key points on that is that, that portfolio continues to pay down quite rapidly actually. The risk weights, we haven't disclosed the risk weights on that portfolio. A key challenge on that is, obviously, we're successful at concluding the IRB outcome on our core portfolio. There is some work to be done on that over the coming years. And the question is, which comes first. So we're looking at that, and we're having good regulatory engagement to ensure that we get the best outcome for the bank but also suit and support what the regulatory expectations are there. So that's a work in progress.

So just on your question on mortgages. Obviously, mortgages continue to be a key part of our volume growth. But as I mentioned earlier on, 70% of our lending last year was nonmortgage. And it's not so long ago that it was only a [ 95.5% ] number. So we are trying to diversify into other areas, and we're doing it quite successfully and Barry gave an indication of the growth we're seeing in unsecured lending.

But to come back to your core question. What the IRB models really allow us consider our positioning in the mortgage market and much more in a freer manner in that sense. And we've clearly indicated in our presentation that the risk weights and first-time buyer mortgage origination, which is about 60% to 70% of the market are lower. And therefore, our return in that segment of the market has improved significantly. And therefore, it gives us more optionality. And you would have seen in mid-January, we reduced our rates, particularly for higher LTV mortgages, which is a first-time buyer mortgage category.

So we're not chasing any market share. It is our natural area of activity after 210 years of doing this very extremely well. And we have more optionality in that sense. We're happy with our 20% share in a growing market. But we can also consider competing more in various segments, given our new IRB modeling. So that's how I'll put it.

Just 2 questions on capital, if I may. First of all, the CET1 ratio of 17.5% on a pro forma basis seems a little bit higher than what was mentioned in the January statement. I was wondering if you could provide us some color there and then talk us through the moving parts of that change?

And then secondly, on capital returns. If you can provide some details on the decisioning to pursue further capital returns at this time?

I'll take the first question. Eamonn, you might take the second piece. So the 17.5%, obviously, greater than EUR 900 million RWA change with the IRB models equivalent in that is the back book versus front book mix. Eamonn mentioned earlier, great than 50% previously with the models that were developed back in 2017 versus now. We haven't -- we cannot actually share what the new number is, but it's materially lower.

And in FX, what we've tried to do with the capital model is building our strategy. So we want to -- how we actually acquire current account savings and also the mortgage. So the broad customer relationship plays into that. So what we saw was a very strong second half year on mortgage acquisition, and that played into our numbers. As that progresses over time, we'll continue to see that evolve.

Another feature of this as well with the model for those loans that actually have any arrears history or negative elements in terms of payment. The model is more penal as well. So we have to look and consider how things will actually look at over time. But all in, the number at June reflected the balances that were available. The December obviously reflected a strong second half, and that has played very positively through to the number.

So to come back to your second question, the pro forma is based on the IRB model officially been approved in January. So we -- that pro forma is based on that number. But dividend payments are based off your financial statements. So it's the capital position as at the end of the year or expected capital position.

And as Barry mentioned, the IRB models alone have added 1.5% to that CET1. We have to put this in the context of 2 aspects. One is it's our first dividend payment, where we've applied to the regulator. And that in itself is a momentous application for us because of where we've come from. And secondly, it has been absolutely the norm in the market that the first dividend payment that banks make at a slightly lower level than -- so as to ensure that there's a sustainable dividend payment going forward. That's the norm in the market. Indeed, we would have seen even Virgin Money issuing a dividend of 1p per share when they started to show that they could pay a dividend.

That's really all I can say about it because we are in a formal sales process, and it is not our intention to make any distributions based on that process. So that's all I can say. But to reiterate, it's the formal position at the end of 2025. We look at not the pro forma, and we're following a normal path of how a bank thinks about distributions. And this is particularly relevant to us because we had a dividend restriction or a dividend blocker, 1 of only 2 banks in Europe to have such a blocker for such an extended period of time as well. So that's the background.

Are there any questions online?

[Operator Instructions] Our first question is from Dan O'Neill from Carraighill.

Two from me. So firstly, your 20% mortgage market share versus the 16.5-ish in 2024. So I believe it's at least partly explained by disagreement between one of your competitors and the brokers. I don't think this caveat has been mentioned today. So basically, I'm wondering if there's a risk that this comes down going forward, even despite your improved ability to complete post IRB.

And then the second question is to do with headcount. So I think you said that EUR 35 million of costs were related to the voluntary severance scheme. So the 300 FTEs that works out to about EUR 120,000 per head. So given that, it would appear that you've lost higher-paid employees. So looking forward, do we have falling FTEs as well as a falling cost per employee?

Okay. So I'll pick up the first one. I won't comment on how competitors are competing in the market. The year before last year, so 2023, we had a 20% share of the market and it dipped in '24, primarily because of our -- the capital movement related to the Ulster deal, and we were cautious in the sense of how we allocated our capital as we settle that deal into the bank. We have -- you're referring to the intermediary market. We have a long-standing and very positive engagement with the intermediary market. The broker market, which now represents between 40% to 50% of volume, it's not so long ago it was only 20% of volume. And we actually have a positive and growing share in that segment because we've stuck with brokers and we supported intermediaries through thick and thin over many, many years.

We're one of the fastest to, yes, and the fastest to cash, and brokers like that. So once we are competitive on price, we will win business through that channel. We've seen other competitors go in and out of that market over time, but we have been consistently there for brokers.

So we're comfortable with our position. But in fact, when you stand back, our non-broker channel by way of mortgage origination is growing much faster than our intermediary channel. And that's related to our brand proposition. We are now 1 of 3 pillar banks in the market, and we're competing effectively. And the mention of IRB model review will now help us by way of our optionality with regard to how we will compete in that market with a much better return than we had here before.

So overall, I'm not too worried about what others are doing. I'm actually concentrated in ensuring we fulfill broker needs, and we ensure we're growing our share in the nonbroker channel as well. So overall, that's our position.

Thanks, Eamonn. Just on the FTE storyline and the EUR 35 million voluntary severance. What we did in DC, it was actually -- it was a longer service staff who took the option to take a voluntary severance. So in all, I think it was around 240 FTEs that have actually chosen to take that out of the 329 that we saw leave the bank at the end of 2025. There are some elements that will come through in the '26 results, as I mentioned earlier, about just under half of the savings of EUR 21 million that we expect on a full year basis came through in 2025, and we'll see the balance of that come through in the current year.

But just to add to what Barry said, we have more longer term colleagues who have taken the availability of that. So it's a mixture of service, how that interacts with the severance payment and then their underlying salary costs as well. So it is -- it has worked for us. And indeed, all employees have contractual rights in that sense. And we've facilitated our colleagues and indeed, reduced our head count in a very professional manner, and that will continue to be our approach as we think about overall head count. We will manage it professionally. We'll manage it in an orderly fashion. And indeed, we are focused, as I mentioned earlier on in ensuring we drive efficiency.

But efficiencies also, a flat cost and a growing volume by way of how we think about growing our business over time and a diversification of our business with a higher margin. So all of these things are coming together, and we can make sense to them. But we will continue to focus and manage our costs. And lastly, against our 2 players in the market, their costs have increased this year, our costs have reduced. So I think in that sense, we are also booking the trend of the wider market. So thank you.

Our next question is from Aman Rakkar from Barclays.

We've got feedback on the line, so I'm going to try and ask the question anyway. On costs, I just want to check, I think the market is probably looking for cost to be down versus the '25 level. And I just wanted to check whether that's a realistic assumption. Obviously, you've done better performance on an underlying basis in '25, but it seems like the levy, for example, is unsustainably low. So I just wanted to check. You might not want to give us an exact number, but just in terms of the shape, is it reasonable to expect the kind of cost down from the '25 level from here? Or should we expect kind of some potential increase in that, mindful of the fact, the top line looks like it's growing pretty strongly from here.

And then the second one, I appreciate the limitations that you're under right now and you might be constrained in terms of what you can say in terms of financial outcomes, but just would invite you, if you're able to comment at all on the formal sale process in terms of your experience to date or any color at all would be very helpful, if you're able to.

So I'll pick up on the 2 questions. I'll take the second one first. So under the takeover panels, with panel rules, we are absolutely restricted in commenting with respect to the process, only to say that it's ongoing. And also to say because it's in the public domain, when we announced this program, we announced it in the sense of clearly saying to the market, we have a strong position. And these 2025 numbers underpin our position at that time around launching the sales process, which in itself was an open process, and invited anybody who had credibility and interest in acquiring the bank, as I say, 1 of 3 peer banks in the market, and that process continues. I can't comment any more than that.

With regard to definitive comment on lower cost. Again, we're restricted in saying that. But we are very cost conscious. We are focused on managing our costs. I refer to aspects of human-assisted AI activity that we're working on and looking to embed in the organization over the next number of years. And indeed, the proof point around a 10% reduction in our head count in 1 year in the sense of enrolling that cost, annualized cost reduction forward is a very positive indication of how we think about cost, but I can't give you a definitive by way of it being lower. But if you add up all the comments I've made, you can come to your own assessment.

Our next question is from John Cronin from SeaPoint Insights.

I just want to come back to what's happening in the banking system more broadly. Your CET1 print is obviously very strong. I hear your comments in relation to the inaugural dividend and that being more of a signpost than necessarily a run rate. And that being said, you've stuck your CET1 target of 14%. I think I asked you about this back at the half year. And I know you can't comment now in relation to where that might trend, but we've seen one of your peers formally increased its target ratio to the surprise of markets. And I guess, look, theoretically, if you weren't in a sales process, like what are you thinking right now in terms of optimal levels for a bank like PTSB, if I can put the question like that? And is there anything we need to be thinking about in terms of the same?

So thanks for your question, John. And nice to hear from you. So we're sticking to the 14% level. What you would have seen from the outcome from our SREP engagement with our regulator last year, our SREP demand reduced by 25 basis points. So after many years of increasing SREP demand, we're seeing some level of reduction. So in that sense, we believe 14% is the level. It's arguable. And John, we would have discussed this over many years. It's hard to go for a bank like ours, which has a more simplistic in the sense of a business model not only complicated with no level of additional complication around market making and trading and things of that nature, it's arguable that rate should be lower if you compare it to our competitors across Europe. But we know Ireland has a higher risk weight and has a higher capital demand. But we're sticking at 14%, but we've seen a downward trend in the sense of the request from a regulator based on our SREP outcome. So that's where we are, John.

We currently have no further questions. So I will hand back to the management team for some closing remarks.

Great. Well, thank you very much. 2025 has been a transformational year for us, not only by way of the results that we've produced, which clearly shows growth. Our balance sheet grew by 6%. It clearly shows that if there's credit growth in the market, we will get our fair share, if not more. And the diversification of our business model will assist us in driving on both our net interest margin, but also our volume in due course. So this is a very exciting time for us. And of course, it's transformational in the sense that we have put ourselves up for sale, and the process with regard to that is ongoing.

So thank you very much, and thanks for your attention.

Hello, everyone, and thank you for joining the Permanent TSB Investor Call. My name is Gabrielle, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, Eamonn Crowley, CEO of Permanent TSB. Please go ahead.

Thank you, and good morning, everyone, and thank you for joining the call, particularly at such short notice. I'm joined here by our CFO, Barry D’'Arcy. And over the next half hour, we will take you through the outcome of our IRB models application and what it means for PTSB. As was the case when we announced our quarter 3 update at the end of October, we restricted on what level of information we can provide as we were in a close period and also our formal sales process is subject to the takeover rules.

As per standards process for any organization undertaking a formal sales process, our financial advisers, Goldman Sachs, are represented on the call this morning to ensure that all information provided is permitted under the takeover rules.

Today's announcement is an extremely positive announcement for PTSB, and I'm delighted to be meeting with you today to update you on the outcome of our IRB models review. As many of you know, PTSB has been working on this project for the best part of 2 years and a positive outcome was critical for us to be able to successfully compete in the market, to grow our business over the medium and long term and to also achieve a sustainable return for our shareholders.

And the outcome that we announced today ticks all of these boxes. From the end of this month, when the models go live, PTSB will no longer be constrained by a historical IRB model that was agreed in 2017, and that do not reflect the strong asset quality and balance sheet that we have today.

And there is no doubt that we can look to the future with confidence with this new model. Many colleagues have worked on this project over a long period of time, and I want to acknowledge their contribution to its success. I also want to acknowledge the very constructive engagement with the Central Bank of Ireland throughout what was a very intensive process.

So I'm now going to hand over to our CFO, Barry D'Arcy, to take you through the details. Thank you.

Thanks, Eamonn. As our statement this morning outlined, the new models will reduce our risk weighting on our total residential mortgage book from 36.4% we reported last June to a pro forma 32.8%. Excluding mortgages that are on a standardized model, which are essentially the loans we acquired from Ulster Bank, the reduction in risk-weight intensity for IRB home loan book amounts to circa 5 percentage points.

Pro forma, the impact of the new models on our total risk-weighted assets at the end of June would be EUR 0.7 billion lower, reducing from EUR 10.9 billion to EUR 10.2 billion. This would raise our CET1 ratio from 15.5% to 16.6% releasing the equivalent of circa EUR 0.1 billion of capital at June. And just to note, with the models, we will see at December a more positive picture in the context of how the models will actually play forward, and I'll talk to that in a moment.

What's important to understand is the new models give a far more favorable treatment to our front book than the models approved in 2017. Many of you have heard us talk about the risk weight on our new business being over 50% due to the bank's loss experienced during the great financial crash and the way the models were constructed at that time. While I will not disclose where this weighting has moved to now for competitive reasons, it has moved significantly down.

Hence, the capital benefit we receive will increase over time as the bank grows its new lending volumes. Hence, our total RWAs will reduced by more than the EUR 0.7 billion at end '25 and as -- be as much as circa 10% lower by end '28 when compared to our medium-term plan. Factoring in this lower path for RWAs, we have made a preliminary estimate of what this would mean for our ROTE targets. For 2027 and 2028, we estimate that the previously disclosed 9% and circa 11%, we confirm that forward would rise to greater than 10% and circa 13%, respectively, in '27 and '28.

And indeed, if you were to roll the model forward again, our ROTE would improve further. Our full year '25 results will be released in a few weeks on March 5, and we aim to provide you with some more details at that time, including what implications this could have for potential distribution capacity. Our current policy targets a payout ratio of 40% over time, starting from a moderate base. I can reiterate today that it is still our intention to recommend a modest final dividend to shareholders this year to be paid out of 2025 earnings. This will be subject to the required regulatory and other approvals. Today's announcement does not have any implications for the quantum of that distribution.

In light of positive trading conditions, these 2025 results are also expected to close ahead of current market expectations. Given the restrictions Eamonn referenced earlier, I'm sure you will understand we cannot comment any further on our '25 results today or the FSB process, which continues to progress. So thank you for your attention. And Eamonn and I would now be happy to take your questions.

[Operator Instructions] Our first question is from Borja Ramirez from Citi.

I have 2. Firstly, I would like to ask with regards to the ongoing sale process, if there's any update you could provide as to maybe the number of interested parties, any new maybe competitors? And also if there's any time line for the bid? And then my second question would be...

Sorry, this is James from Goldman Sachs chaperoning the meeting. They won't be able to answer the first question at all. They can't give any details on the formal sale process.

Thank you, that is noted. And then my other question would be more on the cost side. Some investors have asked what could be the efficiency opportunity given also like if you could disclose from the staff, how many are in the head office?

That's something we'll update on the 5th of March when we issue our annual results. But this call is specifically about the outcome of the IRB model. So Borja, we'll have to -- we'll talk to you on the 5th of March because we're in the close period. And indeed, with regards to the FSB, we've also mentioned we can't comment on that today. So it's purely on IRB.

Our next question is from Denis McGoldrick from Goodbody.

Firstly, just to acknowledge it's obviously great that this piece of work has been completed. I know how much work has gone into it over the last couple of years. So it's great to see that over the line. I just have one question, and it's actually on the comments around restarting the dividends this year. So I guess you note that today's outcome, I guess, does an impact on the quantum of the dividend that you're thinking about. And I guess, in the context of the ongoing sales process, I'm just wondering -- and given, I guess, the stock obviously continues to trade at a discounted book value, would it not be in your interest to distribute as much of the excess capital as possible in advance of hopefully a completion of the sale? Just interested in getting your thoughts on that, please.

So I'll just comment initially, Denis, thanks for your question and then let Barry comment as well. So we have to put this in perspective that the last dividend the bank has paid was in 2008. We operated as an organization with a dividend blocker until 2 years ago. So the actual payment of a dividend -- a final dividend and the fact that we're confident subject to regulatory approval, we're confident of announcing that on the 5th of March, is a major milestone for us in that sense.

It also has to be taken into account that the formal approval of the IRB models only happened yesterday evening. So in effect, any consideration of increased dividend payments can only operate from today onwards. It's not something we could have preempted or indeed thought about. So that's something we will outline on the 5th of March with regard to how we think about excess capital and things of that nature.

But by way of a process and an approach, we now have to reflect on the impact of this. And indeed, as I mentioned, it would not be timely at this moment to work on any particular distribution for that period. But obviously, it puts us in a much stronger position, both by way of the level of excess capital and indeed the capital required to run this business over the next years which in itself is transformational.

Yes. And just to add, and as we said in the statement, we are committing to pay that modest dividend at year-end. But again, that's still subject to the required approvals. And -- but as you'd be aware, we'd also have to assess the impact of the new models through our ICAP and medium-term plan and fully run that through our governance cycle and then again, engage with regulatory authorities. However, the FSP has now taken place, and it's not appropriate at this time to take an out from this review and formally change our distribution policy. So that's the position, Denis, as it stands now.

Our next question is from John Cronin from SeaPoint Insights.

Can you hear me okay?

Yes, John, yes.

Great. Congratulations on getting this over the line. Now look, my question is really same as Denis', but just to extend on it, I guess. In terms of the review that you're doing now that you've had this outcome in the context of the ICAP and going through the governance process. I know you said you'll update on that on the 5th of March.

Just trying to understand like could that be completed by the 5th of March? And would you -- I'm trying to understand timing really. Could you do a special dividend, for example, as soon as late March or early April with all the requisite approvals in place? Or is the ICAP and governance process much more elongated than that?

So I mean, your questions are well put and indeed these are aspects of which we will consider with the Board in due course. And we can't speculate on how that will land today. So we have to consider with our Board and again, update on the 5th of March. And that's really all I can say at this moment. But what obviously, John was supposed -- is a very strong position, both by way of our current capital position and indeed how we think about capital going forward. So that's all I can say at this moment.

Our next question is from Daniel O'Neill from Carraighill.

So just 2 from me. Firstly, obviously, this is great news. But even so, RWA density in Ireland is still high relative to European peers. So I'm wondering, are there any other items you can consider to improve your risk efficiency, things like SRTs. Obviously, we know your competitors are doing this. So yes, how should we think about this going forward? And then secondly, how should we now think about your ability or should I say, plans to compete on mortgage pricing?

Thanks, Daniel. Just on the capital optimization piece, as you'd be aware, we've been very cognizant of our capital position and risk weights over time. It's something that now that we've got this outcome concluded as part of our planning cycle, we will consider all elements in terms of how we actually improve our capital position. We haven't really looked in detail at SRTs or other elements. But as we go through the past this phase, it's something that we will keep an open mind towards in terms of capital optimization.

With regards to the second question, on mortgage pricing. Broadly, we keep a very active look at the mortgage market. We are very well positioned today. We announced pricing yesterday changes that actually were decided upon in advance of this approval. So we believe today, we're actually very well positioned from a pricing viewpoint. And again, we keep pricing under consideration, and we'll see how we are positioned in due course. So we are in a good place right now.

Our next question is from Rob Noble from Deutsche Bank.

Can you just -- a few technicals on the risk densities, right? Can you help us with the math on the IRB approval? So the Pillar 3, I see real estate exposure of EUR 22 billion. I think you base it off of a lower number. So just what's the difference between what I'm seeing in the Pillar 3 and what you put in the statement?

And then going forward, what risk density should we assume that the new lending is coming in at now? Is it the existing back book IRB risk density of, say, 33%? Or is it something different?

And then lastly, that risk density on the IRB is still higher than bank and AIB. Why do you think that is? Or is that something that could be optimized over time?

Just on the first piece, we'll obviously have full Pillar 3 disclosures in a couple of weeks' time. But I think the key difference between what you see there is both buy-to-let and SME captured within some of the model piece. So we can capture that separately if that's okay, Rob.

Just on the densities and where we close out, we can't comment on how others are, their competitive position. I think going back to it, what we've stated previously is that the models in 2017 were built at a point in time, which reflected relatively little new business and actually, it was positioning to protect that back book. What I would see with this model going forward is that we've normalized our position in terms of how we look at capital and the risk profile. And what we would see is in that front book that, as I mentioned, would be considerably lower.

It allows us to compete more effectively into the market. And I can't comment on exactly what it is in terms of where we've ended up. But in effect, it will allow us to play an appropriate role in the market with the growth that's taking place there, too.

Yes. And just to add that there's about 30% of our book is pre-global financial crisis. That will pay down over time and has a higher capital weighting given the experience in that book. As Barry just mentioned, the new book is created under -- with a lower capital rating, which is market competitive in the sense of where we are. And that could be the transformation. effectively, the back book will release capital over time as it pays down and the front book will be originated at lower capital levels to hence that transformation.

Can I just add one thing with respect to not to leave any uncertainty, on the 5th of March, I do not envisage that we will be mentioning anything more than having subject to the regulatory approval, a final dividend regard to 2025. I do not -- there won't be anything else at that moment, but we will be able to update our position with regard to how we think about excess capital and how we think about it in a wider sense of where we're positioned at this moment. So not to leave that unsaid as regards our position as we move into that 5th of March time frame. That relates to an earlier question from John. So there's no uncertainty in that regard. So thank you.

Our next question is from Peter de Lacy from Cantor Fitzgerald.

Okay. Just in terms of the negotiations or engagement with the Central Bank, what were the main areas of pushback? Or did they generally accept the model as proposed asking lots of questions, obviously, but were there any areas that needed significant amendment from what you had initially submitted, and why was that?

Thanks, Peter. I think as people are broadly aware, the any IRB engagement is very fulsome. And what we've been able to try and do with this outcome is actually reflect our current position. And we're pretty happy with that outcome today in terms of all the core elements that we wanted to see come through have come through.

And that engagement while robust from the Central Bank, allows us to actually move ahead with the outcome today. So I would say there's -- it's been a very constructive challenging engagement, but it's been pragmatic at the same time. So I think what I'd say here is we're pretty happy with this outcome. And there's not a whole lot left in terms of -- to be said in that context. It's a good outcome for the bank.

Our next question is from Diarmaid Sheridan from Davy.

Congratulations to you and the team on a very significant achievements today. Maybe just thinking about going forward and looking at, I guess, the other part of capital optimization in terms of your overall capital stack and your MREL stack. To what extent in your revised ROTE published this morning, are there any benefits from having a lower risk-weighted assets incorporated into those and from today's announcement?

Thanks, Diarmaid. A very good question. Today, what we're purely reflecting is the change on the IRB risk weights. We haven't have the luxury of time, given, as Eamonn mentioned, the approval only came through last night, to actually think through and plan out how we'd look at capital through time.

As previously disclosed, we have a very robust MREL level. We know that's something that we have said previously, we'd continue to look at. And indeed, this position and this outcome now, especially as you look through time, puts us in a better position to think that through in a more positive way. But we haven't captured that in any of the OLT numbers as they stand today. But no doubt that would actually improve things further, but we haven't captured that at this stage.

Our next question is from Fatima Ghaznavi from Keefe, Bruyette & Woods.

I just wanted to ask on your potential provision release as you review your IFRS 9 assumptions and models, you haven't given us much details on this. So could you maybe give a bit more color around when you might update us? It seems like there's still some value levers you could pull ahead of being sold? And is there maybe a reason why you're holding back some of these benefits?

Thanks, Fatima. As we've said, we will be announcing results on the 5th of March, and a key element of that will be -- part of that will be an update on IFRS 9 as well and what we've been able to deliver there. So that is only a relatively short period of time away. So we look forward to providing that update at that time. And today, it's primarily focused on IRB. We're not commenting on anything else from a results viewpoint at this time. But we'll -- we will share that detail in full color on the 5th of March.

[Operator Instructions] We have a follow-up question from Peter de Lacy from Cantor Fitzgerald.

Can you hear me now?

Yes, we can hear you, Peter, yes.

Okay. Yes, sorry about that. Just wanted to understand how the risk weighting will change -- risk-weighted asset weighting will change over time as you lend into the mortgage market. Is the lower rating applicable to recent loans going back a number of years? Or is it only on forward loans? Or are there buckets of risk weighting that apply to different cohorts, be that, say, 1 to 5, 1 to 3? Just so I can help understand that a bit better how the RWA weighting might change over time?

No, Peter, that's a good question. So it will -- in effect, we updated our credit policy back in 2012, followed by the macro prudential rules in '15. So what we've seen over recent times is a very low level of default rate in that portfolio. And through time, what we've seen is actually the book pre-2012 has actually been the more challenged element of the portfolio and carries higher risk weights.

So what we would see is actually that back book to a certain extent, that is more recent vintage will improve. But also the key element as we've said, is the front book as we write new business, given the growth in the market and actually the mortgage market growing and our share in that will actually help that picture further.

And as Eamonn mentioned, with the back book paying down, we'll see the mix change between that front book and back book quite substantially change out over to 2028. Probably by 2028, that front book mix will be more 80-20 versus front book today about 35% to 65%. So we're going to see quite a change over that period of time in that context.

Our average risk weight will reduce in that sense from now on and will transform in that respect.

[indiscernible] The underlying characteristics of the portfolio. So if we continue to underwrite in a very positive way, we'll see that feed through into our capital outcome, which we intend to do.

We currently have no further questions. So I will hand back to Eamonn for closing remarks.

Thank you very much, and thank you, as I mentioned earlier, for joining the call at short notice. For us, this is a milestone announcement in the sense of we've lived with the existing IRB model since 2017 We've been able to operate with those, but indeed, it has affected our return on equity over time. And now you can see a clear path to getting to double-digit and mid-teen ROE over the not-too-distant future.

We did say and promise to the best of our ability to deliver this result before the end of January of this year. We have and that's down to the work and effort by internal teams, but also the positive engagement with the Central Bank over that time. So it is a milestone day for us. It does provide clarity in the market to our position and indeed puts us in a great footing and a great position to grow and compete in this market over the medium term.

So we are delighted with the outcome, and we will roll on now to the 5th of March to update the market on 2025 performance and indeed where we're positioned as of December with regard to our capital position. So thank you very much.

This concludes today's Permanent TSB investor call. Thank you for joining. You may now disconnect.

Hello, everyone, and thank you for joining us today for the PTSB conference call. My name is Sami, and I'll be coordinating your call today. [Operator Instructions] I'll now hand over to our host, Eamonn Crowley, CEO, to begin. Please go ahead, Eamonn.

Great. Good morning, everyone, and thank you for joining the call. I'm joined here with our CFO, Barry D'Arcy, and there are 3 topics which we would like to cover with you in the next half hour. First, we announced this morning that the Board of PTSB with the support of our largest shareholder, Ireland's Minister of Finance, has decided to launch a formal sales process or FSP in accordance with the Irish takeover rules. This puts the bank into a formal offer period. As a result, we're quite restricted in what we can say, but we will do our best to explain how the process will work and answer your questions. Second, we'd like to brief -- take you through our third quarter results for 2025, which continue to show that PTSB is making great progress in delivering on our strategy and improving returns for our shareholders. And then finally, we'll provide an update on our guidance and medium-term targets.

If I start with the FSP, I'm sure you're aware that PTSB has seen a significant increase in appetite for shares from international investors. We've had a very successful exit of NatWest from the register back in July. And more recently, we saw unprecedented demand for our Green Tier 2 issuance from an extended number of investors who also operate in the equity space. This is against the backdrop of increased consolidation activity in the European banking sector. And in recent years, PTSB's business has also fundamentally transformed. We've built a sustainable business model that is competing very strongly in the Irish personal business banking markets, supported by a refreshed customer-focused brand.

Therefore, with the support of the Minister of Finance, the Board of PTSB has concluded that now is the right time to seek a new long-term owner to support the next phase of the bank's growth and strategic development under the framework of an FSP. The Board believes that such a process could identify a new long-term owner of the bank, one which, subject to agreeing the terms satisfactory to the Board and the requisite shareholder and regulatory approval, could be value accretive for shareholders and beneficial for customers and colleagues.

In terms of how the process will work, the FSP will enable PTSB to have conversations with potential bidders on a confidential basis and within a structured sales process. There's no prescribed statutory time line under the Irish takeover rules. But if the FSP proceeds as anticipated, the Board will publicly announce the identity of a successful bidder in the FSP and the terms of their offer during the first half of 2026. It is currently expected that any recommended offer would be for this entire issued share capital of PTSB. And that offer would then be subject to shareholder approval and applicable regulatory consents.

There's no impact on customers as a result of this announcement and PTSB's operations, products and services are unaffected by the formal sales process. Our customers can continue to avail our products and services as normal and have our team of dedicated colleagues that are available to support customers through our voice and digital channels as well as through our network of 98 branches nationwide. PTSB is committed to the Irish retail banking market. And as always, customers can be assured of the safety and security of their funds along with our continued focus to deliver exceptional customer experiences.

There will be no change for our colleagues either, and the FSP won't cause any changes for those colleagues during the process. Our people are fundamental to the success of the business, and it is our colleagues across the organization that have driven our success in recent years. So while we are happy to take questions on the FSP today, we are limited on what we can say in addition to the formal announcement that was issued this morning. But what I can say is that the commencement of an FSP is a usually positive development for PTSB and evidence of the bank's position of strength in the Irish retail banking market. Our continued sustainable growth is critical to ensure competition in the market and provide choice for customers.

And at this point, I will ask our CFO, Barry D'Arcy, to take you through the highlights of our quarter 3 results for 2025.

Thanks, Eamonn, and good morning, everyone. Looking at the key elements of our P&L. Total operating income for the first 9 months of 2025 reduced 4%, and we had a net interest margin or NIM of 201 basis points over the period. The bank's NIM has stabilized, and we expect it to exceed 200 basis points for the year as guided.

Total operating expenses were marginally lower over the first 9 months, and we remain on track to reduce costs for the full year to our target of EUR 525 million. Asset quality remains strong with no impairment charge in the first 3 quarters and the bank remains well provisioned.

Total gross loans rose to EUR 22.4 billion, up 3% since year-end and 4% year-on-year. Our new mortgage lending was up 64% to EUR 2.1 billion during the first 9 months, which gave us a share of over 20% of new business written in the market. Meanwhile, new lending in business banking, which is our SME and asset finance business, was up 11%. We recently announced enhancements to our consumer term lending proposition with new attractive rates ranging from 5.99%, and we have already seen a positive uptick in business as a result. Customer deposits were EUR 25.4 billion at the end of September, an increase of 5% or EUR 1.3 billion since year-end and around 7% year-on-year, which is a very strong performance.

Meanwhile, the bank maintains a strong capital position with a CET1 capital ratio of 15.5% at the end of September. Following our recent SREP review, our Pillar Two requirement reduced by 25 basis points. This equates to 14 basis points at the CET1 level, reducing our CET1 requirements to 10.69%. Our IRB model review is also progressing with the Central Bank of Ireland, and we will update the market when appropriate.

I'd also like to highlight the successful issuance of our Green Tier 2 bond, where we raised EUR 300 million with a coupon of just 3.875%. That transaction was a record 11.5x oversubscribed, and it was a great validation of the progress we have made. We also announced this week the redemption of our EUR 125 million AT1 bond due in November, and these 2 transactions will help us improve our capital structure, which is a key objective we've spoken about a number of times.

With that, I will hand you back to Eamonn, who will provide an update on our medium-term targets.

Thank you, Barry. If we can turn to our guidance, as we outlined in our trading statement this morning, 2025 is progressing well, and hence, our guidance for the year remains in line with the prior market communication. Today, we're also reaffirming our 2027 return on tangible equity target of circa 9%, and we're also issuing a new return on tangible equity target of circa 11% for 2028.

The principal drivers behind the expansion in the RoTE as we move into 2028, our income growth driven by higher volumes, and we've seen that volume coming through in the first 3 quarters already. NIM widening, a decline in our cost-income ratio and further benefits from refinancing the bank's debt stack, which mature through '27 into '28, so reflected in that '28 number. Once again, these targets are prior to any potential benefit from the ongoing IRB model review process.

So thank you for your attention. And Barry and I will be happy to take your questions. Given some of the restrictions -- we have to acknowledge the restrictions we have on the FSP process, but we're happy to take any questions you have now. So over to you, please.

[Operator Instructions] Our first question comes from Denis McGoldrick from Goodbody.

Just 2, please, if I may. In relation to the sales process, I'm just wondering, can you give a little bit more color on what has triggered the announcement and the process that the Board went through to arrive at it? And then secondly, I guess, just why the Board believes that now is the right time to go into this process given the expected benefits which we all believe are to come from the updated IRB mortgage models?

Yes. So just to -- I'll take your second question first in the sense of, we've seen very positive performance in our share price over the last year. In fact, if you look at it even now, our share price has obviously hit EUR 2.85, around that. Within last 12 months, it was around the EUR 1.30 level. So we've seen significant outperformance in our share price and our value.

By the way, I would argue that not much has changed from my perspective versus a year ago in the sense of how the business is operating and indeed our ambition in that sense. We are closer to the IRB outcome. But in effect, from a business point of view, it's actually quite similar. So I would why now in the sense of our positioning has changed. Fundamentally, the bank has transformed itself. We are working on growing our income. We are working on managing our cost base. We're in an environment of some regulatory change that we also have to adhere to such as instant, et cetera, but we are managing that well.

Our position is clear now as a pillar bank in the Irish economy. So again, we're very well positioned from that perspective by way of where we are. And we also see that while the IRB model isn't clear at this moment, it has progressed, and we would expect in 2026 for that to come through, but we've yet to close that with the Central Bank, but it is progressing well. And indeed, we clearly highlighted our capital position is strong as well.

So when I look at the '28 numbers, they actually reflect what is our position without IRB. And then it's about potential bidders, then reflecting on what the IRB impact could be on the bank and valuing that in the sense of how they would consider the bank normalizing itself from a capital perspective. And to come back to where the Board has considered this, the Board has taken all of these items into account and we do have an under the framework agreement. We also have ongoing discussions with our main shareholder, and that's covered by the framework agreement. And through that process and through the Board's discussion on this, taking into account the value accretion we've had over the last year, our positioning in the market and indeed, the timing and where our main shareholder sits in the sense of owning their shares, the Board came to a decision to actually launch the sales process.

And we're placed into this process with a lot of confidence and a lot of confidence in where the bank is, how it's positioned, and indeed ensuring that all shareholders get the right price for the bank as we move forward, including, obviously, our main shareholder, who is the anchor tenant and indeed, as you know, bailed the bank out, originally supported the bank over more difficult times. And indeed, now as a shareholder is looking to also get a return from their shareholding as we launch this process.

Our next question comes from Borja Ramirez from Citigroup.

I have 2. The first, it's probably been answered, but I would like to ask why are you undertaking this process so publicly? And then my second question would be a bit more technical, but given the capital treatment in Ireland with a higher RWA density and even though you have an IRB benefit to come, I would like to ask if there could be any regulatory relief on capital requirements for any acquirer that maybe has a different -- that is maybe based outside of Ireland?

So with regard to the second question, that is not something that we would have any particular awareness of, and it will be subject to any bidder deciding how they would think about that in due course, but it's not something that we have on our agenda.

With regard to the public process, the reason why we're launching a public process is to ensure that the availability of PTSB as the third bank in Ireland, a pillar bank in what is a growing market with a very safe balance sheet, probably the safest balance sheet that exists in European banking, if not including the U.S. By way of our provision levels and indeed our capital coverage at this moment, it is an attractive acquisition for a party who is interested in acquiring a bank. And therefore, we wanted to be as public as possible, because we believe we can generate and achieve the best price by having the most interest in the bank that is available in a bidding process. And that is really why it is in such a public way. And we want to demonstrate to all our shareholders that we've done everything possible to achieve the correct price for PTSB in a very positive sense. So that's why it's in the public domain.

Our next question comes from Andrew Stimpson from Keefe, Bruyette, & Woods.

I suppose I'm not sure if you can answer or whether I'm repeating a question. I suppose I've got the same kind of why now question as the other guys because you're just in the middle of the model review process, which I think we're all agreed could well have a really material positive impact on your profitability and therefore, the valuation.

If I was a buyer, would just be placing a probability below 100% that there's a good outcome from that model review process. And I would assume that you guys have got closer to 100% given you undertook that process. So I appreciate your shares are higher now than where they were a year ago, which is good news. But they're still below tangible book value and still a fraction of where you'd expect them to be versus the new 11% RoTE you've set for 2028, which would also have some upside from the model review process. So I suppose -- I'm not sure it's a question, maybe more -- it feels like you're selling that things get a lot better.

Well, no, I disagree with that, because if we go back 2 or 3 years, Andrew, and we could have a different discussion about where the bank was pre the Ulster transaction. So at this moment, we are in a very, very strong position. We're more than halfway through the IRB model review, because in order to start that process, you have to create the models, you have to validate them. You have to go through a fairly significant and detailed process before you even submit them to the regulator. And all of that has happened. And now we're in discussions with the regulator and progressing in that sense.

So it's clear that any buyer will want to know, and if I were a buyer, I would want to have clarity with regard to where the models are. And we will be, as best we can, ensuring that, that clarity is provided to borrowers in an adequate way in order for them to make a proper offer. And we think about that through the process. Indeed, if I was buying the bank, I would buy it subject to having that clarity as well. That's just how I would look at it if I was buying. But I think we are very well progressed at this moment, but we still have to get through a regulatory process. And we're confident, but it hasn't closed out.

Barry, do you want to comment on that as well, just to...

I think the key element on that, on IRB is -- we have done everything in our control. It's with the regulator right now. It is progressing. The key element on that is the timing. So this process, we have said should conclude in 2026. So I think the timing of this will align.

Exactly. And that's our position as well in the sense of how we think about this. And as I say, if you were a buyer, you'd want clarity on that as well. So we will be able to manage that.

Okay. That's really good. I've got a second one. I appreciate my first question was about 10 minutes long. The loan growth was actually super strong. I know the loan rates had struggled for a while, but that was a very, very good performance in the third quarter. Can you talk us through how you think that speed of that could evolve, just because quarter-on-quarter that looks very, very quick.

What we've seen, Andrew, this year to date is actually, on the mortgage market side, we are actually maintaining that greater than 20% level over the year. And business banking is consistent in terms of our expectation as to where that's going to close for the year as well. So it is all pretty much in line with what we kind of set out at the start of the year. And I think a key difference this year and prior years is actually we're delivering to those expectations in a very clear way. And we see that across the board in terms of what we're doing.

And we launched, in recent weeks, the consumer finance offering as well. And we've seen a pretty strong increase week-to-week on that product line alone just in terms of simplifying our product set and pricing it at the right level. So we're well positioned in terms of some of the lending pricing changes we did as well on the first-time buyer side, in effect the 80% to 90% level, too. That was just to remain competitive, reposition ourselves in the right way there, because it's the most important segment in the marketplace. So in its broad sense, we're not surprised by the outcome. It's pretty much in line with what we expected and what we've communicated.

And indeed, if you look at the Bank of Ireland results yesterday, you can see momentum in their growth as well. And if you just look then at the broader mortgage market in Ireland and government policy and where first-time buyers are and the wider population, there's a very exciting mortgage market ahead of us, and we're an anchor tenant there. We're in the mortgage business for well over 200 years, and we know how to do it and do it well. So all of this will be reflected in how we talk to potential bidders and how we extract value in that sense as well. So we face this process with a lot of confidence and indeed a backdrop of an Irish credit market that is now growing, when for many, many years it was either contracting or flat. So thanks for your question.

Our next question comes from Aman Rakkar from Barclays.

It's Aman Rakkar from Barclays. I have 2 kind of broad questions, please. One around the sale process. So can I clarify, and I don't know if you can answer this, but is there existing interest from a potential buyer that you are currently fielding, or is there somebody -- you don't have to mention obviously who that is, but is there existing interest, a conversation that's taking place at the moment that you can kind of point to? And then I was interested in...

No, there isn't. Sorry, there isn't. Just to be clear, there is not.

Okay. Then I was interested in the value accretion that you've kind of -- you've alluded to a number of times as part of the call, which I guess I take as kind of value extraction synergies, be it costs and revenues. But that's also going to be a function of the potential buyer in terms of a bank that is seemingly going to be able to extract value out of this transaction more so than a nonbank buyer. But I don't know, qualitatively, could you kind of give an indication of kind of what you're referring to around value accretion? What do you envisage, what value do you envisage a buyer seeing in Permanent TSB from here that can only be extracted as part of a bigger entity rather than stand-alone?

And I guess my second question, so I appreciate and take the liberty here, but I note that you've downgraded your cost/income ratio target for '27, I think, to 62%. Kind of what is the driver of that downgraded cost/income outturn, because it looks like the income drivers are actually better than...

Yes.

Yes, this confidence. Your outturn is better, but the forward looks better. And is that in any way related to what's being announced today?

Yes. So the 2028 numbers reflect clearly how we see '28 evolving, which is primarily an income growth story. Barry will talk to cost in a second, but it's primarily our expansion in income. And the perception broadly is that we have a cost problem. We don't have a cost problem. We have an income issue by way of our ability to grow scale as an organization. And we've demonstrated in the last 5 years, we brought our balance sheet from a EUR 20 billion balance sheet to a EUR 30 billion balance sheet. And then how do we grow that balance sheet now in an environment -- and by the way, that was an environment where there was no credit growth. How do we then grow this balance sheet over the next number of years in an environment where there is credit growth and credit availability.

So for instance, a bank buyer could bring different products, different experiences, for instance, more wealth management, more larger corporate type exposure that we wouldn't have that experience in. So different bank buyers can bring different areas of where we could tag on. But that is yet to be played out. Different buyers have different value propositions that they can bring to an organization. And I've seen that myself in my own past by way of buying different operations where you can increase value. So that's one aspect.

Naturally, one of the issues around value for us has been the overhang, the government overhang and the fact that when will the government sell down, how will they sell down, et cetera. That's been an issue by way of how the share price has operated. This provides absolute clarity now with regard to how we think about extracting value in the sense of both multiples opportunity and a clear positioning in the government now looking to exit as well. So again, I think that's value enhancing and it's supported by how the share price has moved today. I appreciate it's only this morning, I appreciate it's only a couple of hours, but saying that it has moved to its highest level now in an extended period of time.

So to come back, the value levers for us is on the income side and how we grow as a pillar bank in Ireland in an environment where we will have lower capital requirement, which we'll be able to demonstrate through the process as well, and that will extract the value that we need.

On the cost side, Barry, do you want to comment on that?

Yes. Just again, kind of continuation from Eamonn's perspective on the income side. What we want to try and do is protect the growth that we're seeing on the lending side out through time. We do see our cost/income ratio come back to below the 60% level in 2028 or at or below. It is an inflationary environment in which we're operating. We're trying to manage everything within our control, but we also have to keep an eye on growing the bank. And that is a core element of the decision to actually increase the guidance. Marginally, it's about EUR 10 billion in real terms. So on a cost base of just over EUR 500 million, it is relative. But the opportunity from the income side is stronger.

We're also seeing, in a broader sense, the macro environment is stabilizing and the growth in the macro is actually more positive than what we anticipated. So we are moving away from a hard cost number toward cost/income because we see expansion on the income side taking place. And it does require continued investments to maintain that position. We are trying to continue to invest in our digital offering and actually bring value for our customers. So in the context of the broader picture, we are still seeing that reduction coming back from the 77% level that we see today. So 2027 to '28, we're comfortable that, that is probably the best position the bank can be in from a cost perspective.

Our next question comes from Seamus Murphy from Carraighill.

I have just a couple of questions. So was the decision to commence the sales process in response to an approach that was made to the government about the stake? Or was it a more strategic decision taken by the Board itself? So that's question number one. And the second question then is, I mean, when we look at -- I mean, I know this has kind of been asked in several ways, but when we looked at the projected evolution of your excess capital over the coming 3 to 4 years, it kind of rises to well over EUR 350 million into '28, maybe EUR 500 million at that time, and the value of your DTA, the lower funding costs and also the fact that you're probably going to be growing now. And so I suppose a directed buyback is clearly much more accretive for all shareholders when we're kind of moving in that direction. And I suppose when the Board presented this kind of organic scenario to the government in response to the sales process, how did the government respond to the kind of the organic story that's going to emerge in PTSB over the next couple of years?

And lastly, I suppose this kind of comes to the crux of the issue as well. I know you've appointed an adviser yourselves. But do we know who's advising the government on this? Because it just seems like a ridiculous time for the government to initiate a sales process on the base that we're going to get this enormous value creation over the next 3 to 4 years. So I suppose it just seems like -- it doesn't mean you don't get a knockout price, but it just seems that the representations the Board made about the organic value of PTSB, how do they respond to that?

So there's a good bit known of that, Seamus, so we'll just deal with it as we move along. So as far as I'm aware, no approach has been made to the government. So that's the information I have that there was no approach. But it was very clear and it has been clear for an extended period of time that the minister is not a long-term shareholder in PTSB as they've stated on numerous occasions. And indeed, as recently as the July sell-down by NatWest, if you recall the comment from the minister at that stage that they were looking at all options with respect to their shareholding in the bank. So just to say that. And indeed, the minister is very supportive of the announcement today. So that's telling you, the minister is a seller.

So in that sense, as a 57% shareholder, by way of the capital evolution, yes, based on projections, we would expect we would have excess capital. The question we had is where we would use that excess capital. No decisions have been made with respect to how that excess capital would be distributed, whether we need it for new lending, and you can see our lending is growing, but you'd expect at a lower risk base. We would also be interested in expanding the business in that sense as well. So that was something that is also of interest to us to get more scale and indeed to look at then how we distribute the capital in the sense of whether it was directed buybacks or not. And some of those directed buybacks hadn't -- as I say, we hadn't -- we'd have to go through a process with our shareholders in order to get that approved as well. So it would take some time to execute those buybacks.

By way of the growth story, there's no doubt that in the sales process, we will be clearly communicating to bidders, and indeed, with the support of the wider analyst market, to show that there is value in this bank, there is value in where the market is. But look at where analysts are, one analyst has us as low as EUR 1.30 or EUR 1.60 by way of share price. And generally, analysts are around EUR 3. So I appreciate the value in the market, but the analyst community isn't exactly communicating that either in the sense of where this value will come from. And that's based on projections we have out in the public domain.

So it is an interesting point in the sense of value creation over time. But currently, projections are supporting clearly what is the current share price and indeed our ability to knock out and to get a very good price for the bank, which we believe and I believe is a prized asset. It's not often that somebody can actually buy a #3 position in a market with a macro background and a position that Ireland has. And I would say that's extremely attractive, and we'll be looking to extract the best price in that respect. And then lastly, it is in the public domain that Rothschild are advising the government in this sense. So that is already out there, Seamus.

Our next question comes from John Cronin from SeaPoint Insights.

Just by way of follow-up on a couple of those questions. So look, going back to Aman's question and Seamus' question on the kind of processes right now, can I just double check, Eamonn, you're saying that there's categorically been no engagement with an interested party. There isn't any live engagement or there wasn't any recent engagement? Just trying to kind of clear that up in my own head, because typically, my experience would be kind of for these processes, it's when there is 1 or 2 maybe, and it's an attempt to get more competitive tension into the mix. But look, I appreciate every situation is unique, and I hear your point on seeking to extract the best price, which is clearly critical as we've seen.

And secondly, curious on the Board's view on financial buyers, so non-trade buyers, so private equity, those kind of folks. And I presume it's just a question of best price here, but would be interested in your take on that.

Sorry, John, I just missed the last point. What was it again?

Yes. The potential for financial buyers to come into the mix there?

Yes. Okay. So there's no restriction on any buyers to express interest in the bank. There's a process that they have to go through as they approach Goldman Sachs in order to start that process. So there's no restriction with regard to who would like to buy the bank. It's an open process in that respect.

And I can't comment on the detail that you've mentioned, but the bank has had no approach and no interest in that sense. We are opening this process as a public process, and we're looking for bidders to express interest in buying PTSB and making an offer for it.

Our next question comes from John Hickey from Sretaw PE DAC.

Could I just ask just to follow up on the last few questions there regarding the process. What gives you the confidence that there are interested parties. Like to John's question there, like presumably at least 1 or 2 parties had expressed an interest or else you would risk launching this process into a vacuum? So what gives you the confidence that there are interested parties that are interested in acquiring the bank?

So I can't talk about those details at all. The process is launched. It's open. It's clear our position is very interesting. Even the questions are being asked today would highlight here that we have a very interesting position here that interested parties will see. So the process will speak for itself. And if it doesn't succeed, we're at the status quo where we are, and we still have a strategy that we're executing. We would still stand by the numbers that we're putting forward and we'd execute them. So in that sense, the process will describe the level of interest in that regard, John.

Okay. But to that point, though, basis the confidence that you have in that there will be a successful outcome here for shareholders, like how would you think about that if you were in our shoes?

Well, we can just use the NatWest sell-down in July as the basis. There was significant over demand for the stock on that sale. And there's been a lot of commentary and demand for when the government will sell down their stock as well. So we know there's interest in the bank. We know there's interest in our future and our positioning and indeed, their inputs to how we think about this process as well.

And in terms of from here, if and when there are people who enter the FSP, I think it's in the statement that there will be communication with the market, that the company will update the market regarding the FSP in due course. Like what are the staging posts kind of from here that we should expect to see as regards to market announcements in terms of progress?

We'll update the market when appropriate. So there's no particular staging points, John. We'll update it when it's appropriate to update the market. We won't be updating the market on speculation, because that would be absolutely incorrect, nor will we be able to comment on market speculation, but we will update the market when it's appropriate to provide definitive information with regard to where the process has gone.

Our next question comes from Rob Noble from Deutsche Bank.

I've got another pedestrian question, it feels like, now just on net interest margin. Just the drivers of the step-up from 2.2%, 2.25% in '27 to greater than 2.3% in 2028, can you give us a sense of the key moving parts in that year that makes it jump?

Yes. I'll take that, Rob. Broadly, what we're seeing coming forward is actually, as our fixed-term mortgages, which are typically 3 to 5 years, as they mature over the coming years, we'll see a step-up in terms of the rates that will be applicable to those loans. Typically, we have a retention rate of around the 90% level. So ideally, we'll see that unfold, and that's what we've captured in our forecast.

And on the deposit or liability side, we had a 3-year, 3% level 3 years ago. That's now starting to mature, and we had a 1-year 2.75% rate that will mature as well over the next 1 to 2 to 3 years in effect. So we see that come forward. And actually, in terms of the environment we're operating right now, pricing perspective, we keep a close eye on it. And at this moment, as we look out with those core changes, we believe we're in a good position to see that outcome. And hence, we're updating now to confirming what we see in '27 and updating '28 in that context as well.

And in terms of the business mix expectation in 2028, I presume that it's higher yield corporate, increasing mix?

So what we're seeing is a steady increase in our business banking mix. We are very solid in terms of our mortgage market share. We expect that to be in the greater than 20% level, as we've seen right now. Actually, we're seeing the accretion at a stronger level on the business banking side. What we have said previously is that we would like to be a 4% to 5% growth overall with 3% or so in the mortgage side and 15% level on the business banking, which includes SME and asset finance. So it's consistent with that mix change over time.

Our next question comes from [ Phil Fuller from Dechert Investments ].

This is Phil from [ Dechert ]. Can you hear me?

Yes, Phil.

My first question for the credit investors would more be on rating down rates or having the rating the same. Are you committed that if PTSB is sold to whoever it may be, that ratings will stay at least at the level where they are now?

Well, we don't have any backdrop to the Irish government. Even though the Irish government are a 57% shareholder or a majority shareholder, we don't rely on the Irish government in that sense. So our rating is independent of that shareholding. It's on a stand-alone basis rather than with any particular support. So we don't see any impact on our rating through this process. Barry, do you want to comment as well?

No. And what we've seen in recent times is actually the improvement in investment grade is fundamentally due to the improved balance sheet that we have and actually the income levels that we've seen accrue in the last number of years. And if you look at it, we are a low-risk bank. We are primarily a mortgage operation, and we've seen very limited NPL evolution in recent times. And actually, impairment levels continue to be -- we're very well provisioned. So we don't see any negative outlook in any shape or form in that regard.

Actually, what we're seeing is the broader macro environment is looking better than what we anticipated even 6 to 12 months ago. So at this moment in time, I would say we're in a very positive space in that regard. I don't expect any change, only maybe to a better outcome.

Okay. And my second question would be on bonus. So as far as I know, currently, you're not paying bonuses to your employees. And will you pay bonuses to your employees and management for next year? And how much could it cost?

No. So there's no -- in the Irish environment, there is a super tax which is applied to bonuses to employees of the banks that were bailed out by the state and we were one of those banks. So there's no bonuses of any material level in the bank. We do pay bonuses up to EUR 20,000. But with regard to senior management bonuses, they're nonexistent. So it's not an issue.

I think we can finish there. Unless there's one more question from somebody, we can close it off then. Thank you, by the way, Phil. There's no more questions in the queue?

We have -- there is one more question we can answer, if you're happy to.

Okay. This will be our last question.

Our last question comes from Miruna Chirea from Jefferies.

I was just trying to understand a bit what your return on tangible equity targets could be if you get the IRB approval. So anything around that would be helpful in terms of, for example, in your base case, if you do get the approval, what would you expect your risk density on the mortgage book to come down to? Is it more coming down in line with peers in the market? Or could it be even lower than that?

Our RoTE guidance at this moment in time is excluding IRB change. And what we've been very consistent with in our storyline here is that we haven't provided any guidance in terms of what IRB would actually come out to be. We haven't done so in recent weeks, and we will not be doing so as we go into this process. And that has been a very consistent approach that we've taken. Obviously, the bank is going to be updating its models from where it was in 2017. So obviously, the better overall position the bank is, we'll ideally see a better outcome, but we can't comment, clarify, or color in any shape or form that picture at this time.

So thank you for your question. And I think we can end the call now, please.

Of course. We currently have no further questions. So Eamonn, would you like to give any closing remarks?

No, no. Just one thing with respect to some of the questions on the process. The process is governed by the Irish takeover rules, which are quite prescriptive. So going back to the question from John Hickey around information to be provided, it's very prescriptive. We won't be speculating, we won't be commenting and we'll provide information when we have clarity to the market in that sense. So there will be no stage posts in that sense that will be in the public domain. So just to say, that's governed by the Irish takeover rules. So thank you very much for your interest and for partaking in the call, and we'll take it easy, and goodbye. Thank you.

This concludes today's call. We thank everyone for joining. You may now disconnect your lines.