Mortgage arrears fall further at Ireland's permanent tsb

DUBLIN, Sept 18 (Reuters) - The number of homeowners and property investors in arrears at Irish state-owned mortgage lender permanent tsb (ptsb) fell further over the last two months, the bank said on Thursday.

The smallest and weakest of Ireland (Other OTC: IRLD - news) 's three remaining domestically-owned lenders said the proportion of homeowners in arrears for more than 90 days fell to 11.7 percent at the end of August from 12.5 percent two months earlier.

That represented a 21 percent fall since the start of the year, with over 4,000 fewer customers in distress, and compared with an industry average of 11.8 percent at the end of June.

Ptsb's buy-to-let mortgage arrears fell to 14.7 percent last month from 15.2 percent at the end of June and remained significantly below the industry average of 22 percent, which edged up further in the second quarter.

The figures do not include the 99 percent state-owned bank's Springboard Mortgages business, a subsidiary which is no longer writing home loans and is being prepared for sale.

Ptsb remains the only loss-making Irish lender, albeit after cutting its underlying loss by 62 percent in the first half, and analysts said it remains vulnerable ahead of European-wide stress tests next month despite the progress on its troubled loan book.

"Ptsb appears to have grasped the nettle on restructuring unsustainable mortgage debt and is making tangible progress on working out its stock of impaired loans," said Ciaran Callaghan, an analyst at Merrion Stockbrokers.

"Despite these improvements, we still worry about ptsb's performance in the upcoming ECB's Comprehensive Assessment. In contrast to the other Irish banks, ptsb was still eroding capital in (the first half of) ... 2014." (Reporting by Padraic Halpin; Editing by David Holmes)