Permanent TSB Group, the Irish state-owned lender, is forecasting a 10 per cent return on equity for its good-bank unit by 2017 under a plan to return it to private ownership after a bailout.

The bank is targeting a 5 per cent return on equity by 2017, including its internal bad bank of distressed mortgages and a unit of loans to be sold, according to an investor presentation. Return-on-equity, or ROE, is a measure of profitability.

Jeremy Masding, who has been chief executive officer for almost two years, considered closing the 99.2 per cent state- owned bank as its bad-loan losses soared following the collapse of a real estate bubble. His board decided that the "least worst option" was to keep it going, he said in August. "Ireland's economy is recovering, with clear improvements in the labor and property markets," the bank said in the presentation. "Investors are well positioned to benefit from improved consumer sentiment."

Permanent TSB sees European Union approval for its restructuring plan, arising from a €4 billion bailout, by April, according to the presentation. The bank plans to return the good bank to full or partial market ownership by 2017, according to the presentation. It will "seek opportunities to attract a strategic or capital-markets investor early in the planning period," it said.

Bloomberg