Permanent TSB Group Holdings PLC · EURONEXT:PTSB
Permanent TSB — Irish Life & Permanent — Investor Presentation (June 2009)
45 slides from Permanent TSB's investor presentation, June 2009
Slide 1: Investor Information Pack
Investor Information Pack ● Group overview ● Ireland Economy & Demographics ● Life & Investment business ● Banking business ● Group financials June 2009 1 Group Overview
Slide 2: Group Overview
Group Overview 2 Group Overview
Slide 3: Profile
Profile z Formed in 1999 from merger of Irish Life plc and Irish Permanent plc z Irish Life, the largest life company, and Irish Permanent, the largest residential mortgage lender, in Ireland z Acquired TSB Bank in 2001 and merged with Irish Permanent to create permanent tsb, the group’s retail bank
Slide 4: Strategy
Strategy z Focused on personal financial services in Ireland z Market position built on strong brands and franchises supported by broadly based distribution z Low risk business activities - secured lending and unit-linked life business z Main challenges: ¾ Adapting business to impact of recession in
Slide 5: Ratings
Ratings Irish Life & Permanent plc Moody’s Standard & Poor’s Senior Debt Short-term covered by Irish Govt. Guarantee Scheme P-1 A-1+ Long-term covered by Irish Govt. Guarantee Scheme Aaa AA Short-term issued outside Irish Govt. Guarantee Scheme P-1 A-2 Long-term issued outside Irish Govt. Guarantee
Slide 6: Operating Structure
Operating Structure Irish Life & Permanent Group Irish Life permanent tsb Allianz PTSB Retail Corporate ILIM(1) PTSB CHL(2) Allianz-Irish Life Finance Individual Group life & Fund Mortgages, Auto & Residential General life, pensions, pensions via management. car finance, Consumer mortgage insurance
Slide 7: Legal Structure
Legal Structure Quoted Irish Life & Permanent plc Company + Bank t/a permanent tsb 100% 100% 100% Irish Life Ltd permanent tsb Capital Home Finance Loans Ltd (UK) 100% Irish Life Assurance plc 30% Allianz 100% Irish Life Investment Irish Life plc Managers Ltd 100% Irish Life International Ltd Genera
Slide 8: Group Earnings Mix
Group Earnings Mix Banking 9% Banking Associate 8% 36% Bancassurance Life 11% Life 48% 72% Associate 5% Bancassurance 11% 2008 Operating Profit: €341m 2007 Operating Profit: €590m * Bancassurance included in reported life earnings 8 Group Overview
Slide 9: Ireland – Economy & Demographics
Ireland – Economy & Demographics 9 Group Overview
Slide 10: Economic Forecasts - 2009 & 2010
Economic Forecasts - 2009 & 2010 DoF ESRI Davy Goodbody Average S% S% S% S% S% 2009(f) y Consumption -7.8 -7.0 -9.0 -9.0 -8.2 y Employment -7.8 -8.9 -8.4 -10.1 -8.8 y GDP -7.7 -8.3 -7.9 -8.7 -8.2 y Unemployment 12.6 13.2 12.8 14.9 13.4 2010(f) y Consumption -3.7 -3.0 -2.0 -6.5 -3.8 y Employment -4.6
Slide 11: Real Economy Transformation from late 1980s…
Real Economy Transformation from late 1980s… 140.0 Income Per Capita 120.0 100.0 80.0 60.0 40.0 20.0 EU IE 0.0 2004 2006 2008 1976 1984 1986 1988 1994 1978 1980 1982 1990 1992 1996 2002 1974 2000 1998 1966 1960 1962 1964 1968 1970 1972 …. with income levels surpassing EU averages 11 Group Overview
Slide 12: Rapid Expansion in Household & Bank Balance Sheets
Rapid Expansion in Household & Bank Balance Sheets 900000 Trends in Household Net Worth 700000 500000 300000 100000 ‐100000 ‐300000 2001 2002 2003 2004 2005 2006 2007 Total Financial Assets Total Financial Liabilities Total Housing Assets Net Financial Assets Total Net Worth 12 Group Overview
Slide 13: Positive Demographics
Positive Demographics z Population growth of 1.8% p.a. in 10 years to 2008 ¾ 54% natural increase ¾ 46% net immigration z Net immigration from mid 1990s ¾ Predominantly returning Irish nationals & EU citizens ¾ Net immigration of 38,500 in year to April 2008 z Irelands age profile positive ¾ Median
Slide 14: A Perfect Storm…
A Perfect Storm… International Factors z Global financial crisis z Global economy / trade shock z Exchange-rate appreciation (nb Sterling) Domestic Factors z Sharp housing downturn (volumes and prices) z Banking crisis z Rapid deterioration in public finances …. both externally and internally 14 Gro
Slide 15: Responding to Crisis
Responding to Crisis z Sharp economic downturn, but rapid adjustment of asset prices, wage and price levels underscoring necessary flexibility z Fiscal adjustments underway to stabilise the public finances z Comprehensive approach to resolving the banking sector problem z Favourable medium-term pros
Slide 16: Solving the Banking Crisis
Solving the Banking Crisis z Funding – Bank Guarantee Scheme ¾ Bank liabilities of €376bn (203% of GDP)* guaranteed until 30 Sept, 2010 ¾ Extend guarantee for future debt issuance with maturity out to 5 years z Recapitalisation of Banks ¾ €7bn injection into AIB and BOI (funded by NPRF) ¾ Anglo Iris
Slide 17: Life & Investment Business
Life & Investment Business 17 Group Overview
Slide 18: Irish Life
Irish Life Leading asset gatherer in Irish market 32% share of life & pensions market 28% of domestic funds under management Predominantly unit-linked Dominant position built on: Multi-channel distribution strategy Investment reputation Business platform and service delivery Adapting to recession &
Slide 19: Life Sales
Life Sales €m 700 634 600 482 481 Pension 500 Investments 400 368 317 Protection 290 300 250 Savings 200 100 0 2002 2003 2004 2005 2006 2007 2008 19 Group Overview
Slide 20: Life Distribution
Life Distribution 2008 Sales €481m [2007: €634m] APE Mix €m % Bancassurance 94 19 Direct / Cormnmarket 167 35 Brokers / IFAs 133 28 Pensions Consultants 87 18 * Retail & Corporate APE sales 20 Group Overview
Slide 21: Unrivalled Distribution Reach & Depth
Unrivalled Distribution Reach & Depth Direct Sales Brokers Bancassurance Onesource Consultants & Cornmarket & Institutions 250 advisors, 1,000 brokers, Most efficient & 175 franchises Access to large increased agents & productive using direct employer & productivity authorised bancassurer sales sell
Slide 22: Life Market Share
Life Market Share % 36 33 30 32% ● Irish Life is clear market leader 30% ● Sustained track record of market 27 28% share gain 24 25% 26% ● Franchise based on distribution reach, 23% product performance and service 21 22% ● Confident of further gains in 2009 18 15 2002 2003 2004 2005 2006 2007 2008 2
Slide 23: Irish Life Investment Managers
Irish Life Investment Managers Market leader No.1 with a 30% market share FUM of €27bn split 47% active and 53% passive Business model Asset manager for life businesses (48%) Direct institutional business (52%) Offers own funds and open architecture for specialist products Performance Consistent abo
Slide 24: Irish Life Investment Managers
Irish Life Investment Managers Funds under Management €bn 40 34 ● ILIM now acknowledged market leader 35 31 30 25 27 in Ireland 25 20 21 ● Market share 30% - up 7% in last 5 years 15 10 ● In-flows of over €2bn in 2008 - €7.5bn in last 3 years 5 0 ● Strong and growing client base 2004 2005 2006 2007
Slide 25: Banking Business
Banking Business 25 Group Overview
Slide 26: Profile
Profile Merger of Irish Permanent and TSB in 2001 Focused on personal / retail banking market Leader in residential mortgages Strong brand and franchise from mutual heritage and service ethos Enjoyed strong growth Multi-channel distribution - 100 branches, independent brokers, Irish Life sales force
Slide 27: Bank Loan Book
Bank Loan Book €bn 39.2 39.9 40 Low risk loan book - reflecting exclusive 35 33.8 retail focus and conservative underwriting 98% lending secured - 88% secured 30 26.3 residential mortgages 25 Unsecured lending (2%) represents 21.1 20 personal loans, current accounts and Visa 17.1 for core customer b
Slide 28: Loan Credit Quality
Loan Credit Quality Irish Mortgage* Arrears Cases (> 1 month) 000’s 000’s 12 No. of Mortgages (RHS) 200 Marked increase in arrears cases in 2008 190 Irish mortgages cases > 1 month in arrears 10 7,900 at Dec 08 out of a total portfolio of 180 over 192,000 cases 8 170 No. in Arrears * Average indexed
Slide 29: Brand Strength
Brand Strength Summary of Fair Share A modern innovative brand that stands out from the Personality dimensions crowd ptsb Bank X Bank Y Most trusted bank brand ¡ Over Index ¡ Over Index ¡ Over Index Modern –Modern –Unhelpful –Safe –Youthful –Impersonal –Reliable Youthful –Traditional –Dependable –Dy
Slide 30: Customer Acquisition
Customer Acquisition Strong brand, outstanding service reputation and high Current Accounts impact marketing 000’s 53,000 new customers in 2008; 250,000 over past 500 four years 450 Attracting new customers in the key 25 to 35 age 400 range 350 300 Growing resource base, €1bn new retail deposits in
Slide 31: Profile
Profile Specialist UK Mortgage lender Acquired 1995, only group business outside Ireland Niche player in UK buy-to-let market, loan book of Stg£6.8bn. Closed to new business March 2008 Credit squeeze limits funding availability Managing run-off of loan book Rising impairments as UK recession hits Sh
Slide 32: Loan Credit Quality
Loan Credit Quality UK Buy-to-Let Mortgage Arrears Cases* % BTL accounts for 93% of Capital Home 3 2.79 Loans (CHL) portfolio CML (Industry average) 2.5 CHL BTL arrears cases significantly 2.15 2 increased, 946 cases at Dec 2008 out of a CHL book of 44,000 1.40 1.5 Closed to new business - resources
Slide 33: Group Financials
Group Financials ● 5 Year Summary ● Earnings ● Investment portfolios ● Funding ● Capital & Shareholder Equity 33 Group Overview
Slide 34: Summary 2003 - 2008
Summary 2003 - 2008 cents € 200 15 NAV ps (RHS) ● EPS - operating profit on 150 embedded value basis 10 ● NAV ps - shareholder equity on 100 EPS (LHS) embedded value basis 5 ● No final dividend paid for 2008 50 ● Ratios based on total issued shares DPS (LHS) 0 0 2003 2004 2005 2006 2007 2008 34 Grou
Slide 35: Group Earnings - Embedded Value Basis
Group Earnings - Embedded Value Basis 2008 2007 ● 2008 operating profit net of bank loan €m €m and asset impairment provisions Operating profit* 341 590 ● Life embedded value movement due to Life Embedded Value (535) (128) impact of falls in investment markets on fee income and asset values and to B
Slide 36: Group Earnings - IFRS (Statutory) Basis
Group Earnings - IFRS (Statutory) Basis 2008 2007 ● The 2008 contributions from businesses €m €m reduced as a result of bank loan and Business Contributions 345 482 asset impairment provisions Life Movements (110) (3) ● The negative life value movement in 2008 was due to the fall in asset values, Ba
Slide 37: Life Operating Profit
Life Operating Profit Life Income 2008 2007 New Business Statement * €m €m Life (excl. ILIM) new business margin New business 100 154 ¾ APE: 15.1% (2007: 19.2%) In-force business 184 192 ¾ PVNBP: 2.4% (2007: 2.9%) • Total expected return 165 147 Return on life new business ¾ IRR: 12.1% (2007: 13.3%)
Slide 38: Bank Operating Profit
Bank Operating Profit Revenues Bank Income 2008 2007 ● NII impacted by wholesale funding Statement €m €m spreads Net interest income 473 500 ● Margin of 105bps (2007: 117bps) Other income 47 48 ● Exceptional gain of €29m on disposing Gilt gains 29 - of gilt portfolio in Q1 549 548 Impairments / Expe
Slide 39: Life Investment Portfolio
Life Investment Portfolio Funds Under management €27bn, Dec 2008 Unit-linked Assets €bn % z Investors / policyholders bear full market Debt securities 6.3 30 risk in unit-linked funds Equities 10.1 47 z Non-linked (traditional) insurance Property 2.1 10 liabilities fully matched with debt Cash / Oth
Slide 40: Bank Investment Portfolio
Bank Investment Portfolio Debt Securities December 2008 ● 85% of FRNs / Corporate Bonds rated Category €bn % A or higher Sovereign Bonds 0.4 12 ● Provisions made for defaulted bonds (Icelandic Banks & Lehman) Bank FRNs / Corporate Bonds 2.2 65 ● RMBS all prime: RMBS 0.8 23 ¾ 96% AAA rated ¾ 97% Euro
Slide 41: Bank Funding
Bank Funding December 2008 - Total €44bn ● Government guarantee scheme Short-term debt Long-term debt critical 38% 29% ¾ Broad coverage up to Sept 2010 ¾ Extension of scheme ● High level of ECB funding in Q4 2008 and into 2009 ● Raised €2bn term debt in H1 2009 ● Some easing of liquidity from Q2 200
Slide 42: Bank Capital
Bank Capital Dec 08 Dec 07 ● Transitioning to Basel II Basel I Basis ● Basel I equivalent basis: Core Tier 1 ratio 10.1% 10.4% ¾ Core Tier 1 ratio of 10.1% ¾ Regulatory minimum 9.03% Basel II Tier 1 capital €2.1bn €2.0bn ● Basel II Pillar 1 RWAs ¾ Pillar 1 in operation €18.2bn €18.9bn ¾ Pillar 2 out
Slide 43: Life Capital
Life Capital Life Capital * Movement €m ● December 2008 minimum solvency Free assets Dec 2007 620 margin of €410m covered 1.6 times by Capital generated 359 free assets of €665m 979 ● Solvency 2 potential release of excess New business strain (87) values - c. €800m based on QIS 4 STIFS & Economic va
Slide 44: Group Shareholder Equity
Group Shareholder Equity December 2008 IFRS Embedded (Statutory) Value €m €m Bank 865 865 Insurance & Investment * 1,218 1,649 Associate 139 139 Other 68 71 Goodwill 71 66 2,361 2,790 * Excludes “own shares” adjustment 44 Group Overview
Slide 45: Contact Information
Contact Information Please contact our Investor Relations Department for any further information or visit our group website at www.irishlifepermanent.ie Investor Relations Contacts: Barry Walsh barry.walsh@irishlife.ie +353 1 704 2678 Orla Brannigan orla.brannigan@irishlife.ie +353 1 704 1345 Treasu
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