Aib Group Plc · EURONEXT:A5G
Aib — Debt Investor Presentation (July 2018)
35 slides from Aib's debt investor presentation, July 2018
Slide 1: Half-Yearly Financial Results 2018
Half-Yearly Financial Results 2018 For the six months ended 30 June 2018 AIB Group plc
Slide 2: Important information and forward looking statement
Important information and forward looking statement This presentation should be considered with AIB’s Annual Financial Report 2017, Q1 Trading Update April 2018 and all other relevant market disclosures, copies of which can be found at the following link: http://aib.ie/investorrelations Important In
Slide 3: AIB Group plc
f Performan y Strategic Ob
Slide 4: H1 2018 Highlights
H1 2018 Highlights Franchise and business model delivering sustainable performance Profit before tax of €0.8bn, continuing sustainable underlying profitability, loan book growth and significant improvement in asset quality Strong capital ratio of CET 1 FL 17.6%; continuing capital generation and c
Slide 5: Growing economy with attractive market dynamic
Growing economy with attractive market dynamic Well positioned for growth Irish economic growth improving; Brexit risk remains Total employment levels rising as unemployment falls % 7.2 2300 16 2200 14 5.6 12 4.3 2100 4.0 3.7 10 3.4 3.1 2000 2.7 8 1900 6 1800 4 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2017*
Slide 6: Delivering continued momentum
Delivering continued momentum Increased new lending; Leading market shares Continuing increase in New Lending Continuing momentum in key sectors Leading market shares in key segments Drawdowns (€bn) Mortgage Lending (€bn) Stock 41% 43% 36% 32% 5.5 23% 20% 4.8 1.2 0.5 1.1 (1) (3) 0.5 H1 2017 H1 2018
Slide 7: AIB Group plc
AIB Group plc
Slide 8: Financial highlights H1 2018
Financial highlights H1 2018 Business model delivering sustainable performance Sustainable profitability underpinned by stable net interest income and margin NIM 2.53% with underlying NIM(1) 2.50% Continued cost discipline, H1 2018 in line with expectations Stable costs and income, CIR 51%; excl
Slide 9: Income statement
Income statement PBT €0.8bn driven by strong business performance Summary income statement (€m) H1 2018 H1 2017 Net interest income 1,061 1,077 Net interest income in line with H1 2017 Other income 322 452 Total operating income 1,383 1,529 Other income €322m - stable fees and (1) Total operatin
Slide 10: Average balance sheet
Average balance sheet NIM stable and in line with 2.40%+ medium term target H1 2018 H1 2017 Average Average Volume Interest Yield Volume Interest Yield €m €m % €m €m % Assets Loans to customers 60,728 1,050 3.49 60,815 1,078 3.57 Stable loan yields NAMA senior bonds 0 0 0.00 845 2 0.49 ex suspense
Slide 11: Other income
Other income Stable net fee and commission income Net fee & commission income(1) €m 224 217 Stable fee and commission income of €217m 35 35 25 Income from customer accounts represents 47% 23 26 20 of net fees and commission income and includes 35 36 current account fees and transaction payment 1
Slide 12: Costs
Costs Continued focus on cost discipline targeting CIR < 50% Operating expenses(1) Operating expenses €711m (+3%) in line with expectations €m Factors impacting cost: 45% 51% 693 711 Stable staff costs while absorbing wage inflation (2.75%) 333 347 Continued investment in loan restructuring
Slide 13: AIB Group plc
AIB Group plc
Slide 14: Balance sheet
Balance sheet Growing with new lending supported by strong liquidity and capital ratios Assets Balance sheet (€bn) Jun-18 Jan-18 Dec-17 Net loan book growth €0.5bn excl portfolio sales Gross loans to customers 62.8 63.3 63.3 Provisions (2.9) (3.6) (3.3) Performing loan book €55.3bn growing (up €
Slide 15: Customer loans
Customer loans Gross performing loans €55.3bn up 4%, NPE €7.5bn down 27% Gross Net Customer loans (€bn) Performing NPE ECL loans loans Closing balance Dec 2017 53.1 10.2 63.3 (3.3) 60.0 Harmonisation of default defintion 0.6 (0.6) 0.0 (0.3) (0.3) Opening balance Jan 2018 53.7 9.6 63.3 (3.6) 59.7 New
Slide 16: Asset quality & NPE deleveraging strategy
Asset quality & NPE(1) deleveraging strategy NPE (1) €7.5bn (12% of gross loans) Continued progress in NPE reduction in H1 2018 27% reduction (€2.7bn) in NPEs from €10.2bn (16%) to €7.5bn (12%) IFRS 9 and early adoption of new guidelines on definition of default Net credit impairment writeba
Slide 17: Momentum in NPE reduction continues
Momentum in NPE reduction continues Significant progress in de-risking the balance sheet IAS 39 IFRS 9 €bn Alignment of Stage 3 / NPE / Default 10.2 9.6 0.6 2.4 1.3 1.0 1.1 7.5 1.0 0.7 0.7 0.9 7.1 7.3 5.9 5.1 NPE Harmonisation of NPE BAU activitiy Portfolio Sales NPEs - Net NPEs - 31.12.17 default d
Slide 18: NPE de-leveraging strategy
NPE de-leveraging strategy On track to normalised levels 80% of the loan book strong / satisfactory Targeting further deleveraging to European norms(1) €bn €bn 12% €62.8bn 32% 7.5 12% 5.3 8% 7.5 5% 50.0 80% Jun-18 June 2018 NPEs Out of BAU Restructures Portfolio Sales & Medium Term Probationary Stra
Slide 19: Asset quality by portfolio
Asset quality by portfolio Continued progress as NPEs reduce across all sectors, ECL / NPE coverage 32% Residential Other Property and Non-property Jun-18 mortgages personal construction business lending Total €bn Loans to customers amortised & FVTPL 33.1 3.1 8.1 18.5 62.8 of which NPE: 4.2 0.4 1.7
Slide 20: AIB Group plc
AIB Group plc
Slide 21: Funding structure
Funding structure Strong and stable funding well positioned for growth Total funding Liquidity ratios well in excess of requirements €bn Liquidity metrics % H1 2018 FY 2017 €89.8bn Loan to deposit ratio (LDR) 89% 93% Liquidity coverage ratio (LCR) 135% 132% Customer Net stable funding ratio (NSFR) 1
Slide 22: HoldCo
HoldCo HoldCo structure (AIB Group plc) in place for MREL issuance Simplified group structure(1) MREL Minister for Finance Other shareholders HoldCo structure (AIB Group plc) completed in Dec (71.1188% interest) (28.8812% free float) 2017 and HoldCo has become the sole issuer of MREL debt MREL t
Slide 23: Credit Ratings
Credit Ratings Investment Grade status for AIB Group plc AIB Group plc (Hold Co) – Baa3 BBB- BB+ Long Term Issuer Rating Outlook Positive Positive Positive Investment Grade AIB p.l.c. (Op Co) – A3 BBB- BBB Long Term Issuer Rating Outlook Positive Positive Positive Investment Grade 23
Slide 24: Capital ratios
Capital ratios Strong capital position 17.6%, capital generation +130bps Capital ratios (fully loaded) RWAs (fully loaded) % 19.0% 19.3% Risk weighted assets (€m) Jun-18 Dec-17 Movement 0.5 0.6 Credit risk 46,278 46,414 (136) 1.0 1.1 Market risk 431 360 71 Operational risk 4,624 4,248 376 CVA / othe
Slide 25: Medium term financial targets
Medium term financial targets Focused on delivering sustainable performance Medium Term Metric (3-5 Years) Guidance & Targets HY1 2018 Commentary Net interest margin 2.40%+ Maintain strong and stable NIM, 2.53% Excluding suspense 2.40%+ interest 2.50% Stable costs, CIR 53% Cost income ratio <50% Bel
Slide 26: AIB Group plc
AIB Group plc
Slide 27: Capital detail
Capital detail Transitional and fully loaded capital detail and ratios AIB Group - CRD IV transitional capital ratios AIB Group - Fully loaded capital ratios Risk weighted assets (€m) 30-Jun-18 31-Dec-17 Risk weighted assets (€m) 30-Jun-18 31-Dec-17 Total risk weighted assets 52,015 51,728 Total ris
Slide 28: Capital requirements
Capital requirements Strong capital position; Steady-state target CET1 ratio of 13% Minimum capital requirements / SREP(1) CET1 requirements FY 2018 FY 2021 9.725% CET 1 requirement for 2018 is composed of Pillar 1 - CET1 4.500% 4.500% • 4.50% Pillar 1 CET1 • 3.15% Pillar 2 requirement (P2R) Pilla
Slide 29: Minority interest restriction
Minority interest restriction (1) Impact of minority interest at AIB Group plc level Minority interest restriction impact at AIB Group plc level Minority Pre interest Post Jun-18 restriction restriction restriction Fully loaded capital ratios % % No impact on CET1 Minority interest restriction –
Slide 30: Investment debt securities
Investment debt securities €15.1bn portfolio Key components Investment debt securities: €bn €15.1bn down from €15.6bn - in line with plans to reduce 9.6 8.5 overall portfolio reflecting lower liquidity requirements €16m net gains from disposal of investment debt 4.3 4.3 securities in H1 18 1.4 1
Slide 31: Return on tangible equity
Return on tangible equity (PAT – AT1 Coupon + DTA Utilisation) / (FL CET1 @ 13% + DTAs) H1 2018 €m PAT 650 Profit (1) (-) AT1 coupon 18 (+) DTA utilisation 84 Profit on Profit (Numerator) 716 CET1 @ Profit (Annualised) 1,443 13% of RWAs + RWAs 51,871 DTAs CET1 at 13% RWAs 6,743 (+) DTAs 2,705 CET1 @
Slide 32: Residential mortgages
Residential mortgages Improving asset quality, lower NPEs Residential mortgages €bn €33.1bn Continued improvement in overall asset quality 28% 13% 4.2 3.0 9% 78% of portfolio is strong / satisfactory 25.9 78% NPEs 13% of portfolio, down from 14% at Dec 17, with coverage of 28% Jun-18 Strong /
Slide 33: Personal loans
Personal loans Demand remains strong for personal loans, lower NPEs Personal loan €bn Portfolio comprises €2.3bn loans and overdrafts and €0.8bn in credit card facilities €3.1bn 47% 0.4 14% 0.3 10% Demand remains strong, increased online approval through internet and mobile credit application ac
Slide 34: Property & construction
Property & construction Lower NPEs Portfolio €7.9bn down €0.7bn (6%) due to continued €7.9bn restructuring, write-offs, amortisation and repayment and 33% the sale of a portfolio of loans 1.6 21% 0.6 8% 72% of the portfolio is strong / satisfactory 5.7 72% NPEs 21% of portfolio down from 33% a
Slide 35: Non-property business
Non-property business Improvement in asset quality of new lending and reduction in impaired loans Non-property business portfolio €bn Portfolio €18.5bn, up €0.8bn comprises Corporate and SME lending €18.5bn 39% 1.2 7% 1.4 7% Overall improvement in asset quality with new lending exceeding amortis