Aib Group Plc · EURONEXT:A5G
Aib — Allied Irish Banks, p.l.c. — FY2010 Earnings Presentation
41 slides from Aib's earnings presentation, 2011
Slide 1: Allied Irish Banks, p.l.c.
Allied Irish Banks, p.l.c. aS )
Slide 2: Forward looking statements
Forward looking statements Slide 2 A number of statements we will be making in our presentation and in the accompanying slides will not be based on historical fact, but will be “forward-looking” statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Actu
Slide 3: David Hodgkinson, Executive Chairman
Slide 3 David Hodgkinson Executive Chairman
Slide 4: Agenda
Agenda Slide 4 Overview 2010 Financial Summary Outline of Restructuring Plan and Strategic Review
Slide 5: Overview
Overview Slide 5 Current realities Basis to rebuild Low industry confidence State investment and commitment Core tier one capital 22% (proforma Dec 2010) €18bn* private capital consumed AIB pillar of banking landscape Additional capital mandated Fire power for customer support Moneta
Slide 6: AIB's vision
AIB’s vision Slide 6 Fulfil a key role in the recovery and development of the Irish economy Restore AIB to a sustainable position of stand-alone strength and stability with the capacity to grow in a measured and prudent manner Redefine customer proposition to meet their needs and expectations
Slide 7: Necessary steps to achieve our vision
Necessary steps to achieve our vision Slide 7 Most challenging change programme AIB has ever undertaken; necessary to fulfil responsibilities to our stakeholders and customers Separate €86bn net loans into core bank c. €61bn and newly established non-core bank c. €25bn (non-core to include perfo
Slide 8: Progress to date
Progress to date Slide 8 Capital actions c. €8bn generated Repairing Poland, M&T, Goodbody, Anglo deposits Strengthened risk management / control Liability management exercises Detailed credit review Loan portfolio reductions Rebuilding Nov 2010 to date Comprehensive review New strategy;
Slide 9: PCAR / PLAR – implications for AIB
PCAR / PLAR – implications for AIB Slide 9 Increased capital requirement €bn Equity 6.3 Capital buffer 1.4 Contingent capital 1.4 9.1 Capital deferred since Feb 4.2 Total 13.3 State commitment Net core loans €61bn, non-core loans €25bn €7.2bn already invested c. €20bn deleveraging, loan / de
Slide 10: 2010 Financial Summary
Slide 10 2010 Financial Summary Bernard Byrne Bernard Byrne, Chief Financial Officer Chief Financial Officer
Slide 11: Basis of Presentation
Basis of Presentation Slide 11 Except where stated, the commentary in this presentation is on a continuing operations basis which constitute the businesses AIB will continue to operate following business disposals. In 2010 these continuing businesses comprised the following divisions: AIB Bank RoI,
Slide 12: 2010 overview
2010 overview Slide 12 Extremely difficult year, loss after tax of c. €10.4bn Irish economic environment and sentiment further deteriorated in H2 Materially influenced our assessment of asset quality; higher bad debt charges were required AIB’s capital requirement increased significantly fol
Slide 13: Key financial features
Key financial features Slide 13 Dec* Dec* Dec Dec €bn 2010 2009 Funding % 2010 2009 Total operating income 2.6 4.1 Loans / deposits ratio 165 123 Wholesale funding as Operating profit 1.0 2.6 % of total funding 48 39 Credit provisions – non-NAMA (4.5) (1.9) Dec Dec Profit / loss before tax (pre NAMA
Slide 14: Income
Income Slide 14 €bn Net interest margin bps 4.1 5 2.6 2009 NIM 184 4 Customer deposits -20 1.2 3 Cost of wholesale funding -14 2 0.8* Capital income -19 1 2.9 Loan margins +10 1.8 0 Treasury/other +11 2009 2010 2010 NIM 152* Interest Income Non-Interest Income *excluding loss on transfer to NAMA * e
Slide 15: Costs
Costs Slide 15 €bn 1.7 1.68 1.69* 1.66 1.64 1.65 1.62 2009 underlying 2010 *excludes €159m gain from amendment to retirement benefits €bn 2009 2010 Personnel expenses 1.07 0.92 General & administration 0.49 0.55 Other 0.13 0.18 1.69 1.65 Staff costs 14%; following reductions of 5% and 8% respect
Slide 16: Credit losses – c. €20bn over 3 years
Credit losses – c. €20bn over 3 years Slide 16 €bn 14 13.0 12 10 8.5 65% 8 NAMA 5.3 6 Continuing Operations 4 3.4 64% 35% 1.7 4.5 2 0.9* 53% 1.9 36% 0.8 47% 0 2008 2009 2010 * management estimate NAMA losses reflects change in NAMA definition 2010 vs 2009
Slide 17: Deposit volumes
Deposit volumes Slide 17 Customer accounts Deposit outflows driven by ratings 84 sensitive international corporates / institutions 52 -22 -10 2009 Outflows Poland 2010
Slide 18: Loan volumes
Loan volumes Slide 18 Gross loans to customers 130 Loans reduction €34bn 96 -18 -9 -7 2009 Poland NAMA Deleveraging 2010
Slide 19: Loan book composition – total €94bn
Loan book composition – total €94bn* Slide 19 €13.4bn €30.9bn Residential Mortgages 33% Other Personal 6% €17.7bn Property & Construction 28% SME / Other Commercial 19% €6bn €25.9bn Corporate 14% * excludes NAMA €2.25bn held for sale on which provision for loss of 60% has been made
Slide 20: Provisions & PCAR loss forecasts
Provisions & PCAR loss forecasts Slide 20 Provisions and PCAR loss forecasts are very different. To comply with accounting rules (IFRS), AIB and other banks are required to make provisions on an “incurred” loss basis. This means that we provide for losses on loans that we have identified as impa
Slide 21: Criticised loans - definitions
Criticised loans - definitions Slide 21 Watch Credit exhibiting weakness but with the expectation that existing debt can be fully repaid from normal cashflow Vulnerable Credit where repayment is in jeopardy from normal cash flow and may be dependent on other sources Impaired A loan is impaired
Slide 22: Loan book – credit profile
Loan book* – credit profile Slide 22 2010 €93.9bn 2009 €97.9n 13% 6% 6% 8% €12.1bn 9% €6bn €7.6bn €8.4bn €7.6bn €66.6bn €77.8bn 8% 71% 79% Satisfactory Watch Satisfactory Watch Vulnerable Impaired Vulnerable Impaired Total provisions €7.3bn Total provisions €2.7bn Specific provisions / impaired loan
Slide 23: Mortgages – now largest sector exposure
Mortgages – now largest sector exposure Slide 23 Residential Mortgages c. €31bn, represent c. 33% of all continuing operations loans UK mortgages of c. €3.4bn; N.I. €2.3bn & GB €1.1bn Total arrears €188m; higher arrears experience in N.I. €131m 90+ days arrears of €141m RoI total mortgage
Slide 24: RoI residential mortgages – total €27bn
RoI residential mortgages – total €27bn Slide 24 Dec 2010 Owner Occupier Buy-to-let Total Total residential mortgages €bn 19.4 7.8 27.2 In arrears (> 30 days) €bn 0.8 0.9 1.7 In arrears (> 90 days) €bn 0.6 0.7 1.3 Of which impaired €bn 0.4 0.6 1.0 Total provisions €m 211 355 566 Specific provisions
Slide 25: Property & construction – credit profile
Property & construction* – credit profile Slide 25 2010 €25.4bn 2009 €23.8bn 11% 28% 10% €2.7bn €7bn €2.4bn €12.4bn €3.3bn €15.4bn €3.2bn €2.8bn 14% 13% 48% 65% 11% Satisfactory Watch Satisfactory Watch Vulnerable Impaired Vulnerable Impaired Total provisions €4bn Total provisions €1.1bn Specific pr
Slide 26: Property & construction
Property & construction* Slide 26 Land & development €7.4bn €1.2bn of portfolio continues to fully 0.2 perform 2.0 RoI PCAR submission reflects a 60% 5.2 UK writedown, (€4.4bn on the €7.4bn Other portfolio) Investment property €17.2bn 1.2 1.1 RoI €10.9bn of portfolio continues to 7.8 UK fu
Slide 27: SME / commercial
SME / commercial Slide 27 2010 €17.6bn 2009 €19.2bn 15% 9% 10% €2.7bn €1.9bn €1.7bn 12% €2.1bn €10.4bn €2.5bn €13.1bn €2.4bn 13% 14% 59% 68% Satisfactory Watch Satisfactory Watch Vulnerable Impaired Vulnerable Impaired Total provisions €1.7bn Total provisions €0.9bn Specific provisions / impaired lo
Slide 28: Personal Loans
Personal Loans Slide 28 2010 €6bn 2009 €7.1bn 14% 9% 7% 10% €0.8bn €0.5bn €0.6bn €0.6bn 10% €0.7bn €0.7bn €3.9bn €5.3bn 11% 65% 74% Satisfactory Watch Satisfactory Watch Vulnerable Impaired Vulnerable Impaired Total provisions €0.6bn Total provisions €0.4bn Specific provisions / impaired loans 61% S
Slide 29: Corporate loans
Corporate loans Slide 29 2010 €13.4bn 2009 €15.7bn €0.1bn €0.2bn €0.4bn €0.2bn 1% €0.1bn 1% 2% 1% 3% 1% €0.5bn €12.6bn €15bn 95% 96% Satisfactory Watch Satisfactory Watch Vulnerable Impaired Vulnerable Impaired Total provisions €0.3bn Total provisions €0.2bn Specific provisions / impaired loans 45%
Slide 30: Available for sale portfolios
Available for sale portfolios Slide 30 Gov Securities 3% 2% 4% 3% Senior Bank / Fin Inst Debt 6% ABS -RMBS 5% 48% Gov Guaranteed Snr Bank Debt Supranationals Covered Bonds 14% Corporate Debt 15% Other ABS Subordinated Bank Debt 96% investment grade Excludes NAMA bonds of c. €8bn held in loans an
Slide 31: PCAR - expected losses 2011 - 2013
PCAR - expected losses 2011 - 2013 Slide 31 AIB financial results include 31 Dec 2010 balance sheet provisions of €7.3bn AIB Central Bank Base Stress Base Stress €8.4bn €10.8bn €9.5bn €12.6bn BlackRock Solutions carried out testing on behalf of Central Bank. Methodology included combined effect of t
Slide 32: Funding
Funding Slide 32 €bn 175 16 10% Asset funding requirement reduced by 150 16 10% €26bn in 2010 9 7% 125 15 9% 12 9% Challenging wholesale funding conditions 9 5% 4 3% 9 7% €6bn of unsecured guaranteed term 100 24 15% funding raised in H1 41 29% 75 €2.5bn of term funding maturities in 2011 F
Slide 33: Outline of our Restructuring Plan and Strategic Review
Slide 33 Outline of our Restructuring Plan and Strategic Review David Hodgkinson Executive Chairman
Slide 34: Restructuring plan: transforming AIB
Restructuring plan: transforming AIB Slide 34 Supporting the needs of the Irish economy; capacity and flexibility to respond to future Irish banking and customer needs Primary focus on Irish market (incl. Northern Ireland) personal and small business, commercial and corporate; selective GB and i
Slide 35: Restructuring plan: deleveraging
Restructuring plan: deleveraging Slide 35 2010 2013 Net Proforma Target Loans Deposits LDR LDR •Supportive of Irish recovery with Core 61 52 117% 115% select international presence Non- •Remaining L&D, UKLM, select 25 - n/a n/a core international Group 86 52 165% 122.5% Non-core Bank will be separ
Slide 36: Restructuring plan: target operating model
Restructuring plan: target operating model Slide 36 Significant operational restructuring needed to ensure long term viability Single operating platform will deliver enhanced risk management, cost reduction, operational efficiency and renewed customer focus From To • Silo culture, three autonomo
Slide 37: Restructuring plan: staff
Restructuring plan: staff Slide 37 Building a bank that is ‘Fit for the Future’ Excellent leadership, implementation and transparent communication essential Return to normal people management practices to attract and retain talent Reshaping the management team Revitalise confidence and engag
Slide 38: Restructuring plan: customers
Restructuring plan: customers Slide 38 Engagement, Support and Transparency Plan puts customers at the heart of our business A restructured AIB will support economic growth and job creation Actions will acknowledge and seek to reward the support of the Irish taxpayers Support will be priced
Slide 39: 2013 goals
2013 goals Slide 39 Plan is conservative and includes the following key features: Return to profitability Continuation of elevated funding costs, gradual recovery in net interest margin post trough in 2011 Improved efficiency with implementation of new operating model Significant fall in bad
Slide 40: In conclusion
In conclusion Slide 40 AIB Board and management are grateful to Irish taxpayers for the support essential to the bank’s survival AIB has the capital, staff and customer franchises to regenerate the organisation The recovery has begun though the future remains challenging Successful implementation of
Slide 41: Contacts
Contacts Slide 41 Our Group Investor Relations Department will be happy to facilitate your requests for any further information Alan Kelly alan.j.kelly@aib.ie +353-1-6412162 Rose O’Donovan rose.m.o’donovan@aib.ie +353-1-6414191 Pat Clarke patricia.m.clarke@aib.ie +353-1-6412381 +353-1-660 0311
Allied Irish Banks, p.l.c. — FY2010 Earnings Presentation on 6ix