Slide 1: Backing our customers
Backing our customers Annual Financial Results 2018 for the financial year ended 31 December 2018 AIB Group plc
Slide 2: Forward Looking Statement
Forward Looking Statement This document contains certain forward looking statements with respect to the financial condition, results of operations and business of AIB Group and certain of the plans and objectives of the Group. These forward looking statements can be identified by the fact that they
Slide 3: Backing our customers - Bernard Byrne, CEO
Backing our customers Bernard Byrne Chief Executive Officer AIB Group plc
Slide 4: 2018 highlights
2018 highlights Customer First strategy delivering sustainable performance Profit before tax €1.25bn, loan book growth and significant improvement in asset quality Reaching more normalised annual dividend level with +42% increase to €461m / 17c per share Business generating capital +210bps pre
Slide 5: Growing Irish economy
Growing Irish economy Continuing attractive market dynamic Irish economic growth* improving; Brexit risk remains Total employment levels rising as unemployment falls % 7.5 2300 16 2200 14 12 4.2 2100 3.7 3.6 10 3.1 2000 2.7 8 1900 6 1800 4 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2013 2013 2014 2014 2015
Slide 6: Delivering continued momentum
Delivering continued momentum Increased new lending; leading market shares Continuing increase in new lending Continuing momentum in key sectors(1) Leading market shares in key segments Drawdowns (€bn) Mortgage lending (€bn) Stock 44% 42% 12.1 37% 32% 2.8 2.4 22% 21% 10.5 1.4 1.1 2017 2018 Main Pers
Slide 7: Consistency of strategy and delivery
Consistency of strategy and delivery Continued strategic, financial and operational performance through 2018 AIB Purpose “To back our customers to achieve their dreams and ambitions” “We put our customers first; we are better together; we keep it simple; we are empowering, we are AIB Values building
Slide 8: Purpose & four pillar strategy driving performance
Purpose & four pillar strategy driving performance Backing our customers to achieve their dreams and ambitions and delivering for stakeholders Customer First Simple & Efficient Risk & Capital Talent & Culture Customer and business outcomes Multiple touchpoints Greater efficiency, product offering &
Slide 9: Customer First driving commercial success
Customer First driving commercial success Focus on customer value, efficiency and improving the experience Customer led initiatives Customer benefits Customer outcomes Express mortgage Fast decision <90 minutes customer journey Dedicated Mortgage App (1) & Improving customer experience; + 61NP
Slide 10: Continued investment in key focus areas
Continued investment in key focus areas Predictable levels of investment c.€225m per annum Annual investment spend (€m) Customer engagement platforms • My Mortgage app 300 Informational & analytical capability • Real time customer data capture 250 Modernised processing solutions Strategic • Ex
Slide 11: Modern tiered architecture
Modern tiered architecture Scaling our digital transformation across every tier of our technology estate Engagement Leading digital banking capabilities API Gateway Eventing Micro-Services Contexts Integration BPM (Customer, Account, etc.) Rules Engine Reliable MS MS MS Open, flexible, modular and M
Slide 12: Continuing to evolve
Continuing to evolve Improving sustainability with increased focus on customer delivery Core Segments Business Homes Consumer Continuing to evolve our operating model Business & Customer Services to align strategy, structure and customer delivery Risk Key Enablers Increased focus on Finance sustaina
Slide 13: Significant capital generation and capacity for return
Significant capital generation and capacity for return Normalising NPEs and distributions 14.1 Strong organic capital generation CET1 (FL) ratio % 10.2 6.1 2.1 (0.7) 18.4 (0.9) 17.5 (0.5) 17.5 17.0 2016 2017 2018 NPE (€bn) 461 €13.1bn €13.4bn 326 250 Dec-17 IFRS 9 Jan-18 Profit Inv Dec-18 Proposed D
Slide 14: Backing our customers - Donal Galvin, CFO
Backing our customers Donal Galvin Chief Financial Officer AIB Group plc
Slide 15: Financial highlights 2018
Financial highlights 2018 Strong operational and financial performance Profit before tax €1.25bn – strong financial performance NIM 2.47%; NIM on a previous basis including interest on cured loans 2.53%(1) Costs €1.4bn; stable year on year New lending €12.1bn(2), up 15%; increased across all
Slide 16: Income statement
Income statement Profit before tax €1.25bn driven by strong business performance Summary Income Statement (€m) FY 2018 FY 2017* Net interest income stable Net interest income 2,100 2,115 Other income 626 791 Other income €626m – fees and commissions stable; offset by Total operating income 2,726
Slide 17: Net interest margin (NIM)
Net interest margin (NIM) Stable and in excess of 2.40%+ target Net interest margin material movements Net interest margin stable • 2.47%; on a previous basis incl. 7 bps (6 bps) income on cured loans 2.53% 2.50% (1) (3 bps) (2 bps) 2.47% Lower cost of funding offset by • reducing investment sec
Slide 18: Other income
Other income Stable net fee and commission income Net fee & commission income (€m) Fees and commissions €457m 449 457 71 71 • customer accounts and card income 49 45 Customer related FX increase driven by higher volumes 77 85 Other fees & commission of transactions 47 45 Card Credit related fees
Slide 19: Costs
Costs Continued focus on cost discipline Operating expenses (1) €m Costs €1.4bn in line with expectations 49%(2) 53% 1,428 1,448 Factors impacting costs: 717 718 CIR% • wage inflation 3% partially offset by lower average FTE Other costs • increased depreciation from investment programme 711 730
Slide 20: Balance sheet
Balance sheet New lending growth supported by strong liquidity and capital ratios Balance sheet (€bn) Dec 2018 Jan 2018 Dec 2017 Performing loans 56.8 53.7 53.1 Performing loans increase Non-performing loans 6.1 9.6 10.2 €3.7bn Gross loans to customers 62.9 63.3 63.3 Loss allowance (2.0) (3.6) (3.
Slide 21: Gross performing loans
Gross performing loans Increased €3.7bn; strong growth across all asset classes €bn Resi mortgages Growing the €bn Other personal 28.9 29.0 performing loan book €bn 2.7 2.5 56.8 53.1 Dec-17 Dec-18 Dec-17 Dec-18 €bn Property & construction €bn Corporate & SME (ex. property) 18.6 6.5 15.8 5.9 Dec-17 D
Slide 22: Momentum in NPE reduction continues
Momentum in NPE reduction continues On track to reach 2019 target of c.5% NPE trajectory (€bn) 31.0 33% 10.2 9.6 27% 0.6 1.3 1.3 1.0 1.1 1.1 6.1 0.7 0.8 c.5% 9.6 7.3 7.2 6.10 4.6 NPE NPE IFRS9 - NPE Cash / Restructuring / Portfolio NPE Dec 2019 Dec 2013 Dec 2017 harmonisation Jan 2018 redemptions Ot
Slide 23: Momentum in NPE reduction continues
Momentum in NPE reduction continues Progress in resi mortgages – 48% not past due and / or <90 DPD €bn NPE €bn Resi Mortgages - NPE PDH €2.5bn Aged analysis 33% 9.6 1.7 27% 20% 2.8 6.1 3.3 36% 1.0 47% 0.8 2.6 0.5 1.4 0.6 0.4 12% 3.1 5% 4.6 2.5 3.3 2.0 Not Past Due Jan '18 Dec-18 NPE Net NPE Collater
Slide 24: Funding structure
Funding structure €1.65bn MREL issuance complete; investment grade achieved Total funding (€bn) Investment grade (IG) with all three rating agencies • AIB Group plc upgraded by Moody's and S&P €88.9bn in 2018 MREL target 28.04% by 1 Jan 2021 - issuance plans Customer c. €4bn of which €1.65bn com
Slide 25: Risk weighted assets (RWA)
Risk weighted assets (RWA) Strong capital position, comfortably ahead of minimum requirements Risk weighted assets FL (€m) Dec 2018 Dec 2017 Movement RWA density reduced to 56% from 58% Credit risk 46,052 46,414 (362) in 2018 • balance sheet growth and asset mix +€1.4bn Market risk 371 360 11 • gr
Slide 26: Capital ratios
Capital ratios Strong capital position Capital ratios fully loaded (%) CET1 17.5% reflects strong profit generation +210 bps 19.0 19.1 Increased proposed dividend -90 bps reflects 17c per ordinary share (€461m) 0.5 0.6 Strong leverage ratio 10.1% Total 1.0 1.0 AT1 T2 17.5 17.5 CET1 FY 2017 FY
Slide 27: Medium term financial targets on track
Medium term financial targets on track Focused on delivering sustainable performance Medium Term Metric Targets Guidance & Targets FY 2018 Commentary Net interest margin 2.40%+ Maintain strong and stable NIM, 2.47% Stable NIM, focus on 2.40%+ excess liquidity Cost income ratio <50% Below 50% by end
Slide 28: Backing our customers - Colin Hunt, CEO Designate
Backing our customers Colin Hunt Chief Executive Officer Designate AIB Group plc
Slide 29: Continuing to evolve
Continuing to evolve Improving sustainability with increased focus on customer delivery Continuing to evolve our operating model to align strategy, structure and customer delivery Increased focus on sustainability of Changing our business property portfolio to model support evolution of Customer Fir
Slide 30: Delivering against medium term financial targets
Delivering against medium term financial targets Strong customer franchise, capital accretion and returns and sustainable growth Investment in Customer First agenda driving growth Target returns on tangible equity Shareholder Maintain strong and stable NIM 2.40%+ 10%+(1) value creation Robust and ef
Slide 31: Outlook
Outlook 2019 opportunities and challenges Continuity and consistency of delivery Relentless customer focus Optimise our market leading franchise for growth Prepare for and navigate through Brexit Normalise NPEs and deliver attractive capital returns 31
Slide 32: Appendix
Appendix Annual Financial Results 2018 for the financial year ended 31 December 2018 AIB Group plc
Slide 33: Average balance sheet
Average balance sheet NIM 2.47% December 2018 December 2017* Average Volume Interest Yield Average Volume Interest Yield €m €m % €m €m % Assets Customer loans 60,879 2,082 3.42 60,619 2,105 3.47 Investment securities 15,313 226 1.47 16,908 284 1.68 Loans to banks 8,654 22 0.26 6,396 12 0.20 NAMA sen
Slide 34: AIB Group plc
AIB Group plc HoldCo structure (AIB Group plc) in place for MREL issuance Simplified group structure(1) MREL HoldCo structure (AIB Group plc) Minister for Finance Other shareholders completed in Dec 2017 and HoldCo (71.1188% interest) (28.8812% free float) has become the sole issuer of MREL debt
Slide 35: Minority interest restriction
Minority interest restriction(1) Impact of minority interest at AIB Group plc level Dec 2018 Minority Pre interest Post Fully loaded capital ratios (%) restriction restriction restriction CET1 17.5 - 17.5 Tier 1 18.4 -0.3 18.1 Total capital 20.0 -0.9 19.1 Dec 2018 Minority Pre interest Post Transiti
Slide 36: Capital detail
Capital detail Transitional and fully loaded capital detail and ratios Transitional capital ratios Fully loaded capital ratios Risk weighted assets (€m) Dec 18 Dec 17 Risk weighted assets (€m) Dec 18 Dec 17 Total risk weighted assets 51,596 51,728 Total risk weighted assets 51,439 51,823 Capital (€m
Slide 37: Credit ratings
Credit ratings Investment grade status for AIB Group plc AIB Group plc (HoldCo) Baa3 BBB- BBB- Long term issuer rating Outlook Positive Positive Stable Investment grade AIB p.l.c. (OpCo) A3 BBB- BBB+ Long term issuer rating Outlook Positive Positive Stable Investment grade 37
Slide 38: Investment securities
Investment securities €16.1bn portfolio of debt securities Key components €bn Analysis of government securities €bn 9.6 8.4 7.0 6.3 FY 2017 FY 2017 5.0 4.3 FY 2018 FY 2018 1.4 1.1 0.8 0.9 1.1 1.1 0.5 0.4 0.4 Government Supranational Euro bank Non Euro bank 0.2 0.1 Securities Banks and gov securities
Slide 39: Return on tangible equity
Return on tangible equity (PAT – AT1 coupon + DTA utilisation) / (FL CET1 @ 13% + DTA) FY 2018 €m PAT 1,092 Profit (1) (-) AT1 coupon 37 (+) DTA utilisation 114 Profit (numerator) 1,169 Profit on RWA 51,439 CET1 @ 13% of CET1 at 13% RWA 6,687 RWAs + (+) DTA 2,697 DTAs Adjusted CET1 (denominator) 9,3
Slide 40: Asset quality by portfolio
Asset quality by portfolio Continued progress in NPE reduction across all asset classes Property Corporate Residential Other & & SME (ex €bn mortgages PDH BTL personal construction property) Total December 2018 Customer loans 32.3 29.0 3.3 3.1 7.9 19.6 62.9 of which NPEs 3.3 2.5 0.8 0.4 1.4 1.0 6.1
Slide 41: Asset quality
Asset quality Improving asset quality in the loan book Credit quality (€bn) NPE deleveraging strategy (€bn) 63.3 62.9 9.6 15% 6.1 9.6% 4.5 9.6% 5.0 7.2% 8% 6.1 c.5% 52.3 83.2% 48.7 77% Jan 18 Dec 18 Dec 2018 - Cash / Restructuring / Portfolio sales 2019 NPEs redemptions other & strategic NPE initiat
Slide 42: Residential mortgages
Residential mortgages Improving asset quality; lower NPE Residential mortgages (€bn) Continued improvement in asset quality 32.3 20% 3.3 10% 82% of portfolio is strong / satisfactory 2.4 8% NPE 10% of portfolio, down from 14% at Dec 17, with coverage of 20% 26.6 82% NPE Weighted average LTV
Slide 43: Other personal
Other personal Demand remains strong, lower NPE Other personal (€bn) Portfolio €3.1bn comprises €2.3bn loans and €0.8bn credit card facilities 3.1 50% 0.4 11% 9% Demand remains strong, increased online 0.3 approval through internet and mobile credit application activity 80% 2.4 NPE 11% of port
Slide 44: Property & construction
Property & construction Lower NPE Property & construction (€bn) Portfolio €7.9bn down €0.9bn (10%) due to continued restructuring, write-offs, 7.9 29% 18% repayments and the sale of a portfolio of 1.4 0.6 8% loans 74% of the portfolio is strong / satisfactory 5.9 74% NPE 18% of portfolio down
Slide 45: Corporate & SME (ex property)
Corporate & SME (ex property) Improvement in asset quality of new lending and reduction in NPE Corporate & SME (ex property) (€bn) Portfolio €19.6bn, up €1.9bn 36% 19.6 Overall improvement in asset quality from 1.0 5% 1.2 6% upward grade migration in the portfolio and new lending exceeding repay
Slide 46: Loan book analysis
Loan book analysis Breakdown by sector, geography and interest rate type Concentration by sector (%) Dec 2018 Dec 2018 Fixed Variable Loan book by interest rate type (%) rate rate Total Agriculture 3 Republic of Ireland 12 74 86 Energy 2 United Kingdom 1 12 14 Manufacturing 5 Total 13 87 100 Propert
Slide 47: Scaling for sustainable performance
Scaling for sustainable performance Digital transformation across every tier of our technology estate Leading Digital Banking Capabilities Engagement • Extensive digital capabilities responsive to customer needs - AIB is deemed to be a Digital Leader amongst global Retail Banks API’s Progressive Mod
Slide 48: Sustainability
Sustainability Our journey continues …. We want to be a leader in Sustainability in Ireland. We are continuing to make positive steps to achieve that ambition. Jun 2017 Oct 2017 Jan – Mar 2018 May – Sep 2018 Oct 2018 IPO First sustainability Materiality Purpose workshops Signatory of BITC Carbon ple
Slide 49: Contacts
Contacts Our Investor Relations Department will be happy to facilitate your requests for any further information Name email telephone Niamh Hore niamh.a.hore@aib.ie +353 1 6411817 Head of IR Janet McConkey janet.e.mcconkey@aib.ie +353 1 6418974 Siobhain Walsh siobhain.m.walsh@aib.ie +353 1 6411901 P