AIB Group plc · EURONEXT:A5G
AIB — Investor Day (December 2020)
25 slides from AIB's investor day presentation, Dec 2, 2020
Slide 1: Investor and Analyst Update
AIB Group plc Investor and Analyst Update 2 December 2020 1
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: Agenda
Agenda Colin Hunt - CEO Update Strategic Update Donal Galvin - CFO Update Financial Targets 3
Slide 4: Strategic Update
1 Strategic Update Colin Hunt Chief Executive Officer 4
Slide 5: 2020: Twin-track approach to crisis management and future planning
2020: Twin-track approach to crisis management and future planning COVID-19 pandemic has made radical change necessary and possible Targets 2023 1 Cost(1) 6 March 2020 COVID-19 pandemic 2 Dec 2020 < €1.35bn Strategic refresh to Plan to accelerate simplify, streamline and Crisis and catalyst strategy
Slide 6: Prepared and well-positioned
Prepared and well-positioned Sound fundamentals allow us address challenges and opportunities • Leading market positions in attractive market Sound AIB • Modern, resilient and flexible digital IT architecture; No1 Irish banking app fundamentals • Resilient balance sheet, focus on asset quality and s
Slide 7: Strategic review complete
Strategic review complete Proven strategy compounded by accelerating trends Strategic Pillars Accelerating trends Customer First Sustainability Digitalisation Simple & Efficient Accelerating Risk & Capital trends Talent & Culture Ways of working Sustainable Communities 7
Slide 8: Digitalisation
Digitalisation COVID-19 has changed the way our customers bank Less physical branch footfall Increased digital adoption 50% reduction at the peak of COVID-19 9% increase in digital adoption amongst ‘Over 40s’ Now 30% below pre-COVID rate 27% increase in digital daily usage among ‘Over 65s’ Average m
Slide 9: Digitalisation – refocused customer engagement
Digitalisation – refocused customer engagement Reconfigured sales and advisory model due to accelerated digital adoption, increased mobile enablement, declining cash usage and reduced branch footfall Branch footfall (weekly) 2019 2020 -30% -50% March November Community Presence Outcomes A refocuse
Slide 10: Digitalisation – End to End credit
Digitalisation – End to End credit Data-driven, digitally-enabled, agile & frictionless credit End to End Credit Management Decisioning Fulfilment Origination Origination via digital Outcomes 77% Enhanced customer experience with faster response and turnaround times 27% Automation of back office
Slide 11: Ways of working – Property
Ways of working – Property Responding to workforce trends to provide greater flexibility while saving costs Dublin office estate - represents c. 50% of our property costs Dublin office estate costs 50% reduction c. €50m in location 40% reduction in capacity Exited in 2020 2020 2023 Outcomes 2020 Wor
Slide 12: Ways of working – Change Delivery
Ways of working – Change Delivery Creating roles whilst delivering sustainable annual cost savings & reducing risk Creation of 400 new AIB roles Change Technology Data Shift the change management agenda in-house External expertise AIB employees Current workforce model, paying a premium 75% : 25% Out
Slide 13: Business model – UK
Business model – UK Refocusing on GB Corporate banking market and exiting the SME market in GB Reshaping the business towards higher return assets AIB UK – Loans AIB UK – Loans 29% 25% £7.7bn 49% 8% 67% 22% AIB GB - Corporate 2020 estimate 2023 estimate AIB GB - SME AIB NI Outcomes Withdraw from t
Slide 14: Business model – product gaps
Business model – product gaps Exploring opportunities to enhance and diversify our revenue to become a full service provider of financial services for our customers Expanding the product range Non interest income 2020 as % of Total Income Mortgages Credit cards Transaction Loans services 40% Payment
Slide 15: 'We pledge to Do More' to be the leading Irish Financial Institution in Climate Action
Sustainability ‘We pledge to Do More’ to be the leading Irish Financial Institution in Climate Action 2020 Progress Leadership Our Footprint Net zero targets & ambition published 40% reduction in own carbon Founding Signatory UN Principles for footprint (since 2014) Responsible Banking and sup
Slide 16: AIB in 2023
AIB in 2023 A re-shaped business delivering sustainable returns Excellent customer experience as a Customer First digital bank across all segments Simple & Efficient Cost challenge addressed for a leaner, more agile business Risk & Capital Strong and resilient balance sheet to deliver sustainable pr
Slide 17: Financial Targets
2 Financial Targets Donal Galvin Chief Financial Officer 17
Slide 18: Challenging environment for banks
Challenging environment for banks Significant uncertainty remains Irish Economy / Brexit Ireland GDP 2020-2022 % Interest rate 8 environment 6 4 COVID-19 impact 2 0 NPEs -2 -4 GDP forecasts Credit demand 2020 2021 2022 Source: IMF forecasts Deposits 18
Slide 19: Medium-term target: operating expenses < €1.35bn by 2023
1 Medium-term target: operating expenses(1) < €1.35bn by 2023 >10% cost take-out delivering a leaner and more efficient organisation Operating Expenses c. €180m (>10%) net cost reduction from 2020 to 2023 €m 9,520 c. 9,200 c. €230m cost take-out (ex depreciation) €1.3bn < 7,700 • Digitalisation c. €
Slide 20: Investment: 2019 - 2023
Investment: 2019 - 2023 Continuing to invest to enhance our customer experience and efficiency Continue digital transformation of our credit processes €m Investment: 2019 - 2023 Strategic Enable our customers to digitally self serve Expand negative interest rate response 400 Replacement of c
Slide 21: Medium-term target: CET1 >14%
2 Medium-term target: CET1 >14% Strong capital gives optionality CET1 - Capital requirements (%)(1) 11.00% Capital requirements – fully phased 9.69%(2) 10.19% 1.00 CET1 capital requirement 10.19% 1.00 1.50 2.50 Significant buffers to SREP/MDA 2.50 2.50 3.00 1.69 1.69 Medium term target: CET1 >14
Slide 22: Medium-term target: Return on Tangible Equity (RoTE) >8%
3 Medium-term target: Return on Tangible Equity (RoTE) >8% Pathway to >8% returns RoTE method: (PAT – AT1) / (CET1 @ 14% of RWAs) RoTE method > 8% by 2023: Return: Profit after tax less AT1 coupons Return: Equity: CET1 @ 14% of RWAs PAT – AT1 Anticipate modest RWA growth by 2023 Return on CET1
Slide 23: Medium-term targets (2023)
Medium-term targets (2023) A re-shaped business delivering sustainable returns 1 2 3 Focused Appropriate Deliver cost(1) capital sustainable discipline target returns < €1.35bn CET1(2) > 14% RoTE(3) > 8% Enhance shareholder value and returns 1) Costs before bank levies and regulatory fees and except
Slide 24: AIB Group plc
AIB Group plc 24
Slide 25: 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