Permanent TSB Group Holdings PLC · EURONEXT:PTSB
Permanent TSB — FY2016 Earnings Presentation
40 slides from Permanent TSB's earnings presentation, Jul 4, 2017
Slide 1: Annual Results 2016
Annual Results 2016 For the Twelve Months Ended 31 December 2016 Interim Results 2016
Slide 2: Forward Looking Statements
Forward Looking Statements This document contains certain forward-looking statements with respect to certain of the Permanent TSB Group Holdings plc’s Group’s (the ‘Group’) intentions, beliefs, current goals and expectations concerning, among other things, the Group’s results of operations, financia
Slide 3: Agenda
Agenda 2016 Review and Strategic Outlook Jeremy Masding 3 Group CEO Detailed Financial Performance Patricia Carroll 14 Interim Group CFO 2016 Annual Results 2
Slide 4: 2016 Review and Strategic Outlook
2016 Review and Strategic Outlook Jeremy Masding Group CEO 2016 Annual Results 3
Slide 5: Key Points
Key Points o Underlying Profit of €159m*; an improvement of over €130m o 30,000 New Customers; 14% Growth in New Lending o NPLs down by €700m or 11% o Non-Core Deleveraging Programme now complete o Robust Capital Position at 14.9% (Fully Loaded); well above SREP Demand of 11.45%** * Excluding Gain f
Slide 6: Financial Results
Financial Results Underlying Performance Net Interest Margin*** -2% 2% 7% Dec 16 148bps €159m* Dec 15 112bps €26m Adj. ROE** Dec 14 90bps Dec 14 Dec 15 Dec 16 (€39m) Profit / (Loss) Before Exceptional Items Cost Income Ratio Impairment Write-Back / (Charge) Cost Income Ratio Adjusted Cost Income Rat
Slide 7: Operational Construct
Operational Construct PTSB Commercial Unit Asset Management Unit Customers Treated Trading Performance Untreated Digital Journey 2016 Annual Results 6
Slide 8: Commercial Unit: Customers
Commercial Unit: Customers Franchise NPS Score* o 1.1m Customer Base Q3 – Q4 ‘15 Q3 – Q4 ‘16 o 77 Branches 2nd o Multi-Channel and Product Customer Offering +11 +14 Amongst Irish o 30,000 New Customers Banks Active Current Accounts** Current Accounts +13% over the timeline o Launch of Explore Curren
Slide 9: Commercial Unit: Trading Performance
Commercial Unit: Trading Performance Customer Deposits New Customer Lending €591m €491m €519m 14% o 80% of Total Funding from Customer Deposits* 6% o 80% of Customer Deposits* are Irish retail-based o Loan to Deposit ratio at a comfortable level of 111% Dec 14 Dec 15 Dec 16 FY16 New Customer Lending
Slide 10: Commercial Unit: Digital Journey
Commercial Unit: Digital Journey Delivering Digital Assets 42% Increase in Mobile Payments 18% Increase in Active Mobile Customers YoY Mobile Traffic makes up 60% of all traffic to www.permanenttsb.ie 579K Total App Downloads since launch 19% increase in web traffic on www.permanenttsb.ie 100 millio
Slide 11: Asset Management Unit: NPLs
Asset Management Unit: NPLs Steady Decline in Overall NPL Balances ROI HL and BTL NPL Composition €8.3bn 27% 20% 54% €6.6bn €5.9bn 11% 7% 12% Treated Closures Technically Held Untreated Dec 14 Dec 15 Dec 16 o NPLs reduced by 29% since 2014 o 12% en route to Closure via Repossession or Voluntary Sale
Slide 12: Risk Weighted Assets, Regulatory Capital and Dividends
Risk Weighted Assets, Regulatory Capital and Dividends RWAs (Transitional Basis) Common Equity Tier 1 Ratio SREP Demand (Transitional Basis) 17.1% 17.2% Dec 15 €12.2bn €10.6bn Dec 16 Pillar 2 2.25% Guidance 15.0% 14.9% 11.45% 9.20% Dec 15 Dec 16 Transitional CET1% Fully Loaded CET1% 2016 SREP CET1 2
Slide 13: Start Of The Beginning
Start Of The Beginning Completion of the Deleveraging Programme, De-risking and Re-shaping of the Balance Sheet Non-Core Loan Book ECB Funding €9.3bn €4.9bn €4.7bn 56% YoY 4% YoY 100% YoY 70% YoY €4.1bn €1.4bn 15% of 18% of Total Total 7% of €0.0bn Funding Funding Total Funding Dec 14 Dec 15 Dec 16
Slide 14: Risks and Opportunities
Risks and Opportunities Opportunities Disproportionate Bank Levy and Regulatory Charges Strong Irish Economy Prolonged Lower Interest Rates Commercial Momentum Higher Level of NPLs Government Housing Action Plan ECB RWA Bilaterals and Harmonisation Improving Property Prices IFRS 9 And Basel IV Impro
Slide 15: Financial Performance
Financial Performance Patricia Carroll Interim Group CFO 2016 Annual Results 14
Slide 16: Income Statement
Income Statement €m FY 2016 FY 2015 Change • NII and NIM o NII increased by €36m reflecting higher NIM which grew to 1.48% Net Interest Income (NII) 394 358 36 o NIM growth primarily driven by reduced Cost of Funds and deleveraging Other Income 71 34 37 • Other Income ELG Fees (4) (14) 10 o Increase
Slide 17: Net Interest Margin
Net Interest Margin 3 2.53 2.32 2.25 2.5 2.11 2.14 2.11 Asset Yield % 1.72 2 • NIM Improved to 1.48% in 2016 (Q4 NIM - 1.59%) principally reflecting 1.44 1.43 1.52 lower Cost of Funds 1.3 1.28 1.5 NIM % • Asset Yields have reduced from 2.18% to 2.13% for the full year 2016, 1 mainly due to: 0.88 1.0
Slide 18: Total Operating Expenses
Total Operating Expenses €m FY 2016 FY 2015 Change • Total Operating Expenses Excluding Bank Levy and Regulatory Charges remained flat YoY: Total Staff Costs 135 132 3 o Staff Costs increased marginally by c.2% due to pay and modernisation programme Depreciation and Amortisation 18 18 - o Average no
Slide 19: Impairment Write-Back / (Charge)
Impairment Write-Back / (Charge) Breakdown by Portfolio (€m) FY 2016 FY 2015 Change • Write-Back of €68m for 2016 compared to a €35m Charge in 2015 ROI Home Loans 66 12 54 • Underlying Cost of Risk reduced by 4bps in 2016 due to better underlying ROI BTLs (14) (66) 52 performance Total ROI Residenti
Slide 20: Balance Sheet
Balance Sheet €bn Dec 2016 Dec 2015 Movements in Total Assets Trackers 13.6 14.2 • Total net ROI Loan Book decreased by €0.6bn mainly due to repayments and Variable 7.3 7.5 redemptions exceeding new lending Fixed 0.5 0.5 • Non-Core loan book was fully disposed in 2016 Total ROI Loan Book (Gross) 21.
Slide 21: NPLs
NPLs Dec 2016 Dec 2015 Change Total Loan Book NPLs (€bn) 5.9 6.6 0.7 • Total NPLs reduced by €0.7bn or 11% in 2016 ROI HL and BTL Loan Book • ROI HL and BTL NPLs decreased by €0.5bn or 8% mainly due to cures arising from improved arrears treatment outcomes Gross Loans (€bn) 20.7 21.5 0.8 • ROI HL an
Slide 22: Funding Profile
Funding Profile The Funding Profile of Permanent TSB has improved considerably following Customer Deposits Wholesale ECB Funding the disposal of its Non-Core loan book Customer Deposits 7% • 80% of Total Funding from Customer Deposits 18% 13% o 60% of Customer Deposits are Irish Retail Deposits whil
Slide 23: Regulatory Capital Position
Regulatory Capital Position Regulatory Capital Position Dec 16 Dec 15 Change SREP Demand CET 1 Capital (Transitional Basis) 2.25% o Transitional 17.2% 17.1% 0.1% Pillar 2 2.25% Guidance o Fully Loaded 14.9% 15.0% 0.1% Total Capital 11.45% 12.70% 9.20% o Transitional 18.9% 18.7% 0.2% o Fully Loaded 1
Slide 24: Summary
Summary o Underlying Profit of €159m*; an improvement of over €130m o Net Interest Margin improved to 1.48% o Impairment Charge down by €103m o NPLs down by €700m or 11% o CET1 Ratio remains robust at 14.9% (Fully Loaded) and 17.2% (Transitional) * Excluding Gain from Visa Europe Share Sale of €29m
Slide 25: Appendices
Appendices Trading Conditions 25 Permanent TSB Overview 26 Historical Financial Results 27 Segmental Income Statement 28 Interest Income Analysis 29 Interest Expenses Analysis 30 Tracker Book and Margin 31 Other Income Analysis 32 Loan Book Profile 33 Asset Quality: Arrears Performance 34 NPL Compos
Slide 26: Trading Conditions
Trading Conditions GDP to expand to close to 5% in 2016 Unemployment Rate* 30 % YoY 25 14.1% 12.2% 20 10.2% 15 8.9% 10 6.9% 5 0 GDP -5 -10 1998 2001 2004 2007 2010 2013 2016F Dec 12 Dec 13 Dec 14 Dec 15 Dec - 16 Housing Completions RPPI Curve** 100 30 National - All Residential Properties % Yoy 90 2
Slide 27: Permanent TSB Overview
Permanent TSB Overview Permanent TSB is a full service retail bank which serves personal, small and medium-sized enterprise customers in the Republic of Ireland via a multi-channel distribution network. 2016 Annual Results 26
Slide 28: Historical Financial Results
Historical Financial Results €m FY 2015 FY 2014 FY 2013 FY 2012 Net Interest Income 358 329 309 300 Other Income 34 38 48 62 ELG Fees (14) (59) (105) (165) Total Operating Income 378 308 252 197 Total Operating Expenses (317) (389) (300) (283) Pre-Impairment Profit / (Loss) 61 (81) (48) (86) Impairm
Slide 29: Segmental Income Statement
Segmental Income Statement Group Core Non-Core €m FY 2016 FY 2015 FY 2016 FY 2015 FY 2016 FY 2015 Interest Income 568 694 543 567 23 127 Interest Expense (174) (336) (141) (207) (31) (129) Net Interest Income (excl. ELG) 394 358 402 360 (8) (2) ELG Fees (4) (14) (4) (14) - - Other Income 71 34 70 33
Slide 30: Interest Income Analysis
Interest Income Analysis Gross Average Balances (€bn) Gross Yields* Interest Income (€m) FY 2016 FY 2015 FY 2016 FY 2015 FY 2016 FY 2015 Core Bank Tracker 13.5 14.1 X 1.2% 1.2% = 165 169 Core Bank Fixed and Variable 7.4 7.7 X 3.9% 4.0% = 291 310 X = Consumer Finance 0.3 0.4 9.4% 8.9% 32 32 X = ROI N
Slide 31: Interest Expenses Analysis
Interest Expenses Analysis Average Balances (€bn) Cost of Funds Interest Expense (€m) FY 2016 FY 2015 FY 2016 FY 2015 FY 2016 2015 Current Accounts 3.2 2.8 X 0.0% 0.0% = 1 1 Retail Deposits 10.3 11.3 X 0.6% 1.1% = 64 127 Corporate Deposits 2.7 2.7 X 1.2% 2.1% = 35 58 Institutional deposits 0.4 1.9 X
Slide 32: Tracker Book And Margin
Tracker Book And Margin Gross Irish Tracker Book Tracker Margin Impact at December 2016 €14.8bn (bps) €14.2bn Average Customer Rate 121 €13.6bn - ECB Repo Rate 0 - Average Fixed Spread 121 Cost of Funds 70 Net Interest Margin 51 Dec 14 Dec 15 Dec 16 2016 Annual Results 31
Slide 33: Other Income Analysis
Other Income Analysis (€m) FY 2016 FY 2015 Retail Banking And Credit Card Fees 45 45 Brokerage And Insurance 10 9 Other Fee Income 2 2 Total Fee And Commission Income 57 56 Fee and Commission Expense (18) (17) Net Fee And Commission Income 39 39 Net Trading Expense 3 (4) Net Other Operating Income /
Slide 34: Loan Book Profile
Loan Book Profile Dec 2016 (€bn) ROI HL ROI BTL UK HL UK BTL CRE Consumer Total Core Non-Core Gross Loans 15.3 5.5 0.0 0.0 0.2 0.3 21.3 21.3 0.0 Performing Loans 11.1 3.9 0.0 0.0 0.1 0.2 15.4 15.4 0.0 NPLs 4.1 1.6 0.0 0.0 0.1 0.1 5.9 5.9 0.0 Provisions Stock 1.4 0.9 0.0 0.0 0.1 0.1 2.5 2.5 0.0 PCR*
Slide 35: Asset Quality: Arrears Performance
Asset Quality: Arrears Performance Home Loan - # Cases 0-90 Days in Arrears Home Loan - # Cases >90 Days in Arrears 16.0% 6.0% 3.4% 12.0% 7.8% 3.0% 8.0% 3.0% 7.7% 4.0% 0.0% 0.0% Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 PTSB Industry PTSB Industry Buy To Let - # Cases 0-9
Slide 36: NPL Composition
NPL Composition Treated ROI HL NPLs Treated ROI BTL NPLs FY 2016 FY 2015 FY2014 FY 2016 FY 2015 FY2014 Long Term €1.2bn €1.3bn €1.3bn Long Term €0.5bn €0.8bn €0.8bn o €3.1bn / 54% (by balances) of Splits €1.2bn €1.2bn €1.0bn Splits €0.1bn €0.1bn €0.1bn Loans in Forbearance Treatments i.e. Treated Sh
Slide 37: Asset Quality: Forbearance Treatments
Asset Quality: Forbearance Treatments €4.4bn in Active Forbearance, 71% NPLs & 73% Home Loans ROI Home Loan in Forbearance - Performing €0.7bn ROI BTL in Forbearance - Performing €0.6bn 8% 1% 1% 11% Trials Term Extension/ Capitalisation 23% Term Extension/ Capitalisation Part Capital & Interest Part
Slide 38: Treasury Portfolio Overview
Treasury Portfolio Overview FY 2016 FY 2015 Treasury Portfolio Mix Asset Type Balance (€bn) Gross Yield%* Balance (€bn) Gross Yield%** 33% Debt Securities 2.7 2.4 3.8 2.8 Government 2.4 2.5 3.1 3.2 NAMA*** 0.3 1.7 0.7 1.4 59% Loans and Advances to 8% Credit Institutions 1.3 0.0 1.6 0.1 (Cash and Equ
Slide 39: RWAs
RWAs 42% • RWAs reduced by €1.7bn of which: 45% o €1.4bn is due to the disposal of the UK loan portfolios (Lansdowne €12.3bn 199 and the IOM). €10.6bn o €0.2bn decrease in the ROI portfolio, however the underlying decrease was €0.8bn (see below). Dec-15 Dec-16 • In advance of the ECB’s TRIM exercise
Slide 40: Regulatory Capital
Regulatory Capital 31 Dec 16 31 Dec 15 Transitional Fully Loaded Transitional Fully Loaded €m €m €m €m RWAs 10,593 10,593 12,210 12,260 Capital Resources: CET1 Capital 1,827 1,579 2,086 1,837 Additional Tier 1 98 82 105 79 Tier 1 Capital 1,925 1,661 2,191 1,916 Tier 2 Capital 78 68 91 70 Total Capit
Permanent TSB Group Holdings — FY2016 Earnings Presentation on 6ix