Bank Of Cyprus Holdings Plc · CSECY:BOCH
Bank Of Cyprus — FY2023 Earnings Presentation
81 slides from Bank Of Cyprus's earnings presentation, Mar 28, 2024
Slide 1: Group Financial Results for the year ended 31 December 2023
Bank of Cyprus Group Group Financial Results For the year ended 31 December 2023
Slide 2: Disclaimer
DISCLAIMER The financial information included in this presentation is not audited by the Group’s external auditors. The Investor Presentation should be read in conjunction with the information contained in the Press Release and neither the financial information in the Press Release nor in the Invest
Slide 3: Table of Contents
Table of Contents Executive Summary – Updated Financial Targets 1. Executive Summary and Updated Financial Targets 2. FY2023 Financial Performance 3. Capital, Liquidity & Asset Quality 4. ESG update 5. Appendix Appendix 3
Slide 4: Why Bank of Cyprus
Why Bank of Cyprus Strong Macro Market Leader • Open economy growing faster than the Eurozone average • Market leader in a consolidated market • Strong recovery in tourism, proving Cyprus’ resilience • 42% loan market share; 38% deposit market share • Fiscal discipline, sovereign rated investment gr
Slide 5: Resilient Economy Outperforming Eurozone Average
Resilient Economy Outperforming Eurozone Average GDP growth of 2.2% for 4Q2023 Unemployment rate decreased to 6.0% in 3Q2023 Real GDP (yoy % change) Quarterly (%) (seasonally adjusted) 2021: 9.9% 2022: 5.1% 2023: 2.5% 2021: 7.5% 2022: 6.8% 16.9% 15.00% 10.00% 9.00% 8.3% 3.4% 2.4% 2.2% 5.00% 14.9% 7.
Slide 6: Strong Performance in FY2023 Supported by Interest Rate Tailwinds
Strong Performance in FY2023 Supported by Interest Rate Tailwinds… Strong revenues supported by higher rates while maintaining a well-diversified business model Non-NII expected to continue covering 70-80% of total operating expenses2 (€ mn) Breakdown of FY2023 Non-NII 1,092 21% 90% 88% 300 Average
Slide 7: Leading to Accelerated Shareholder Value Creation
…Leading to Accelerated Shareholder Value Creation Robust capital position at 17.4% post distribution Tangible book value per share up 25% yoy CET1 ratio 1.75 1.75 2.20 +25% 220 bps • ECB approval received for total € 4.93 17.4% 5x Cash Dividend 4 distribution of €137 mn 0.25 15.1% 15.2% 3.93 per sh
Slide 8: Distribution at 30% Payout Ratio; 5x Increase in Cash Dividend
Distribution at 30% Payout Ratio1; 5x yoy increase in Cash Dividend2 and Inaugural Share Buyback 30% Material yoy increase in payout ratio; Payout c.9%3 dividend yield 2022 2023 ratio1 €112 mn €137 mn Cash 5x increase in cash dividend2 yoy €22 mn €137 mn FY2023 dividend2 Distribution €25 mn Intentio
Slide 9: Snapshot for 4Q2023; ROTE over 20%
Snapshot for 4Q2023; Current ROTE over 20% in Excess of Medium-Term Target Net Interest Income at its peak, up 3% qoq Cost to income ratio1 at 32% supported by higher income (€ mn) 214 220 60% 57% 196 162 47% 136 39% 34% 32% 29% 30% 89 71 74 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 1Q
Slide 10: Financial Performance Surpassed 2023 Targets
Financial Performance Surpassed 2023 Targets, Supported by Rates 2023 Targets FY2023 (June 2023 Investor Update Guidance) Net Interest Income Average ECB Depo rate >€650 mn 3.0% €792 mn 3.3% ✓ Cost to Income Ratio1 sub 40% 31% ✓ ROTE >17% 24.8% ✓ NPE Ratio <4% 3.6% ✓ Cost of Risk 50-80 bps 62 bps ✓
Slide 11: 2024 and 2025 ROTE Targets Reiterated
2024 and 2025 ROTE Targets Reiterated FY2024 FY2025 FY2024 (June 2023 Investor (June 2023 Investor (February 2024) Update Guidance) Update Guidance) Net Interest Income >625 mn Lower than 2024 >670 mn Average ECB Depo rate 3.1% 2.5% 3.4% Cost to Income Ratio1 c.40s Mid 40s c.40s 2025 ROTE ROTE of >1
Slide 12: NII Remains Strong >€670 mn as Rates Decline
NII Remains Strong >€670 mn as Rates Decline 6m Euribor +3.2% +3.3% Outlook +0.7% +3.7% rate (avg) ECB depo +0.1% +3.3% +3.4% +3.1% • 2024 a transition year with an expected declining interest rate rate (avg) 792 environment; 2024 at >€670 mn, with quarterly declining trend >670 during the year +114
Slide 13: Reducing NII Sensitivity via Structural Hedging
Reducing NII Sensitivity via Structural Hedging NII sensitivity to parallel shift in interest rates (annualised)1 EUR +100bps -100bps Dec 2022 €121 mn -€126 mn • Increase in total cost of deposits by 10 bps reduces NII by c.€19 mn Sensitivity/Total NII 34% €16 mn • 1 p.p. increase in Time and Notice
Slide 14: Table of Contents
Table of Contents Executive Summary – Updated Financial Targets 1. Executive Summary and Updated Financial Targets 2. FY2023 Financial Performance 3. Capital, Liquidity & Asset Quality 4. ESG update 5. Appendix Appendix 14
Slide 15: FY2023 Highlights
FY2023– Highlights • Continued strong economic growth; Cyprus GDP growth of 2.2%1 for 4Q2023, outperforming the Eurozone average Resilient economic • New lending of €2.0 bn, despite the rising interest rate environment outlook • Gross performing loan book at €9.8 bn, broadly flat year on year as rep
Slide 16: Income Statement
Income Statement FY2023 FY2022 4Q2023 3Q2023 qoq% yoy% € mn IFRS 17 Net Interest Income 792 370 220 214 3% 114% Non-interest income 300 292 76 71 8% 3% Total income 1,092 662 296 285 4% 65% Total operating expenses1 (341) (325) (93) (86) 9% 5% Operating profit 708 299 190 187 2% 137% Provisions and
Slide 17: NII Peaked in 4Q2023, up 3% qoq
NII Peaked in 4Q2023, up 3% qoq; Totaled €792 mn in FY2023 4Q2023 NII of €220 mn, up 3% qoq Effective yield on assets & cost of funding 363 366 Performing loans Cost of deposits 341 343 400 NIM bps 400 291 Liquid assets 2 Cost of wholesale funding 2 165 200 200 (bps) 792 0 0 520 547 560 +3% 455 +114
Slide 18: Highly Liquid Balance Sheet
Highly Liquid Balance Sheet (€ bn) 26.63 26.63 Other assets 1.85 Other 1.31 REMU repossessed 0.86 properties Equity (incl AT1) 2.49 • 22% linked with Bank’s base rate1 (‘natural Wholesale hedging’ of time & notice cost of deposits) 0.98 Issuance of €350 mn MREL- Eligible Senior Funding from • 49% li
Slide 19: Robust Liquidity Position; Surplus Liquidity of €9.1 bn
Robust Liquidity Position; Surplus Liquidity of €9.1 bn Diversified, mainly retail funded deposit base Highly liquid balance sheet Group deposits Liquid assets • Sticky deposit base sits • 58% insured deposits epo d 5% 3% • 61% Retail eld in c a s h 3% 58% sured 20% 22% • Average size of Retail depo
Slide 20: Retail Funded Deposit Base up 2% yoy
Retail Funded Deposit Base up 2% yoy; Loan to Deposit Ratio at 51% Deposits at €19.3 bn; market share at 38%1 Time & Notice deposit pass-through2 at 18% for 4Q2023 +2% yoy Time & Notice Savings, Current & Demand Cost of deposits (bps) € bn 19.0 19.0 19.2 19.3 19.3 (bps) 7 10 14 19 24 5.6 29% 5.7 30%
Slide 21: New Lending of c.€2.0 bn in FY2023
New Lending of c.€2.0 bn in FY2023; Loan Balances Broadly Flat yoy due to Repayments New lending of €462 mn in 4Q2023 Gross performing book1 at €9.8 bn € mn € bn 2,092 2,025 624 9.80 9.90 9.91 9.86 9.78 184 223 64 0.69 0.67 0.69 0.74 0.76 494 462 50 445 991 865 297 43 66 3.83 3.90 3.89 3.79 3.69 212
Slide 22: Fixed Income Portfolio up 42% yoy
Fixed Income Portfolio up 42% yoy, Representing 14% of Total Assets1 Fixed income securities per category - NBV Fixed income securities per issuer type - NBV to increase to % assets1 11% 13% 14% 14% +42% c.16% by Dec 20242 3,548 3,548 3,489 3,489 (€ mn) 163 Other financial (€ mn) 3,178 170 3,178 415
Slide 23: Non-Interest Income up 3% yoy
Non-Interest Income up 3% yoy Supported by Increased Fees and Commission Total Non-NII (€ mn) +3% yoy +8% 292 300 qoq 10 81 13 72 76 2 43 50 3 71 REMU 2 12 3 5 2 11 22 54 16 5 11 FX and other income 3 44 15 16 4 10 13 Non-recurring items Net insurance result 214 170 181 235 54 44 61 46 58 45 62 46 N
Slide 24: Profitable Life Insurance Business
Profitable Life Insurance Business - Valuable and Sustainable Contribution to the Group € mn FY2023 FY2022 yoy% IFRS 173 11% 7% 27% Net Insurance result 32.4 25.5 27% Contribution Market Contribution to the Other net income/(expenses) (0.5) 0.0 - share2 to non-NII Group’s PAT Other operating costs (
Slide 25: Profitable Non-Life Insurance Business
Profitable Non–Life Insurance Business – Valuable and Sustainable Contribution to the Group € mn FY2023 FY2022 yoy% IFRS 173 7% 5% 14% Net Insurance result 20.6 18.9 9% Contribution Market Contribution to the share2 Other operating costs (non- to non-NII Group’s PAT (3.7) (2.9) 25% attributable) PAT
Slide 26: Leading Card Processing and Payment Solutions Business in Cyprus
Leading Card Processing and Payment Solutions Business in Cyprus € mn FY2023 FY2022 yoy% 11% 2% 84% Net fee and commission income 29.6 26.7 11% Contribution Market Contribution to the share3 Net other income 3.7 4.51 -18% to non-NII Group’s PAT FX and net gains on revaluation 0.7 2.7 -73% of investm
Slide 27: Digital Offerings via Digital Channels Enhance Group's Sales
Digital Offerings via Digital Channels Enhance Group’s Sales Quickloans1 of €100 mn in FY2023; launched Digital account Openings2 up 108% yoy New debit cards up 156% yoy in Jan 2023 Accounts (#) Accounts (#) Accounts (#) € mn 9,715 11,536 15,962 +108% +156% 100 4,667 4,515 FY2023 FY2023 FY2022 FY202
Slide 28: JINIUS; Leader in Shaping the Digital Local Economy
JINIUS; Leader in Shaping the Digital Local Economy • Establishment of Jinius Ltd subsidiary in April 2023 • Launched Business-to-Business services and • Launched new Business-to-Consumer service enhanced current ones in 2023: in February 2024: • Tenders management (New!) • Product Marketplace • Eco
Slide 29: Cost to Income Ratio at 31% in FY2023
Cost to Income Ratio2 at 31% in FY2023 Supported by Stronger Income and Disciplined Cost Management Disciplined cost management despite inflationary pressures YoY Performance (FY2023 vs FY2022) 5% yoy • Total operating expenses2 up 5% yoy, with 2022 efficiency actions partly offsetting (€ mn) inflat
Slide 30: Table of Contents
Table of Contents Executive Summary – Updated Financial Targets 1. Executive Summary and Updated Financial Targets 2. FY2023 Financial Performance 3. Capital, Liquidity & Asset Quality 4. ESG update 5. Appendix Appendix 30
Slide 31: Robust Capital Position: CET1 at 17.4%
Robust Capital Position: CET1 at 17.4% on a 30% Payout Ratio Regulatory capital ratios Updated capital requirements1,2 – Jan 2024 22.4% 15.61% 20.4% 20.7% 20.4% 19.4% 19.0% 19.1% 19.3% 17.4% (0.18%) 10.91% 0.37% 15.2% 15.6% 15.2% 10.72% 14.5% 14.1% 14.2% 14.1% Mar 22 Jun 22 Sep 22 Dec 22 Mar 23 Jun
Slide 32: MREL Position
MREL Position • MREL ratio (% of RWAs1) at 25.5%2 as at 31 December 2023 (previously reported 24.6%3) MREL (% of RWAs) • MREL ratio (as % of Leverage Ratio Exposure (LRE)) of 11.7%2 (previously reported 11.4%3) • Based on final SRB MREL communication: 4.48%1 CBR1 • Final target is set at 25.00%1 of
Slide 33: NPE Ratio at 3.6%, in Line with 2023 Target
NPE Ratio at 3.6%, in Line with 2023 Target NPE broadly flat qoq at €365 mn; residual NPEs mainly Retail Underlying NPE inflows remain under control 90% 78% 77% Net inflows/ 80% NPE 73% -57 -22 -18 -13 7 69% (outflows) coverage 70% 60 46 60%(€ mn) 411 (€mn) 371 358 365 365 13 11 53 UTPs 50% 10 37 NP
Slide 34: Cost of Risk of 73 bps for 4Q2023 and 62 bps in FY2023
COR of 73 bps for 4Q2023 and 62 bps in FY2023, in Line with 2023 Target Cost of risk increased to 62 bps Bank’s IFRS 9 macroeconomic assumptions 0.57% 0.62% Base line GDP rate Unemployment rate 0.44% 2023 2.5% 6.1% 0.61% 2024 2.7% 5.8% (0.04%) FY2021 FY2022 FY2023 Breakdown of quarterly cost of risk
Slide 35: REMU Stock Properties Down €217 mn yoy
REMU Stock Properties Down €217 mn yoy; on Track to Achieve 2025 Target REMU repossessed stock at €862 mn at December 2023 Organic sales1 consistently close to Open Market Value; comfortably 2.0 above Book Value Group BV (€ bn) 1.5 1.48 1.44 -€217 mn 76% of Open Market Value 112% 111% 112% 111% 1.16
Slide 36: 2024 and 2025 ROTE Targets Reiterated
2024 and 2025 ROTE Targets Reiterated FY2024 FY2025 FY2024 (June 2023 Investor (June 2023 Investor (February 2024) Update Guidance) Update Guidance) Net Interest Income >625 mn Lower than 2024 >670 mn Average ECB Depo rate 3.1% 2.5% 3.4% Cost to Income Ratio1 c.40s Mid 40s c.40s 2025 ROTE ROTE of >1
Slide 37: Concluding Remarks
Concluding Remarks ✓ FY2023 Distribution at 30% Payout ratio; cash dividend of €0.25 per ordinary share (5x on prior year levels) and inaugural share buyback of up to €25 mn ✓ FY2023 performance ahead of 2023 targets ✓ Profit after tax of €487 mn in FY2023; ROTE of 24.8% ✓ ratio, in an environment o
Slide 38: Steadily Improving Credit Ratings for BOC
Steadily Improving Credit Ratings for BOC: Investment Grade by Moody’s Moody’s upgraded rating to Baa3 in October 2023; outlook positive S&P upgraded rating to BB in December 2023; outlook positive A38 A- 8 Baa1 BBB+ Baa2 7 Baa2 BBB 7 BBB Baa3 Baa3 Investment grade BBB- Investment grade 6 Ba1 BB+ 6
Slide 39: Key Information and Contact Details
Key Information and Contact Details Contacts Investor Relations & ESG Executive Director Finance Tel: +35722122239, Email: investors@bankofcyprus.com Eliza Livadiotou, Tel: +35722 122128, Email: eliza.livadiotou@bankofcyprus.com Annita Pavlou Manager Investor Relations & ESG Tel: +357 22 122740, Ema
Slide 40: ESG Update
Table of Contents Executive Summary – Updated Financial Targets ESG update https://www.bankofcyprus.com/globalassets/csr/sustainability-reports/bocsustainabilityreport2022_eng.pdf Appendix 40
Slide 41: Key ESG Milestones Achieved in 2023
Key ESG milestones achieved in 2023 1) Set the first decarbonisation target on Mortgage portfolio aligned with IEA’s B2DS1 climate scenario so as to manage transition risks, align the portfolio with the Net Zero commitment of 2050 and drive the new lending strategy. Base Base Sector/ Emissions Targe
Slide 42: Delivering on our ESG Commitments
Delivering on our ESG Commitments Stakeholder ESG Priorities in 2024 Progress in 2023 SDG • Set additional decarbonisation targets on loan and investment • Set decarbonisation targets on Scope 1 and Scope 2 GHG portfolios emissions of the Group • Enhance ESG disclosures to ensure transparency agains
Slide 43: Delivering on our ESG Commitments
Delivering on our ESG Commitments Climate Stability - Target 1: Become Carbon Neutral by 2030 by reducing Bank’s performance against baseline of 2021 Scope 1 & Scope 2 GHG emissions by 42% by 2030 compared to 2021 baseline • c.11% yoy reduction in Scope 1 and Scope 2 GHG emissions in FY2023 (8%) (18
Slide 44: Delivering on our ESG Commitments
Delivering on our ESG Commitments Climate Stability – Target 3: Increase portfolio of environmentally friendly loans Climate Stability - Target 4: Increase utilisation of renewable energy in own operations 285,907 Gross loans (€ mn) # of accounts 173,583 65% 20.9 24.5 597 17.8 Renewable energy 16.7
Slide 45: Delivering on our ESG Commitments
Delivering on our ESG Commitments Financial Inclusion and Resilience - Target 7: Continue supporting start- Health and Safety - Target 9: Contribute and support cancer patients and their ups under IDEA1 Innovation Centre. families through the Bank of Cyprus Oncology Centre IDEA Innovation Centre (si
Slide 46: Delivering on our ESG Commitments
Delivering on our ESG Commitments Education - Target 11: Provide upskilling/reskilling employee opportunities in line Culture and Heritage - Target 12: Increase Bank of Cyprus Cultural with the digital transformation initiatives to broaden career opportunities Foundation activities and attendees Ban
Slide 47: Macroeconomic Overview
Table of contents Executive Summary – Updated Financial Targets FY2022 Financial Performance Appendix Macroeconomic overview 47
Slide 48: Strong, Diversified Economy Demonstrated by Key Enablers
Strong, Diversified Economy Demonstrated by Key Enablers A diversified, service-based economy Cyprus Public Debt to GDP below Euro area average Structure of Economy in 2022 (% of GVA) As at 30 September 2023 166% Public debt expected to 141% decrease to c.63%1 by end- 9% 9% Wholesale & Retail trade
Slide 49: Cyprus is a Growing Business and Tech Hub in the Region
Cyprus is a Growing Business and Tech Hub in the Region Well educated, highly skilled labour force Labour costs significantly below the average Euro area Level of education (€ ‘000) 24 19 Tertiary 43% 14 13 13 1 Wages per capita 11 #3 country in Europe on 7 number of university graduates per capita
Slide 50: EU Recovery and Resilience Facility (RRF)
EU Recovery and Resilience Facility (RRF) To mitigate the socioeconomic impact of the pandemic & to strengthen the resilience and competitiveness of the Cypriot economy c.7% increase in GDP for 2022-2026 €1.2 bn €1.0 bn from EU mechanism additional funds mobilised in Cyprus c.3% increase in employme
Slide 51: Additional Financial Information
Table of contents Executive Summary – Updated Financial Targets FY2022 Financial Performance Appendix Additional financial information 51
Slide 52: Analysis of Deposits
Analysis of Deposits Deposits by Currency (€ bn) Deposits by Customer Sector (€ bn) Currency Dec 22 Jun 23 Sep 23 Dec 23 Sector Dec 22 Jun 23 Sep 23 Dec 23 Retail 11.35 11.68 11.68 11.79 EUR 17.07 17.30 17.35 17.51 SME 1.01 0.97 1.01 1.03 USD 1.53 1.47 1.53 1.45 International 0.14 0.13 0.14 0.12 GBP
Slide 53: Income Statement
Income Statement FY2022 € mn FY2023 4Q2023 3Q2023 qoq% yoy% IFRS 17 Net Interest Income 792 370 220 214 3% 114% Net fee and commission income 181 192 46 45 4% -6% Net foreign exchange gains and net gains/(losses) on financial instruments 37 26 8 8 13% 46% Net insurance result 54 44 16 13 19% 20% Net
Slide 54: Consolidated Balance Sheet
Consolidated Balance Sheet 31.12.2022 % 31.12.2022 % Assets (€ mn) 31.12.2023 IFRS 17 change Liability and Equity (€ mn) 31.12.2023 IFRS 17 change Cash and balances with central banks 9,615 9,567 0% Deposits by banks 472 508 -7% Loans and advances to banks 385 205 88% Funding from central banks 2,04
Slide 55: Capital Position; Quarterly Evolution
Capital Position; Quarterly Evolution min OCR1 requirement for 2023 22.4% 5.0% 17.4% (0.1%) (0.3%) 15.56% 15.2% 2.6% 10.72% Regulatory CET1 2H2023 profits RWAs 3 Distribution at CET1 ratio AT1 & T2 Capital Ratio Dec 2023 5 Sep 2023 2 30% payout ratio 4 Dec 2023 5 1) OCR - Overall Capital Requirement
Slide 56: Risk Weighted Assets – Regulatory Capital
Risk Weighted Assets– Regulatory Capital Risk Weighted Assets by Geography Reconciliation of Group Equity to CET1 € mn 31.12.23 € mn 31.12.21 31.12.22 30.09.23 31.12.23 Shareholder’s equity 2,247 Cyprus 10,595 10,059 10,208 10,297 Less: Intangibles (24) Overseas 99 55 56 44 Less: Deconsolidation of
Slide 57: Overall Capital Requirements
Overall Capital Requirements CET1 ratio Total capital ratio 15.56% 15.61% CCyB c.0.48% c.0.48% 10.91% 1.50% c.1.88% 10.72% O-SII c.0.48% CCyB c.0.48%. CCB 2.50% 2.50% O-SII 1.50% c.1.88% Pillar 2R 3.08% 2.75% CCB 2.50% 2.50% Tier 2 2.00% 2.00% Pillar 2R 1.73% 1.55% AT1 1.50% 1.50% Total Pillar 1: 8%
Slide 58: Buffer to MDA Restrictions Level & Distributable Items
Buffer to MDA Restrictions Level & Distributable Items1 CET1 Ratios 667 bps2 17.4% 10.7% • Significant CET1 MDA buffer as at 31 December 2023: 667 bps2 (€690 mn2) • Distributable items1 of €1,531 mn for BOCH as at 31 December 2023 • BOCH fully utilises its AT1 and Tier 2 buckets as at 31 December 20
Slide 59: Income Statement Bridge for FY2023
Income Statement Bridge1 for FY2023 Underlying € mn Other Statutory Basis basis Net interest income 792 - 792 Net fee and commission income 181 - 181 Net foreign exchange gains and net gains/(losses) on financial instruments 37 4 41 Net gains on derecognition of financial assets measured at amortise
Slide 60: Analysis of Interest Income and Interest Expense
Analysis of Interest Income and Interest Expense Analysis of Interest Income (€ mn) FY2023 FY2022 4Q2023 3Q2023 2Q2023 1Q2023 4Q2022 3Q2022 Loans and advances to customers 523 347 141 138 131 113 102 87 Loans and advances to banks and central banks 322 59 97 92 76 57 36 9 Repurchase agreements 3 - 3
Slide 61: Income Statement by Business Line for FY2023
Income Statement by Business line for FY2023 Corporate International International Consumer SME Wealth & € mn and large corporate Business RRD REMU Insurance Treasury JCC Other Total Banking Banking Markets Banking Banking Unit Net interest income/(expense) 381 56 166 33 123 17 18 (35) - 35 - (2) 79
Slide 62: Additional Asset Quality Slides
Table of contents Executive Summary – Updated Financial Targets FY2022 Financial Performance Appendix Additional Asset Quality Slides 62
Slide 63: Well Diversified Loan Portfolio With High Quality Collateral
Well Diversified Loan Portfolio With High Quality Collateral Gross loans (excluding legacy)1 by business sector of €9.78 bn € bn Housing Other Private 3.81 0.70 4.51 Individuals Hotels & 1.16 Catering Private individuals Private individuals Business Real Estate 1.03 LTV2 Housing Other €5.27 bn €3.81
Slide 64: Gross Loans and NPE Coverage by Customer Type
Gross Loans and NPE Coverage by Customer Type Gross loans by customer type € mn Dec 22 Sep 23 Dec 23 Retail Housing 3,542 3,547 3,556 Retail other 947 996 994 SMEs 1,119 1,031 1,010 International corporate 685 744 763 Corporate & Large 3,924 3,849 3,747 Corporate Total 10,217 10,167 10,070 Corporate
Slide 65: Loans by Economic Activity and Arrears Analysis
Loans by Economic Activity and Arrears Analysis Gross loans (€ mn) Dec 22 Sep 23 Dec 23 Loans arrears analysis Dec 22 Sep 23 Dec 23 (€ mn) Trade 926 937 886 Loans with no arrears 9,788 9,775 9,675 Manufacturing 397 365 364 Hotels & Catering 1,185 1,185 1,178 Loans with arrears but not 18 34 30 NPEs
Slide 66: €7 mn Net Organic NPE Inflows in 4Q2023
€7 mn Net Organic NPE Inflows in 4Q2023 Analysis of total inflows(€ mn) 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 New inflows 7 7 9 9 6 Redefaults 1 2 1 0 1 Unlikely to pay 5 1 1 37 53 Total inflows 13 10 11 46 60 Analysis of total outflows (€ mn) Curing of restructuring (40) (13) (8) (7) (9) DFAs & DFEs (
Slide 67: Gross Loans and Coverage by IFRS 9 Staging
Gross Loans and Coverage by IFRS 9 Staging Gross loans by IFRS 9 stage Allowance for expected loan credit losses Coverage ratio (€ mn) 10,217 10,167 10,070 282 275 Dec 22 Sep 23 Dec 23 267 Stage 1 7,970 8,180 8,335 83% 85 83 84 Stage 1 1.1% 1.0% 1.0% 51 49 Stage 2 2.8% 3.0% 3.1% 42 Stage 2 13% 146 1
Slide 68: Stage 2 Exposures Well Collateralised
Stage 2 Exposures Well Collateralise; 97% of Exposures Present no Arrears € mn 1,370 8.0% Real estate 104 Migration rate of Stage 2 to Stage 3 at Of which: • Net c.€245 mn Stage 2 loans were migrated to 3.7% Trade 123 5.3% FY2023 Stage 1 in FY2023 • €271 mn (20%) Performing Forborne 5.4% Other 163 •
Slide 69: Rescheduled Loans
Rescheduled Loans1 Rescheduled loans1 by customer type Fair value of collateral and credit enhancements € bn Dec 21 Dec 22 Sep 23 Dec 23 31 Dec 2023 Loans and advances to customers (€ mn) Retail housing 0.43 0.18 0.15 0.14 Cash 475 Retail other 0.17 0.06 0.04 0.03 Securities 744 SMEs 0.17 0.11 0.05
Slide 70: REMU - the Engine for Dealing with Foreclosed Assets
REMU - the Engine for Dealing with Foreclosed Assets €1.99 bn sales1 of 4,449 properties across all property classes since set-up €213 mn organic sales1 in FY2023; comfortably above Book Value Sales € mn (contract prices1) Net Proceeds / BV 106% 104% 115% 102% 105% # 99 # 331 # 575 # 579 # 492 # 1,1
Slide 71: REMU - the Engine for Dealing with Foreclosed Assets
REMU - the Engine for Dealing with Foreclosed Assets Inflows substantially reduced with completion of de-risking Evolution of properties managed by REMU Group BV (€ mn) By type (€ mn) Net inflows/ -16 7 -207 -76 -173 1,116 (outflows) 21 196 (194) (€ mn) 146 45 (18) 17 Inflows 86 878 50 (47) 34 16 15
Slide 72: IFRS 17 Implementation
Table of contents Executive Summary – Updated Financial Targets FY2022 Financial Performance Appendix IFRS 17 Implementation 72
Slide 73: Statutory Income Statement for Insurance Businesses for FY2023
Statutory Income Statement for Insurance Businesses for FY2023 € mn FY2023 FY2022 yoy% € mn FY2023 FY2022 yoy% (IFRS 17) (IFRS 17) Insurance revenue 78.1 72.3 8% Insurance revenue 63.9 58.9 9% Insurance service expense (45.4) (47.7) -5% Insurance service expense (31.9) (31.9) 0% Net insurance servic
Slide 74: Transition to IFRS 17 from IFRS 4
Transition to IFRS 17 from IFRS 4 IFRS 17 is an accounting standard. It does not change the economics of our insurance business For more details on the transition to IFSR 17, please refer to 1Q2023 Group Financial Results presentation (slides 51-54) Overview Balance Sheet and Capital • Accounting ch
Slide 75: Glossary & Definitions
Table of contents Executive Summary – Updated Financial Targets FY2022 Financial Performance Appendix Glossary & Definitions 75
Slide 76: Glossary & Definitions
Glossary & Definitions AC Amortised cost bonds. Adjusted recurring profitability The Group’s profit after tax before non-recurring items (attributable to the owners of the Company) taking into account distributions under other equity instruments such as the annual AT1 coupon. Advisory and other tran
Slide 77: Glossary & Definitions
Glossary & Definitions This is the ratio of the number of digital transactions performed by individuals and legal entity customers to the total number of transactions. Transactions include deposits, withdrawals, internal and Digital transactions ratio external transfers. Digital channels include mob
Slide 78: Glossary & Definitions
Glossary & Definitions Legacy exposures Legacy exposures are exposures relating to (i) Restructuring and Recoveries Division (RRD), (ii) Real Estate Management Unit (REMU), and (iii) non-core overseas exposures. Leverage Ratio Exposure (LRE) Leverage Ratio Exposure (LRE) is defined in accordance wit
Slide 79: Glossary & Definitions
Glossary & Definitions Non-interest income comprises Net fee and commission income, Net foreign exchange gains/(losses) and net gains/(losses) on financial instruments and (excluding net gains on loans and advances Non-interest income to customers at FVPL), Net insurance result, Net gains/(losses) f
Slide 80: Glossary & Definitions
Glossary & Definitions Non-legacy (performing) Relates to all business lines excluding Restructuring and Recoveries Division (“RRD”), REMU and non-core overseas exposures. The NSFR is calculated as the amount of “available stable funding” (ASF) relative to the amount of “required stable funding” (RS
Slide 81: Glossary & Definitions
Glossary & Definitions Return on Tangible equity (ROTE) Return on Tangible Equity (ROTE) on 15% CET1 ratio, excluding amounts reserved for distributions is calculated as Profit/(loss) after tax (attributable to the owners of the Company) (as defined) on 15% CET1 ratio, excluding (annualised - (based