Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — FY2021 Earnings Presentation
60 slides from Bank Of Ireland's earnings presentation, March 2022
Slide 1: 2021 Results Announcement
20 21 2021 Results Announcement 31 December 2021
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Slide 3: Group CEO Francesca McDonagh
3 Bank of Ireland 2021 Results Announcement Group CEO Francesca McDonagh
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Slide 5: Strong performance and strategic momentum in 2021
5 Strong performance and strategic momentum Bank of Ireland 2021 Results Announcement in 2021 2021 €1.4bn • • Operating profit pre-impairment increased by 53% vs 2020 and 25% vs 2019 Adjusted RoTE1 of 12.7% reflecting a strong business performance and an impairment Performance Underlying profit gain
Slide 6: Our purpose is to enable our Customers, Colleagues and Communities to thrive
6 Our purpose is to enable our Customers, Bank of Ireland 2021 Results Announcement Colleagues and Communities to thrive Serving Customers Enabling Colleagues Supporting Communities €2.4bn in new Irish €2.7bn in new Irish Cultural embedding continues to Begin Together Fund €1.3bn in Green mortgage l
Slide 7: Responsible and Sustainable Business; delivering on our Investing in Tomorrow strategy
7 Responsible and Sustainable Business; delivering on Bank of Ireland 2021 Results Announcement our ‘Investing in Tomorrow’ 1 strategy launched in 2021 Pillar 1 Pillar 2 Pillar 3 Enabling all Enhancing Supporting the Colleagues to Thrive Financial Wellbeing Green Transition Digitally able Increasing
Slide 8: Positive outlook for Irish economy
8 Positive outlook for Irish economy Bank of Ireland 2021 Results Announcement Ireland1 Irish economy benefitting from broad-based recovery 15.0% • Strong recovery in domestic economic activity; modified domestic demand +4.9% y/y in Q1-Q3 last year, adding to yet another strong year for export growt
Slide 9: Investment has supported transformation of digital offering
9 Investment has supported transformation Bank of Ireland 2021 Results Announcement of digital offering Continuing the pivot to a Digital Digital adoption and digitised Digital End-to-End4 (E2E) Relationship Bank delivery has reached tipping point customer journeys have generated c.€70m5 in savings
Slide 10: Transformation delivering customer benefits and improved business outcomes
10 Transformation delivering customer benefits Bank of Ireland 2021 Results Announcement and improved business outcomes Digital initiatives delivering tangible benefits across Delivering digital enhancements in line with customer journeys, costs and business performance our commitments Improving the
Slide 11: 2021 cost target of <€1.65bn delivered
11 2021 cost target of <€1.65bn delivered Bank of Ireland 2021 Results Announcement Consistent progress on cost delivery €1,900m 10.9k • Costs reduced by 13% vs 2017, net of wage inflation and 21% reduction transformation investment 8.7k • Costs reduced in each of the past eight consecutive €25m rep
Slide 12: UK strategic actions and supportive market drive turnaround in 2021
12 UK strategic actions and supportive market drive Bank of Ireland 2021 Results Announcement turnaround in 2021 Retail UK 2019 2020 2021 32% improvement in operating profit pre-impairment vs 2020 Net interest income £494m £497m £536m • 8% increase in net interest income underpinned by strategic act
Slide 13: Wealth and Insurance generated strong performance vs 2020
13 Wealth and Insurance generated strong Bank of Ireland 2021 Results Announcement performance vs 2020 32% increase in operating profit to €121m Operating income +25% or €52m vs 2020 33% y/y growth in Life and non Life APE 1% improvement in life assurance sales to €417m market share to 20% 14% incre
Slide 14: Transformational acquisitions to add significant scale
14 Transformational acquisitions to add Bank of Ireland 2021 Results Announcement significant scale Diversified and complimentary AUM (€bn) Ireland’s market leading provider of mass affluent and high c.€22.5bn c.€20bn 1 net worth wealth advisory and capital markets services 2 6 c.€20bn AUM Dec 2021
Slide 15: Group CFO Myles O'Grady
15 Bank of Ireland 2021 Results Announcement Group CFO Myles O’Grady
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Slide 17: FY 2021 financial summary
17 FY 2021 financial summary Bank of Ireland 2021 Results Announcement • Underlying profit before tax of €1.4bn • Total income 12% higher • Costs reduced by 4% • Net credit impairment gain of €194m • Net lending of €0.6bn excluding planned UK deleveraging • NPE ratio declined to 5.5% • Strong build
Slide 18: Strong 2021 financial performance
18 Strong 2021 financial performance Bank of Ireland 2021 Results Announcement FY 2020 FY 2021 • Operating profit pre-impairment +53% (€m) (€m) Net interest income 2,115 2,219 • Net interest income +5% Business income 561 636 • Business income3 +15% with +27% increase in H2 vs Additional gains, valu
Slide 19: Net interest income +5%
19 Net interest income +5% Bank of Ireland 2021 Results Announcement Net interest income • Pricing discipline maintained – Loan asset spread 12bps higher FY 2021 vs FY 2020 €2,167m €2,115m €2,219m • Interest income boosted by €62m from TLTRO participation in 2021 282bps 281bps 293bps • Application o
Slide 20: New customer lending +16% (excluding Retail UK)
20 New customer lending +16% (excluding Retail UK)1 Bank of Ireland 2021 Results Announcement New lending by division Lending trends in 2021 €14.1bn €14.2bn • Total new lending of €14.2bn in 2021 +16% lending growth vs 2020 – Corporate and Markets +30% with strong growth €5.3bn €5.7bn €5.4bn across
Slide 21: Business income +15%
21 Business income1 +15% Bank of Ireland 2021 Results Announcement FY 2020 FY 2021 Total other income +46% vs 2020 (€m) (€m) Wealth and Insurance 214 266 • Wealth and Insurance +24% vs 2020 due to higher new business and improved performance on the Retail Ireland 209 215 existing book Retail UK 6 2
Slide 22: Operating expenses -4%
22 Operating expenses -4% Bank of Ireland 2021 Results Announcement Cost Movement Broad based cost reduction in 2021 • €74m reduction in costs reflects lower staff costs, depreciation and transformation investment (€88m) • Cost efficiencies absorbed wage inflation and supported continued investment
Slide 23: Non-core costs -62%
23 Non-core costs -62% Bank of Ireland 2021 Results Announcement FY 2020 FY 2021 €241m reduction in 2021 non-core charge primarily Non-core items reflects (€m) (€m) Transformation programme costs (245) (122) • Reduction in transformation investment costs primarily reflecting large voluntary redundan
Slide 24: 2021 net impairment gain of €194m
24 2021 net impairment gain of €194m Bank of Ireland 2021 Results Announcement IFRS 9 models Loan loss experience and Macro-economic update and management adjustment portfolio activity €152m gain €42m gain • Improved economic outlook resulting in an impairment loss allowance (ILA) gain, • Gain prima
Slide 25: NPEs reduce to 5.5%
25 NPEs reduce to 5.5% Bank of Ireland 2021 Results Announcement NPE movements Non-performing exposures • NPEs reduced by c.€0.2bn to €4.3bn during 2021, and 6.3% 4.4% 5.7% 5.5% NPE ratio reduced 20bps to 5.5% • NPE reduction supported by Irish residential mortgage (€0.3bn) €0.1bn €581m NPE transact
Slide 26: Asset quality improved in 2021 and remains strong
26 Asset quality improved in 2021 and Bank of Ireland 2021 Results Announcement remains strong Group loan book by portfolio Diversified balance sheet with strong credit quality n Consumer €5.2bn • Mortgage portfolios 56% of Group loan book n Property and construction • Non-property SME and corporate
Slide 27: Capital ratios remain strong as we emerge from COVID-19
27 Capital ratios remain strong as we emerge Bank of Ireland 2021 Results Announcement from COVID-19 RWAs Fully Loaded CET1 ratio RWAs €48.0bn €46.2bn 30bps (20bps) 16.0% 90bps 185bps 30bps (45bps) (10bps) (200bps) for acquisitions 13.4% Dec 20 Organic Capital 1 Credit Transformation RWA2 Optimisati
Slide 28: 2022 outlook (excludes impact from announced acquisitions)
28 2022 outlook Bank of Ireland 2021 Results Announcement (excludes impact from announced acquisitions) Profitability Asset Quality Capital • 2022 total income expected to • Impairment outlook expected • Completion of proposed be in line with 2021 reflecting to remain benign in 2022 with acquisition
Slide 29: Summary – strong momentum into 2022
29 Summary – strong momentum into 2022 Bank of Ireland 2021 Results Announcement Strong • 2021 adjusted RoTE 1 of 12.7% reflecting a strong business performance and an impairment gain; operating profit pre-impairment increased by 53% vs 2020 & 25% vs 2019; performance • Tangible strategic progress d
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Slide 31: Appendix
31 Bank of Ireland 2021 Results Announcement Appendix
Slide 32: Appendix
32 Appendix Bank of Ireland 2021 Results Announcement Page No. • Responsible and Sustainable Business (RSB) 33 • BOI overview - customer loans / new lending volumes 34 • Ireland mortgage loan book 35 • Income statement – Net interest income analysis 36 – Structural hedge / Liquid assets / Net intere
Slide 33: Our Responsible and Sustainable Business strategy
33 Our Responsible and Sustainable Business strategy 1 Bank of Ireland 2021 Results Announcement is fundamental to our purpose of enabling our customers, colleagues and communities to thrive Pillar 1 Pillar 2 Pillar 3 Enabling all Enhancing Supporting the Colleagues to Thrive Financial Wellbeing Gre
Slide 34: Overview of customer loans
34 Overview of customer loans Bank of Ireland 2021 Results Announcement Profile of customer loans1 at Dec 2021 (Gross) Ireland UK RoW Total Total Composition (Dec 21) (€bn) (€bn) (€bn) (€bn) (%) Mortgages 22.4 20.9 0.0 43.3 56% Non-property SME and corporate 10.5 5.4 4.9 20.8 27% SME 6.9 1.7 0.0 8.6
Slide 35: Ireland mortgages: €22.4bn
35 Ireland mortgages: €22.4bn Bank of Ireland 2021 Results Announcement New lending volumes and market share Ireland mortgages (gross) €23.0bn €22.9bn €22.4bn 25% 24% 23% €11.2bn €12.2bn €13.1bn €3.2bn €2.9bn €2.3bn €2.1bn €2.4bn €2.5bn €8.7bn €7.9bn €6.8bn FY 19 FY 20 FY 21 Dec 19 Dec 20 Dec 21 n N
Slide 36: Income statement
36 Income statement Bank of Ireland 2021 Results Announcement Net interest income analysis H1 2020 H2 2020 H1 2021 H2 2021 Average Gross Gross Average Gross Gross Average Gross Gross Average Gross Gross Volumes Interest Rate Volumes Interest Rate Volumes Interest Rate Volumes Interest Rate (€bn) (€m
Slide 37: Structural hedge, liquid assets, net interest margin and negative interest rates
37 Structural hedge, liquid assets, net interest Bank of Ireland 2021 Results Announcement margin and negative interest rates Structural hedge & liquid assets Structural hedge 1 Liquid assets 2 • Structural hedge and liquid asset income reducing as Average a result of the negative interest rate envi
Slide 38: Interest rate sensitivity
38 Interest rate sensitivity Bank of Ireland 2021 Results Announcement The table below shows the estimated sensitivity of the Group’s income (before tax) to an instantaneous and sustained 1% parallel movement in interest rates Dec 20 Dec 21 Estimated sensitivity on Group income (1 year horizon) (€m)
Slide 39: Non-performing exposures by portfolio
39 Non-performing exposures by portfolio Bank of Ireland 2021 Results Announcement Non-performing Non-performing Impairment loss Advances Impairment loss Composition (Dec 21) (€bn) exposures exposures as % of allowance (€bn) allowance as % of (€bn) advances non-performing exposures Residential Mortg
Slide 40: Portfolio by stage
40 Portfolio by stage Bank of Ireland 2021 Results Announcement Gross carrying amount Composition (Dec 21) Impairment loss allowance ILA % (before impairment loss allowance) of gross Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Sectoral analysis by stage loans €m €m €m €m €m
Slide 41: Non-property SME and Corporate by stage
41 Non-property SME and Corporate by stage1,2 Bank of Ireland 2021 Results Announcement Gross carrying amount Composition (Dec 21) Impairment loss allowance ILA % (before impairment loss allowance) of gross Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Sectoral analysis by st
Slide 42: Residential mortgages / Consumer loans
42 Residential mortgages / Consumer loans Bank of Ireland 2021 Results Announcement Gross loans by stage Residential mortgages • Mortgage portfolios 56% of Group loan book Residential Mortgages Consumer €44.7bn – Average LTV of 55% on stock €5.3bn €2.2bn €43.3bn €5.2bn – 93% of the portfolio has LTV
Slide 43: Non-property SME and Corporate / Property and Construction
43 Non-property SME and Corporate / Property Bank of Ireland 2021 Results Announcement and Construction Gross loans by stage Non-property SME and corporate Non-property SME and corporate Property and construction • 27% of Group loan book, well diversified by geography €19.9bn €20.8bn €8.6bn €8.6bn a
Slide 44: Forward looking information – macro-economic scenarios
44 Forward looking information Bank of Ireland 2021 Results Announcement – macro-economic scenarios Ireland United Kingdom 31 December 2021 2022 2023 2024-2026 2022 2023 2024-2026 Central scenario - 45% probability weighting GDP growth1 5.7% 3.9% 3.2% 5.2% 1.8% 1.5% GNP growth1 6.1% 3.6% 3.0% n/a n/
Slide 45: ILA sensitivity to macro-economic scenarios
45 ILA sensitivity to macro-economic scenarios Bank of Ireland 2021 Results Announcement The following table indicates the approximate extent to which impairment loss allowance (ILA), excluding Group management adjustments, would be higher or lower than reported were a 100% weighting applied to the
Slide 46: Ireland mortgages
46 Ireland mortgages Bank of Ireland 2021 Results Announcement Continued proactive arrears management >90 days arrears1 >90 days arrears Industry • Bank of Ireland is significantly below the industry Average average for both Owner Occupier (33% of industry average) and Buy to Let (29% of industry av
Slide 47: Capital and liquidity
47 Capital and liquidity Bank of Ireland 2021 Results Announcement Liquidity Dec 20 Dec 21 (€bn) (€bn) • Funding and liquidity remains strong from stable customer deposits and MREL issuance Customer loans 77 76 Liquid assets 31 50 Customer deposits: €92.8bn Other assets 26 29 • Growth of €4.2bn driv
Slide 48: Ordinary shareholders' equity and TNAV
48 Ordinary shareholders’ equity and TNAV Bank of Ireland 2021 Results Announcement Dec 20 Dec 21 Movement in ordinary shareholders’ equity (€m) (€m) Ordinary shareholders’ equity at beginning of period 9,625 8,587 Movements: Profit / (Loss) for the period (707) 1,055 Impact of adopting IFRS 9 – – D
Slide 49: Capital – strong Fully Loaded and Regulatory CET1 ratios
49 Capital – strong Fully Loaded and Regulatory Bank of Ireland 2021 Results Announcement CET1 ratios Capital ratios – 31 December 2021 Regulatory ratio Fully Loaded ratio (€bn) (€bn) Total equity 11.3 11.3 Less Additional Tier 1 (1.0) (1.0) Deferred tax 1 (0.8) (1.1) Intangible assets and goodwill
Slide 50: Regulatory capital requirements
50 Regulatory capital requirements Bank of Ireland 2021 Results Announcement Pro forma CET1 Regulatory Capital Requirements 2020 2021 2022 Pillar 1 – CET1 4.50% 4.50% 4.50% Pillar 2 Requirement (P2R) 1.27% 1.27% 1.27% Capital Conservation Buffer (CCB) 2.50% 2.50% 2.50% Ireland Countercyclical buffer
Slide 51: Risk weighted assets (RWAs) / leverage ratio
51 Risk weighted assets (RWAs) / leverage ratio Bank of Ireland 2021 Results Announcement Customer lending average credit risk weights – Dec 20211,2 EBA Transparency Exercise 2021 (Based on regulatory exposure class) Country by Country Average IRB risk weights Residential Mortgages – Jun 2021 EAD 3
Slide 52: Transformation investment / operating expenses
52 Transformation investment / operating expenses Bank of Ireland 2021 Results Announcement Transformation investment 2016-2021 Transformation investment €51m • Average annual investment from 2018-2021 equates to CET1 capital of c.50-60bps €367m €306m €112m • Investment of €243m in 2021 split across
Slide 53: Cost income ratio: Dec 2021
53 Cost income ratio: Dec 2021 Bank of Ireland 2021 Results Announcement Headline vs. Adjusted FY 21 Pro forma FY 21 Headline adjustments Pro forma (€m) (€m) (€m) Net interest income 2,219 – 2,219 Other income – Business income 636 – 636 – Additional gains 17 (17) - – Other valuation items 72 (72) -
Slide 54: Return on tangible equity (RoTE)
54 Return on tangible equity (RoTE) Bank of Ireland 2021 Results Announcement FY 2021: Headline vs. Adjusted Adjustments FY 21 Additional gains Adjusted for FY 21 Headline & valuation items, CET1 ratio Adjusted (€m) net of tax at 13.0% (€m) Profit for the period 1,055 – Non-core items including tax
Slide 55: Defined benefit pension schemes
55 Defined benefit pension schemes Bank of Ireland 2021 Results Announcement Group IAS19 Defined Benefit Pension (Deficit) / Surplus Total Group Defined Benefit Pension Scheme Assets (%) 2.10% 2.00% €7.1bn €7.2bn €7.2bn €8.4bn €8.9bn €9.6bn 1.60% 1.30% 1.35% 58% 55% 65% 65% 0.80% 69% 66% €0.60bn 17%
Slide 56: Forward-looking statement
56 Forward-looking statement Bank of Ireland 2021 Results Announcement This document contains forward-looking statements with respect to certain of the Bank of Ireland Group plc (the ‘Company’ or ‘BOIG plc’) and its subsidiaries’ (collectively the ‘Group’ or ‘BOIG plc Group’) plans and its current g
Slide 57: Contact Details
57 Contact Details Bank of Ireland 2021 Results Announcement For further information please contact: • Group Chief Financial Officer Myles O’Grady tel: +353 12 50 8900 ext. 43291 myles.ogrady@boi.com • Investor Relations Darach O’Leary tel: +353 12 50 8900 ext. 44711 darach.oleary@boi.com Eamonn Hug
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