Bank Of Ireland Group Plc · EURONEXT:BIRG

Bank Of Ireland — FY2007 Earnings Presentation

48 slides from Bank Of Ireland's earnings presentation, May 31, 2007

  1. Slide 1: Preliminary Results Announcement

    Preliminary Results Announcement For the year to 31st March 2007 31st May 2007

  2. Slide 2: Forward-looking statement

    2 Forward-looking statement This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934 and Section 27A of the US Securities Act of 1933 with respect to certain of the Group’s plans and its current goals and expectations relat

  3. Slide 3: Financial reporting

    3 Financial reporting ƒ Definitions – Abbreviations: • RFSI: Retail Financial Services Ireland (including Retail Republic of Ireland & Bank of Ireland Life) • BIAM: Bank of Ireland Asset Management • UKFS: UK Financial Services • POFS: UK Post Office Financial Services • FRES: First Rate Exchange Se

  4. Slide 4: Brian Goggin, Group Chief Executive

    Brian Goggin Group Chief Executive

  5. Slide 5: Year end highlights

    5 Year end highlights March 2007 March 2006 Change Underlying profit before tax €1700m €1393m 22% Underlying earnings per share 144.6c 118.5c 22% Profit before tax €1958m €1524m 28% Earnings per share 172.2c 128.5c 34% Impairment losses 9bps 11bps 2bps Dividend 60.4c 52.5c 15% Return on equity 23% 2

  6. Slide 6: Year end highlights

    6 Year end highlights % of Group PBT by Division Strong performance across the Group RFSI 45% • Retail 37% ƒ Retail Ireland PBT +27% • Life 8% ƒ Life operating profit +29% Capital Markets ƒ Capital Markets PBT +21% 31% ƒ UK Financial Services PBT +26% UKFS 24% % of Group PBT by geography Strategic T

  7. Slide 7: Delivery on a clear and proven strategy

    7 Delivery on a clear and proven strategy 12 months to 12 months to 12 months to 31 March 2005 31 March 2006 31 March 2007 Underlying PBT + 5%* + 16% + 22% Underlying EPS + 7%* + 16% + 22% Impairment losses 11bps* 11 bps 9bps Dividend + 10% + 15% + 15% Return on equity 23% 24% 23% Cost / income rati

  8. Slide 8: Restructured, refocused and revitalised

    8 Restructured, refocused and revitalised ƒ Delivering on a clear and proven strategy ƒ Considerable progress made – New operating model established – Strengthened our leading domestic franchise – Revitalised and refocused our UK Division – Established international platforms and delivering growth ƒ

  9. Slide 9: Economic fundamentals remain strong in our core markets

    9 Economic fundamentals remain strong in our core markets Ireland Irish economy broadly spread ƒ Strong economy – fastest growth in eurozone (000s) Employment by sector 2006 2500 - 6% (f) 2007; 5% (f) 2008 ƒ GDP broadly spread – employment and output 2000 ƒ Significant job creation (+4%) and rising

  10. Slide 10: Going forward

    10 Going forward ƒ Our priorities: –1 Drive growth from our leading Irish franchise –2 Significantly reposition the geographic earnings profile of the Group: >50% international • Grow United Kingdom as our second core market • Drive significant international expansion with a particular US focus –3 M

  11. Slide 11: Priority 1: Drive growth from our leading Irish franchise

    11 Priority 1: Drive growth from our leading Irish franchise ƒ Business Banking: GROWTH DRIVER – Significantly strengthened market position – Drive growth in recruitment and cross-sales ƒ Wealth Management: GROWTH DRIVER – Very strong market positions – Invest in people, product, innovation and tech

  12. Slide 12: Priority 2: Reposition the Group's geographic earnings profile

    12 Priority 2: Significantly reposition the Group’s geographic earnings profile UKFS – drive growth in our second core market ƒ Business Banking: GROWTH DRIVER – Broaden distribution - invest further in new Business Bankers – Broaden product capability – increase “share of wallet” ƒ Mortgages: EXTEN

  13. Slide 13: UKFS: Consumer Financial Services

    13 UKFS: Consumer Financial Services Growing relationship with UK Post Office ƒ Contribution in year to March 2007 £41m ƒ POFS break-even for H2 Our partnership with Post Office Financial Services (POFS) the UK Post Office ƒ Over 1m customers - a growing force in the provision of ƒ Significant sales

  14. Slide 14: Priority 2: Leveraging our strengths in Capital Markets

    14 Priority 2: Significantly reposition the Group’s geographic earnings profile Leveraging our strengths in Capital Markets ƒ Corporate Banking: GROWTH DRIVER – Expand existing product segments, enter new growth segments – Invest in people: talent and capability – Continue to ‘move up the tombstone’

  15. Slide 15: Priority 3: Maximise efficiency through the new Group operating model

    15 Priority 3: Maximise efficiency through the new Group operating model Group operating model ƒ Cost culture embedded ƒ Group Manufacturing platform established Capital Markets - 4,500 employees UKFS - Driving operational processing RFSI efficiencies by consolidating and standardising like activiti

  16. Slide 16: Looking forward over the medium term

    16 Looking forward over the medium term Strong and sustained profit growth ƒ Drive growth from our leading Irish franchise ƒ Significantly reposition the geographic earnings profile of the Group - Focus on UK and US - >50% international ƒ Maximise efficiency from new operating model - Achieve mid 40

  17. Slide 17: John O'Donovan, Chief Financial Officer

    John O’Donovan Chief Financial Officer

  18. Slide 18: Delivering strong results - Group income statement

    18 Delivering strong results - Group income statement Group income statement Non-core items (including non-core items) Mar 07 Mar 06* % Mar 07 Mar 06* €m €m Change €m €m Total income Total income** 4176 3602 16 Gain on disposal of business 358 176 Operating expenses (2159) (2020) 7 activities/proper

  19. Slide 19: Financial highlights

    19 Financial highlights Key metrics Highlights Mar 07 Mar 06 % Change Total PBT* €1,958m €1,524m 28 Total EPS* 172.2c 128.5c 34 ƒ Excellent performance across Underlying PBT €1,700m €1,393m 22 all key metrics Underlying EPS 144.6c 118.5c 22 Cost / income jaws 7% 5% ƒ Cost growth firmly managed Cost

  20. Slide 20: Total income & operating expenses

    20 Total income & operating expenses Total income (excluding non-core items) +13% +15% excl Acq & Disp* ƒ Strong income growth ƒ Impact of acquisitions and disposals €3869m €3747m €3439m €3260m ƒ Income growth drivers: - Strong volume growth - Slowing margin attrition Mar 06 Mar 07 Mar 06 Mar 07 Ope

  21. Slide 21: Net interest margin

    21 Net interest margin Net interest margin Drivers of margin attrition Mar 07 Mar 06 % % 06/07 05/06 Group net interest margin 1.73 vs vs 1.69 excluding IAS impact 05/06 04/05 IAS 39 impact 0.08 0.06 Balance sheet structure (4bps) (9bps) Group net interest margin 1.77 1.79 Liability spreads +2bps (5

  22. Slide 22: Strategic Transformation Programme

    22 Strategic Transformation Programme Cumulative annual cost savings Original 2005/06 2006/07 2007/08 2008/09 target: €30m €75m €105m €120m 2006/07 Achieved: €95m 2007/08 Programme progress ƒ 2006/07 target significantly exceeded Implementation costs €m – €95m versus €75m savings achieved in current

  23. Slide 23: Cost / income ratios

    23 Cost / income ratios* Cost / income ratios ƒ Mar-05 ƒ Mar-06 ƒ Mar-07 -5% -11% -6% 63% 60% 60% 59% 57% 56% 55% 54% 0% 52% 46% 43% 43% Group RFSI Capital Markets UKFS A strong cost story ƒ Excellent efficiency improvements across the Group ƒ Significant operating leverage ƒ Continued focus on cost

  24. Slide 24: Strong loan & resource volume growth

    24 Strong loan & resources volume growth Divisional volume growth March 07 vs March 06 Retail Financial Services Ireland Capital Markets UKFS 50% 47% 45% 40% 35% 34% 33% 30% Resources 25% 22% Business Loans Business Loans 20% 19% 18% Corporate Loans Mortgages Personal Loans 15% 11% 10% 10% 9% Resour

  25. Slide 25: Asset quality

    25 Asset quality Impairment losses on loans Asset quality €m Mar 07 Mar 06 1,000 €m €m 900 800 Specific 121 114 700 600 IBNR 1 10 500 €968m 400 €796m Recoveries (19) (21) 300 200 €428m €360m Total 103 103 100 0 Annualised loan loss 9bps 11bps Mar 07 Mar 06 charge Impairment Provisions Impaired Loans

  26. Slide 26: Profile of Loans & Advances to Customers - €125.5bn

    26 Profile of Loans & Advances to Customers - €125.5bn % of Group loan portfolio Financial & government Other 2% 7% Distribution 3% Manufacturing Mortgages 6% 47% Personal 7% Services 8% Property - investment & development 20% Group lending Well diversified across portfolios, sectors and geographies

  27. Slide 27: Residential mortgages – 47% of Group loan book

    27 Residential mortgages – 47% of Group loan book UK mortgage book ƒ Excellent asset quality - 0.54% arrears vs. 0.89% industry £24bn sterling - 2006: 196 repossessions vs. 17,000 industry UK ƒ Extended product range to include BTL 58% of 28% Professional BTL - Max. LTV 75% for >£1m; max. loan £20m

  28. Slide 28: Property: investment & development – 20% of Group loan book

    28 Property: investment & development – 20% of Group loan book Geographic profile Property lending Ireland International 41% UK Ireland UK 58% ƒ UK focus 41% 58% ƒ No indirect/direct Rest of exposure to US Rest of sub-prime Worldmarket World 1% 1% ƒ Diversified risk Development vs. investment Irelan

  29. Slide 29: Strong capital base

    29 Strong capital base Capital ratios Strengthened capital base Mar 07 Mar 06 Sept 06 ƒ Strengthened capital ratios % % % ƒ Equity tier 1 ratio increased from 4.8% Tier 1 capital 8.2 7.5 7.7 to 5.2% Total capital 11.8 11.4 10.9 – Sale & leaseback of branches and Davy sale added €0.4bn (0.35%) Asset

  30. Slide 30: Balance sheet funding

    30 Balance sheet funding March 07 March Continued diversification 6.4% Securitisation 06 11.3% ƒ Wholesale funding remained Senior debt 15.5% / ACS unchanged at 46% driven by 46% 13.1% improved loan and resource growth CP/CDs 12.0% 46% alignment Deposits 21.5% ƒ Funding maturity profile lengthened 1

  31. Slide 31: Profit before tax by Division

    31 Profit before tax by Division PBT by Division Group Divisional profitability*** Mar 07 Mar 06* % €m €m Change Retail Ireland 698 550 27 Life 8% Bank of Ireland Life 148 134 10 Retail Capital Markets 572 471 21 UKFS 37% UKFS 441 349 26 24% Group Centre (159) (111) 43 Underlying PBT 1700 1393 22 Ca

  32. Slide 32: Retail Republic of Ireland

    32 37% Retail Republic of Ireland Income statement Retail PBT +27% Mar 07 Mar 06 % ƒ Excellent performance €m €m Change – Strong business growth – Firm cost management driving efficiency Net interest income 1311 1119 17 gains – Jaws 8% – Cost / income ratio down 4% to 55% Other income* 377 356 6 – E

  33. Slide 33: Bank of Ireland Life

    33 Bank of Ireland Life 8% Income statement (IFRS) Operating profit +29%, PBT +10% Mar 07 Mar 06 % €m €m Change ƒ Excellent performance: – APE sales +27% Income* 250 208 20 – Increased market share +1% to 26% Operating expenses (104) (95) 9 ƒ Significant efficiency gains – Cost / income ratio down 4

  34. Slide 34: Capital Markets

    34 Capital Markets 31% Income statement Corporate Banking Mar 07 Mar 06 % ƒ PBT +56% €m €m Change ƒ Corporate loan book +18% to €24bn – 65% outside Ireland ƒ Growth well spread across all markets Net interest income 671 461 46 and portfolios ƒ Investment delivering strong returns Other income*/** 37

  35. Slide 35: UK Financial Services (sterling)

    24% 35 UK Financial Services (sterling) Income statement* Mortgages ƒ PBT +8% Mar 07 Mar 06 % ƒ Standard residential volumes +5% £m £m Change ƒ Specialist lending (BTL & self-cert) volumes +17% Net interest income 531 493 8 ƒ Margins stabilised during the year Business Banking Other income** 118 91

  36. Slide 36: Summary

    36 Summary ƒ Delivering successfully on our growth and investment strategies ƒ Cost growth firmly contained ƒ Low margin attrition ƒ Excellent asset quality ƒ Strengthened capital position ƒ Excellent performance across all key metrics ƒ Guiding low double digit underlying EPS growth to March 2008 f

  37. Slide 37: Questions & Answers

    Bank of Ireland Group Questions & Answers

  38. Slide 38: Supplementary

    Bank of Ireland Group Supplementary

  39. Slide 39: Supplementary

    39 Supplementary ƒ EPS calculation ƒ Bank of Ireland Life - embedded value basis ƒ Asset quality ƒ Ireland & UK mortgage analysis ƒ Geographic analysis: – PBT – Shareholder base ƒ Economic outlook – Ireland ƒ Economic outlook – UK

  40. Slide 40: EPS calculation

    40 EPS calculation Mar 07 Mar 06* % €m €m Change PBT €1958m €1524m 28% Tax (€306m) (€303m) Minority interests & pref. dividend (€16m) (€4m) A Profit attributable to shareholders €1636m €1217m 34% After tax impact of non-core items (€225m) (€66m) B Profit attributable to shareholders €1411m €1151m 23

  41. Slide 41: Bank of Ireland Life - embedded value basis

    41 Bank of Ireland Life - embedded value basis (Insurance & investment business) Mar 07 Mar 06 % €m €m Change New business 114 78 46% Existing business – Expected return 83 71 17% – Experience variances 14 20 (30%) – Operating assumption changes - 8 Inter-company payments (36) (32) Operating profit

  42. Slide 42: Asset quality

    42 Asset quality Mar 07 Mar 06 Impaired loans (€m) Ireland 517 461 UK 282 230 International 169 105 Group 968 796 Impairment provisions (IP) €m Ireland 263 215 UK 73 69 International 92 76 Group 428 360 IP as % of impaired loans (%) 44% 45% IP as % of PIT loans (bps) 34bps 35bps P&L annualised charg

  43. Slide 43: Residential mortgages

    43 Residential mortgages Loan to value – new business Residential mortgages: ROI Average loan to value Mar 07 Mar 06 Owner occupied 74% 75% Investors 63% 64% Residential mortgages: UKFS Average loan to value Mar 07 Mar 06 Standard 57% 61% Specialised: Self-certified 75% 77% Buy to let 72% 71%

  44. Slide 44: Republic of Ireland residential mortgages

    44 Republic of Ireland residential mortgages New business LTVs <75% 75-90% 90-92% 92-100% >100% Mar 07 (%) 49 31 7 13 0 Mar 06 (%) 48 32 11 9 0 Arrears profile 1-6mths 6-12mths 12+ mths Total Mar 07 (%) 0.5 0.2 0.2 0.9 Mar 06 (%) 0.4 0.2 0.2 0.8

  45. Slide 45: UK residential mortgages

    45 UK residential mortgages New business LTVs <75% 75-90% 90-95% 95-100% Mar 07 (%) 48 40 11 2 Mar 06 (%) 45 40 8 7 Arrears profile 1-6mths 6-12mths 12+ mths Total Mar 07 (%) 0.8 0.2 0.1 1.1 Mar 06 (%) 0.7 0.1 0.1 0.9

  46. Slide 46: Geographic analysis

    46 Geographic analysis Geographic split of PBT by geography – Mar 07 shareholder base – Mar 07 11% 23% 17% 29% 60% 26% 19% 15% Ireland 17% Retail 26% Ireland 60% UK 15% UK 29% US 19% Rest of World 11% Europe/Rest of World 23%

  47. Slide 47: Economic outlook - Ireland

    47 Economic outlook - Ireland Actual Forecast 2006 2007 (F) 2008 (F) 2009 (F) GDP growth 6.0 6.0 5.0 5.0 GNP growth 7.4 6.2 5.2 5.0 Consumer spending growth 6.2 6.8 6.0 5.5 Exports growth 4.9 6.2 5.5 5.0 Inflation (incl. mortgage interest repayments) 4.0 4.6 2.8 2.0 Unemployment 4.4 4.4 4.5 4.5 Sour

  48. Slide 48: Economic outlook - UK

    48 Economic outlook - UK Actual Forecast 2006 2007 (F) 2008 (F) 2009 (F) GDP growth 2.7 2.7 2.4 2.7 Consumer spending growth 2.0 2.4 2.2 2.5 Inflation 2.3 2.3 2.0 2.0 Unemployment 3.0 3.0 3.0 3.0 Source: Bank of Ireland Global Markets

Bank of Ireland Group — FY2007 Earnings Presentation on 6ix