Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — H1 2015 Earnings Presentation
56 slides from Bank Of Ireland's earnings presentation, Jun 30, 2015
Slide 1: Interim Results Announcement
Interim Results Announcement 30 June 2015
Slide 2: Slide 2
Slide 3: H1 2015 Progress and Financial Results
1 H1 2015 Progress Richie Boucher, CEO 2 Financial Results Andrew Keating, CFO 1
Slide 4: H1 2015 Progress
H1 2015 Progress Richie Boucher
Slide 5: Business Highlights
Business Highlights On-going delivery of strategic priorities Successfully developing customer relationships; Group new lending up 50% on H1 2014 C ontinue to be largest lender to the Irish economy in H1 2015 Customers R estored growth to our UK Mortgage business; lending of £1.3bn vs £0.6bn H
Slide 6: Substantial increase in profitability
Substantial increase in profitability Increased underlying PBT by €416m Increased underlying PBT by >100% to €743m H1 2014 H1 2015 Increased total income by 19% (€284m) reflecting; Higher net interest income; Total income €1,475m €1,759m Higher fee income; and Gains on liquid asset portfol
Slide 7: Strong organic capital generation continues
Strong organic capital generation continues Increased fully loaded CET1 ratio by 180 bps to 11.1% Customer loans increased by c.€3.2bn (FX translation benefit €3.6bn) Dec 14 Jun 15 N ew lending of €6.5bn during H1 2015; 50% increase on H1 2014 (€4.3bn) with strong performances in both Ireland an
Slide 8: Favourable macroeconomic environment and outlook
Favourable macroeconomic environment and outlook GDP Unemployment Residential Economic Rate Property Prices Indicators National Change Annual Real Growth Annual Average 12 months to June 2015 2014: 5.2% 2014: 11.3% 2015f: 5.3% 2015f: 9.7% 2015: 10.7% 2016f: 4.8% 2016f: 8.3% 2014: 3.0% 2014: 6.3% 201
Slide 9: Ireland - Leading bank in a growing economy with a well structured market
Ireland - Leading bank in a growing economy with a well structured market #1 or #2 positions across all principal product lines 18% growth in new mortgage lending versus H1 2014; remain commercially disciplined in Consumer the somewhat more competitive environment, which we had anticipated, as o
Slide 10: International - delivering growth
International - delivering growth With our Post Office partner, we are a leading UK consumer bank with c.2.8m customers Growth supported by the launch of “Post Office Money” brand and on-going network investment by Post Office Maintaining #1 position in consumer FX Good performance in other
Slide 11: Investing to meet changing customer requirements, enhance customer propositions and broaden distribution
Investing to meet changing customer requirements, enhance customer propositions and broaden distribution Travel Money card winning Dedicated e-portal launched to new customers enhance Irish SME offering Market leading Business loans UK Mortgage up to €100k can platform now be approved launched; over
Slide 12: Attractive and sustainable returns for shareholders
Summary On track to deliver attractive and sustainable returns for shareholders Irish and UK economies providing supportive backdrops for our businesses Strong retail & commercial franchises; diversified business model Attractive and Capital strength with robust funding position and sources sustaina
Slide 13: Financial Results
Financial Results Andrew Keating
Slide 14: Group Income Statement
Group Income Statement Underlying profit more than doubled to €743m Underlying profit more than doubled to €743m H1 2014 H1 2015 % (€m) (€m) Change in H1 2015 Pre-provision operating profit up €222m (34%) Total income 1,475 1,759 19% Net interest income 1,161 1,219 5% Increased Net interest in
Slide 15: Divisional Analysis
Divisional Analysis All trading divisions are contributing to the Group’s profitability Retail Ireland Retail UK Underlying (loss) / profit before tax Underlying profit before tax €261m €99m €57m (€28m) H1 2014 H1 2015 H1 2014 H1 2015 BOI Life Corporate & Treasury Underlying profit before tax Underl
Slide 16: Net interest income
Net interest income Further growth in net interest income achieved in 2015 Net interest income trend Net interest income - €1,219m 2.05% 2.15% 2.21% D elivered net interest income growth of €22m (c.2%) vs H2 2014 reflecting NIM growth and higher interest earning assets €1.7bn Average interest earn
Slide 17: Loans and advances to customers
Loans and advances to customers Group new lending up 50% to €6.5bn New lending volumes C ustomer loans (net of provisions), increased by c.€3.2bn to €85.3bn (FX translation benefit of €3.6bn) +36% +84% +22% N ew lending amounted to €6.5bn1 in H1 2015; Up 50% vs H1 2014 €3.4bn1 Irish business
Slide 18: Operating Expenses
Operating Expenses Cost / income ratio 50% C ost / income ratio of 50% (H1 2014: 55%) H1 2014 H1 2015 O perating expenses impacted by the increase in the value (€m) (€m) of sterling (c.€23m) Total staff costs of €446m in H1 2015 Staff costs increased by €26m, primarily driven by Total staff
Slide 19: Asset Quality
Asset Quality
Slide 20: Defaulted loans and impairment charge
Defaulted loans and impairment charge Defaulted loan volumes €5bn reduction € 1bn reduction during H1 2015, notwithstanding €18.3bn €16.7bn FX translation headwinds of c.€0.4bn: €14.3bn €13.3bn Reductions in all asset classes €5bn or 27% reduction since peak in Jun 13 Expect further reductions
Slide 21: ROI Mortgages: €25.3bn
ROI Mortgages: €25.3bn Owner Occupied Owner Occupied: €20.0bn 42% Reduced defaulted loans by 12% to €1.5bn in 2015 40% 41% Arrears at <50% of industry1 €2.1bn BOI arrears >720 days reducing and at 40% of industry2 €1.7bn €1.5bn 50% or €9.9bn of mortgages are ECB trackers (Dec 14: €10.2bn) Bu
Slide 22: Bank of Ireland Group
Bank of Ireland Group C@) 20
Slide 23: Funding & Capital
Funding & Capital
Slide 24: Balance Sheet
Balance Sheet Capital and Liquidity available to support growth Dec 14 Jun 15 Strong liquidity ratios (€bn) (€bn) Net Stable Funding Ratio - 118% Customer loans 82 85 Liquidity Coverage Ratio - 101% Liquid assets 25 24 Loan to Deposit Ratio - 108% BOI Life assets 16 16 Customer deposits - €79b
Slide 25: Capital
Capital1 On track to de-recognise 2009 Preference Shares CET1 ratio Total capital ratio S ignificant pace of organic capital accretion continued in H1 2015 20.7% Robust CET1 ratios 18.3% 15.9% T ransitional CET1 ratio of 15.9%; 110bps increase 14.8% during H1 2015 Continue to expect to maint
Slide 26: Additional Information
Additional Information
Slide 27: Additional Information
Additional Information Slide No. BOI Overview Business profile 26 Historic financial results 28 Financial targets 30 Income Statement Divisional performance 31 Net interest income analysis 32 Other income analysis (net) 33 Non-core Items 34 ECB tracker mortgage loan book 35 Ass
Slide 28: BOI Overview
BOI Overview Ireland: Leading bank in a growing economy with a well structured market Comprehensive multi-channel distribution c.250 branches c.1,750 Increased digitally c.335k active 24 x 7 platform Self-service active customer mobile customers devices numbers by >25% Wealth Consumer Management inc
Slide 29: BOI Overview
BOI Overview Attractive international franchises provide further opportunities for growth Challenger consumer banking franchise in GB Acquisition finance Trusted brands, established customer base and expanding product range c.1.5m c.200k Retail FX c.535k c.575k Current Well recognised lead arranger
Slide 30: BOI Overview: Income Statement
BOI Overview Income Statement1 y/e Dec 11 y/e Dec 12 y/e Dec 13 y/e Dec 14 Jun 15 (€m) (€m) (€m) (€m) (6 month) (€m) Total income 2,058 1,862 2,646 2,974 1,759 Net interest income 1,983 1,755 2,133 2,358 1,219 Other income 524 495 642 653 545 ELG fees (449) (388) (129) (37) (5) Operating expenses (1
Slide 31: BOI Overview: Summary Balance Sheet
BOI Overview Summary Balance Sheet1 Dec 11 Dec 12 Dec 13 Dec 14 Jun 15 (€bn) (€bn) (€bn) (€bn) (€bn) Net Customer Loans2 102 93 85 82 85 Liquid assets 31 33 27 25 24 Other assets 10 9 6 7 6 Total Assets 143 135 118 114 115 Customer deposits 71 75 74 75 79 Wholesale funding 51 39 27 20 15 Private Sou
Slide 32: BOI Overview: Financial targets
BOI Overview Financial targets Metrics Target H1 2015 Status Balance Sheet Loans and advances to customers1 c.€90bn €85bn On track Group loan / deposit ratio ≤120% 108% ✔ Buffer Transitional CET1 ratio maintained >10% 15.9% ✔ ELG covered liabilities Fully €1bn ELG fees disengaged €5m ✔ Profitability
Slide 33: Income Statement: Divisional performance
Income Statement Divisional performance Retail Bank of Retail Corporate & Group Centre Group 6 months ended Jun 15 Ireland Ireland Life UK Treasury & Other (€m) (€m) (€m) (€m) (€m) (€m) Operating profit / (loss) before 315 58 152 429 (70) 884 impairment charge Impairment charge (59) - (75) (34) - (1
Slide 34: Net interest income analysis
Income Statement Net interest income analysis H1 2014 H2 2014 H1 2015 Average Gross Gross Average Gross Gross Average Gross Gross Volumes Interest Rate Volumes Interest Rate Volumes Interest Rate (€bn) (€m) (%) (€bn) (€m) (%) (€bn) (€m) (%) Loans & Advances to Customers 84.2 1,517 3.60% 83.5 1,501 3
Slide 35: Other income analysis (net)
Income Statement Other income analysis (net) H1 2014 H1 2015 (€m) (€m) Retail Ireland 156 167 Bank of Ireland Life 71 81 Retail UK (net) 7 5 Corporate and Treasury 66 71 Group Centre and other (17) (5) Business income 283 319 Other gains Transfer from available for sale reserve on asset disposal 89
Slide 36: Non-core items
Income Statement Non-core items H1 2014 H1 2015 (€m) (€m) Cost of restructuring programme (27) (18) Gross-up for policyholder tax in the Life business 8 10 Gain / (Charge) arising on the movement in Group’s credit spreads 8 (8) Impact of changes to pension benefits in the Group sponsored defined ben
Slide 37: ECB tracker mortgage loan book
ECB tracker mortgage loan book Irish tracker book (gross) Margin impacts Jun 2015 (bps) e2.2bn Customer pay rate at Jun 112 €15.9bn - ECB repo rate1 5 €15.2bn €14.4bn €13.7bn - Average fixed spread 107 Cost of funds2 89 Net interest margin 23 Dec 13 Jun 14 Dec 14 Jun 15 Volume of loans Net interest
Slide 38: Profile of customer loans at Jun (gross)
Asset Quality Profile of customer loans1 at Jun 15 (gross) ROI UK RoW Total Total (€bn) (€bn) (€bn) (€bn) (%) Mortgages 25.3 28.1 - 53.4 58% Non-property SME and corporate 12.1 4.92 3.7 20.7 22% SME 9.5 2.6 - 12.1 13% Corporate 2.6 2.3 3.7 8.6 9% Property and construction 8.5 6.4 0.2 15.1 16% Invest
Slide 39: Defaulted customer loans & impairment provisions
Asset Quality Defaulted customer loans & impairment provisions Impairment Impairment Advances Defaulted Loans Defaulted Loans Composition (Jun 15) (€bn) (€bn) as % of advances Provisions Provisions as % of (€bn) defaulted loans Residential mortgages 53.4 3.3 6.2% 1.5 44% - Retail Ireland 25.3 2.8 11
Slide 40: Defaulted loans by portfolio
Defaulted loans by portfolio Defaulted loans reducing across all portfolios ROI Mortgages UK Mortgages 51% 46% 48% 22% 23% 24% €3.7bn €3.2bn €2.8bn €0.6bn €0.5bn €0.5bn Jun 14 Dec 14 Jun 15 Jun 14 Dec 14 Jun 15 n Defaulted Loans Coverage Ratio n Defaulted Loans Coverage Ratio Non property SME and Co
Slide 41: ROI Mortgage book profile
ROI Mortgage book profile ROI Owner Occupier - book profile ROI Buy to Let - book profile 161k 158k 162k 35k 33k 32k 1.8% 1.0% 0.7% 3.5% 2.6% 6.9% 6.2% 5.5% 7.0% 12.5% 16.2% 10.0% 8.4% 21.7% 13.7% 18.8% 7.0% 12.5% 0.8% 1.1% 1.2% 1.6% 1.2% 2.3% 91.6% 93.0% 81.2% 83.8% 90.0% 78.3% Dec 13 Dec 14 Jun 15
Slide 42: UK Residential mortgages: £20.0bn/€28.1bn
UK Residential mortgages: £20.0bn/€28.1bn Defaulted loan volumes 22% 23% 24% £457m £395m UK residential mortgage books continue to £351m perform well Impairment reversal reflects on-going favourable economic and property market conditions and continued low level of arrears Jun 14 Dec 14 Jun 15 n
Slide 43: SME & Corporate loans: €20.7bn
SME & Corporate loans: €20.7bn ROI SME - €9.5bn UK SME - £1.9bn / €2.6bn Corporate - €8.6bn 51% 51% 52% 44% 44% 46% 38% 54% 59% €2.7bn €2.5bn €2.3bn €0.7bn £344m £327m £262m €0.4bn €0.4bn Jun 14 Dec 14 Jun 15 Jun 14 Dec 14 Jun 15 Jun 14 Dec 14 Jun 15 n Defaulted Loans Coverage Ratio n Defaulted Loan
Slide 44: Property & Construction: €15.1bn
Property & Construction: €15.1bn Investment Property - €12.5bn Land and Development - €2.6bn 41% 46% 48% 73% 74% 75% €5.7bn €4.7bn €4.5bn €2.8bn €2.4bn €2.3bn Jun 14 Dec 14 Jun 15 Jun 14 Dec 14 Jun 15 n Defaulted Loans Coverage Ratio n Defaulted Loans Coverage Ratio Jun 14 Dec 14 Jun 15 Jun 14 Dec 1
Slide 45: Available for Sale Financial Assets
Asset Quality Available for Sale Financial Assets ROI UK Spain Other Jun 15 Dec 14 Carrying Value €bn €bn €bn €bn €bn €bn Sovereign bonds 2.6 0.7 0.3 1.7 5.3 8.3 Covered bonds 0.3 0.3 0.6 1.1 2.3 2.5 Senior debt - - - 1.6 1.6 2.3 Subordinated debt 0.3 - - - 0.3 0.2 Asset backed securities - 0.1 - 0.
Slide 46: CET1 ratios
Capital1 CET1 ratios Transitional ratio Fully loaded ratio (excl Prefs) (€bn) (€bn) Total equity (excl additional Tier 1 capital) 9.5 9.5 Less 2009 Preference Shares - (1.3) Deferred Tax2 (0.1) (1.4) Pension Deficit 0.4 - Available for sale reserve (0.4) - Removal of National Filters (0.2) - Other I
Slide 47: Fully loaded CET1 ratio capital build
Fully loaded CET1 ratio (excl Prefs) capital build1 Increased CET1 fully loaded ratio by 180bps to 11.1% 0.3% 0.1% 1.2% 0.2% 11.1% 9.3% Dec 14 Attributable profit RWA2 Pension Other Jun 15 CET1 deficit CET1 1 Capital ratios have been presented including the benefit of the retained profit for the per
Slide 48: Defined Benefit Pension Schemes
Defined Benefit Pension Schemes Group IAS19 Pension Deficit Group IAS19 pension deficit of €0.8bn at Jun 15 (€0.99bn at Dec 14) 3.65% rimary drivers of the reduction in deficit were; P Group pension scheme assets returns were c.4% during the period 2.45% 2.20% Euro AA Corporate Bond discount
Slide 49: Defined Benefit Pension Schemes
Defined Benefit Pension Schemes Group has developed a framework for pension funding and investment decision-making as part of a long-term plan. Management of Group’s DB pension position involves a multi-year programme, categorised into 3 broad areas. Activity in these areas includes; 1 Review Li
Slide 50: Reimbursing and rewarding taxpayers support
Reimbursing and rewarding taxpayers support Jan 09 - Jun 15 Risk to the State dealt with - ELG expired c.14% Shareholding Since 2009, c.€4.8bn cash invested by the State Cumulative c.€6bn cash returned to the State State Aid repaid State continues to hold valuable c.14% equity shareholding
Slide 51: Ordinary stockholders’ equity and TNAV
Ordinary stockholders’ equity and TNAV 2014 2015 Movement in ordinary stockholders’ equity (€m) (€m) Ordinary stockholders’ equity at beginning of period 6,528 7,392 Movements: Profit attributable to stockholders 786 617 Dividends on preference stock (141) (137) Foreign exchange movements 275 334 Ca
Slide 52: Contact details
Contact details For further information please contact: Group Chief Financial Officer Andrew Keating tel: +353 76 623 5141 andrew.keating@boi.com Investor Relations Mark Spain tel: +353 76 623 4850 mark.spain@boi.com Barry McLoughlin tel: +353 76 624 5753 barry.mcloughlin@boi.com Kate Butler tel
Slide 53: Forward-Looking statement
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 Bank of Ireland Group’s (the ‘Group’) plans and its current
Slide 54: Bank of Ireland Group
Bank of Ireland Group C@) 52
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Bank of Ireland Group — H1 2015 Earnings Presentation on 6ix