Slide 1: Half-Yearly Financial Results
Half-Yearly Financial Results For the half year ended 30 June 2016
Slide 2: Important information and forward looking statement
Important information and forward looking statement This presentation should be considered with AIB’s Half-Yearly Financial Report 2016, Trading Update May 2016 and all other relevant market disclosures, copies of which can be found at the following link: http://investorrelations.aib.ie Important In
Slide 3: Bernard Byrne, Performance & Strategic Objectives
Bernard Byrne Chief Executive Officer Performance & Strategic Objectives
Slide 4: H1 2016 in summary
H1 2016 in summary Strong financial performance; ongoing sustainable profitability, capital generation and further improvement in asset quality Market leading franchise with customer first strategy and investment in digital and innovation driving the commercial agenda Robust capital generation
Slide 5: Profitable and strong capital generation
Profitable and strong capital generation H1 2016 financial highlights €1.0bn • Strong sustainable underlying profit Profit before tax • Enhanced by provision writebacks and one-offs €1.2bn in H1 2015 2.08% • Positive upward NIM trajectory to 2.08% from Net Interest Margin(1) 1.92% 16bps increase in
Slide 6: Improving economy in H1 2016; challenges remain
Improving economy in H1 2016; challenges remain Growth momentum despite Brexit Unemployment rate falling, strong jobs growth ROI GDP (% change in real terms) forecasts pre- and post- Brexit Average Unemployment rate (%) referendum 9.5 5.0 4.7 4.5 7.9 4.0 7.2 6.7 3.5 3.0 2016(f) 2017 (f) 2018 (f) 201
Slide 7: Customer first strategy driving the commercial agenda
Customer first strategy driving the commercial agenda Leading omni-channel and digital offering Strategic multi-brand and proposition approach • Largest distribution network in Ireland supported by digital innovation • Reconfiguration of the physical franchise into ‘Local Markets Model’ Pillar bank
Slide 8: Investment delivering on strategic priorities
Investment delivering on strategic priorities Risk & Capital Customer First Simple & Efficient Talent & Culture Delivering tangible outcomes Management • Over 1 million online users Focused Investment of €870m (2015- 2017) • 578,000 active mobile users • 95% of customer transactions are automated •
Slide 9: Strong franchise in Ireland with retail and business focus
Strong franchise in Ireland with retail and business focus Segment overview AIB Ireland – well positioned for growth • Ireland’s leading franchise bank with continuous Operating Contribution (1) development of customer propositions €m 84 • Omni-channel distribution with No.1 physical presence and hi
Slide 10: Strategic propositions supporting lending growth
Strategic propositions supporting lending growth Increase in new lending year on year Momentum across key sectors Drawdowns €bn €bn Mortgage Lending €bn Personal Lending 3.8 3.9 0.4 0.5 2% 28% 0.75 0.77 0.32 0.25 1.0 1.2 H1 2015 H1 2016 H1 2015 H1 2016 €bn Business and Corporate lending £bn UK lendi
Slide 11: Progress on resolving legacy customer issues
Progress on resolving legacy customer issues €bn Impaired Loans Delivering for customers in financial difficulty • €18bn reduction in impaired loans to €11bn since 29 - 62% Dec 2013 • Case by case restructuring of personal and 22 business customers in financial difficulty 55% 13 • Implementing susta
Slide 12: Substantial payments to the State
Substantial payments to the State Further capital repaid – €6.5bn in total payments to the State Regulatory approval for €3.5bn payments to State reflects strength of capital base €3.2bn paid in €1.6bn of capital Total payments €1.7bn paid in fees, coupons, repaid in July of €6.5bn to Dec 2015 divid
Slide 13: Summary
Summary Sustainable profitable with strong capital base; delivering capital to the State Continued reduction in impaired loans and improvement in asset quality Leading market shares and growing new lending through customer first strategic priorities and a differentiated business model enhanced
Slide 14: Mark Bourke, Financial Performance
Mark Bourke Chief Financial Officer Financial Performance
Slide 15: Financial highlights
Financial highlights Key performance metrics in line with expectations Sustainable underlying profitability and positive net interest margin trajectory Stable performing loan book in H1 driven by new lending, redemptions, restructuring and FX impact Reduction in impaired loans; primary restruc
Slide 16: Operating Performance
Operating Performance
Slide 17: Income Statement
Income Statement Sustainable underlying profit of €0.5bn Summary income statement (€m) HY 2016 HY 2015 Change % • Operating income of €1.2bn (H1 2015 €1.3bn) Net interest income 945 940 1% • net interest income marginally higher Other income 295 409 -28% • net interest margin up 16bps to 2.08%; cont
Slide 18: Average balance sheet
Average balance sheet Further NIM expansion due to lower funding costs and stable asset yields Half year ended 30 June 2016 Half year ended 30 June 2015 Average Interest Average Average Interest Average • NIM(1) of 2.08% balance Rate balance Rate €m €m % €m €m % • Maintaining spread between Assets c
Slide 19: Other income
Other income Stable customer fees and commissions; lower treasury income €m Other Income • Other income €295m (H1 2015 €409m) Fees & • Stable net fee and commission income of €193m (H1 99 Commissions 2015 €207m) 72 Other Business • Increased customer activity in cards and wealth 207 Income managemen
Slide 20: Costs
Costs Continued focus and management of cost while progressing on strategic investment programme €m Operating expenses(1) • Operating expenses €677m +5% Factors impacting cost 646 677 • Staff costs flat and incorporate wage inflation; Outsourcing 318 for future resilience 290 • Investing in strategi
Slide 21: P&L - Other items
P&L - Other items Exceptional benefits and provision writebacks partially offset by regulatory fees and levies • Net credit provision writeback of €211m(1) mainly due to Other PL items (€m) HY 2016 HY 2015 case by case restructuring of customers in difficulty Operating profit before provisions 563 7
Slide 22: Balance sheet & Asset quality
Balance sheet & Asset quality
Slide 23: Balance sheet
Balance sheet Efficient balance sheet management and strong capital ratios; well positioned for growth Balance Sheet €bn Jun-16 Dec-15 % Change Assets Gross loans to customers 67.0 70.1 -4% Provisions (5.9) (6.9) -14% • Net loans €61.1bn (Dec €63.2bn) Net loans to customers 61.1 63.2 -3% • Stable pe
Slide 24: Customer loans
Customer loans New lending up 2% to €3.9bn, performing loan book stable Customer loans (€bn) Performing loans Impaired loans Gross loans Specific provisions IBNR provisions Net loans Opening balance (1 January 2016) 57.0 13.1 70.1 (6.2) (0.7) 63.2 New lending volumes 3.9 0.0 3.9 0.0 0.0 3.9 New impa
Slide 25: Customer loans
Customer loans Corporate & SME driving new lending growth June 2016 – Performing loans €55.7bn June 2016 – New lending €3.9bn €6.9bn Residential Mortgages €0.7bn Residential Mortgages €2.7bn 12% €15.7bn 18% 5% 28% Other Personal Other Personal €2.0bn Property & construction €0.4bn 51% Property & con
Slide 26: Asset quality
Asset quality Continued progress as impaired loans reduce across all sectors Jun-16 Non-property Residential Property and Other Personal business Total €m Mortgages Construction lending Loans and receivables to customers 35,742 3,319 10,475 17,550 67,086 Impaired loans net of Impaired 5,263 639 3,53
Slide 27: Balance sheet provisions
Balance sheet provisions Working well within provision stock while maintaining coverage Non- Residential Other Property & Balance sheet provisions movement (€m) property Total Mortgages Personal construction business Opening Balance sheet provisions 1 Jan 2016 Specific 2,045 486 2,475 1,152 6,158 IB
Slide 28: Financial investments
Financial investments €18.3bn portfolio of Financial investments including €3.4bn as HTM €bn Key components of AFS - Debt Securities(1) €bn AFS - Components of Government securities 8.7 5.4 7.4 4.7 4.6 4.7 3.5 3.4 2 1.8 1.2 1.2 1 0.9 0.6 0.5 0.3 0.3 Irish France Italy Spain Rest of World Held to Mat
Slide 29: Funding & Capital
Funding & Capital
Slide 30: Funding structure
Funding structure Normal market participant €bn Total Funding Key Funding Metrics Jun-16 Dec-15 Loan deposit ratio (LDR) 99% 100% 98.7 92.3 Liquidity coverage ratio (LCR) 122% 116% Customer Accounts Net stable funding ratio (NSFR) 115% 111% 63.4 61.6 • Customer deposits Wholesale Funding & Capital •
Slide 31: Capital ratios
Capital ratios Strong capital base with fully loaded CET 1 of 13.3% - normalised capital stack • Capital accretive % Capital ratios • profit after tax €0.8bn • offset by pension deficit increase €0.5bn 18.9 19.2 15.5 15.7 • Reorganised capital stack • LT2 €750m and AT1 €500m issuances December 2015
Slide 32: Normalised and well positioned
Normalised and well positioned Capital repayment facilitated by progress and momentum • Strengthened and simplified capital structure • Sustainable profitability €6.5bn of payments to the State • Path to normalised balance sheet Shareholder value creation • Normalised funding market access • Deliver
Slide 33: Appendix
Appendix
Slide 34: Criticised loans and definitions
Criticised loans and definitions €bn Credit profile – criticised loans Watch The credit is exhibiting weakness but with the expectation that existing debt can be fully repaid from normal cash flows. 6.8 Vulnerable Credit where repayment is in 6.1 5.2 jeopardy from normal cash flows and may be depend
Slide 35: Improving asset quality
Improving asset quality Jun-16 Dec-15 Group & Group & €m Ireland UK Total Irel a nd UK Total Intl Intl Res i dentia l mortga ges 33,765 1,977 0 35,742 34,456 2,362 0 36,818 of whi ch: owner-occupi er 28,547 1,715 0 30,262 28,880 2,048 0 30,928 of whi ch: buy-to-l et 5,218 262 0 5,480 5,576 314 0 5,8
Slide 36: Balance sheet provisions by segment
Balance sheet provisions by segment Group & Balance sheet provisions movement (€m) Ireland UK Total Intl Opening Balance sheet provisions 1 Jan 2016 Specific 5,109 1,027 22 6,158 IBNR 596 71 7 674 Balance sheet provisions 5,705 1,098 29 6,832 Income statement - credit provision charge/writebacks Spe
Slide 37: ROI residential mortgages – arrears significantly lower
ROI residential mortgages – arrears significantly lower €bn ROI Mortgage Portfolio – June 2016 €m Impairment writeback 11% 15% 36% 53% 85% 322 €33.8bn Owner-occupier 66 Tracker Variable Fixed Buy-to-let June-15 June-16 €bn Impaired Loans • 85% of the RoI mortgage portfolio is owner occupier and 15%
Slide 38: Other personal
Other personal €bn Personal Loan Portfolio – June 2015 €m Impairment writeback 19% 11% 4% 66% 36 €3.3bn 8 Satisfactory Watch Vulnerable Impaired June - 15 June - 16 €bn Impaired Loans • Portfolio comprises €2.5bn loans and overdrafts and €0.8bn in credit card facilities 69% 70% 64% • Increase in new
Slide 39: Property & construction
Property & construction €bn €m Impairment writeback Property & Construction Portfolio – June 2015 4% 2% 111 99 19% 75% €10.5bn Investment Land & Development Contractors Housing Associations June - 15 June - 16 €bn • Overall portfolio has reduced by €1bn (9%) since Dec’ 15 Impaired Loans • €0.6bn due
Slide 40: Non-property business
Non-property business €bn Non-property business portfolio – June 2016 €m Impairment writeback Agriculture 10% 26% 110 Hotels & Licensed 16% Premises Retail/Wholesale/Other Distribution 33% 15% Other Services Other 1 €17.6bn June - 15 June - 16 €bn • Portfolio comprises Corporate and SME lending Impa
Slide 41: ROI Mortgages – stock of forbearance
ROI Mortgages – stock of forbearance of which: loans > 90 days of which: loans > 90 days June 2016 - Total June 2016 - Total in arrears and/or impaired in arrears and/or impaired Balance Balance Balance Balance Forbearance type by mortgage Number Number Number Number (€m) (€m) (€m) (€m) Interest onl
Slide 42: Non-mortgage – stock of forbearance
Non-mortgage – stock of forbearance Jun-16 Dec-15 Non-property Non-property Property and Property and Other Personal business Other Personal business construction construction lending lending Balance Balance Balance Total Balance Balance Balance Total Forbearance Type by Non-Mortgage €m €m €m €m €m
Slide 43: Funding market access
Funding market access 2013 2014 2015 2016 ACS Issuance Senior Senior Tier 2 AT1 ACS Issuance Senior ACS Issuance ACS Issuance ACS Issuance ACS Issuance September Unsecured Unsecured November December January 2013 Unsecured March 2014 January 2015 July 2015 January 2016 2013 April 2014 March 2015 201
Slide 44: AIB segment performance
AIB segment performance AIB Ireland AIB UK (£m) Group & International Contribution statement (€m) Jun-16 Jun-15 Jun-16 Jun-15 Jun-16 Jun-15 Net interest income 685 665 90 104 144 133 Other income 229 231 21 36 40 129 Total operating income 914 896 111 140 184 262 Total operating expenses (389) (379)
Slide 45: Capital movements H1 2016
Capital movements H1 2016 AIB Group - CRD IV Transitional Capital Ratios AIB Group - Fully loaded Capital Ratios Risk Weighted Assets (€m) 30-Jun-16 31-Dec-15 Risk Weighted Assets (€m) 30-Jun-16 31-Dec-15 Total Risk Weighted Assets 56,528 58,549 Total Risk Weighted Assets 56,688 59,058 Capital (€m)