Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — FY2015 Earnings Presentation
60 slides from Bank Of Ireland's earnings presentation, Dec 31, 2015
Slide 1: 2015 Results Announcement
2015 Results Announcement 31 December 2015
Slide 2: Slide 2
Slide 3: 2015 progress Financial Results Priorities for 2016 and beyond
1 2015 progress Richie Boucher, CEO 2 Financial Results Andrew Keating, CFO 3 Priorities for 2016 and beyond Richie Boucher, CEO 1
Slide 4: 2015 Progress
2015 Progress Richie Boucher
Slide 5: Business Highlights
Business Highlights Continuing to deliver on strategic priorities Group loans grew in 2015; net new lending of €3.9bn in core loan books Continue to be the largest lender to the Irish economy in 2015 Customers International businesses (UK & Acquisition Finance) both performed well Group new
Slide 6: Substantial increase in profitability
Substantial increase in profitability Increased underlying PBT by €280m or 30% Increased underlying PBT by 30% to €1,201m 2014 2015 Increased total income by 10% (€298m) reflecting Higher net interest income Total income €2,974m €3,272m Higher fee income; and Additional gains of €237m Net
Slide 7: Continuing strong organic capital generation
Continuing strong organic capital generation Increased fully loaded CET1 ratio by 200bps to 11.3% Customer loans increased as new lending exceeded redemptions Dec 14 Dec 15 New lending volumes of €14.2bn during 2015; 42% increase on 2014 with strong performances from both Irish and international
Slide 8: UK and Irish economies performing well
UK and Irish economies performing well GDP Unemployment Residential Economic Rate Property Prices Indicators National Change Annual Real Growth Annual Average 12 months to Dec 2015 2015f: 6.8% 2015: 9.4% 2015: 6.6% 2016f: 5.0% 2016f: 8.2% 2015: 2.2% 2015: 5.4% 2015: 4.5% 2016f: 2.3% 2016f: 5.1% Sour
Slide 9: Attractive businesses operating in growing economies
Attractive businesses operating in growing economies Benefitting from Irish growth with international diversification Ireland (~70% of total income) Retail and commercial bank; Ireland’s only bancassurer Largest lender to the Irish economy #1 or #2 market positions across all principal product
Slide 10: All Irish businesses supporting and benefitting from economic growth
All Irish businesses supporting and benefitting from economic growth Retail Ireland Corporate & Treasury - Ireland Business Banking: Corporate Banking Ireland: Ireland’s #1 business bank; >50% market share of new SME / Agri lending Ireland’s #1 corporate bank with New lending volumes of €2
Slide 11: Delivering growth in our International divisions
Delivering growth in our International divisions Retail UK Post Office: Partnership further strengthened during the year Supported by “Post Office Money” brand launch and on-going network investment by Post Office #1 position in consumer FX; Travel money card winning new customers AA: Co
Slide 12: Investing in today's requirements and building for the future
Investing in today’s requirements and building for the future Investing in our customer franchises, propositions and business model Personal Customers Wealth Customers Business Customers Channels Improving Customer Propositions 40% reduction in Mortgage Banking and wealth Drawdown time management ac
Slide 13: Financial Results
Financial Results Andrew Keating
Slide 14: Group Income Statement
Group Income Statement Improved Underlying PBT by €280m or 30% Increased underlying PBT by €280m in 2015 2014 2015 (€m) (€m) Increased pre-provision operating profit by €150m (12%) Total income 2,974 3,272 Increased net interest income by €96m; higher Net interest income 2,358 2,454 NIM partia
Slide 15: Divisional Analysis
Divisional Analysis All trading divisions are contributing to the Group’s profitability Retail Ireland Retail UK Underlying profit before tax Underlying profit before tax €507m €328m £140m £103m 2014 2015 2014 2015 BOI Life Corporate & Treasury Underlying profit before tax Underlying profit before t
Slide 16: Net interest income
Net interest income 4% growth in net interest income in 2015 Net interest margin drivers 2015 performance 3.60% 3.56% 3.58% 3.49% Net interest income of €2,454m, up €96m (4%) vs 2014 (€2,358m) reflecting NIM growth of 8bps (4%) offset by a slight reduction in average interest earning assets (AIEAs
Slide 17: Loan book grew in 2015
Loan book grew in 2015 Core loan books up €3.9bn Group loan book movement Loan book grew in 2015 with new loans exceeding 2.3 redemptions by €0.7bn in the second half of 2015 (0.4) 0.7 New loan volumes of €14.2bn1 Up 42% vs. 2014 with strong performance across all 84.7 businesses 82.1 More t
Slide 18: Other Income
Other Income 6% growth in business income Business Income 2014 2015 Includes fee income from customer activity in our (€m) (€m) Retail ROI, BOI Life, Corporate & Treasury and Retail UK divisions 6% growth to €626m as customer activity levels increase Business Income 592 626 across our businesses
Slide 19: Operating Expenses and Regulatory Charges
Operating Expenses and Regulatory Charges Reduced Cost / income ratio to 53%1 Cost / income ratio of 53%1 (2014: 54%) 2014 2015 (€m) (€m) Operating expenses impacted by the increase in the value of sterling (c.€41m) Total staff costs 823 894 Total staff costs of €894m in 2015 Staff costs 685 7
Slide 20: Asset Quality
Asset Quality
Slide 21: Non-performing loans and impairment charge
Non-performing loans and impairment charge Significant reduction in non-performing loans and impairment charge Non-performing loan volumes Non-performing loan volumes1 – €12.0bn €15.8bn €3.8bn reduction during 2015 €1.5bn €12.0bn Reductions in all asset classes €1.4bn Defaulted loans component
Slide 22: ROI Mortgages: €25.0bn
ROI Mortgages: €25.0bn ROI Mortgages Portfolio Performance Reduced NPLs1 by €0.9bn or 22% to €3.0bn in 2015 38% 39% Defaulted loans component of €2.3bn; down 40% since June 2013 peak €3.9bn Track record of probationary mortgages returning to performing status €0.7bn €3.0bn €22.7bn or 91% of
Slide 23: UK Mortgages: €27.9bn
UK Mortgages: €27.9bn UK Mortgages Portfolio Performance NPLs1 represent 4% of UK mortgages; defaulted loans 9% 9% represent 2% of UK mortgages Impairment credit of €12m reflects ongoing improvement €1.3bn in portfolio performance €1.2bn Coverage ratio of 9% (Dec 14: 9%) €0.8bn Industry Compar
Slide 24: Funding & Capital
Funding & Capital
Slide 25: Balance Sheet
Balance Sheet Capital and Liquidity available to support growth Dec 14 Dec 15 Strong liquidity ratios (€bn) (€bn) Net Stable Funding Ratio – 120% Customer loans 82 85 Liquidity Coverage Ratio – 108% Liquid assets 25 24 Loan to Deposit Ratio – 106% BOI Life assets 16 16 Customer deposits – €80b
Slide 26: Capital
Capital Further strong capital accretion facilitated 2009 Prefs redemption Transitional CET1 ratio1 Total capital ratio1 F urther significant organic capital accretion in 2015 2 00bps increase in Fully loaded CET1 ratio 18.0% 1 50bps increase in Transitional CET1 ratio 15.2% 13.3% Robust capit
Slide 27: Fully Loaded CET1 ratio – capital build
Fully Loaded CET1 ratio – capital build Increased by 500bps in past 2 years 0.4% 1.8% (0.3%) (0.1%) 0.2% 0.9% 1.5% 1.4% (0.2%) (0.6%) 11.3% 9.3% 6.3% Dec 13 Attributable 2009 Pref Pension RWA1 & Other2 Dec 14 Attributable 2009 Pref Pension RWA1 & Other2 Dec 15 CET1 profit Dividends deficit Expected
Slide 28: Capital Guidance and Distribution policy
Capital Guidance and Distribution policy Minimum SSM CET1 SREP1 requirement for 2016 of 10.25%, calculated on a transitional basis Regulatory Capital O-SII buffer1 will be phased in at 0.5% from July 2019, 1.0% from July 2020 and Requirements 1.5% from July 2021 Capital Expect to maintain suff
Slide 29: Priorities for 2016 and beyond
Priorities for 2016 and beyond Richie Boucher
Slide 30: Priorities for 2016 and beyond
Priorities for 2016 and beyond Continue to develop relationships with existing and new customers Leverage our strong market positions to meet increasing credit appetite as the Irish economy continues to grow, with confidence returning Customers Support customers re-financing from other institu
Slide 31: Attractive and sustainable returns for shareholders
Summary Remain focused on delivering 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 diversified funding sustainable ret
Slide 32: Additional Information
Additional Information
Slide 33: Additional Information
Additional Information Slide No. BOI Overview Business profile 32 Historic financial results 34 Financial targets 36 Income Statement Divisional performance 37 Net interest income analysis 38 Other income analysis (net) 39 Non-core Items 40 Irish mortgage loan book 41 UK mortga
Slide 34: BOI Overview: Business profile
BOI Overview: Business profile Ireland: Leading bank in a growing economy with a well structured market Comprehensive multi-channel distribution c.250 branches c.1,750 – Increased digitally active c.364k active 750k service calls platform Self-service customer numbers by mobile customers monthly / 2
Slide 35: BOI Overview: Business profile
BOI Overview: Business profile Attractive international franchises provide further opportunities for growth Partnership based consumer banking franchise in UK Acquisition finance Trusted brands, established customer base and expanding product range c.1.5m Savings c.250k Mortgage Retail FX c.700k Cur
Slide 36: BOI Overview: Historic financial results
BOI Overview: Historic financial results Income Statement1 y/e Dec 11 y/e Dec 12 y/e Dec 13 y/e Dec 14 y/e Dec 15 (€m) (€m) (€m) (€m) (€m) Total income 2,058 1,862 2,646 2,974 3,272 Net interest income 1,983 1,755 2,133 2,358 2,454 Other income 524 495 642 653 828 ELG fees (449) (388) (129) (37) (10
Slide 37: BOI Overview: Historic financial results
BOI Overview: Historic financial results Summary Balance Sheet1 Dec 11 Dec 12 Dec 13 Dec 14 Dec 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 80 Wholesale fundin
Slide 38: BOI Overview: Financial targets
BOI Overview: Financial targets Metrics Target 2015 Status Balance Sheet Loans and advances to customers1 c.€90bn €85bn On track Group loan / deposit ratio ≤120% 106% ✔ Buffer Transitional CET1 ratio maintained >10% 13.3% ✔ ELG covered liabilities Fully €0.7bn ELG fees disengaged €10m ✔ Profitabilit
Slide 39: Income Statement: Divisional performance
Income Statement Divisional performance Retail Bank of Retail Corporate & Group Centre Group Year ended Dec 15 Ireland Ireland Life UK Treasury & Other (€m) (€m) (€m) (€m) (€m) (€m) Operating profit / (loss) before 604 103 284 699 (239) 1,451 impairment charge Impairment charge (95) - (139) (62) - (
Slide 40: Income Statement: Net interest income analysis
Income Statement Net interest income analysis H1 2014 H2 2014 H1 2015 H2 2015 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) (%) (€bn) (€m) (%) (€bn) (€m) (%) (€bn) (€m
Slide 41: Income Statement: Other income analysis
Income Statement Other income analysis (net) 2014 2015 (€m) (€m) Retail Ireland 320 331 Bank of Ireland Life 145 154 Retail UK (net) 9 9 Corporate and Treasury 152 153 Group Centre and other (34) (21) Business income 592 626 Other gains Transfer from available for sale reserve on asset disposal 192
Slide 42: Income Statement: Non-core items
Income Statement Non-core items 2014 2015 (€m) (€m) Cost of restructuring programme (56) (43) Gross-up for policyholder tax in the Life business 14 11 Payments in respect of Career and Reward framework (32) (2) Gain / (Charge) arising on the movement in Group’s credit spreads (10) 11 Impact of chang
Slide 43: ROI mortgages: €25bn
ROI mortgages: €25bn ROI Mortgages (gross) Market share and margins €26.7bn €25.6bn €2.5bn €25.0bn €2.3bn H1-15 H2-15 €3.9bn €8.2bn €8.9bn €8.1bn New Lending Volumes1 €0.5bn €0.9bn €15.9bn €14.4bn Market share 26% 31% €12.9bn Dec 13 Dec 14 Dec 15 n Tracker n Variable Rates n Fixed Rates Trackers r
Slide 44: UK Residential mortgages: £20.5bn/€27.9bn
UK Residential mortgages: £20.5bn/€27.9bn UK Residential Mortgages (gross) UK Residential Mortgages (gross) £20.8bn £19.8bn £20.8bn £20.5bn £20.5bn £19.8bn £3.1bn £3.3bn £2.6bn £4.2bn £2.9bn £6.9bn £7.6bn £8.3bn £7.6bn £6.1bn £7.8bn £4.9bn £10.1bn £9.5bn £8.7bn £9.3bn £9.1bn £10.4bn Dec 13 Dec 14 De
Slide 45: Asset Quality: Profile of customer loans
Asset Quality Profile of customer loans1 at Dec 15 (gross) ROI UK RoW Total Total (€bn) (€bn) (€bn) (€bn) (%) Mortgages 25.0 27.9 - 52.9 59% Non-property SME and corporate 12.1 4.62 4.3 21.0 23% SME 9.3 2.4 - 11.7 13% Corporate 2.8 2.2 4.3 9.3 10% Property and construction 7.8 5.5 0.1 13.4 15% Inves
Slide 46: Non-performing loans by portfolio
Non-performing loans by portfolio Non-performing loans reducing across all portfolios ROI Mortgages UK Mortgages 38% 39% 9% 9% €3.9bn €0.7bn €3.0bn €0.7bn €1.3bn €1.2bn €3.2bn €2.3bn €0.8bn €0.7bn €0.5bn €0.5bn Dec 14 Dec 15 Dec 14 Dec 15 n Defaulted Loans Probationary Mortgages Coverage Ratio n Def
Slide 47: Non-performing customer loans & impairment provisions
Asset Quality Non-performing customer loans & impairment provisions Impairment Impairment Non-performing Defaulted Non-performing Impairment Composition (Dec 15) Advances loans loans loans as % of Provisions Provisions as % of Provisions as % (€bn) (€bn) (€bn) advances (€bn) non-performing of defaul
Slide 48: ROI Mortgages: €25.0bn
ROI Mortgages: €25.0bn Owner Occupied Non-performing loans Owner Occupied: €20.0bn Reduced NPLs by 23% to €1.6bn in 2015 31% 32% Arrears at 43% of industry level1 (Dec 14: 47%) BOI arrears >720 days reducing and at 37% of industry €2.1bn level2 (Dec 14: 43%) €0.4bn €1.6bn 94% of mortgage acc
Slide 49: Available for Sale Financial Assets
Asset Quality Available for Sale Financial Assets ROI UK France Other Dec 15 Dec 14 Carrying Value €bn €bn €bn €bn €bn €bn Sovereign bonds 2.8 0.7 0.8 1.4 5.7 8.3 Senior debt - - 0.1 1.4 1.5 2.3 Covered bonds 0.3 0.3 0.4 1.2 2.2 2.5 Subordinated debt 0.3 - - - 0.3 0.2 Asset backed securities - 0.1 -
Slide 50: Capital: CET1 ratios
Capital CET1 ratios Transitional ratio Fully loaded ratio (€bn) (€bn) Total equity 9.1 9.1 Less Additional Tier 1 (0.8) (0.8) Deferred Tax1 (0.1) (1.3) Pension Deficit 0.4 - Available for sale reserve (0.5) - Removal of National Filters (0.1) - Intangible assets and goodwill (0.5) (0.5) Other Items2
Slide 51: Regulatory Capital Requirements
Regulatory Capital Requirements Requirements expected to be reviewed annually 13.3% O-SII buffer +1.5% phased in from 10.25% +1.0% July 2019 +0.5% 2016 CET1 Transitional SREP CET1 Ratio Requirement SREP requirement from 2017 (Incl. Capital onwards not known at this point Conservation Buffer) Dec 201
Slide 52: Risk weighted assets (RWA)
Risk weighted assets (RWA) RWA Density1 Customer lending Avg. Credit Risk Weights2 (Based on regulatory exposure class) EAD3 RWA Avg. Risk (€bn) (€bn) Weight ROI mortgages 25.3 6.8 27% UK mortgages 27.2 5.1 19% SME 22.6 15.7 70% Corporate 13.5 13.6 101% Other Retail 4.0 2.4 59% 45% 46% Total custome
Slide 53: 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 786 940 Dividends on preference stock (141) (257) Foreign exchange movements 275 255 Ca
Slide 54: Defined Benefit Pension Schemes
Defined Benefit Pension Schemes Group IAS19 Pension Deficit Group IAS19 pension deficit of €0.74bn at Dec 15 (€0.99bn at Dec 14) 3.65% rimary drivers of the reduction in deficit were P Group pension scheme assets returns2,3 were c.2% in 2015 2.20% 2.30% Euro AA Corporate Bond discount rate4
Slide 55: Defined Benefit Pension Schemes
Defined Benefit Pension Schemes Group has developed a framework for pension funding and investment decision-making as part of 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 Liab
Slide 56: Reimbursing and rewarding taxpayers support
Reimbursing and rewarding taxpayers support Jan 09 – Dec 15 Risk to the State dealt with – ELG expired Since 2009, c.€4.8bn cash invested by the State c.14% Shareholding Cumulative c.€6bn cash returned to the State + State Aid repaid State continues to hold valuable c.14% equity shareholding
Slide 57: 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 Niall Murphy te
Slide 58: 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
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