Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — H1 2013 Earnings Presentation
64 slides from Bank Of Ireland's earnings presentation, July 2013
Slide 1: Interim Results 30 June 2013
Interim Results 30 June 2013 Bank of lreland@ For small steps, for big steps, for life
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Slide 3: 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 go
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Slide 5: Agenda
1 Group Chief Executive’s Review 2 Group Income Statement 3 Asset Quality 4 Funding & Capital 5 Additional Information 3
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Slide 7: Group Chief Executive's Review
Group Chief Executive’s Review Richie Boucher
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Slide 9: Summary
Summary Delivering on Strategic Objectives Strong Franchise Positions Close to Profitability 5
Slide 10: Highlights
6 Highlights Delivering on Strategic Objectives Balance Sheet Metrics Loan to deposit ratio at 121% Dec 12 Jun 13 Demonstrated access to wholesale funding markets Loans / deposits ratio 123% 121% ECB funding approaching normalised levels (down by E6bn Wholesale funding E39bn E31bn incl. unwind
Slide 11: Strategic Objectives - strong progress since 2011 recapitalisation
Strategic Objectives - strong progress since 2011 recapitalisation Maintained and enhanced strategic shape Transformed funding profile, availability and cost Leading Irish bank in a consolidating market Deposits now 70% of funding EU Restructuring Plans amended and confirmed Loan to Deposit
Slide 12: Reimbursing and rewarding the State's investments
8 Delivering on Strategic Objectives Jan 09 - Aug 13 15% Since 2009 e4.8bn cash Shareholding invested by the State Cumulative e3.9bn cash returned to the State State continues to hold E1.8bn valuable investments Preference Stock - e1.8bn Preference Stock paying an annual coupon of 10.25% - 15%
Slide 13: Strong Franchise Positions: supporting the Irish economic recovery
Strong Franchise Positions Supporting and benefiting from the Irish economic recovery Lending to homebuyers and supporting homeowners Supporting Irish businesses Launched E2bn mortgage fund Oct 12 Approved E1.9bn in new and increased SME lending facilities H1 2013 c.E1.2bn mortgages approved f
Slide 14: Retail Ireland - leading bank in a consolidating market
10 Strong Franchise Positions Retail Ireland - leading bank in a consolidating market Wealth Management Strong c.1.6m c.150k SME / incl. relationships Consumer Banking Business New Ireland Assurance with customers Customers Customers >600k Customers Leading multi-channel distribution 250 branches 1,
Slide 15: Investing in our Strong Franchise Positions
Investing Strong Franchise in our Strong Positions Franchise Positions Corporate & Treasury Retail UK Number 1 Corporate Bank in Ireland Challenger consumer banking franchise with established customer base >30% market share, >50% of MNC Continue to develop partnership, Leading provider of treasu
Slide 16: Close to Profitability
12 Close to Profitability 1.20% 1.34% 1.65% E99m Operating profit E176m pre-impairment E380m E212m building strongly E187m E37m H1 2012 H2 2012 H1 2013 n Operating profit pre-impairment ELG Fees ● NIM H1 2012 H2 2012 H1 2013 Impairment E785m E680m charges E984m reducing E100m E780m n Impairment char
Slide 17: Delivering on our Medium Term Targets
Delivering on our Medium Term Targets Metrics Dec 12 Jun 13 Target Loans and advances €93bn €87bn c.€90bn to customers1 Balance Sheet Group loan / deposit ratio 123% 121% 120% Buffer maintained over Capital - Core tier 1 ratio2 13.8% 14.2% regulatory minimum ELG covered liabilities €26bn €8bn
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Slide 19: Group Income Statement
Group Income Statement Andrew Keating
Slide 20: Group Income Statement: reduced underlying loss by E550m
15 Group Income Statement H1 2012 H1 2013 Change Change Income €m €m €m % Delivered total income growth of E313m (36%) Net Interest income 840 968 128 15% Increased net interest income by E128m (15%) ELG fees (212) (99) 113 53% Reduced ELG fees by E113m (53%) Other income (net) 247 319 72 29%
Slide 21: Key financial metrics continuing to improve
Group Income Statement H1 2012 H2 2012 H1 2012 H1 2013 H2 2012 €m €m v H2 2012 €m v H1 2013 Net Interest income 840 915 968 ELG fees (212) (176) (99) Other income (net) 247 248 319 Total income 875 987 1,188 Staff Costs (ex pension) (388) (383) (351) Pension Costs1 (57) (13) (7
Slide 22: Focusing on our Return to Profitability
17 Focusing on our Return to Profitability Retail Ireland Corporate & Treasury Operating profit pre-impairment Operating profit pre-impairment E159m E243m E264m E305m E103m E51m H1 2012 H2 2012 H1 2013 H1 2012 H2 2012 H1 2013 Retail UK BOI Life Operating profit pre-impairment Operating profit E77m E
Slide 23: Significant Net Interest Margin Momentum Continuing
Significant Net Interest Margin Momentum Continuing Net Interest Margin Trend Continuing to Rebuild NIM 1.65% bps 1.34% 31 Positive momentum as asset yields are increasing while 1.20%1 14 bps cost of funds is decreasing Continue to reprice deposits across each portfolio Achieving higher margin
Slide 24: Exceptional Government Guarantee / ELG Fees
19 Exceptional Government Guarantee / ELG Fees ELG Fees ELG fees phasing out quickly E212m E11 3m / 53% ELG expired on 28 Mar 2013 E176m Experienced no adverse impact on deposit volumes or pricing strategy E99m Covered liabilities expected to reduce by c.E3bn during H2 2013 1.2% 1.1% 1.1% Th
Slide 25: Operating Expenses
Operating Expenses Transformation of Operating Costs Delivered E502m or 23% cost reductions since peak in 2008 E2,140m E502 m/2 3% Continuing to invest in core franchises E1,638m Staff Costs - down E32m or 8% on H2 2012 Staff costs reflect headcount reductions Redundancy programmes on-going
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Slide 27: Asset Quality
Asset Quality
Slide 28: Loans and Advances to Customers - E95bn
22 Loans and Advances to Customers - E95bn1 Portfolio Profile2 Geographic Profile2 Consumer 3% SME 15% Mortgages ROI UK 58% 51% 44% Corporate 9% Property & Construction 15% ROW 5% Mortgages, Consumer & SME - 76% Portfolio balanced between Ireland and UK 1 Loans and advances to customers of E95bn at
Slide 29: Impairment Charges
Impairment Charges Trend of reducing charges continuing Three consecutive periods of reducing impairment charges E1,097m Portfolios performing broadly in line with expectations E941m Pace of growth in defaulted loans continue to reduce E783m E780m E100m Impairment charges (ex CBI guidelines im
Slide 30: ROI Owner Occupied Mortgages: €20.6bn
24 ROI Owner Occupied Mortgages: €20.6bn Net change in defaulted loan volumes (> 90 days past due and / or impaired) Profile of Assets Repayment basis - 93% capital and interest 55% or E11.3bn are ECB Tracker Mortgages E364m Market Environment House prices continue to stabilise E141m E108m E
Slide 31: ROI Buy to Let Mortgages: €6.5bn
ROI Buy to Let Mortgages: €6.5bn Net change in defaulted loan volumes (> 90 days past due and / or impaired) Profile of Assets Repayment basis - 57% capital and interest (Dec 12 - 52%) Portfolio repaid net E142m in H1 2013 - 2% reduction 81% or E5.3bn are ECB Tracker Mortgages E251m Market Env
Slide 32: UK Residential Mortgages: £22bn / €25bn
26 UK Residential Mortgages: £22bn / €25bn Profile of UK Residential Mortgages Profile of Assets £1bn or 4% reduction in the portfolio during H1 2013 Market Environment £10bn £9bn House prices remaining broadly stable (44%) (40%) Unemployment levels reducing Portfolio Performance Total arrea
Slide 33: SME & Corporate Loans: €22bn
SME & Corporate Loans: €22bn ROI SME - E11bn UK SME - £2bn / E3bn Corporate - E8bn E2.9bn E2.8bn E2.5bn E1.2bn E1.2bn E1.3bn E1.1bn E1.1bn E0.9bn E0.6bn E0.6bn E0.6bn E0.4bn E0.4bn E0.4bn E0.2bn E0.2bn E0.3bn Jun 12 Dec 12 Jun 13 Jun 12 Dec 12 Jun 13 Jun 12 Dec 12 Jun 13 n Defaulted Loans Provision
Slide 34: Property & Construction: E17.4bn
28 Property & Construction: E17.4bn Property & Construction Loans Defaulted Loans & Provision Stock E20.1bn E5.9bn E19.2bn E5.6bn E5.3bn E17.4bn E16.5bn E15.6bn E3.2bn E3.2bn E14.2bn E3.0bn E1.9bn E2.1bn E1.8bn E1.9bn E1.9bn E1.7bn E3.6bn E3.6bn E3.2bn Jun 12 Dec 12 Jun 13 Jun 12 Dec 12 Jun 13 Jun 1
Slide 35: Funding & Capital
Funding & Capital
Slide 36: Funding Transformation
29 Funding Transformation Dec 10 Jun 13 E135bn E103bn Wholesale E32bn / 24% 27% reduction E37bn Deposits Deposits 48% 70% E65bn E72bn Wholesale 21% Monetary E22bn Authority 25% E33bn Monetary Authority 9% / E9bn1 175% LDR 121% LDR Transformed the profile, availability and cost of our funding base 1
Slide 37: Customer Deposits
Customer Deposits Deposit Volumes Loan to deposit ratio improved to 121%; impacted 175% 144% 123% 121% by FX rates E75bn No volume impact from ELG expiry in Mar 13 E72bn E71bn E65bn Optimising across funding pools for volume, stability and cost E35bn E36bn E35bn Deposit strategies leverage t
Slide 38: Wholesale Funding
31 Wholesale Funding Wholesale Funding Profile Consistently accessed private market E70bn Demonstrated continued market access E3 - Issued E500m of 3 year term unsecured senior debt 9b in May 13 n (56 % - Issued E500m Asset Covered Securities using Irish ) E33bn E51bn mortgage collateral in Mar 13
Slide 39: Capital
Capital Core Tier 1 Ratio Core Tier 1 Ratio Core tier 1 ratio of 14.2% versus CBI requirement of 10.5% E79bn E67bn E57bn E51bn €6bn or 11% reduction in RWA reflecting deleveraging, 13.7%1 13.8%1 14.2% the impact of impaired loans and FX Basel III - Pro-forma Fully Loaded Ratio of c.8.6% 10.5% 9.
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Slide 41: Summary
Summary Delivering on Strategic Objectives New Ireland retained as a key element of our franchise Transformed the profile, availability and cost of our funding base Achieved all deleveraging and loan to deposit ratio targets Healthy capital position Strong Franchise Positions Leading bank
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Slide 43: Additional Information
Additional Information
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Slide 45: Additional Information
Additional Information Slide No. EU Restructuring Plan 37 Summary Balance Sheet 39 Loans and Advances to Customers 40 Defaulted Loans and Impairment Provisions 41 ROI Owner Occupied Mortgages - Arrears / Forbearance Profile 42 ROI Buy to Let Mortgages - Arrears / Forbearance Profile 43
Slide 46: EU Restructuring Plan - Summary of Amendments
37 EU Restructuring Plan - Summary of Amendments On 9 Jul 13, the European Commission approved amendments to the Group’s EU Restructuring Plan Manufacturer of pension, investment, protection and annuity products Distributed through comprehensive multi-channel network New Ireland Second largest
Slide 47: EU Restructuring Plan - Supporting detail
EU Restructuring Plan - Supporting detail H1 2013 Net Book Jun 13 Financial Position Operating New Ireland Value Profit1 retained New Ireland E875m E41m Gross Jun 13 Financial Position RWA Assets Selected GB Corporate Banking E1.3bn E0.9bn activities will GB Business Banking E2.6bn E2.0bn be exited
Slide 48: Summary Balance Sheet
39 Summary Balance Sheet Dec 12 Jun 13 Group Balance Sheet Ebn Ebn Net loans and advances to customers1 93 87 Liquid assets 30 26 IBRC repo transaction2 3 - BOI Life assets 13 13 Other assets 9 8 Total Assets 148 134 Customer deposits 75 72 Wholesale funding - Private Sources 24 22 W
Slide 49: Loans and Advances to Customers
Loans and Advances to Customers ROI UK RoW Total Total Profile at 30 June 20131 €bn €bn €bn €bn % Mortgages 27.1 25.1 - 52.2 55% Non-property SME and corporate 13.5 5.4 3.6 22.5 24% - SME 10.9 3.3 - 14.2 15% - Corporate 2.6 2.1 3.6 8.3 9% Property and construction 8.6 8.2 0.6 17.4 18% - Investment p
Slide 50: Defaulted Loans & Impairment Provisions
41 Defaulted Loans & Impairment Provisions Loans and advances to customers Advances Defaulted Loans1 Defaulted Loans as Impairment Impairment Provisions Composition and impairment €bn €bn % of advances provisions €bn as % of defaulted loans Residential mortgages 52.2 4.4 8.5% 1.8 41% ROI 27.1 3.
Slide 51: ROI Owner Occupied Mortgages - Arrears / Forbearance Profile
ROI Owner Occupied Mortgages - Arrears / Forbearance Profile Performing Book Arrears Book Number of Accounts (143k) Number of Accounts (18k) Early Arrears 2% Late Arrears 3% 89% Forbearance & Overpayment 4% Resolution - Consensual / Legal process 2% 9 out of 10 mortgage accounts are performing E
Slide 52: ROI Buy to Let Mortgages - Arrears / Forbearance Profile
43 ROI Buy to Let Mortgages - Arrears / Forbearance Profile Performing Book Arrears Book Number of Accounts (28k) Number of Accounts (8k) Early Arrears 3% Late Arrears 8% 78% Forbearance & Overpayment 4% Resolution - Consensual / Legal process 7% 8 out of 10 mortgage accounts are performing Earl
Slide 53: Available for Sale Financial Assets
Available for Sale Financial Assets ROI UK Spain / Portugal Other Jun 13 Dec 12 Carrying Value Ebn Ebn Ebn Ebn Ebn Ebn Sovereign Bonds 6.3 0.1 - 0.1 6.5 5.6 Covered Bonds 0.1 0.7 1.0 1.0 2.8 3.2 Senior Debt 0.8 0.1 - 0.9 1.8 1.6 Subordinated Debt 0.1 - - - 0.1 0.1 Asset Backed Securities - 0.2 0.1 0
Slide 54: Capital: Basel III Impacts
45 Capital: Basel III Impacts Basel III - Pro-forma Fully Loaded Ratio CT1 / CET1 CT1 / CET1 Capital Impact RWAs The Capital Requirements Regulation (CRR) was published Capital Ratio Ebn in the Official Journal of the EU on 27 Jun 13 and will apply Ebn % from 1 Jan 14. A number of items are requir
Slide 55: Divisional Performance
Divisional Performance H1 2012 H2 2012 H1 2013 Retail Ireland Em Em Em Operating profit pre-impairment 51 103 159 Impairment charges (660) (489) (497) Underlying loss / profit before tax1 (611) (378) (339) H1 2012 H2 2012 H1 2013 BOI Life Em Em Em Operating profit 39 39 42 Impairment charges - - - U
Slide 56: Other Income Analysis (Net)
47 Other Income Analysis (Net) Net Other Income H1 2012 H2 2012 H1 2013 €m €m €m Retail Ireland 141 139 144 Business income decreased €39m on H1 2012, increased €53m on H2 2012 Bank of Ireland Life 74 59 64 Retail UK 32 8 2 Retail Ireland increased €3m as a result of Corporate and Treasury 91 53
Slide 57: Pension - size of deficit and new accounting standard
Pension - size of deficit and new accounting standard Asset performance positive - returns of c.11% in 2012 EUR AA Corporate Bond Curve and c.1% in H1 2013 % E0.42bn E0.34bn1 E1.07bn1 E1.05bn 8 Deficit reducing contributions from the 2010 pensions review continue (2012 - E120m, H1 2013 - c.E30m)
Slide 58: Non-Core Items
49 Non-Core Items H1 2012 H2 2012 H1 2013 Non-Core Items €m €m €m Charges arising on the movement in credit spreads on the Group’s own debt and deposits (125) (172) (88) accounted for at ‘fair value through profit or loss’ Cost of restructuring programmes (66) (84) (50) Gross-up for policyholder tax
Slide 59: Stockholders' Equity and Tangible Net Asset Value
Stockholders’ Equity and Tangible Net Asset Value Dec 12 Jun 13 Movement in Stockholders’ Equity €m €m Stockholders’ equity at beginning of period 10,265 8,657 Movements: Loss attributable to stockholders (1,835) (454) Dividends paid on preference stock (196) (192) Foreign exchange movements 136
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Slide 61: 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 Tony Joyce tel: +353 76 623 4729 tony.joyce@boi.com Ciaran McGrath tel: +353 76 623 4730 ciaran.mcgrath@boi.com Capital Managemen
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Slide 64: Bank of Ireland is regulated by the Central Bank of Ireland
Bank of Ireland is regulated by the Central Bank of Ireland. Bank of Ireland incorporated in Ireland with limited liability. Registered Office - Head Office, 40 Mespil Road, Dublin 4, Ireland. Registered Number – C-1.
Bank of Ireland Group — H1 2013 Earnings Presentation on 6ix