Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — 9M to Dec 2009 Earnings Presentation
54 slides from Bank Of Ireland's earnings presentation, March 2010
Slide 1: Preliminary Results Announcement
Preliminary Results Announcement For the 9 months ended 31 December 2009
Slide 2: 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
Slide 3: Basis of presentation
Basis of presentation Bank of Ireland change of financial year end to 31 December Published financial information comprises: – Income Statement comparatives for 9 months to 31 December 2009 versus 9 months to 31 December 2008 – Balance Sheet comparatives as at 31 December 2009 and 31 March 2009
Slide 4: Richie Boucher, Group Chief Executive
Richie Boucher Group Chief Executive
Slide 5: Presentation of preliminary results
Presentation of preliminary results Section 1: Slides 6 to 12 Group Chief Executive’s Review Section 2: Asset quality Slides 14 to 25 Loans and advances to customers (incl. loans held for sale to NAMA) Section 3: Slides 26 to 31 Funding and capital Section 4: 36% Wholesale Slides 32 to 35 fundingGro
Slide 6: Preliminary highlights – Group
Preliminary highlights – Group Group Profitability Income Statement* highlights 9 Months to Dec 2008 Dec 2009 9 Months to Dec 2008 Dec 2009 Profit / (loss) before tax €372m (€1,813m) Total income €2,998m €2,437m Operating expenses (€1,545m) (€1,381m) Underlying*PBT/(LBT) €595m (€2,972m) Net interest
Slide 7: Preliminary highlights - divisional performance
Preliminary highlights - divisional performance 9 mths to Dec 2008 9 mths to Dec 2009 % Change €M €M Retail Ireland 655 314 (52%) Bank of Ireland Life** (1) 69 UK Financial Services 290 231 (20%) UK Financial Services (£m) 233 205 (12%) Capital Markets 639 558 (13%) Group Centre (130) (122) 6% UNDER
Slide 8: Delivering Group Stability
Delivering Group Stability Support Stability Strength 2008 2009 2010 2011 Difficult operating environment Irish Government acted decisively EU engagement ongoing and constructive Bank of Ireland strategy to stabilise the Group further - strengthen capital, improve quality and term of funding
Slide 9: Delivering Group Stability: National Asset Management Agency
Delivering Group Stability Continuing progress on key priorities National Asset Management Agency Eligible Bank Assets classified as “loans held for sale Profile of loans held for sale to NAMA to NAMA” of circa €12.2 billion (gross) 31 December 2009 – Phased transfer in 2010 – Performing and non-p
Slide 10: Delivering Group Stability: Continuing progress on key priorities
Delivering Group Stability Continuing progress on key priorities Priority Progress Liability management initiatives supplemented capital: Plans in place to meet revised Equity tier 1 * 5.8%; Core tier 1 * 9.3%; Tier 1 * 10.2%; Capital Financial Regulator capital targets Total capital * 13.4% 31 Dec
Slide 11: Delivering Group Stability: Continuing progress on key priorities
Delivering Group Stability Continuing progress on key priorities Priority Progress Re-pricing loans and deposits Net interest Aim to achieve net interest margin in Negative impact on NIM of higher funding costs in short term margin excess of 175bps by 2013 Aim to achieve cost / income ratio Costs do
Slide 12: Delivering Group Stability: Core loan portfolio defined
Delivering Group Stability Core loan portfolio defined Core loan portfolio Total loan portfolio (gross) 34% / €31bn Residential mortgages Core loan portfolio 45% / €61bn Core portfolio loans and Residential mortgages 34% / €30bn advances to customers €89bn €89bn loans and advances to Non property co
Slide 13: John O’Donovan, Group Chief Financial Officer
John O’Donovan Group Chief Financial Officer
Slide 14: Section 2: Asset quality
Section 2 Asset quality Loans and advances to customers (incl. loans held for sale to NAMA)
Slide 15: Profile of total loans - €135bn at Dec 2009
Profile of total loans* - €135bn at Dec 2009 % of Group Loan Book Group loan book* Group loan book €135bn at 31 Dec 2009 Residential mortgages RoI - 21% Significant Residential mortgage book - 45% / €61bn UK - 24% €29bn in RoI and €32bn in the UK €24bn or 18% of Group loan book in retained Pro
Slide 16: Group loan book asset quality profile
Group loan book asset quality profile Asset Quality Mar 2009 Sept 2009 Dec 2009 €m % €m % €m % High quality 72.5 53.5 69.3 51.4 69.2 51.4 Satisfactory quality 37.1 27.3 33.1 24.5 29.7 22.1 Acceptable quality 12.6 9.3 14.3 10.6 13.6 10.1 Lower quality but not past due nor impaired 2.3 1.7 3.8 2.8 3.3
Slide 17: Stock of Balance Sheet provisions and coverage ratio
Stock of Balance Sheet provisions and coverage ratio Total loans and Impairment Impaired loans as Impairment 31 Dec 2009 advances to Impaired loans % of advances provisions provisions as % of customers impaired loans €bn €bn % €bn % Residential mortgages 61 0.5 0.8 0.4 76* Non property corporate and
Slide 18: Impairment charge by portfolio
Impairment charge by portfolio Impairment charge on loans and advances Total Loans to customers by portfolio At Dec 09 9 mths to Dec 08 12 mths to Mar 09 9 mths to Dec 09 bps bps bps €bn €m €m €m (annualised) (annualised) (annualised) Residential mortgages €61bn €60m 13bps €127m 20bps €237m 52bps -
Slide 19: UK Residential mortgages
UK Residential mortgages - £29bn / €32bn Dec 2009 UK mortgages 53% of total Group mortgages (24% of Group loans and Book - segment split advances to customers) Bank of Ireland has c.262,000 residential mortgages in the UK Modest decline in book: – end Sept 09 to Dec 09: (0.9)% 47% Standard – e
Slide 20: Irish Residential mortgages
Irish Residential mortgages - €29bn Dec 2009 Irish mortgages 47% of total Group mortgages (21% of total Group loans and advances to Book - segment split customers) Bank of Ireland has c.199,000 residential mortgage accounts in Ireland Book growth: – end Sept 09 to Dec 09:0.4% – end Jun 09 to S
Slide 21: Property and construction loans
Property and construction loans - €35.5bn Dec 2009 * Geographic and sector profile - €bn Total Loans held for sale to NAMA Retained Book – Post NAMA Land and Land and Land and Investment Total Investment Total Investment Total development development development Ireland Land - 3.7 3.7 - 3.1 3.1 - 0.
Slide 22: Retained Property and construction loans - €23.6bn Dec 2009
Retained Property and construction loans - €23.6bn Dec 2009 Investment Loans Land and Development Loans €20.8bn €2.8bn Investment loans €20.8bn – 88% of retained Land and development loans €2.8bn – 12% of Property & construction loans retained Property & construction loans - Land – €1.3bn (RoI €
Slide 23: Loans held for sale to NAMA – circa €12.2bn
Loans held for sale to NAMA – circa €12.2bn Profile of loans transferring to NAMA at 31 Dec 2009 Total loans and Impairment Impaired loans as Impairment advances to Impaired loans provisions as % of % of advances provisions customers impaired loans €m €m % €m % Property and construction 11,956 6,452
Slide 24: Asset quality Dec 2009
Asset quality Dec 2009 Non-property corporate and SME loans & Consumer loans Non-property corporate and SME Consumer loans - €4bn loans - €34bn Corporate and SME loan portfolio of €34bn - Consumer loan portfolio of €4bn at 31 Dec 09 portfolio diversified across a range of (€6bn Mar 09) sectors a
Slide 25: Visibility on non-NAMA impairments
Visibility on non-NAMA impairments Economic assumptions Extensive Group loan loss forecast re-fresh exercise undertaken in January/February 2010 underpinning expected impairment charge – Assessment grounded in consensus base-case macro economic forecasts Ireland – Combination of modelled and granu
Slide 26: Section 3: Funding and capital
Section 3 Funding and capital
Slide 27: Balance Sheet funding strategy
Balance Sheet funding strategy Mar 2009 Sept 2009 Dec 2009 Balance Sheet funding strategy Total Total Total Customer Deposits liabilities liabilities liabilities – Drive growth through strength of franchise and scale €184bn* €173bn* €169bn* of distribution Wholesale Funding – Continue to extend
Slide 28: Group deposits
Group deposits Divisional profile of deposits Competitive market % growth Deposits increased by 2% Dec 09 vs Mar 09 Mar 09 Sept 09 Dec 09 Dec 09 despite intense competition and pressure on Vs international deposits Mar 09 Distribution, strength of brand and stable Group Total €83bn €87bn €85bn 2
Slide 29: Wholesale funding profile
Wholesale funding profile Quantum of wholesale funding at Dec 2009 reduced to Wholesale Funding €61bn from €74bn at Mar 2009 – Increase in customer deposits Mar 2009 Sept 2009 Dec 2009 – Reduction in liquid assets of €7bn as wholesale funding €74bn €61bn €61bn is termed out 9% €9bn of term fundi
Slide 30: Funding position
Funding position Funding Metrics Mar Sept Dec 2009 2009 2009 Balance Sheet de-leverage Loans and advances to customers Dec 2009 Customer deposits €83bn €87bn €85bn Group Loans (incl. NAMA 161% 152% 152% Assets) / deposit ratio Potential transfer Group Loans (excl. NAMA - - 141% of c.€12bn Assets) /
Slide 31: Capital position
Capital position Liability Management initiatives supplemented capital position Capital – Basel II – Re-purchase of tier 1 securities June 2009 generated €1bn of equity tier 1 capital Mar Sept Dec – Lower tier 2 debt-for-debt exchange February 2009 2009 2009* 2010 generated €405m of equity tier 1
Slide 32: Section 4: Group Income Statement
Section 4 Group Income Statement
Slide 33: Group Income Statement
Group Income Statement 9 months to December 2009 Group Income Statement Non-core items (including non-core items) Dec 08 Dec 09 % Total income Dec 08 Dec 09 €m €m Change €m €m Total income* 3,079 3,599 Gain on re-purchase of non-core tier 1 debt Operating expenses (1,849) (1,381) - 1,037 securities
Slide 34: Total income & operating expenses - 9 months to December 2009
Total income & operating expenses - 9 months to December 2009 Total income* 19% Total income down 19% Net interest income down 11% – Negative impact: margin attrition on deposits due to low interest rate environment and intense €2,998m competition (31bps); and higher cost of term funding (7bps)
Slide 35: Net interest margin
Net interest margin 9 months to December 2009 Net interest margin Margin attrition - drivers Dec 2008 Dec 2009 Dec 09 vs Dec 08 (bps) 9 months net interest income (Annualised) after impact of IFRS income €2,300m €2,050m classifications Margin attrition on deposits (31bps) Average interest earning €1
Slide 36: Section 5: Divisional performance
Section 5 Divisional performance
Slide 37: Retail Ireland
Retail Ireland 9 months to December 2009 Income Statement Continued adverse impact of: – The sharp contraction in the Irish Economy Dec 08 Dec 09 % €m €m Change – Intense competition for deposits Net interest income 1,114 888 (20%) – Sharp decline in property and construction sectors Other income
Slide 38: Bank of Ireland Life
Bank of Ireland Life 9 months to December 2009 Operating profit down 49% to €43m Income Statement – Operating income down 25% (IFRS Performance) • Lower volumes of new business (APE sales down 32%) and lower margins Dec 08 Dec 09 % €m €m Change • Policy lapses due to lower disposable income • Lowe
Slide 39: UK Financial Services (Sterling)
UK Financial Services (Sterling) 9 months to December 2009 Business Unit Performance Residential mortgages Dec 08 Dec 09 % Operating profit increased by 5% reflecting improved £m £m Change product margins and a reduction in the operating costs Operating Profit resulting from closure of the interme
Slide 40: Capital Markets
Capital Markets 9 months to December 2009 Business Unit Performance Corporate Banking Dec 08 Dec 09 Loss before tax driven by increase in impairment charge % Change €m €m Operating income down 3% Operating Profit – Due to higher funding costs, recognition of impairment on investment properties a
Slide 41: Conclusion
Conclusion Difficult operating environment in 2009 Trading conditions remain challenging in the first quarter of 2010 – signs of stabilisation Funding profile improved and costs well managed in 2009 – First transfer of assets to NAMA is imminent and loan losses on our retained loans portfolios
Slide 42: Questions & Answers
Bank of Ireland Group G) Questions & Answers
Slide 43: Supplementary
Bank of Ireland Group G) Supplementary
Slide 44: Supplementary
Supplementary EPS calculation Stockholders’ Equity Composition of Balance Sheet UKFS and Capital Markets – Income Statements Ireland and UK Mortgage analysis – LTV new business – Arrears profile Profile of available for sale assets Impairment charge and stock of Balance Sheet provision
Slide 45: EPS calculation
EPS calculation 12 months to 9 months to Mar 2009* Dec 2009 €m €m Profit attributable to ordinary stockholders 69 (1,460 ) Restatement for IFRS 2 amendment (16) - Profit attributable to stockholders as restated 53 (1,460) Dividends to other equity interests (10) (4) Dividend required on 2009 prefere
Slide 46: Stockholders’ equity
Stockholders’ equity 9 mths ended 12 mths ended 31 Mar 09* 31 Dec 09 (€m) (€m) Stockholders’ equity at beginning of period 6,484 6,852 Movements: Profit / (loss) attributable to stockholders 53 (1,460) Equity dividends (387) - Preference share capital and warrants 3,462 - Reissue of stock / treasury
Slide 47: Composition of Balance Sheet
Composition of Balance Sheet Total Balance Sheet* Total Balance Sheet* €184 billion at March 2009 €169 billion at December 2009 Liabilities Assets Liabilities Assets 45% Customer 73% Loans and deposits 50% Customer advances to 71% Loans and deposits customers advances to customers 36% Wholesale 40%
Slide 48: Income Statements – UKFS and Capital Markets
Income Statements – UKFS and Capital Markets 9 months to December 2009 Income Statement - UKFS Income Statement – Capital Markets Dec 08 Dec 09 % Dec 08 Dec 09 % £m £m Change €m €m Change Net interest Net interest income 1,202 705 (41%) 457 411 (10%) income Other income (284) 83 Other income 73 61 (
Slide 49: Residential mortgages – Ireland
Residential mortgages – Ireland Average Loan to Value – new business Retail Ireland 12 Months to 6 months to 9 months to Mar 2009 Sept 2009 Dec 2009 Owner Occupied 63% 66% 66% Investors 57% 46% 45% Mortgages – arrears profiles Retail Ireland 1 – 3 mths 3 – 6 mths 6 – 12 mths 12+ mths Total Mar 09 (%
Slide 50: Residential mortgages – UK
Residential mortgages – UK Average Loan to Value – new business UK 12 Months to 6 months to 9 months to Mar 2009 Sept 2009 Dec 2009 Owner Occupied 63% 61% 59% Investors 70% 64% 64% Book closed to new Book closed to new Self Cert 73% business business Mortgages – arrears profiles UK 1 – 3 mths 3 – 6
Slide 51: Profile of available for sale financial assets (AFS) at 31 Dec 2009
Profile of available for sale financial assets (AFS) at 31 Dec 2009 Portfolio of Available for sale (AFS) financial assets: €20.9bn (Mar 2009 €26.9bn) Liquid asset portfolio at 31 Dec 2009: €19.5bn (Mar 2009 €25.2bn) Profile of AFS Average life of liquid asset portfolio to maturity – 2.3 years
Slide 52: Impairment charge and stock of Balance Sheet provisions – by Division
Impairment charge and stock of Balance Sheet provisions – by Division Group Retail Ireland UK Financial Capital Markets Services Mar Dec Mar Dec Mar Dec Mar Dec 2009 2009 2009 2009 2009 2009 2009 2009 Total loans (point in time) 136 135 55 54 52 53 29 28 (€bn) (before balance sheet impairment provis
Slide 53: Investor Relations
Investor Relations For further information please call: Group Chief Financial Officer John O’Donovan tel: +353 1 632 2054 jp.odonovan@boimail.com Director of Group Finance Andrew Keating tel: +353 1 604 3509 andrew.keating@boimail.com Investor Relations Geraldine Deighan tel: +353 1 604 3501 geraldi
Slide 54: Preliminary Results Announcement
Preliminary Results Announcement For the 9 months ended 31 December 2009
Bank of Ireland Group — 9M to Dec 2009 Earnings Presentation on 6ix