Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — Debt Investor Presentation (March 2022)
61 slides from Bank Of Ireland's debt investor presentation, March 2022
Slide 1: 2021 Debt Investor Presentation
20 21 2021 Debt Investor Presentation 31 December 2021
Slide 2: Bank of Ireland Overview
2 Bank of Ireland 2021 Debt Investor Presentation Bank of Ireland Overview
Slide 3: Strong performance and strategic momentum in 2021
3 Strong performance and strategic momentum Bank of Ireland 2021 Debt Investor Presentation in 2021 2021 €1.4bn • • Operating profit pre-impairment increased by 53% vs 2020 and 25% vs 2019 Adjusted RoTE1 of 12.7% reflecting a strong business performance and an impairment Performance Underlying profi
Slide 4: Our purpose is to enable our Customers, Colleagues and Communities to thrive
4 Our purpose is to enable our Customers, Bank of Ireland 2021 Debt Investor Presentation Colleagues and Communities to thrive Serving Customers Enabling Colleagues Supporting Communities €2.4bn in new Irish €2.7bn in new Irish Cultural embedding continues to Begin Together Fund €1.3bn in Green mort
Slide 5: Positive outlook for Irish economy
5 Positive outlook for Irish economy Bank of Ireland 2021 Debt Investor Presentation Ireland1 Irish economy benefitting from broad-based recovery 15.0% • Strong recovery in domestic economic activity; modified domestic demand +4.9% y/y in Q1-Q3 last year, adding to yet another strong year for export
Slide 6: 2021 cost target of <€1.65bn delivered
6 2021 cost target of <€1.65bn delivered Bank of Ireland 2021 Debt Investor Presentation Consistent progress on cost delivery €1,900m 10.9k • Costs reduced by 13% vs 2017, net of wage inflation and 21% reduction transformation investment 8.7k • Costs reduced in each of the past eight consecutive €25
Slide 7: UK strategic actions and supportive market drive turnaround in 2021
7 UK strategic actions and supportive market drive Bank of Ireland 2021 Debt Investor Presentation turnaround in 2021 Retail UK 2019 2020 2021 32% improvement in operating profit pre-impairment vs 2020 Net interest income £494m £497m £536m • 8% increase in net interest income underpinned by strategi
Slide 8: Wealth and Insurance generated strong performance vs 2020
8 Wealth and Insurance generated strong Bank of Ireland 2021 Debt Investor Presentation performance vs 2020 32% increase in operating profit to €121m Operating income +25% or €52m vs 2020 33% y/y growth in Life and non Life APE 1% improvement in life assurance sales to €417m market share to 20% 14%
Slide 9: Transformational acquisitions to add significant scale
9 Transformational acquisitions to add Bank of Ireland 2021 Debt Investor Presentation significant scale Diversified and complimentary AUM (€bn) Ireland’s market leading provider of mass affluent and high c.€22.5bn c.€20bn 1 net worth wealth advisory and capital markets services 2 6 c.€20bn AUM Dec
Slide 10: Responsible and Sustainable Business; delivering on our 'Investing in Tomorrow' strategy
10 Responsible and Sustainable Business; delivering on Bank of Ireland 2021 Debt Investor Presentation our ‘Investing in Tomorrow’ 1 strategy launched in 2021 Pillar 1 Pillar 2 Pillar 3 Enabling all Enhancing Supporting the Colleagues to Thrive Financial Wellbeing Green Transition Digitally able Inc
Slide 11: Operational Performance
11 Bank of Ireland 2021 Debt Investor Presentation Operational Performance
Slide 12: Strong 2021 financial performance
12 Strong 2021 financial performance Bank of Ireland 2021 Debt Investor Presentation FY 2020 FY 2021 • Operating profit pre-impairment +53% (€m) (€m) Net interest income 2,115 2,219 • Net interest income +5% Business income 561 636 • Business income3 +15% with +27% increase in H2 vs Additional gains
Slide 13: Net interest income +5%
13 Net interest income +5% Bank of Ireland 2021 Debt Investor Presentation Net interest income • Pricing discipline maintained – Loan asset spread 12bps higher FY 2021 vs FY 2020 €2,167m €2,115m €2,219m • Interest income boosted by €62m from TLTRO participation in 2021 282bps 281bps 293bps • Applica
Slide 14: New customer lending +16% (excluding Retail UK)
14 New customer lending +16% (excluding Retail UK)1 Bank of Ireland 2021 Debt Investor Presentation New lending by division Lending trends in 2021 €14.1bn €14.2bn • Total new lending of €14.2bn in 2021 +16% lending growth vs 2020 – Corporate and Markets +30% with strong growth €5.3bn €5.7bn €5.4bn a
Slide 15: Business income +15%
15 Business income1 +15% Bank of Ireland 2021 Debt Investor Presentation FY 2020 FY 2021 Total other income +46% vs 2020 (€m) (€m) Wealth and Insurance 214 266 • Wealth and Insurance +24% vs 2020 due to higher new business and improved performance on the Retail Ireland 209 215 existing book Retail U
Slide 16: Operating expenses -4%
16 Operating expenses -4% Bank of Ireland 2021 Debt Investor Presentation Cost Movement Broad based cost reduction in 2021 • €74m reduction in costs reflects lower staff costs, depreciation and transformation investment (€88m) • Cost efficiencies absorbed wage inflation and supported continued inves
Slide 17: 2021 net impairment gain of €194m
17 2021 net impairment gain of €194m Bank of Ireland 2021 Debt Investor Presentation IFRS 9 models Loan loss experience and Macro-economic update and management adjustment portfolio activity €152m gain €42m gain • Improved economic outlook resulting in an impairment loss allowance (ILA) gain, • Gain
Slide 18: NPEs reduce to 5.5%
18 NPEs reduce to 5.5% Bank of Ireland 2021 Debt Investor Presentation NPE movements Non-performing exposures • NPEs reduced by c.€0.2bn to €4.3bn during 2021, and 6.3% 4.4% 5.7% 5.5% NPE ratio reduced 20bps to 5.5% • NPE reduction supported by Irish residential mortgage (€0.3bn) €0.1bn €581m NPE tr
Slide 19: Asset quality improved in 2021 and remains strong
19 Asset quality improved in 2021 and Bank of Ireland 2021 Debt Investor Presentation remains strong Group loan book by portfolio Diversified balance sheet with strong credit quality n Consumer €5.2bn • Mortgage portfolios 56% of Group loan book n Property and construction • Non-property SME and cor
Slide 20: Capital & MREL
20 Bank of Ireland 2021 Debt Investor Presentation Capital & MREL
Slide 21: Capital ratios remain strong as we emerge from COVID-19
21 Capital ratios remain strong as we emerge Bank of Ireland 2021 Debt Investor Presentation from COVID-19 RWAs Fully Loaded CET1 ratio RWAs €48.0bn €46.2bn 30bps (20bps) 16.0% 90bps 185bps 30bps (45bps) (10bps) (200bps) for acquisitions 13.4% Dec 20 Organic Capital 1 Credit Transformation RWA2 Opti
Slide 22: Regulatory Ratios
22 Regulatory Ratios Bank of Ireland 2021 Debt Investor Presentation Regulatory CET1 ratio RWAs RWAs €48.4bn €46.4bn 30bps (20bps) 95bps 17.0% 180bps (45bps) (200bps) (5bps) for acquisitions 14.9% (25bps) Dec 20 CRD Phasing Organic Capital Transformation RWA Optimisation Pension / Other Distribution
Slide 23: Balance Sheet
23 Balance Sheet Bank of Ireland 2021 Debt Investor Presentation Dec 20 Dec 21 Funding & Liquidity (€bn) (€bn) • LDR reduced from 86% to 82% on foot of growth in Customer loans 77 76 customer deposits and lower lending • Liquid assets increased by c.€19bn primarily due to TLTRO III Liquid assets 31
Slide 24: Significant buffer to potential MDA restrictions
24 Significant buffer to potential MDA1 restrictions Bank of Ireland 2021 Debt Investor Presentation Regulatory CET1 ratio vs. MDA Threshold • Regulatory CET1 ratio of 17.0% at Dec 2021 7.2% MDA Buffer MDA Buffer 6.9% – Continued phase-in of existing transitional adjustments expected to consume c.20
Slide 25: Risk weighted assets (RWAs)
25 Risk weighted assets (RWAs) Bank of Ireland 2021 Debt Investor Presentation Customer lending average credit risk weights – Dec 20211,2 EBA Transparency Exercise 2021 (Based on regulatory exposure class) Country by Country Average IRB risk weights Residential Mortgages – Jun 2021 EAD 3 RWA Avg. Ri
Slide 26: Mortgages
26 EBA Transparency Exercise 20211 Bank of Ireland 2021 Debt Investor Presentation Bank of Ireland’s IRB RWA density across major loan portfolios exceeds a wide distribution of European peers IRB Lending: SME Lending 2 IRB RWA: Corporate Lending 3 120% 80% 70% 100% 60% 80% 50% 40% 60% 30% 40% 20% 20
Slide 27: Regulatory capital requirements
27 Regulatory capital requirements Bank of Ireland 2021 Debt Investor Presentation Pro forma CET1 Regulatory Capital Requirements 2020 2021 2022 Pillar 1 – CET1 4.50% 4.50% 4.50% Pillar 2 Requirement (P2R) 1.27% 1.27% 1.27% Capital Conservation Buffer (CCB) 2.50% 2.50% 2.50% Ireland Countercyclical
Slide 28: Credit Ratings
28 Credit Ratings Bank of Ireland 2021 Debt Investor Presentation Instrument Ratings BOIG GovCo (Stand alone BOIMB ratings) BOIG GovCo BOIG GovCo BOIG GovCo (ACS)3 Aaa Aaa Aaa AAA AAA AAA AAA Investment Grade C baa21 A2 Aa1 Aa1 Aa1 AA+ AA+ AA+ AA+ Stable Stable Aa2 Aa2 Aa2 AA AA AA AA Aa3 Aa3 Aa3 AA
Slide 29: Corporate Structure
29 Corporate Structure Bank of Ireland 2021 Debt Investor Presentation Holding company Capital / MREL Bank of Ireland Group plc (BOIG) AT1 Tier 2 Senior unsecured 100% The Governor and Company of the Bank of Ireland (GovCo) Senior unsecured Operating subsidiaries 1 Funding 100% 100% 100% New Ireland
Slide 30: Summary highlights
30 Summary highlights Bank of Ireland 2021 Debt Investor Presentation • Strong build in capital in 2021; Regulatory CET1 17.0% and Fully Loaded 16.0% (+280bps excluding distributions) Capital • Capital strength supporting c.200bps investment to execute agreed acquisitions of Davy and KBC Bank Irelan
Slide 31: Green Bond Framework
31 Bank of Ireland 2021 Debt Investor Presentation Green Bond Framework
Slide 32: Green Bond Framework
32 Green Bond Framework Bank of Ireland 2021 Debt Investor Presentation Green Bonds are an important part of the Group’s Responsible and Sustainable Business Strategy as we look to finance our customers’ transition to the low carbon economy and take an active role in combating climate change through
Slide 33: Use of Proceeds
33 Use of Proceeds Bank of Ireland 2021 Debt Investor Presentation Green Bond Eligibility Criteria Impact UN SDG Principles Eligible Category • Residential property with an energy efficiency rating within the Top 15% in Annual energy Ireland, equivalent to BER of ‘B3’ or better efficiency Green • Re
Slide 34: Green Bond Allocation Report
34 Green Bond Allocation Report Bank of Ireland 2021 Debt Investor Presentation Green Eligible Assets Portfolio Green Liabilities Eligibility Number of Amount (EUR) ISIN Settlement Date Maturity Date Amount (EUR) Criteria Loans Green Buildings 9,466 3,345,136,689 XS2311407352 10-Mar-21 10-May-271 75
Slide 35: Outlook
35 Bank of Ireland 2021 Debt Investor Presentation Outlook
Slide 36: Summary – strong momentum into 2022
36 Summary – strong momentum into 2022 Bank of Ireland 2021 Debt Investor Presentation Strong • 2021 adjusted RoTE 1 of 12.7% reflecting a strong business performance and an impairment gain; operating profit pre-impairment increased by 53% vs 2020 & 25% vs 2019; performance • Tangible strategic prog
Slide 37: 2022 outlook
37 2022 outlook Bank of Ireland 2021 Debt Investor Presentation (excludes impact from announced acquisitions) Profitability Asset Quality Capital • 2022 total income expected to • Impairment outlook expected • Completion of proposed be in line with 2021 reflecting to remain benign in 2022 with acqui
Slide 38: Appendix
38 Bank of Ireland 2021 Debt Investor Presentation Appendix
Slide 39: Appendix
39 Appendix Bank of Ireland 2021 Debt Investor Presentation Page No. • BOI overview - customer loans / new lending volumes 40 • Ireland mortgage loan book 41 • Income statement – Net interest income analysis 42 – Structural hedge / Liquid assets / Net interest margin / Negative interest rates 43 – I
Slide 40: Overview of customer loans
40 Overview of customer loans Bank of Ireland 2021 Debt Investor Presentation Profile of customer loans1 at Dec 2021 (Gross) Ireland UK RoW Total Total Composition (Dec 21) (€bn) (€bn) (€bn) (€bn) (%) Mortgages 22.4 20.9 0.0 43.3 56% Non-property SME and corporate 10.5 5.4 4.9 20.8 27% SME 6.9 1.7 0
Slide 41: Ireland mortgages: €22.4bn
41 Ireland mortgages: €22.4bn Bank of Ireland 2021 Debt Investor Presentation New lending volumes and market share Ireland mortgages (gross) €23.0bn €22.9bn €22.4bn 25% 24% 23% €11.2bn €12.2bn €13.1bn €3.2bn €2.9bn €2.3bn €2.1bn €2.4bn €2.5bn €8.7bn €7.9bn €6.8bn FY 19 FY 20 FY 21 Dec 19 Dec 20 Dec
Slide 42: Net interest income analysis
42 Income statement Bank of Ireland 2021 Debt Investor Presentation Net interest income analysis H1 2020 H2 2020 H1 2021 H2 2021 Average Gross Gross Average Gross Gross Average Gross Gross Average Gross Gross Volumes Interest Rate Volumes Interest Rate Volumes Interest Rate Volumes Interest Rate (€b
Slide 43: Structural hedge, liquid assets, net interest margin and negative interest rates
43 Structural hedge, liquid assets, net interest Bank of Ireland 2021 Debt Investor Presentation margin and negative interest rates Structural hedge & liquid assets Structural hedge 1 Liquid assets 2 • Structural hedge and liquid asset income reducing as Average a result of the negative interest rat
Slide 44: Interest rate sensitivity
44 Interest rate sensitivity Bank of Ireland 2021 Debt Investor Presentation The table below shows the estimated sensitivity of the Group’s income (before tax) to an instantaneous and sustained 1% parallel movement in interest rates Dec 20 Dec 21 Estimated sensitivity on Group income (1 year horizon
Slide 45: Non-performing exposures by portfolio
45 Non-performing exposures by portfolio Bank of Ireland 2021 Debt Investor Presentation Non-performing Non-performing Impairment loss Advances Impairment loss Composition (Dec 21) (€bn) exposures exposures as % of allowance (€bn) allowance as % of (€bn) advances non-performing exposures Residential
Slide 46: Portfolio by stage
46 Portfolio by stage Bank of Ireland 2021 Debt Investor Presentation Gross carrying amount Composition (Dec 21) Impairment loss allowance ILA % (before impairment loss allowance) of gross Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Sectoral analysis by stage loans €m €m €m
Slide 47: Non-property SME and Corporate by stage
47 Non-property SME and Corporate by stage1,2 Bank of Ireland 2021 Debt Investor Presentation Gross carrying amount Composition (Dec 21) Impairment loss allowance ILA % (before impairment loss allowance) of gross Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Sectoral analysis
Slide 48: Residential mortgages / Consumer loans
48 Residential mortgages / Consumer loans Bank of Ireland 2021 Debt Investor Presentation Gross loans by stage Residential mortgages • Mortgage portfolios 56% of Group loan book Residential Mortgages Consumer €44.7bn – Average LTV of 55% on stock €5.3bn €2.2bn €43.3bn €5.2bn – 93% of the portfolio h
Slide 49: Non-property SME and Corporate / Property and Construction
49 Non-property SME and Corporate / Property Bank of Ireland 2021 Debt Investor Presentation and Construction Gross loans by stage Non-property SME and corporate Non-property SME and corporate Property and construction • 27% of Group loan book, well diversified by geography €19.9bn €20.8bn €8.6bn €8
Slide 50: Forward looking information – macro-economic scenarios
50 Forward looking information Bank of Ireland 2021 Debt Investor Presentation – macro-economic scenarios Ireland United Kingdom 31 December 2021 2022 2023 2024-2026 2022 2023 2024-2026 Central scenario - 45% probability weighting GDP growth1 5.7% 3.9% 3.2% 5.2% 1.8% 1.5% GNP growth1 6.1% 3.6% 3.0%
Slide 51: ILA sensitivity to macro-economic scenarios
51 ILA sensitivity to macro-economic scenarios Bank of Ireland 2021 Debt Investor Presentation The following table indicates the approximate extent to which impairment loss allowance (ILA), excluding Group management adjustments, would be higher or lower than reported were a 100% weighting applied t
Slide 52: Ireland mortgages
52 Ireland mortgages Bank of Ireland 2021 Debt Investor Presentation Continued proactive arrears management >90 days arrears1 >90 days arrears Industry • Bank of Ireland is significantly below the industry Average average for both Owner Occupier (33% of industry average) and Buy to Let (29% of indus
Slide 53: Ordinary shareholders' equity and TNAV
53 Ordinary shareholders’ equity and TNAV Bank of Ireland 2021 Debt Investor Presentation Dec 20 Dec 21 Movement in ordinary shareholders’ equity (€m) (€m) Ordinary shareholders’ equity at beginning of period 9,625 8,587 Movements: Profit / (Loss) for the period (707) 1,055 Impact of adopting IFRS 9
Slide 54: Capital – strong Fully Loaded and Regulatory CET1 ratios
54 Capital – strong Fully Loaded and Regulatory Bank of Ireland 2021 Debt Investor Presentation CET1 ratios Capital ratios – 31 December 2021 Regulatory ratio Fully Loaded ratio (€bn) (€bn) Total equity 11.3 11.3 Less Additional Tier 1 (1.0) (1.0) Deferred tax 1 (0.8) (1.1) Intangible assets and goo
Slide 55: Transformation investment / operating expenses
55 Transformation investment / operating expenses Bank of Ireland 2021 Debt Investor Presentation Transformation investment 2016-2021 Transformation investment €51m • Average annual investment from 2018-2021 equates to CET1 capital of c.50-60bps €367m €306m €112m • Investment of €243m in 2021 split
Slide 56: Cost income ratio: Dec 2021
56 Cost income ratio: Dec 2021 Bank of Ireland 2021 Debt Investor Presentation Headline vs. Adjusted FY 21 Pro forma FY 21 Headline adjustments Pro forma (€m) (€m) (€m) Net interest income 2,219 – 2,219 Other income – Business income 636 – 636 – Additional gains 17 (17) - – Other valuation items 72
Slide 57: Return on tangible equity (RoTE)
57 Return on tangible equity (RoTE) Bank of Ireland 2021 Debt Investor Presentation FY 2021: Headline vs. Adjusted Adjustments FY 21 Additional gains Adjusted for FY 21 Headline & valuation items, CET1 ratio Adjusted (€m) net of tax at 13.0% (€m) Profit for the period 1,055 – Non-core items includin
Slide 58: Defined benefit pension schemes
58 Defined benefit pension schemes Bank of Ireland 2021 Debt Investor Presentation Group IAS19 Defined Benefit Pension (Deficit) / Surplus Total Group Defined Benefit Pension Scheme Assets (%) 2.10% 2.00% €7.1bn €7.2bn €7.2bn €8.4bn €8.9bn €9.6bn 1.60% 1.30% 1.35% 58% 55% 65% 65% 0.80% 69% 66% €0.60
Slide 59: Forward-looking statement
59 Forward-looking statement Bank of Ireland 2021 Debt Investor Presentation This document contains forward-looking statements with respect to certain of the Bank of Ireland Group plc (the ‘Company’ or ‘BOIG plc’) and its subsidiaries’ (collectively the ‘Group’ or ‘BOIG plc Group’) plans and its cur
Slide 60: Contact Details
60 Contact Details Bank of Ireland 2021 Debt Investor Presentation For further information please contact: • Group Chief Financial Officer Myles O’Grady tel: +353 12 50 8900 ext. 43291 myles.ogrady@boi.com • Investor Relations Darach O’Leary tel: +353 12 50 8900 ext. 44711 darach.oleary@boi.com Owen
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