Aib Group Plc · EURONEXT:A5G
Aib — FY2023 Earnings Presentation
58 slides from Aib's earnings presentation, Mar 6, 2024
Slide 1: Annual Financial Results for the year ended 31 December 2023
AIB Group plc Annual Financial Results For the year ended 31 December 2023 For the life you’re after
Slide 2: Forward looking statement
AIB Group plc | Annual Financial Results | 2023 2 Forward looking statement This document contains certain forward looking statements with respect to the financial condition, results of operations and business of AIB Group and certain of the plans and objectives of the Group. These forward looking s
Slide 3: Agenda: 6 March 2024
AIB Group plc | Annual Financial Results | 2023 3 Agenda: 6 March 2024 1 2023 Key highlights – Colin Hunt Presenting today Colin Hunt 2 2023 Financial results – Donal Galvin Chief Executive Officer 3 2024-2026 Strategic update – Colin Hunt Donal Galvin Chief Financial Officer 4 2026 Medium-term targ
Slide 4: 2023 Key highlights
AIB Group plc | Annual Financial Results | 2023 4 2023 Key highlights Profit €2,058m Strong capital position Proposed distributions RoTE 25.7% 15.8% CET1 €1.7bn Transformed balance Sustainability leader Return to private sheet €10bn climate action fund ownership NPEs 2.96% exceeded 2026 medium-term
Slide 5: 2023 ESG highlights
AIB Group plc | Annual Financial Results | 2023 5 2023 ESG highlights Virtual CPPA Exceeded €10bn Climate 30% new green lending generating up to 80% of Action Fund the Group’s electricity Regular issuer of ESG Remuneration policy now Global 1st bank bonds includes variable pay and electricity ‘maint
Slide 6: Increased distributions; return to majority private ownership
AIB Group plc | Annual Financial Results | 2023 6 Increased distributions; return to majority private ownership Significant increase in shareholder distributions Increased free-float as State shareholding reduces €m % State Payout shareholding DBB & ABB ABB ratio trading plan €0.5bn €0.5bn 82% c.57%
Slide 7: 2023 Financial results
2023 Financial results
Slide 8: Financial performance FY 2023
AIB Group plc | Annual Financial Results | 2023 8 Financial performance FY 2023 Profit after tax €2,058m ▪ RoTE 25.7% with 190% growth in EPS to 75.7c Total income €4,741m up 64% ▪ Net interest income €3,841m (+83%) and other income €900m (+13%) Costs €1,826m(1); FTEs 10,551; both up 10% from Dec 22
Slide 9: Income Statement
Income Statement
Slide 10: Income statement – profit after tax €2,058m
AIB Group plc | Annual Financial Results | 2023 10 Income statement – profit after tax €2,058m Summary income statement (€m) FY 2023 FY 2022 2,095 ▪ Total operating income €4,741m up 64% Net interest income(1) 3,841 Other income(1) 900 800 ▪ Operating expenses €1,826m up 10% Total operating income 4
Slide 11: Net interest income €3,841m; up 83%
AIB Group plc | Annual Financial Results | 2023 11 Net interest income €3,841m; up 83% NII/NIM movements (€m)/(bps) €1,746m increase in NII; 142bps increase in NIM NII €3,841m up €1,746m (+83%) from FY 2022 impacted by: ▪ -€519m higher cost of liabilities including: 3.11% • -€186m customer accounts
Slide 12: NII outlook: resilience in a stabilising interest rate environment
AIB Group plc | Annual Financial Results | 2023 12 NII outlook: resilience in a stabilising interest rate environment NII resilience (€bn) NII 2024 guidance >€3.65bn ▪ Assuming period end ECB deposit rate of 2.75% 3.8 > 3.65 NII resilience: ▪ NII remains robust in a stabilising rate environment with
Slide 13: Strong other income driven by fee and commission
AIB Group plc | Annual Financial Results | 2023 13 Strong other income driven by fee and commission Net fee and commission income (€m) FY 2023 FY 2022 ▪ Other income €900m up 13% Customer accounts 240 226 Lending related fees 54 50 ▪ Fee and commission income €633m up €45m (+8%) Card 148 112 Stockbr
Slide 14: Costs €1,826m; 10% increase due to inflation and enlarged Group
AIB Group plc | Annual Financial Results | 2023 14 Costs €1,826m; 10% increase due to inflation and enlarged Group Operating expenses(1) (€m) 1,826 1,659 ▪ Costs €1,826m, up 10% driven by: 295 305 • Staff costs up 16%: Inflation, increase in FTEs and allowance for variable pay • General & Admin up 1
Slide 15: ECL charge €172m (27bps CoR); 2.3% ECL cover
AIB Group plc | Annual Financial Results | 2023 15 ECL charge €172m (27bps CoR); 2.3% ECL cover ECL ECL writeback/(charge) writeback / (charge) by sector ECL charge of €172m for FY 2023 ECL writeback / (charge) FY FY (€m) 2023 2022 €m ▪ €327m charge primarily driven by property sector, includes PMA
Slide 16: Balance Sheet
Balance Sheet
Slide 17: Balance sheet – strong funding & liquidity to support our customers
AIB Group plc | Annual Financial Results | 2023 17 Balance sheet – strong funding & liquidity to support our customers Balance sheet (€bn) Dec 2023 Dec 2022 Assets Performing loans 65.0 59.0 ▪ Gross loans €67.0bn increased 9% including Non-performing loans 2.0 2.2 ▪ €3.8bn Ulster Bank tracker mortga
Slide 18: Net loans €65.5bn; new lending of €12.3bn in FY 2023
AIB Group plc | Annual Financial Results | 2023 18 Net loans €65.5bn; new lending of €12.3bn in FY 2023 Net loans €65.5bn increased €5.9bn (€bn) (1.0) +0.2 +12.3 (10.3) +4.7 65.5 59.6 Dec-22 New lending Redemptions Ulster Bank loans migrated NPE repayments & disposals Other Movements Dec-23 New lend
Slide 19: Loan book growth in 2023-2026
AIB Group plc | Annual Financial Results | 2023 19 Loan book growth in 2023-2026 New lending growth Gross loans Drawdowns (€bn) Gross loans (€bn) 30% CAGR +3% 4% 12.6 -2% 12.3 14% 67.0 1.5 + 9% + 2% 1.4 €67.0bn 52% 61.2 7.1 30% 7.2 4.7 20.1 4.8 19.2 Mortgages Corporate/SME Property Personal New lend
Slide 20: Funding and capital
Funding and capital
Slide 21: Strong funding and liquidity reserves
AIB Group plc | Annual Financial Results | 2023 21 Strong funding and liquidity reserves Total funding composition Customer accounts profile €bn €bn €123.8bn €131.6bn 53% of deposits insured 102.4 104.8 31.5 3.0 31.7 2.9 + €4.4bn net 2.4 6.8 inflows into long- term savings Corporate Customer 32.7 32
Slide 22: Strong organic capital generation; CET1 15.8%
AIB Group plc | Annual Financial Results | 2023 22 Strong organic capital generation; CET1 15.8% CET1 material movements RWAs Net Equity +1.1% (+0.6bn) Net RWA -1.2% (+€4.1bn) (3.1%) +3.7% +0.5% (0.5%) (0.4%) (0.4%) (0.5%) +0.2% (1.3%) cash dividend of €0.7bn (1.8%) approved buyback of €1bn 16.3% 15
Slide 23: 2024-2026 Strategic update
2024-2026 Strategic update
Slide 24: Strategy 2020 – 2023 has transformed AIB
AIB Group plc | Annual Financial Results | 2023 24 Strategy 2020 – 2023 has transformed AIB Providing a strong and resilient platform for the future Dec 2020 Dec 2022 End 2023 Three year plan to accelerate Revised medium-term targets in Strategy 2023 completed strategy through transformation light o
Slide 25: Attractive Irish economic fundamentals
AIB Group plc | Annual Financial Results | 2023 25 Attractive Irish economic fundamentals Good growth forecast for 2024-26 despite headwinds Irish employment rises sharply post the pandemic Irish inflation rate falls sharply, in-line with elsewhere % % 115 12 Index, Q4 2019=100 5 4.5 110 10 4.2 105
Slide 26: AIB is Ireland's #1 Bank
AIB Group plc | Annual Financial Results | 2023 26 AIB is Ireland’s #1 Bank #1 Irish Retail Bank Leading mortgage provider 33% mortgage market share(1) No. 1 credit card provider #1 Business Bank #1 Green Bank Relationship-driven corporate Sustainability leader business 30% new green lending 47% sha
Slide 27: Our purpose is to empower people to build a sustainable future
AIB Group plc | Annual Financial Results | 2023 27 Our purpose is to empower people to build a sustainable future Strategy 2024-2026 puts our purpose into action Guided by our strategic pillars Customer Simple Risk & Talent Sustainable First & Efficient Capital & Culture Communities with three strat
Slide 28: Customer First – a step change in customer experience
AIB Group plc | Annual Financial Results | 2023 28 Customer First – a step change in customer experience Centred on an informed view of our customers’ needs anchored in a progressive ESG agenda Strategy 2024+ to deliver a seamless CX to an enlarged and increasingly digital & ESG-focused customer bas
Slide 29: Greening the loan book
AIB Group plc | Annual Financial Results | 2023 29 Greening the loan book Supporting customers in the transition to a greener future Net-zero transition from 2021-2050 requires c. $275 trillion globally or on average $9.2 trillion p.a.(1) % New green and transition lending New Climate Capital segmen
Slide 30: Operational efficiency
AIB Group plc | Annual Financial Results | 2023 30 Operational efficiency Reduce cost to serve; focus on efficiency and removing complexity Strong focus on optimising customer interactions, digitising our data & systems and tightening our product set and corporate structure ▪ Enhanced customer exper
Slide 31: Transforming business credit process and mobile banking app
AIB Group plc | Annual Financial Results | 2023 31 Transforming business credit process and mobile banking app Digitalisation improving operational efficiency and customer experience Originations: Time to decision: Time to cash: Business credit transformation 60% of originations 90% auto 75% <4 days
Slide 32: Progressive modernisation of technology
AIB Group plc | Annual Financial Results | 2023 32 Progressive modernisation of technology Continuous investment in technology c.€300m investment on average p.a. 2024 to 2026 ensuring a ‘Future fit’ platform to deliver strategic priorities Customer channel Resilient & secure Data & AI experience fou
Slide 33: Transformed, reshaped and revitalised Group
AIB Group plc | Annual Financial Results | 2023 33 Transformed, reshaped and revitalised Group Investment Thesis 2026 medium- Non-financial term targets targets Exceptional financial performance over the last three years Greening our balance Supportive domestic macroeconomic backdrop Cost sheet < €2
Slide 34: 2026 Medium-term targets
2026 Medium-term targets
Slide 35: Guidance and Medium-term targets
AIB Group plc | Annual Financial Results | 2023 35 Guidance and Medium-term targets 2024 Guidance 2026 medium-term targets ▪ Net interest income >€3.65bn ▪ Other income >€700m Cost(1) < €2.0bn ▪ Cost increase 6-7% with CIR <50% ▪ Cost of risk at the lower end of 20-30bps range ▪ Bank levies & regula
Slide 36: Medium-term target: Costs <€2.0bn
AIB Group plc | Annual Financial Results | 2023 36 Medium-term target: Costs(1) <€2.0bn 2023 costs 2026 target Cost target <€2.0bn in 2026 with CIR <50% 16% 15% Transformed Group: Enhanced product suite and more €1.83bn 49% <€2.0bn 50% customers to serve 35% 35% Staff G&A Depreciation Variable pay a
Slide 37: Medium-term target: CET1 >14% with a buffer over MDA at least 250bps
AIB Group plc | Annual Financial Results | 2023 37 Medium-term target: CET1 >14% with a buffer over MDA at least 250bps Capital requirement 2026(1) CET1 target >14% Target >14.0% CET1 target >14% MDA buffer at least 2.5% ▪ Reflecting a prudent approach to capital management 11.4% CET1 ▪ A buffer ove
Slide 38: Commitment to deliver sustainable capital return to shareholders
AIB Group plc | Annual Financial Results | 2023 38 Commitment to deliver sustainable capital return to shareholders Increased EPS Increased DPS Increased distributions (cents) 75.7 (cents) (€m) 82% 64.8 1,000 50% 26.1 21.4 33% 14.3 7.8 696 215 91 122 166 2021 2022 2023 2021 2022 2023 2021 2022 2023
Slide 39: RoTE target 15% in 2026
AIB Group plc | Annual Financial Results | 2023 39 RoTE target 15% in 2026 RoTE target increased from >13% to 15% ~+6% ~(3%) Resilient income ~(1%) 15% Focus on cost discipline >13% Conservative approach to asset quality RWA optimisation RoTE target 15% in 2026 RoTE 2023 Income Costs Other (ECL / Ro
Slide 40: Appendices
Appendices AIB Group plc Annual Financial Results For the year ended 31 December 2023 For the life you’re after
Slide 41: Market leading ESG Customer propositions and ESG ratings
AIB Group plc | Annual Financial Results | 2023 41 Market leading ESG Customer propositions and ESG ratings Propositions Green Mortgage for Widescale lending for energy efficient homes projects in Renewables, across AIB, Haven, EBS Housing, Healthcare, brands & UK Education 12.7 Sustainalytics Green
Slide 42: Average balance sheet
AIB Group plc | Annual Financial Results | 2023 42 Average balance sheet FY 2023 FY 2022 Average Average Volume Interest Yield Volume Interest Yield €m €m % €m €m % Assets Customer loans 63,441 2,391 3.77 56,681 1,957 3.33 Investment securities 16,410 712 4.34 16,456 192 1.17 Loans to banks / other
Slide 43: Customer loans
AIB Group plc | Annual Financial Results | 2023 43 Customer loans €bn Performing Loans Non-performing Loans Customer Loans Gross loans (1 Jan 2023) 59.0 2.2 61.2 New lending 12.3 - 12.3 Redemptions of existing loans (10.3) (0.7) (11.0) Portfolio acquisition 4.7 - 4.7 Portfolio sales - (0.3) (0.3) Ne
Slide 44: Loan book by staging and coverage
AIB Group plc | Annual Financial Results | 2023 44 Loan book* by staging and coverage Dec 2023 Gross loan exposures (€bn) Stage 1 Stage 2 Stage 3** Total Exposure Mortgages 31.6 2.4 0.8 34.8 Loan book by staging – €67.0bn loan exposures Personal 2.6 0.2 0.1 2.9 Property & Construction 5.8 2.8 0.7 9.
Slide 45: Loan book by sector
AIB Group plc | Annual Financial Results | 2023 45 Loan book by sector Concentration by sector (%) Dec 2023 Dec 2023 Gross loans (bn) Natural Resources 5 At amortised cost (excluding mortgages & personal) Stage 1 Stage 2 Stage 3* Total exposures Leisure 4 Property & Construction 5.8 2.8 0.7 9.2 Manu
Slide 46: ECL coverage by stage
AIB Group plc | Annual Financial Results | 2023 46 ECL coverage by stage Dec 2023 Dec 2022 ECL coverage Stage 1 Stage 2 Stage 3* Total cover ECL coverage Stage 1 Stage 2 Stage 3* Total cover Mortgages 0.1% 3.2% 27.1% 0.9% Mortgages 0.1% 3.2% 28.3% 0.9% Personal 0.8% 12.9% 55.2% 3.3% Personal 1.1% 13
Slide 47: Asset quality by portfolio
AIB Group plc | Annual Financial Results | 2023 47 Asset quality by portfolio At amortised cost At FVTPL €bn Mortgages Personal Property Corporate & SME Total Total Total Dec 2023 Customer loans 34.8 2.9 9.2 20.0 67.0 0.0 67.0 Total ECL cover (%) 0.9% 3.3% 5.9% 2.9% 2.3% of which NPEs 0.7 0.1 0.7 0.
Slide 48: Mortgages and personal lending
AIB Group plc | Annual Financial Results | 2023 48 Mortgages and personal lending Total Mortgages Total Mortgages Dec-22 Dec-23 Dec-22 Dec-23 4% 2% 2% 7% 5% 4% 95% 96% 94% 91% €30.3bn €34.8bn €30.3bn €34.8bn Stage 1 Stage 2 Stage 3 Owner-occupier Buy-to-let ROI Mortgages* Personal lending Dec-22 Dec
Slide 49: Property and Corporate/SME
AIB Group plc | Annual Financial Results | 2023 49 Property and Corporate/SME Property €9.2bn/ ECL cover 5.9% Corporate/SME €20.0bn Natural resources 2% Leisure Residential investment Manufacturing Student accomodation 43% 6% 13% 18% Health, education & social work 13% 25% Housing associations 4% Se
Slide 50: NPEs 2.96% of gross loans: c. 3% target achieved
AIB Group plc | Annual Financial Results | 2023 50 NPEs 2.96% of gross loans: c. 3% target achieved NPEs at historically low levels since 2013 peak NPEs target achieved €bn ▪ NPEs €2.0bn; NPE ratio 2.96% at Dec 23 made up of: 21.6% NPE ratio by sector: 7.1% Property & construction: • €0.7bn Property
Slide 51: Asset quality – internal credit grade by ECL staging
AIB Group plc | Annual Financial Results | 2023 51 Asset quality – internal credit grade by ECL staging* Dec 2023 Dec 2022 €m Stage 1 Stage 2 Stage 3 POCI** Total Stage 1 Stage 2 Stage 3 POCI** Total Strong 44,273 2,808 - 15 47,096 40,708 1,159 - 3 41,870 Satisfactory 12,014 2,697 - 6 14,717 11,365
Slide 52: Debt securities €17.0bn; primarily held for liquidity purposes
AIB Group plc | Annual Financial Results | 2023 52 Debt securities €17.0bn; primarily held for liquidity purposes Debt Securities Government securities €5.2bn €bn 6.3 2% 0.1 5.2 14% 2.2 6.2 2.4 2.4 0.2 3.0 1.9 0.8 2.2 0.2 84% 0.5 0.6 Bank securities Govt securities Asset backed securities Supranatur
Slide 53: Reported capital ratios
AIB Group plc | Annual Financial Results | 2023 53 Reported capital ratios Transitional capital ratios Dec 23 Dec 22* Fully loaded capital ratios Dec 23 Dec 22* Total risk weighted assets (€m) 59,643 55,558 Total risk weighted assets (€m) 59,463 55,333 Capital (€m) Capital (€m) Shareholders equity e
Slide 54: Regulatory capital requirements
AIB Group plc | Annual Financial Results | 2023 54 Regulatory capital requirements Regulatory capital requirements Dec-23 Dec-24* Dec-25* Pillar 1 4.50% 4.50% 4.50% Pillar 2 requirement (P2R) 1.55% 1.46% 1.46% Capital Conservation Buffer (CCB) 2.50% 2.50% 2.50% O-SII Buffer 1.50% 1.50% 1.50% Counter
Slide 55: Macroeconomic scenarios and sensitivities
AIB Group plc | Annual Financial Results | 2023 55 Macroeconomic scenarios and sensitivities Macroeconomic scenario - Base 2023 2024 2025 2026 2027 2028 Composition of balance sheet by interest rate type at Dec 2023** (%) Republic of Ireland 54% GDP growth* 1.0 3.7 4.0 3.5 3.2 3.0 Interest Residenti
Slide 56: Credit ratings
AIB Group plc | Annual Financial Results | 2023 56 Credit ratings As at 31 Dec 2023 AIB Group plc (HoldCo) A3 BBB Long term issuer rating Outlook Positive Stable Investment grade ✓ ✓ AIB p.l.c. (OpCo) A1 A Long term issuer rating Outlook Positive Stable Investment grade ✓ ✓
Slide 57: Dividend timetable: cash dividend per share 26.568c
AIB Group plc | Annual Financial Results | 2023 57 Dividend timetable: cash dividend per share 26.568c Dividend Timetable Event Date Full year results Wed, 6 March 2024 Ex-Dividend Date Thurs, 21 March 2024 Record Date Fri, 22 March 2024 Currency/Tax Election Deadline Tues, 9 April 2024 @ 12:00 midd
Slide 58: Contact details
AIB Group plc | Annual Financial Results | 2023 58 Contact details Name Email Telephone Niamh Hore niamh.a.hore@aib.ie +353 86 3135647 Head of Group IR Siobhain Walsh siobhain.m.walsh@aib.ie +353 87 3956864 Head of Debt IR Pat Clarke patricia.m.clarke@aib.ie +353 86 1718598 Bernie Glynn bernie.a.gly