Permanent TSB Group Holdings PLC · EURONEXT:PTSB

Permanent TSB — H1 2014 Earnings Presentation

35 slides from Permanent TSB's earnings presentation, 2014

  1. Slide 1: All numbers and charts contain dummy numbers

    All numbers and 0 charts contain dummy numbers 0 .

  2. Slide 2: Forward Looking Statements

    Forward Looking Statements 1 A number of statements we make in our presentation, and in the accompanying slides, will not be based on historical fact but will be “forward‐ looking” statements within the meaning of the US Private Securities Litigation Reform Act of 1995. Actual results may differ mat

  3. Slide 3: Agenda

    Agenda 2 Jeremy Masding, Group CEO – H1 2014 Highlights Glen Lucken, Group CFO – Financial Performance Shane O’Sullivan, Managing Director 2 of AMU Jeremy Masding, Group CEO – Recap and Priorities Questions & Answers 2

  4. Slide 4: permanent tsb in H1 2014

    permanent tsb in H1 2014 3 IMPROVED MARKET INDEPENDENCE PERFORMANCE RELEVANCE BETTER Bottom Line GROWING Market Share ACHIEVING Funding Stability BETTER Arrears Management 3 3

  5. Slide 5: Sharply Improving Performance (1)

    Sharply Improving Performance (1) 1,600 1,468 Losses (€m) 4 1,400 1,200 Sharply Improving Bottom Line 980 977 1,000  Underlying performance improved €278m 800 1,109 H2 on H1 13 600 523 528 H1 400 200 359 457 449 171 0 2011 2012 2013 2014 4 Sharply Improving Impairment Profile 1,200 1,440 Impairment

  6. Slide 6: Sharply Improving Performance (2)

    Sharply Improving Performance (2) 5  Economic environment continues to support business Improved  Arrears have peaked in 2013 and are falling Performance  Impairments are reducing significantly  Non-Core deleveraging planned in H2 5  Re-establishing market position; a competitive third retail b

  7. Slide 7: Building a Best in Class Retail Bank in Ireland

    …Building a Best in Class Retail Bank in Ireland Deposit Volumes (€bn) and Market Share (%) 6 Attracting New Customers and Deposits 14.8 13.0% 13.2% 13.0%  Deposit balances have increased to €14.5bn 14.4 12.7% 14.5 12.8% (incl. Current Accounts) 14.0 12.5% 14.0 12.6%  Market share of 13% 12.3% 12.

  8. Slide 8: Group: Key Financial Highlights

    Group: Key Financial Highlights Improving Operating Performance 7 Key Metrics  Operating Loss reduced by 61.9% Income Statement H1 ‘14 H1 ‘13 Change  NIM improved by 6bps; ptsb SBU NIM at Operating Loss Before 140bps (171) (449) 61.9% Exceptional Items  Impairment Charges reduced by 65.3% NIM (Be

  9. Slide 9: Agenda

    Agenda 8 Jeremy Masding, Group CEO – H1 2014 Highlights Glen Lucken, Group CFO – Financial Performance Shane O’Sullivan, Managing Director 8 of AMU Jeremy Masding, Group CEO – Recap and Priorities Questions & Answers 8

  10. Slide 10: Group Income Statement

    Group Income Statement H1 2014 H1 2013 Change Change 9 €m €m €m %  Net Interest Income increased marginally by 1.3%, despite a 5.2% reduction in Interest Net Interest Income 158 156 2 1.3% Earning Assets Other Income 33 26 7 26.9%  Steady NIM improvement of 6bps in falling rate environment driven

  11. Slide 11: Group: Segmental Performance

    Group: Segmental Performance 10 Income Statement (€m) Core Bank Non‐Core Group* PTSB AMU H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 Underlying Operating Profit/(Loss) Before 62 (26) (49) (22) (18) 6 4 (33) Impairments and Non‐Recurring Items Non‐Recurring Items ‐ 14 (25) ‐ (1) ‐

  12. Slide 12: Group: Net Interest Income and NIM

    Group: Net Interest Income and NIM Components of NIM NII and NIM 11 1.20%  Group NIM shows a steady 1.00% 0.12% improvement of 6bps 0.80% 0.20% 0.07%  ptsb SBU NIM is at 140bps 0.60% 0.19%  Driven mainly by reduction in overall 0.82% 0.88% 0.40% cost of funds 0.20%  Continuous ECB rate cuts over

  13. Slide 13: Group: Operating Expenses

    Group: Operating Expenses Group Operating Expenses Staff Costs 12 €200m  Staff Costs reduced by €3m or 4% compared to June 2013 due to €160m changes in pension entitlements and other staff benefits, and savings €120m €115m achieved from VSS €69m Other Costs 12  Other Costs increased due higher cos

  14. Slide 14: Impairment Charges

    Impairment Charges Impairment Charges (€m) Group Impairments 13 600  Impairment Charges decreased by €281m (65.3%) since H1 2013, driven by 500 the fall in both early and late arrears across all portfolios 400  ROI HL charge reduced by 45.8% from H1 2013, mainly due to low levels of 65% 300 13 new

  15. Slide 15: Deleveraging

    Deleveraging 37,000 Deleveraging* (€m) Deleveraging 14  Continued natural net reduction of loan 36,000 assets Assets reduced by €2.6bn since 2011  Gross Loans have reduced by over 35,000 €2.6bn since 2011 34,000  Small tranche of CRE sold in H1 Held for Sale 680  €680m of loans are formally ‘Hel

  16. Slide 16: Funding

    Funding €bn Group Funding Mix  Continuing focus on optimising the funding 15 40.0 1.89% 2.00% mix: 1.76%  System Funding reduced by €1.1bn or 1.80% 35.0 1.65% 16%; reduced to 17% of mix and more 8.7 1.60% 7.8 7.9 than two thirds down from peak 30.0 7.5 1.40%  €1bn growth in deposits across Retail

  17. Slide 17: Capital

    Capital 16 CET1 Ratio % 16.0% 13.4% 12.0% 12.7%  Common Equity Tier 1 ratio under Basel III 8.0% transitional basis is 4.0% 12.7%; well above the 0.0% Dec‐13 Jun‐14 regulatory minimum of 16 8% RWA Level €m  RWA – down €0.9bn 17,200 16,953 due both to reduction 16,800 in loans and advances, 16,400

  18. Slide 18: Group: Asset Quality

    Group: Asset Quality Gross Loans NPLs 17 3% 1% 1% 21% 16% ROI HL ROI HL ROI BTL ROI BTL 6% CRE CRE 53% CHL 55% CHL 25% Consumer Consumer 19% 17 ROI HL ROI BTL CRE CHL Consumer Total Gross Loans €bn 17.1 6.4 2.1 7.0 0.3 32.9 Performing % 69% 65% €17.7bn 29% 95% €3.9bn67% 71% NPLs* % 27% 33% 69% 3% 24

  19. Slide 19: Group: Asset Quality - ROI Home Loans

    Group: Asset Quality ‐ ROI Home Loans ROI HL: €17.1bn* H1 2014 H2 2013 Change Portfolio 18 Early Arrears (<90 days) 6,041 7,063 14.4%  73% of ROI residential mortgages are HLs  57% are Trackers Late Arrears (90+ days) 19,009 22,452 15.3% Economic Environment Late Arrears % of Total Cases 13.7% 15.

  20. Slide 20: Group: Asset Quality - ROI Buy-To-Lets

    Group: Asset Quality ‐ ROI Buy‐To‐Lets ROI BTL: €6.4bn* H1 2014 H2 Change Portfolio 19 2013  27% of ROI residential mortgages are BTLs Early Arrears (<90 days) 981 1,013 3.2%  85% are Trackers Late Arrears (90+ days) 3,550 3,905 9.1% Economic Environment Late Arrears % of Total Cases 15.5% 16.9% 1

  21. Slide 21: Agenda

    Agenda 20 Jeremy Masding, Group CEO – H1 2014 Highlights Glen Lucken, Group CFO – Financial Performance Shane O’Sullivan, Managing Director 20 of AMU Jeremy Masding, Group CEO – Recap and Priorities Questions & Answers 20

  22. Slide 22: The Asset Management Unit

    The Asset Management Unit 21 AMU Role  Reduce the flow of new arrears cases  focus on early engagement and cash collection  Engage with customers in late arrears 21  agree a treatment (repayment plan) that is sustainable and affordable  Manage the legal, property management and recoveries proce

  23. Slide 23: The Asset Management Unit

    The Asset Management Unit 22 Key Achievements 1. Engagement delivering real benefits  > 80% of customers engaging  88% of Home Loan customers who engage are offered sustainable and affordable treatments to retain ownership 2. Dramatic increase in restructuring deals offered  24,000 restructure of

  24. Slide 24: Engagement Delivers Real Benefits

    Engagement Delivers Real Benefits 23 Stage 1 Stage 2 Stage 3 Stage 4 Engagement Through Objective Realistic Mortgage Post-Restructure SFS SFS Assessment Restructure Options Payment •26,000 SFSs •For 88% of Home •Where customers •92% of stage 3 completed Loan accounts the work with the Bank, customer

  25. Slide 25: Sustainable Solutions

    Sustainable Solutions 24 Short Term • Interest Only Treatments • > Interest Only • Term Extension Long Term • Arrears Repayment Plan Treatments • Part Capital and Interest with Bullet • Split Mortgage with Bullet 24 • Voluntary Sale (with upfront agreement on shortfall) • Voluntary Surrender Other O

  26. Slide 26: Delivering Arrears Management Performance (1)

    Delivering Arrears Management Performance (1) PTSB Buy To Let: Trend significantly outperforming industry 25 Early Arrears down to 4.2% from 6.4% in June 2012, Late Arrears down to 15.1% from 21% at peak Early Arrears – BTL Late Arrears – BTL 8% 25% 7% 20% % of Accounts in >90 days in Arrears % of A

  27. Slide 27: Delivering Arrears Management Performance (2)

    Delivering Arrears Management Performance (2) PTSB Home Loan: Trend outperforming industry 26 Early Arrears down to 4.1% from 6.2% in June 2012, Late Arrears down to 12.5% from 15.1% at peak Early Arrears – Home Loan Late Arrears – Home Loan 16% 7% 14% 6% % of Accounts in 1‐90 Days in Arrears % of A

  28. Slide 28: Improving Economics

    Improving Economics 27 Customers are continuing to pay what … and balances in negative equity have they can … fallen by 8% since December 2013 • More than 60% of “Non- Balances in Negative Equity Performing” HL customers pay more than 50% of their mortgage €bn 5 €4.0bn 8% each month €3.7bn 4 • More

  29. Slide 29: Agenda

    Agenda 28 Jeremy Masding, Group CEO – H1 2014 Highlights Glen Lucken, Group CFO – Financial Performance Shane O’Sullivan, Managing Director 28 of AMU Jeremy Masding, Group CEO – Recap and Priorities Questions & Answers 28

  30. Slide 30: On the Road to Profitability…

    On the Road to Profitability… Underlying losses before exceptional items (€m) Net Interest Margin Trajectory % 29 0 0.90% ‐100 ‐171 0.85% 0.88% 0.80% ‐200 0.82% 0.82% ‐457 ‐449 0.75% ‐520 ‐528 ‐300 0.76% 0.70% 0.72% NIM ‐400 0.65% ‐500 0.60% 0.55% ‐600 0.50% H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H

  31. Slide 31: …Whilst Recognising and Managing the Constraints

    …Whilst Recognising and Managing the Constraints 30 Performance and outlook have improved dramatically; however, we are balanced about the challenges ahead… Returning to Sustainable Economic Profitability 30 Demonstrating ‘Focus’ is a form of Sustainable Advantage Managing Legacy Issues 30

  32. Slide 32: Summary

    Summary 31  Losses abating for the first time since 2008  Impairment charges reducing; arrears have peaked and are now falling Recap  Strong funding position; deposit base expanding and cost of funds falling  Higher new lending volumes 31  Re-establish market position as competitive third retai

  33. Slide 33: Agenda

    Agenda 32 Jeremy Masding, Group CEO – H1 2014 Highlights Glen Lucken, Group CFO – Financial Performance Shane O’Sullivan, Managing Director 32 of AMU Jeremy Masding, Group CEO – Recap and Priorities Questions & Answers 32

  34. Slide 34: Appendix

    Appendix permanent tsb 33

  35. Slide 35: NPL Analysis

    NPL Analysis 34 €m €m Home Loans NPLs Buy‐to‐Let NPLs 5,000 2,500 €4,355m €2,234m €4,231m €2,088m 4,000 2,000 1,880 €2,317m 1,177 3,000 2,344 €2,880m 1,500 €1,391m 1,084 €1,224m 437 2,000 224 1,000 203 141 501 809 34 225 270 219 1,000 €2,038m 500 €1,351m 979 617 €843m 523 €863m 1,005 ‐ 153 ‐ 1 70 De

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