Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — H1 2022 Earnings Presentation
56 slides from Bank Of Ireland's earnings presentation, Jun 30, 2022
Slide 1: 2022 Interim Results Announcement
20 22 2022 Interim Results Announcement 30 June 2022
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Slide 3: Group CEO Francesca McDonagh
3 Bank of Ireland 2022 Interim Results Group CEO Francesca McDonagh
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Slide 5: Strong business performance and strategic progress in H1 22
5 Strong business performance and strategic progress Bank of Ireland 2022 Interim Results in H1 22 H1 22 €419m • Total income modestly higher vs H1 21 (excluding additional gains, valuation items and acquisitions) Performance Underlying profit • Maintaining cost discipline while investing to attract
Slide 6: Irish economy resilient despite external pressures
6 Irish economy resilient despite external pressures Bank of Ireland 2022 Interim Results Ireland1 • Irish economy well positioned to face global economic uncertainties – Notwithstanding external headwinds, Ireland is forecast to be the EU's fastest-growing economy for a third successive year in 202
Slide 7: Transformation investment achieving higher customer satisfaction and digital adoption
7 Transformation investment achieving higher customer Bank of Ireland 2022 Interim Results satisfaction, digital adoption and low-cost acquisition +4 88% 12m hours +36% +15% Improvement in Proportion of digital traffic Reduction in customer Growth in mobile app Increase in online banking customer NP
Slide 8: Responsible and Sustainable Business (RSB) strategy
8 Responsible and Sustainable Business (RSB) strategy Bank of Ireland 2022 Interim Results supports our purpose to enable our Customers, Colleagues and Communities to thrive RSB – Progress in H1 2022 Pillar 1 Pillar 2 Pillar 3 Enabling all Enhancing Supporting the Colleagues to Thrive Financial Well
Slide 9: Continued strategic progress in the UK
9 Continued strategic progress in the UK Bank of Ireland 2022 Interim Results Strong operating performance in H1 2022 Retail UK H1 2021 H1 2022 Net interest income £268m £292m • 9% increase in net interest income reflects higher net interest margin (+34bps y/y), supported by lower funding costs and
Slide 10: Irish market leader in Wealth
10 Irish market leader in Wealth Bank of Ireland 2022 Interim Results Davy acquisition further strengthens already well diversified Wealth and Insurance model Attractive wealth market backdrop Enhanced market leading capabilities Strong market position reflects confidence in outlook Irish household
Slide 11: Retail Ireland franchise will be enhanced by KBC acquisition
11 Retail Ireland franchise will be enhanced Bank of Ireland 2022 Interim Results by KBC acquisition1 KBC portfolios will materially enhance Retail Ireland performing strongly Irish franchise Leading Irish retail and SME offering with KBC transaction going through final approvals, a unique franchise
Slide 12: Unique growth opportunity from structural change in Irish retail banking market
12 Unique growth opportunity from structural Bank of Ireland 2022 Interim Results change in Irish retail banking market Once-in-a generation Delivering positive Bank of Ireland opportunity for customer and response customer acquisition1 commercial outcomes H1 2021 Ulster Bank and KBC 5x capacity > 1
Slide 13: Group CFO Mark Spain
13 Bank of Ireland 2022 Interim Results Group CFO Mark Spain
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Slide 15: H1 2022 financial summary
15 H1 2022 financial summary Bank of Ireland 2022 Interim Results • Strong business performance in H1 22; underlying profit before tax of €419m • Total income modestly higher vs H1 21 (ex additional gains, valuation items and acquisitions) • Net lending of €1.0bn in Corporate & Markets and Retail Ir
Slide 16: Strong business performance in H1 2022
16 Strong business performance in H1 2022 Bank of Ireland 2022 Interim Results H1 2021 H1 2022 • H1 22 performance3 reflects positive business income (€m) (€m) momentum and continued focus on cost reduction, Net interest income 1,080 1,072 offset by market and TLTRO impact Business income 282 320 •
Slide 17: Net interest income modestly higher excluding TLTRO impacts
17 Net interest income modestly higher excluding Bank of Ireland 2022 Interim Results TLTRO impacts Net interest income movement • Net interest income H1 performance modestly higher in H1 22 vs H1 21 excluding TLTRO impacts €18m (€48m) – Lower funding costs due to improved UK deposit €42m €1,088m ma
Slide 18: Net interest income positively geared to higher interest rates
18 Net interest income positively geared to higher Bank of Ireland 2022 Interim Results interest rates Net interest income sensitivity to parallel shift in Key simplifying assumptions interest rates (annualised) • An instantaneous and sustained parallel movement in all interest rates -100bps +50bps
Slide 19: Net lending of €1.0bn in Corporate and Retail Ireland; UK deleveraging
19 Net lending of €1.0bn in Corporate and Retail Ireland; Bank of Ireland 2022 Interim Results UK deleveraging of €2.0bn in line with strategy New lending1 by division Signs of inflection in Irish retail lending trends • Total new lending of €7.7bn in H1 22 €7.7bn €7.2bn – Retail Ireland +25% y/y wi
Slide 20: Business income +16% reflecting improving momentum
20 Business income1 +16% reflecting Bank of Ireland 2022 Interim Results improving momentum H1 2021 H1 2022 • Wealth & Insurance +9% y/y from higher new life (€m) (€m) business and improved performance on the existing book Wealth and Insurance 105 114 Retail Ireland 101 131 • Retail Ireland +30% y/y
Slide 21: Costs 1% higher; 1% lower ex Davy and one-off investment
21 Costs 1% higher; 1% lower ex Davy Bank of Ireland 2022 Interim Results and one-off investment Cost Movement €8m €12m (€25m) €17m €849m €837m €829m H1 21 Cost efficiencies Inflation/FX H1 221 Davy operating costs Investment in one-off H1 22 reported costs growth opportunity H1 performance Cost out
Slide 22: Non-core costs
22 Non-core costs Bank of Ireland 2022 Interim Results H1 2021 H1 2022 • Transformation programme charge (€23m) primarily Non-core items relates to Retail UK restructuring (€m) (€m) Transformation programme costs (69) (23) • Acquisition costs (€25m) relates to the Davy transaction. Further deferred
Slide 23: H1 2022 net impairment charge of €47m
23 H1 2022 net impairment charge of €47m Bank of Ireland 2022 Interim Results IFRS 9 models Loan loss experience and Macro-economic update and management adjustment portfolio activity €59m gain €106m charge • Gain of €19m from improved macroeconomic outlook and model updates, partially offset • Net
Slide 24: Well diversified loan book with progress on NPEs
24 Well diversified loan book with progress on NPEs Bank of Ireland 2022 Interim Results Group loan book Loan book strongly collateralised >80% secured n Consumer • Weighted average LTV of Ireland mortgages 53%; H1 22 €5.5bn new lending 74% n Property & Construction 7% n Ireland mortgages – c.54% of
Slide 25: Prudent asset quality coverage levels in face of economic uncertainty
25 Prudent asset quality coverage levels in face of Bank of Ireland 2022 Interim Results economic uncertainty Group loan book by stage Stock of impairment loss allowance of €1.9bn €4.3bn €4.1bn 32.2% 33.6% • June 2022 coverage of 2.5% unchanged vs Dec 2021; €12.4bn €10.3bn remains prudent given unce
Slide 26: Capital ratios remain strong
26 Capital ratios remain strong Bank of Ireland 2022 Interim Results Fully Loaded CET1 ratio 60bps (10bps) (30bps) RWAs RWAs €46.2bn 20bps (80bps) €47.3bn (10bps) 16.0% 15.5% Dec-21 Net organic capital 1 Credit impairment RWA2 Foreseeable distribution Pension / Other Davy transaction Jun-22 deductio
Slide 27: Financial benefits of acquisitions
27 Financial benefits of acquisitions Bank of Ireland 2022 Interim Results €20.0bn Material enhancement of Wealth franchise €18.5bn €16.4bn €1.0bn • Momentum in Davy wealth business translating into €15.1bn strong profit growth; reflects quality of franchise €13.1bn €0.8bn €0.8bn • Davy track record
Slide 28: 2022 outlook
28 2022 outlook Bank of Ireland 2022 Interim Results Profitability Asset Quality Capital • Total income (excluding • Impairment charge to be • Strong organic capital acquisitions) lower than 20bps subject to no generation in 2022; capital material change in economic outlook supports continued – Mode
Slide 29: Summary
29 Summary Bank of Ireland 2022 Interim Results • Strong business performance in H1 22 reflected in financial performance • Net interest income positively geared to higher interest rates • Maintaining rigorous cost discipline, notwithstanding inflationary headwinds • Vigilance on credit quality, wit
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Slide 31: Appendix
31 Bank of Ireland 2022 Interim Results Appendix
Slide 32: Appendix
32 Appendix Bank of Ireland 2022 Interim Results Page No. • BOI overview - customer loans / new lending volumes 33 • Ireland mortgage loan book 34 • Income statement – Net interest income analysis 35 – Structural hedge / Liquid assets / Net interest margin / Negative interest rates 36 • Asset qualit
Slide 33: Overview of customer loans
33 Overview of customer loans Bank of Ireland 2022 Interim Results Profile of customer loans1 at June 2022 (Gross) Ireland UK RoW Total Total Composition (Jun 22) (€bn) (€bn) (€bn) (€bn) (%) Mortgages 22.3 18.4 0.0 40.7 53% Non-property SME and corporate 10.7 5.6 5.3 21.6 28% Property & construction
Slide 34: Ireland Mortgages: €22.3bn
34 Ireland Mortgages: €22.3bn Bank of Ireland 2022 Interim Results New Lending volumes and Market Share Ireland Mortgages (gross) 25% 24% €23.0bn €22.9bn 23% 23% €22.4bn €22.3bn €11.2bn €12.2bn €13.1bn €13.8bn €1.3bn €3.2bn €2.9bn €1.0bn €0.9bn €1.0bn €2.5bn €2.2bn €8.7bn €7.9bn €6.8bn €6.3bn H1 19
Slide 35: Income statement: Net interest income analysis
35 Income statement Bank of Ireland 2022 Interim Results Net interest income analysis H2 2020 H1 2021 H2 2021 H1 2022 Average Gross Gross Average Gross Gross Average Gross Gross Average Gross Gross Volumes Interest Rate Volumes Interest Rate Volumes Interest Rate Volumes Interest Rate (€bn) (€m) (%)
Slide 36: Structural hedge, liquid assets, net interest margin and negative interest rates
36 Structural hedge, liquid assets, net interest Bank of Ireland 2022 Interim Results margin and negative interest rates Structural hedge 1 Liquid assets 2 Structural hedge & liquid assets Average • Structural hedge and liquid asset income reducing as €35.1bn €38.3bn €31.0bn €38.5bn volume a result
Slide 37: Non-performing exposures by portfolio
37 Non-performing exposures by portfolio Bank of Ireland 2022 Interim Results Non-performing Non-performing Impairment loss Advances Impairment loss Composition (Jun-22) (€bn) exposures exposures as % of allowance (€bn) allowance as % of (€bn) advances non-performing exposures Residential Mortgages
Slide 38: Portfolio by stage
38 Portfolio by stage Bank of Ireland 2022 Interim Results Gross carrying amount Composition (Jun-22) 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 €m €m €m €
Slide 39: Non-property SME and Corporate by stage
39 Non-property SME and Corporate by stage1,2 Bank of Ireland 2022 Interim Results Gross carrying amount Composition (Jun-22) 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 l
Slide 40: Residential mortgages / Consumer loans
40 Residential mortgages / Consumer loans Bank of Ireland 2022 Interim Results Gross loans by stage Residential mortgages Residential mortgages Consumer • Mortgage portfolios 53% of Group loan book €43.3bn – Average LTV of 53% of stock €1.8bn €40.7bn – 94% of the portfolio has LTV >80% €2.8bn €1.6bn
Slide 41: Non-property SME and corporate / Property & Construction
41 Non-property SME and corporate / Bank of Ireland 2022 Interim Results Property & Construction Gross loans by stage Non-property SME and corporate Non-property SME Property and construction • 28% of Group loan book, well diversified by geography and corporate and sector €20.8bn €21.6bn €8.6bn €8.7
Slide 42: Forward looking information – macro-economic scenarios
42 Forward looking information Bank of Ireland 2022 Interim Results – macro-economic scenarios Ireland United Kingdom 30 June 2022 2022 2023 2024-2026 2022 2023 2024-2026 Central scenario - 45% probability weighting GDP growth1 5.6% 4.6% 3.6% 3.7% 1.2% 1.6% GNP growth1 5.6% 4.1% 3.2% n/a n/a n/a Une
Slide 43: ILA sensitivity to macro-economic scenarios
43 ILA sensitivity to macro-economic scenarios Bank of Ireland 2022 Interim Results 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 to the centr
Slide 44: Ireland mortgages
44 Ireland mortgages Bank of Ireland 2022 Interim Results Continued proactive arrears management >90 days arrears1 >90 days arrears • Bank of Ireland is significantly below the industry average Industry Average for both Owner Occupier (32% of industry average) and Buy to Let (30% of industry average
Slide 45: Capital and liquidity
45 Capital and liquidity Bank of Ireland 2022 Interim Results Liquidity Dec-21 Jun-22 • Funding and liquidity remains strong from stable customer deposits and MREL issuance Customer loans 76 75 Customer deposits: €92.6bn Liquid assets 50 52 • Overall Group customer deposit volumes of €94.1bn Other a
Slide 46: Ordinary shareholders’ equity and TNAV
46 Ordinary shareholders’ equity and TNAV Bank of Ireland 2022 Interim Results Dec-21 Jun-22 Movement in ordinary shareholders’ equity (€m) (€m) Ordinary shareholders’ equity at beginning of period 8,587 10,304 Movements: Profit / (Loss) for the period 1,055 279 Share buy back - repurchase of shares
Slide 47: Capital – Strong fully loaded and regulatory CET1 ratios
47 Capital – Strong fully loaded and regulatory Bank of Ireland 2022 Interim Results CET1 ratios Capital ratios – 30 June 2022 Regulatory ratio Fully loaded ratio (€bn) (€bn) Total equity 12.0 12.0 Less Additional Tier 1 (1.0) (1.0) Deferred tax 1 (0.8) (1.1) Intangible assets and goodwill (0.9) (0.
Slide 48: Regulatory capital requirements
48 Regulatory capital requirements Bank of Ireland 2022 Interim Results Pro forma CET1 regulatory capital requirements 2021 2022 2023 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 buffer (CCy
Slide 49: Risk weighted assets (RWAs) / Leverage ratio
49 Risk weighted assets (RWAs) / Leverage ratio Bank of Ireland 2022 Interim Results Customer lending average credit risk weights – June 20221,2 EBA Transparency Exercise 2021 (Based on regulatory exposure class) Country by Country Average IRB risk weights Residential Mortgages – Jun 2021 EAD 3 RWA
Slide 50: Return on tangible equity (RoTE)
50 Return on tangible equity (RoTE) Bank of Ireland 2022 Interim Results H1 2022: Headline vs Adjusted Adjustments H1 2022 Additional gains Adjusted for H1 2022 Pension Headline & valuation items, CET1 ratio Adjusted Surplus (€m) net of tax at 13.5% (€m) Profit for the period 279 Non-core items incl
Slide 51: Cost income ratio: June 2022
51 Cost income ratio: June 2022 Bank of Ireland 2022 Interim Results Headline vs Adjusted H1 2022 Pro forma H1 2022 Headline adjustments Pro forma (€m) (€m) (€m) Net interest income 1,072 – 1,072 Other income – Business income 320 – 320 – Additional gains 83 – 83 – Other valuation items (86) – (86)
Slide 52: Defined benefit pension schemes
52 Defined benefit pension schemes Bank of Ireland 2022 Interim Results Group IAS19 Defined Benefit Pension (deficit)/surplus Total Group defined benefit pension scheme assets (%) 3.45% €7.2bn €7.2bn €8.4bn €8.9bn €9.6bn €7.7bn 2.10% 2.00% 1.30% 1.35% 55% 58% 0.80% €1.38bn 65% 65% 69% 66% €0.60bn 21
Slide 53: Forward-looking statement
53 Forward-looking statement Bank of Ireland 2022 Interim Results 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 current goals
Slide 54: Contact Details
54 Contact Details Bank of Ireland 2022 Interim Results For further information please contact: • Group Chief Financial Officer Mark Spain tel: +353 12 50 8900 ext. 43291 mark.spain@boi.com • Investor Relations Darach O’Leary tel: +353 12 50 8900 ext. 44711 darach.oleary@boi.com Eamonn Hughes tel: +
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