Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — FY2008 Earnings Presentation
48 slides from Bank Of Ireland's earnings presentation, May 21, 2008
Slide 1: Preliminary Results Announcement
Preliminary Results Announcement For the year to 31st March 2008 21st May 2008
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 Group’s plans and its current goals and expectations relatin
Slide 3: Brian Goggin, Group Chief Executive
Brian Goggin Group Chief Executive
Slide 4: Business overview
Business overview Bank of Ireland is strongly positioned – traditional relationship-driven retail and commercial bank – conservative business philosophy – prudent approach to credit risk – diversified business portfolio and income streams – deep management experience across market cycles Success
Slide 5: Preliminary highlights – Group
Preliminary highlights – Group Group Profitability Group Performance March 2008 vs March 2007 March March 2008 2007 Impairment charge 17bps 9bps Underlying PBT €1,794m + 6% Cost / income ratio 51% 54% PBT €1,933m (1%) Underlying EPS 150.3c + 4% Return on equity 21% 23% EPS 174.6c + 1% Dividend 63.6c
Slide 6: Preliminary highlights
Preliminary highlights % of Group PBT Delivering growth across a well by Division* diversified portfolio RFSI 42% Retail 36% Life 6% Retail Ireland PBT €716m +3% Capital Markets 33% Life operating profit €164m +12% UKFS 25% Capital Markets PBT €651m +14%* * Excludes Group Centre – Corporate Ba
Slide 7: Group priorities
Group priorities Target equity tier 1 in 5.5% to 6.5% range Capital & (after deduction of proposed dividend) dividend Maintain dividend policy Drive deposit growth Maintain our broadly-based funding activities across geographies Funding and programmes – both public and private Continue to
Slide 8: Divisional priorities
Divisional priorities Strongly positioned in a challenging environment Retail Protect our franchise & maximise a wide range of business Financial opportunities from our extensive customer base Services Priority to protect and grow deposits in anticipation of improved Ireland - investor sentime
Slide 9: John O’Donovan, Chief Financial Officer
John O’Donovan Chief Financial Officer
Slide 10: Group Income Statement
Group Income Statement Group Income Statement Non-core items (including non-core items) Total income March 08 March 07 March 08 March 07 % Change €m €m €m €m Profit on disposal of business assets 33 358 Total income* 4276 4176 2 Gross-up for policyholder tax in the Life (60) 19 Operating expenses (2
Slide 11: Total income & operating expenses
Total income & operating expenses Total income (excluding non-core items) +6% Headline +9% excl Disp* Strong income growth €3869m €4120m €3774m €4120m Impact of disposal of Davy Income growth drivers: – Strong volume growth across the Group: Loans +9%; Deposits +19% – Low level of margin attri
Slide 12: Net interest margin
Net interest margin Net interest margin Drivers of margin attrition March 08 March 07 March 08 March 07 Vs Vs Net interest income excluding €2917m €2634m March 07 March 06 impact of IFRS income classifications Balance sheet structure (2bps) (4bps) Average interest earning assets €175bn €156bn Net in
Slide 13: Cost / income ratios
Cost / income ratios* Cost / income ratios -6% -6% -6% 57% 54% 59% 51% 55% 53% -6% -9% 56% 52% 50% 46% 42% 46% 43% 40% 37% Group Retail RoI BoI Life Capital Markets UKFS March 2006 March 2007 March 2008 A strong cost story Completion of Strategic Transformation Programme with annualised cost savin
Slide 14: Loan & deposit volume growth
Loan & deposit volume growth Volume growth* March 08 vs March 07 Retail Financial Capital UKFS Group Services Ireland Markets Sterling Customer Deposits 60% 56% 50% Business Loans Corporate 40% Loans Deposits Business Mortgage Deposits Loans Loans 27% 30% Mortgage Personal Loans Loans 22% 21% Loans
Slide 15: Profile of loans & advances to customers - €136bn
Profile of loans & advances to customers - €136bn UKFS £44bn/€55bn Corporate Banking €27bn Retail RoI €54bn Total UKFS 40% Total Retail RoI 40% Standard mortgages Mortgages (RoI) 13% Specialist mortgages 20% 12% Personal Lending 3% Business Banking 15% Business Banking 17% Corporate Banking 20% Capi
Slide 16: Residential mortgages €61bn - 45% of Group loan book
Residential mortgages €61bn - 45% of Group loan book New business split UK UK mortgages £27bn – 12mths to Mar ’08: 75% fixed rate; 13% SVR; 12% tracker – 12mths to Mar ’07: 56% fixed rate; 30% SVR; 14% tracker 55% of Excellent asset quality Group 51% Standard – 3 month arrears* 0.61% vs. CML 1.1
Slide 17: Property: investment & development €36bn
Property: investment & development €36bn - 26% of Group loan book Geographic and sector profile Property lending €36bn U.S. UK Continental 1% Commercial Corporate Banking €9bn Europe 2% Development Ireland €5bn; UK €3bn; International €1bn Ireland 5% 71% commercial; 29% residential Commercial In
Slide 18: Asset quality – Group loan book
Asset quality – Group loan book 10-year impairment loss trend Impairment losses on loans 35 March 2008 March 2007 30 €m €m 25 20 Specific 169 121 BPS 15 IBNR 30 1 10 SIVs 46 - 5 Recoveries (13) (19) 0 Total 232 103 -5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Annualised loan 17bps* 9bps
Slide 19: Asset quality – Group loan book
Asset quality – Group loan book March 2008 (€136bn) March 2007 (€125bn) High quality 57.2% High quality 59.1% Satisfactory 34.5% Satisfactory 34.5% Acceptable 4.8% Acceptable 3.1% Lower quality but Lower quality but not past due/impaired not past due/impaired 0.5% 0.3% Past due 2.2% Past due 2.5% Im
Slide 20: Strong Balance Sheet
Strong Balance Sheet – minimal exposure to assets affected by market dislocation US Sub-prime mortgages No direct exposure Structured Investment Vehicles (SIVs) €81 million total exposure - 6 vehicles Classified as Loans and advances to customers within Corporate Banking loan portfolio CDOs
Slide 21: Profile of AFS Financial Assets and Trading Book
Profile of Available for Sale (AFS) Financial Assets and Trading Book €1.8bn government bonds >95% AAA rated – ‘Marks’ on portfolio 103.2% of underlying nominal AFS – €26.4bn €24.6bn bank senior debt (FRNs), CP/CDs & covered bonds Liquid Assets – Average rating AA- – ‘Marks’ on portfolio 98.4% o
Slide 22: Balance sheet funding
Balance sheet funding March 08 Sept 07 March 07 Strong funding position Securitisation 5.5% 4.3% ACS 3.5% 3.4% 6.4% Customer deposits increased Senior debt 10.6% 12.2% 3.7% from 41% to 47% of balance 11.8% sheet in the year driven by 19% 40.6% CP/CDs 14.6% 45.7% yoy growth to €86bn 14.4% 45.6% 12.
Slide 23: Profile of customer deposits
Profile of customer deposits +19% growth to €86bn Strong funding position Retail RoI Retail RoI €33bn - Strong customer franchise 276 branches UKFS £17bn €86bn - €33bn deposits Capital Markets €32bn - 1.3m customers with multiple accounts - Average balance €14k Business Banking UK Retail RoI 38%
Slide 24: Group balance sheet – wholesale funding profile March ’08
Group balance sheet – wholesale funding profile March ’08 €bn TOTAL €75 bn Maturity profile 5-7yrs >7yrs Securitisation 8 3-5yrs 3% 4% Term funding: 10% ACS 6 1-3 yrs funding with 16% remaining maturity Funding Senior debt 20 >1yr: 33% <1yr: 67% CP/CDs 27 Currency profile GBP Other 3% JPY 2% HKD 1%
Slide 25: Balance sheet funding
Balance sheet funding Strong funding position Contingent liquidity Robust wholesale funding strategy Strong contingency liquidity management delivering results in challenging markets strategy Excellent deposit gathering capabilities – Established funding programmes (10) diversified by geograph
Slide 26: Strong capital base
Strong capital base Capital* – Basel II Capital* – Basel I March 08 March 08 March 07 Change % Equity tier 1 capital 5.7% 5.3% 4.9% 0.4% Tier 1 capital 8.1% 7.6% 7.9% (0.3%) Total capital 11.1% 10.5% 11.5% (1.0%) RWA (€bn) 117 126 113 11% Total assets (€bn) 197 197 189 5% * All ratios are after dedu
Slide 27: Profit before tax by Division
Profit before tax by Division PBT by Division Group Divisional profitability** March 08 March 07 % €m €m Change Retail Ireland 716 698 3 Life 6% Bank of Ireland Life 108 148 (27) UKFS Retail Capital Markets 651 572 14 25% 36% UKFS 495 441 12 Group Centre (176) (159) (10) Capital Underlying PBT 1794
Slide 28: Retail RoI
Retail RoI 36% Key metrics Retail PBT +3% March 08 vs. March 07 Retail RoI Total income +9% to €1845m – Strong customer proposition and Costs +6% to €983m broadest product range in the market Profit before tax +3% to €716m – Most extensive multi-channel Retail loan book +11% to €54bn distribution
Slide 29: Bank of Ireland Life
Bank of Ireland Life 6% Key metrics Operating profit +12%, PBT -27% March 08 vs. March 07 Performance in second half of Total income +9% to €274m financial year impacted by downturn in equity markets Costs +5% to €110m APE sales growth +4% yoy impacted Operating profit +12% to €164m by weak sing
Slide 30: Capital Markets
Capital Markets 33% PBT – Business Analysis Corporate Banking March 08 March 07 % Strong PBT growth +13% €m €m Change Corporate loan book +22% Corporate Banking 375 332 13 – Growth well-diversified Global Markets 221 144 54 – Margin improvement Asset Management 66 66 - Other (11) 30* Global Mark
Slide 31: UK Financial Services (Sterling)
UK Financial Services (Sterling) 25% PBT – Business Analysis Business Banking Another strong year of profit growth +21% Lending +27% to £17bn March 08 March 07 % Deposits +14% to £13.5bn £m £m Change Stable lending margins Disciplined adherence to credit policies Business Banking 189 156 2
Slide 32: Brian Goggin, Group Chief Executive
Brian Goggin Group Chief Executive
Slide 33: Outlook
Outlook Group well positioned – Strong capital & funding positions – Resilient asset quality Challenging operating environment Management priorities – manage costs tightly while investing in development of our business – maintain tight credit standards as impairment trends towards normalised l
Slide 34: Questions & Answers
Bank of Ireland Group G) Questions & Answers
Slide 35: Supplementary
Bank of Ireland Group G) Supplementary
Slide 36: Supplementary
Supplementary EPS calculation Retail RoI & Bank of Life – Income Statements Bank of Ireland Life – Embedded Value basis Capital Markets – Income Statement UKFS – Income Statement Ireland & UK mortgage analysis Geographic analysis: – PBT – Shareholder base Divisional risk-weighted ass
Slide 37: EPS calculation
EPS calculation March 08 March 07 % €m €m Change PBT €1933m €1958m (1) Tax (€229m) (€306m) Minority interests & pref. dividend (€19m) (€16m) A Profit attributable to shareholders €1685m €1636m 3 After tax impact of non-core items (€197m) (€225m) B Profit attributable to shareholders €1488m €1411m 5
Slide 38: Retail Financial Services Ireland
Retail Financial 36% Services Ireland 6% Retail – Income Statement BoI Life – Income Statement March 08 March 07 % March 08 March 07 % €m €m Change €m €m Change Net interest income 1429 1311 9 Total income 274 250 9 Other income* 416 377 10 Operating expenses (110) (104) 5 Total income 1845 1688 9 O
Slide 39: Bank of Ireland Life - Embedded Value basis
Bank of Ireland Life - Embedded Value basis (Insurance & Investment business) March 08 March 07 % €m €m Change New business 113 114 - Existing business Expected return 98 83 18 Expected variances 11 14 (21) Operating assumption changes 3 - Inter-company payments (32) (36) Operating profit 193
Slide 40: Capital Markets
Capital Markets 33% Income Statement Capital Markets PBT +14% March 08 March 07 % PBT growth +21% excluding Davy €m €m Change Strong performances from Corporate Net interest income* 1030 671 54 Banking and Global Markets Other income** 90 378 (76) Excellent asset quality loan loss charge 3bps
Slide 41: UK Financial Services (Sterling)
UK Financial Services (Sterling) 25% Income Statement UKFS PBT +18% March 08 March 07 % Strong profit performance in difficult £m £m Change market conditions Net interest income 602 531 13 Good income growth despite market dislocation impact on funding costs, Other income* 153 118 30 primarily d
Slide 42: Residential Mortgages Loan to Value – New Business
Residential Mortgages Loan to Value – New Business Residential Mortgages: RoI Average Loan to Value March 08 March 07 March 06 Owner Occupied 70% 74% 75% Investors 59% 63% 64% Residential Mortgages: UK Average Loan to Value March 08 March 07 March 06 Standard 66% 57% 61% Specialised Buy-to-let 71% 7
Slide 43: Mortgages - arrears profiles
Mortgages - arrears profiles Republic of Ireland 1-3 mths 3-6 mths 6-12 mths 12+ mths Total March 08 (%) 0.4 0.3 0.2 0.2 1.1 Sept 07 (%) 0.4 0.2 0.2 0.2 1.0 March 07 (%) 0.3 0.2 0.2 0.2 0.9 UK 1-3 mths 3-6 mths 6-12 mths 12+ mths Total March 08 (%) 0.4 0.5 0.2 0.1 1.2 Sept 07 (%) 0.4 0.4 0.2 0.1 1.1
Slide 44: Geographic analysis
Geographic analysis PBT by geography – March 08 Geographic split of shareholder base – March 08 10% 21% 16% 56% 34% 19% 32% 12% Ireland 16% Ireland 56% Retail 32% UK 34% UK 12% Rest of World 10% US 19% Europe/Rest of World 21% 44
Slide 45: Divisional RWAs
Divisional RWAs Divisional Risk Basel II Basel I Weighted Assets €bn March 08 March 08 March 07 RFSI 35 40 36 Capital Markets 45 46 41 UKFS (€) 37 40 36 Group 117 126 113 45
Slide 46: Economic Outlook - Ireland
Economic Outlook - Ireland Actual Forecast 2007 2008 (F) 2009 (F) 2010 (F) GDP Growth* 5.3 2.0 3.2 4.2 GNP Growth* 5.3 2.0 3.1 4.2 Inflation* 4.9 4.0 2.8 2.6 Unemployment* 4.5 6.0 6.1 6.1 Consumer Spending Growth** 5.4 4.0 4.5 4.5 Exports Growth** 8.2 6.0 5.0 6.0 * Source: Reuters consensus ** Sourc
Slide 47: Economic Outlook - UK
Economic Outlook - UK Actual Forecast 2007 2008 (F) 2009 (F) 2010 (F) GDP Growth* 3.0 1.6 1.7 - Inflation* 2.4 2.6 2.0 - Consumer Spending Growth** 3.0 1.5 1.8 2.5 Unemployment** 5.4 5.5 5.6 5.3 * Source: Reuters consensus – No estimates produced for 2010 ** Source: Bank of Ireland Global Markets 47
Slide 48: Preliminary Results Announcement
Preliminary Results Announcement For the year to 31st March 2008 21st May 2008