Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — FY2011 Earnings Presentation
49 slides from Bank Of Ireland's earnings presentation, February 2012
Slide 1: Preliminary Results Announcement for year ended 31 December 2011
Bank of Ireland Preliminary Results Announcement For the year ended 31 December 2011
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 Bank of Ireland Group’s (the Group) plans and its current go
Slide 3: Presentation of Preliminary results
Presentation of Preliminary results Section 1: Slides 4 to 10 Group Chief Executive’s Review Section 2: Slides 11 to 18 Group Income Statement Section 3: Slides 19 to 30 Asset Quality Section 4: Slides 31 to 36 Funding and Capital Supplementary Information Slides 37 to 49 3
Slide 4: Richie Boucher, Group Chief Executive
Richie Boucher Group Chief Executive
Slide 5: 2011 - Strengthening the Balance Sheet
2011 - Strengthening the Balance Sheet Significant progress on key priorities in 2011 Capital 2011 PCAR requirements fully met - substantially provided by private sector 3 86% of the 2011 - 2013 €10bn divestment target achieved; well below PCAR base case Asset Deleveraging assumption discounts 3 Red
Slide 6: Key Strategic Goals
Key Strategic Goals To be the leading Irish retail and commercial bank in a consolidating sector, with a strongly developing retail orientated business in GB and niche corporate activities internationally To be well positioned in our core markets with strong customer franchises and market positi
Slide 7: Core businesses - Ireland
Core businesses Ireland Savings, Corporate & Consumer Treasury pension and Business Banking Services investment Banking distribution Market1 Leading market position Product Shares Bank of Ireland is no. 1 or no. 2 in all our principal product and market Personal Current Accounts 35% segments Mortgag
Slide 8: Core businesses - International
Core businesses International Post Office Financial Services JV Northern Ireland Main Joint Venture commenced in 2004 44-strong branch network, 255 ATMs Distribution rights for consumer financial services Full service retail and commercial bank offering throughout the UK Post Office’s 11,500
Slide 9: Impairment Charges
Impairment Charges Loans and advance to customers Impairment Charges (2009 – 2011) €2.8bn €1.9bn €1.9bn 1 1 Dec 09 Dec 10 Dec 11 Impairment charges peaked in 2009 Reduced but remained elevated at c.€1.9bn in 2010 & 2011 Expect impairment charges to reduce from this level Trending over time t
Slide 10: Remain focused on targets
Remain focused on targets Measure Dec 2010 Dec 2011 Target Loans and advances to customers €114bn €102bn c.€90bn (net of provisions) Balance Sheet Related Group loan / deposit ratio 175% 144% < 120% Capital Margin maintained over - Core Tier 1 Capital 9.7% 15.1% regulatory minimum - PCAR / EBA Stres
Slide 11: Andrew Keating, Group Chief Financial Officer
Andrew Keating Group Chief Financial Officer
Slide 12: Section 2: Group Income Statement
Section 2 Group Income Statement
Slide 13: Group Income Statement
Group Income Statement Dec 10 Dec 11 % Total Income – 27% lower €m €m Change 11% reduction in average interest earning assets Net interest income 2,511 1,983 (21%) - €142bn in 2011 (€160bn in 2010) Reduction in net interest margin of 13bps to ELG / CIFS Fees (343) (449) 31% 1.33% in 2011 Net oth
Slide 14: Net interest margin
Net interest margin 0.26% 0.13% 1.46% 1.33% Year to Dec 10 Cost of Funds Asset Margin Year to Dec 11 Net interest margin reduced from 1.46% in Dec 10 to 1.33% in Dec 11 Net interest margin (after the cost of ELG fees) reduced from 1.24% in Dec 10 to 1.01% in Dec 11 Current Margin Drivers Future
Slide 15: ELG / CIFS Fees
ELG / CIFS Fees1 Average covered liabilities & Total fees payable €120 Average fees payable 1.20% €102bn €449m €100 1.03% 1.00% 1.03% €343m €80 0.80% €49bn €69bn €68m €60 €23bn 0.60% €44bn €40 0.50% 0.40% €139m €18bn €275m €53bn €20 €46bn 0.20% €26bn 0.14% €0 0.00% 2 2009 2010 2011 2009 2010 2011 Wh
Slide 16: Net Other Income
Net Other Income Dec 2010 Dec 2011 Change €m €m % Net Other Income 634 524 (17%) IFRS Income classification 175 102 (42%) Net Other Income after IFRS classification 809 626 (23%) of which: Banking Businesses 526 512 (3%) Bank of Ireland Life 180 169 (6%) Recurring Income 706 681 (4%) Other Items 103
Slide 17: Operating Expenses
Operating Expenses Total Costs Total Staff numbers €2,140m 23% 16,900 22% €1,785m €1,647m 14,200 €906m 13,200 €775m €785m €1,234m €1,010m €862m Year ended Mar 08 Year ended Dec 10 Year ended Dec 11 Mar 08 Dec 10 Dec 11 Other Costs Staff Costs Staff numbers on a point in time basis Operating Expens
Slide 18: Non-Core Items
Non-Core Items Non-core items Loan Book Deleveraging Year ended Dec 10 Dec 11 Portfolio Volume Loss €m €m €bn €bn UK Investment Property 1.5 (0.3) Gain on liability management exercises 1,413 1,789 UK Mortgages 1.4 (0.1) Loss on deleveraging of loan books - (565) Project Finance 1.0 (0.1) Widening o
Slide 19: Section 3: Asset Quality
Bank of Ireland Group G) Section 3 Asset Quality
Slide 20: Profile of total loans
Profile of total loans1 €125bn Geographic Profile of loans and advances to customers1&3 €120bn RoI UK RoW Total Total 31 Dec 11 €108bn €bn €bn €bn €bn % Mortgages 28 29 - 57 53% Non-property corporate €61bn 13 8 6 27 25% and SME €60bn SME 11 4 - 15 14% €57bn Corporate 2 4 6 12 11% Property and 9 11
Slide 21: Composition of Impaired Loans
Composition of Impaired Loans1 Impaired Loans €13.5bn Total impaired loans increased by €2.5bn or 23% in 2011 €1.5bn The increase of €2.5bn arises from €11.0bn - €1.7bn or 68% primarily relates to €1.1bn investment property loans €4.1bn - €0.4bn or 16% relates to residential mortgages €7.8bn €3.
Slide 22: Impairment Charges and Provisions
Impairment Charges and Provisions Impairment Charges Impairment Provisions Dec 11 - €6.4bn €2.8bn €0.3bn / 5% €0.3bn €1.2bn / 19% €0.9bn €2.0bn €2.0bn €0.4bn €0.5bn €3.2bn €1.7bn / 50% / 26% €0.6bn €0.5bn €1.4bn 1 €0.7bn €0.9bn Residential mortgages €0.1bn Non-property SME and corporate €0.02bn Prop
Slide 23: ROI Owner Occupied Mortgages: €21bn
ROI Owner Occupied Mortgages: €21bn1 Loans – greater than 90 days past due Restructuring Arrangements Dec 09 Dec 10 Dec 11 Owner occupied mortgages that have been restructured Industry* amount to €1.2bn at Dec 11 of which €0.2bn were ‘> 90 Loan Volume 451bps 739bps 1,229bps days past due’ and/or ‘
Slide 24: ROI Buy to Let Mortgages: €7bn
ROI Buy to Let Mortgages: €7bn1 Loans – greater than 90 days past due Restructuring Arrangements Dec 09 Dec 10 Dec 11 Buy to let mortgages that have been restructured amount to €0.6bn at Dec 11 of which €0.1bn were Bank of Ireland ‘> 90 days past due’ and/or ‘impaired’ Loan Volume 568bps 938bps 1,
Slide 25: UK Residential Mortgages: £25bn / €29bn
UK Residential Mortgages: £25bn1 / €29bn Profile of UK Residential mortgages Arrears – greater than 3 months past due2 £29bn £28bn Dec 09 Dec 10 Dec 11 £25bn 128bps £5bn £4bn Standard 97bps 127bps £4bn Buy to let 185bps 192bps 166bps £10bn £10bn Self cert 454bps 545bps 416bps £10bn Total 171bps 199b
Slide 26: Non-Property Corporate & SME Loans: €27bn
Non-Property Corporate & SME Loans: €27bn1 Profile of Loans Impaired Loans & Provisions €34bn €2.3bn €31bn €27bn €1.8bn €12bn €11bn €1.4bn €11bn €1.3bn €5bn €1.1bn €1.1bn €1.1bn €4bn €4bn €0.8bn €0.6bn €0.6bn €0.5bn €17bn €16bn €0.4bn €0.4bn €0.4bn €12bn €0.2bn €0.2bn €0.2bn €0.1bn ROI 2009 ROI 2010
Slide 27: Investment Property Loans: €17bn
Investment Property Loans: €17bn1 Investment Property Loans Impaired Loans & Provisions €4.5bn €21bn €20bn €17bn €2.9bn €1.6bn €1.4bn €1.0bn €0.4bn 2009 2010 2011 2009 2010 2011 Impaired Loans Impairment Provisions Investment Property - €17bn or 16% of loan book Impairment Charge €3bn or 17% red
Slide 28: Land & Development Loans: €3.7bn
Land & Development Loans: €3.7bn1 Land & Development Loans Impaired Loans & Provisions €2.9bn €3.0bn €4.4bn €4.4bn €2.8bn €3.7bn €1.6bn €1.3bn €1.4bn 2009 2010 2011 2009 2010 2011 Land and Development Impaired Loans Impairment Provisions Land & Development - €3.7bn or 3% of the Group’s Impairment
Slide 29: Consumer Loans: €3.3bn
Consumer Loans: €3.3bn1 Consumer Loans Impaired Loans & Provisions €4.4bn €3.7bn €0.43bn €3.3bn €0.38bn €0.37bn €0.34bn €0.32bn €0.28bn 2009 2010 2011 2009 2010 2011 Impaired Loans Impairment Provisions Consumer Loans - €3.3bn or 3% of the Group’s loan book Impairment Charge 10% reduction in por
Slide 30: Available for sale financial assets and NAMA senior bonds
Available for sale financial assets and NAMA senior bonds 2010 2011 Portfolio AFS Portfolio AFS fair value Reserve fair value Reserve €bn €bn €bn €bn Irish Sovereign Bonds 3.1 (0.3) 4.2 (0.2) UK Sovereign Bonds 0.6 - 0.3 0 Senior Bank Debt 6.3 (0.1) 1.4 (0.1) Covered Bonds 4.4 (0.2) 3.5 (0.3) Asset
Slide 31: Section 4: Funding and Capital
Section 4 Funding and Capital
Slide 32: Balance Sheet funding
Balance Sheet funding Total Liabilities €169bn1 Funding Strategy €155bn1 €143bn1 The Group aim to fund loan portfolios substantially through deposits and term funding dependent on €61bn – The ability to attract stable deposits at appropriate pricing – Reduce the quantum of deposits covered by ELG
Slide 33: Customer deposits
Customer deposits Group Profile of Deposits Deposits increased by 8% since Dec 10 (€8bn since July 11) Growth was achieved in each division with UK Post Office deposits growing significantly during 2011 €71bn Loan to deposit ratio of 144% at Dec 11 a 31% reduction from €65bn 175% at Dec 10 A
Slide 34: Wholesale funding profile
Wholesale funding profile Wholesale Funding Quantum of wholesale funding has decreased by €19bn €70bn from €70bn at Dec 10 to €51bn at Dec 11 Net repayments of €19bn €8bn Reduction is driven by asset deleveraging, growth in deposits and recapitalisation proceeds Exceptional liquidity facilitie
Slide 35: Capital
Capital Risk Weighted Assets Core Tier 1 ratio €79bn 15.1% €67bn 9.7% €71bn 14.3% €61bn EBA / PCAR Stress Test Basis €8bn €6bn 2010 2011 Dec-10 Dec-11 Credit Risk Market & Operational Risk Risk Weighted Assets (RWA) Core Tier 1 ratio €12bn or 15% reduction in RWAs due to: Core tier 1 ratio of 15
Slide 36: Summary and Outlook
Summary and Outlook Substantial progress made in 2011 at strengthening the Group’s capital and funding position We remain focused on achieving all of our targets – Balance sheet restructuring and cost reduction targets on track within previously envisaged timeframe – Timing and pace of achieving
Slide 37: Supplementary Information
Bank of Ireland Group G) Supplementary Information
Slide 38: Supplementary
Supplementary Asset Deleveraging Deposit Growth EU Restructuring Plan Divisional Performance Net Other income analysis Summary Balance Sheet Group Loan Book asset quality profile Impaired loans and impairment provisions Stockholders’ Equity and TNAVs Abbreviations Contact detai
Slide 39: Asset Deleveraging
Asset Deleveraging c.€6bn €7.6bn €4.4bn €2.4bn €9.6bn €144bn €114bn €102bn €90bn Loans Loans Disposals Net Loans Disposals Net Loans Sep 08 Dec 10 Redemptions/ Dec 11 Redemptions/ Target other other Dec 14 Substantial asset deleveraging achieved from September 08 to December 2011 €42bn (29%) reduc
Slide 40: Deposit Growth
Deposit Growth NTMA €3bn €5bn - €10bn €65bn €9bn €75bn €71bn to €80bn €65bn €62bn Deposits June Since Deposits Deposit Deposits Dec 10 2011 June Dec 11 Growth Target 2011 Target Dec 14 2012 – 2014 Circa €5bn - €10bn deposits required over 3 years to meet Dec 2014 target Average deposits covered
Slide 41: EU Restructuring Plan – Approved
EU Restructuring Plan – Approved Divestment commitments ahead of schedule – sale of BIAM, Paul Capital & FCE complete 2010 Plan 3 Deleveraging commitments ahead of plan Approved by the European Commission on 20 December 2011 Strategic shape of the Group reconfirmed Further deleveraging com
Slide 42: Divisional Performance
Divisional Performance Retail Retail Corporate Group Retail Ireland Year ended 31 Dec 11 Ireland BIL UK & Treasury Centre Total Net interest income impacted by lower loan volumes, €m €m €m €m €m €m higher cost of wholesale funding and deposits partly offset by improved lending margins Total Income
Slide 43: Net Other Income
Net Other Income Dec Dec Banking Businesses 2010 2011 Change €m €m % Other income from banking and Corporate Banking Businesses 526 512 (3%) and Treasury businesses decreased by €14m (3%) in the year ended Dec 11 Bank of Ireland Life 180 169 (6%) compared to the year ended Dec 10 Recurring Busines
Slide 44: Summary Balance Sheet
Summary Balance Sheet Group Balance Sheet Dec 10 Dec 11 €bn €bn Loans and advances to customers1 (after impairment provisions) 1141 102 Assets held for sale to NAMA (after impairment provisions) 1 - Liquid assets 30 31 BoI Life assets 13 12 Other assets 9 10 Total Assets 167 155 Customer deposits 65
Slide 45: Group loan book asset quality profile
Group loan book asset quality profile Asset Quality Dec 104 Dec 11 €bn % €bn % High quality 65.1 54% 58.4 54% Satisfactory quality 22.0 18% 16.0 15% Acceptable quality 11.4 10% 9.5 9% Lower quality but not past due nor impaired 4.4 4% 4.5 4% Neither past due nor impaired 102.9 86% 88.4 82% Past due
Slide 46: Impaired Loans and Impairment Provisions
Impaired Loans and Impairment Provisions1 31 December 2011 Advances Loans and advances to customers Impaired Loans Impaired Loans as % Impairment provisions Impairment Provisions (pre-impairment) Composition and impairment €m of advances % €m as % of impaired loans €m Residential mortgages 57,490 1,
Slide 47: Stockholders’ equity and Tangible net asset value
Stockholders’ equity and Tangible net asset value Year ended Year ended Stockholders’ equity 31 Dec 10 31 Dec 11 €m €m Stockholders’ equity at beginning of period 6,387 7,351 Movements Profit/(loss) (614) 45 attributable to stockholders Dividends on Preference Stock - (222) Net new equity raised fro
Slide 48: Abbreviations
Abbreviations Bank of Ireland BBRoI Business Banking Republic of Ireland BBUK Business Banking UK BIAM Bank of Ireland Asset Management BIL Bank of Ireland Life BoISS Bank of Ireland Securities Services POFS Post Office Financial Services NI Northern Ireland ROI Republic of Ireland
Slide 49: Contact details
Contact details For further information please contact: Group Chief Financial Officer Andrew Keating tel: +353 76 623 5141 andrew.keating@boi.com Investor Relations Tony Joyce tel: +353 76 623 4729 tony.joyce@boi.com Ciaran McGrath tel: +353 76 623 4730 ciaran.mcgrath@boi.com Capital Management Bria