Aib Group Plc · EURONEXT:A5G
Aib — H1 2023 Earnings Presentation
47 slides from Aib's earnings presentation, July 2023
Slide 1: Backing Our Customers: Half-Yearly Financial Results
BACKING OUR CUSTOMERS AIB Group plc Half-Yearly Financial Results For the six months ended 30 June 2023
Slide 2: Forward looking statements
Forward looking statements 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 statements can be identified by the fact that they
Slide 3: H1 2023 Highlights
H1 2023 Highlights Irish economy well-positioned to withstand inflationary impact and rising rates’ pressure Economic growth expected with supportive fiscal policy and healthy corporate and household balance sheets New lending up 2% to €5.6bn, customer accounts up €1.3bn in H1 to €103.7bn Very stron
Slide 4: Open and resilient Irish economy
Open and resilient Irish economy Solid Irish economic growth still expected despite headwinds Good growth forecast for 2023-25 despite headwinds Employment levels rise while unemployment remains low Irish headline inflation rate in marked decline % % % 2,700 11 12 6 5.3 5.0 2,600 10 10 2,500 9 3.7 3
Slide 5: Delivering on our strategy and adapting to changed environment
Delivering on our strategy and adapting to changed environment Closing out Strategy 2023 2 Dec 2020 2 Dec 2022 End 2023 Three year plan Revised medium-term Reshaped business to accelerate targets in light of delivering sustainable strategy through changed operating returns transformation environment
Slide 6: Filled product gaps and services
Filled product gaps and services Diversifying revenue, increasing efficiency and enhancing customer experience AIB life launched Goodbody-Private launched New iBB mobile app launched closes strategic gap enhances wealth to support business customers proposition AIB life, JV with Great-West Lifeco, l
Slide 7: Acquisition-led loan book growth
Acquisition-led loan book growth Transfers from Ulster Bank now substantially complete Ulster Bank corporate & commercial loans Ulster Bank tracker mortgage portfolio Final tranche of loans migrated in July 2023 Agreed €5.7bn loan book acquisition €3.1bn loan book, c. 3,500 customers Transfer of eco
Slide 8: Organic growth - new lending of €5.6bn in H1 2023
Organic growth - new lending of €5.6bn in H1 2023 2% increase in new lending New lending growth New lending across asset classes Drawdowns (€bn) Mortgages (€bn) Property (€bn) -0.7% -20% +2% 5.6 5.4 1.8 1.7 1.2 1.0 H1 2022 H1 2023 H1 2022 H1 2023 2.1 2.2 Personal lending (€bn) Corporate & SME (€bn)
Slide 9: Robust asset quality
Robust asset quality Transformed and resilient balance sheet Mortgages €30.4bn Property €9.4bn; CRE investment €8bn NPEs €2.1bn, decreased 3% YTD €30.4bn €29.5bn ROI mortgages 3.3% (1) 5% 3% Residential 2% 12% 4% 15% Office 42% 8.0 35% 27% 23% Retail 16% €8bn 1.9 €1.9bn 94% 62% Mixed 8% Industrial 3
Slide 10: Strong delivery across the ESG agenda
Strong delivery across the ESG agenda Proven multi-annual track record of delivery against ambitious sustainability strategy and targets Focus area H1 2023 Progress €10bn green lending by 2023 €9bn green lending since 2019, €1.1bn in H1 with continued focus across renewables and energy efficient bui
Slide 11: Reshaped and larger AIB Group well-positioned for the future
Reshaped and larger AIB Group well-positioned for the future Leading financial services provider AIB Group plc Growing customer numbers 2.7m to 3.2m customers Increased loan book 14%(1) growth since Dec 2020 Generating sustainable profits Full service provider at with long-term multi- Expanded produ
Slide 12: Strategic progress has delivered a strong platform for the future
Strategic progress has delivered a strong platform for the future Enhancing customer experience, operational efficiency and capital generation Following very strong H1 with RoTE of 21.5% and momentum in the business, we are confident for the remainder of the year as we close out Strategy 2023 P Crea
Slide 13: Financial Performance
Financial Performance AIB Group plc 13
Slide 14: Financial performance H1 2023
Financial performance H1 2023 Profit after tax €854m 73% increase in total income Total income €2,209m Net interest income €1,772m (+98%) and other income €437m (+15%) Costs €897m(1) up 15%, FTEs 10,133 at June 2023 Cost income ratio 41% Gross loans €62.8bn(2) increased 3% from Dec 2022 €61.2bn Orga
Slide 15: Income Statement
Income Statement AIB Group plc 15
Slide 16: Income statement – profit after tax €854m
Income statement – profit after tax €854m Summary income statement (€m) H1 2023 H1 2022 Net interest income 1,772 895 Net interest income increased by 98% reflecting changed interest rate Other income(1) 437 379 environment Total operating income 2,209 1,274 Other income €437m up 15%; net fee and To
Slide 17: Net interest income €1,772m; up 98%
Net interest income €1,772m; up 98% NII – material movements NII €1,772m up €877m (+98%) from H1 2022 impacted by: €877m increase in NII; 146bps increase in NIM -€273m higher cost of liabilities including: • -€77m customer accounts reflecting higher interest 2.94% 116 bps expense • -€196m other liab
Slide 18: 2023 NII guidance upgraded to >€3.6bn and NIM >2.90%
2023 NII guidance upgraded to >€3.6bn and NIM >2.90% NII outlook Period end ECB 2023 guidance NII >€3.6bn & NIM >2.90% in 2023, assuming period end ECB deposit rate 2% 3.75% deposit rate of 3.75% (previous assumption 3.5%) assumptions Asset income driven by higher rate expectations >€3.6bn Volumes d
Slide 19: Strong other income; net fee and commission income up 7%
Strong other income; net fee and commission income up 7% Net fee and commission income (€m) H1 2023 H1 2022 Other income €437m up 15% Customer accounts 119 111 Lending related fees 26 25 Net fee and commission income €306m up €20m (+7%) Card 69 49 • Increase reflected higher transaction volumes, the
Slide 20: Costs €897m; 15% increase due to inflation and enlarged Group
Costs €897m; 15% increase due to inflation and enlarged Group Costs €897m, up 15% driven by: Operating expenses(1) (€m) 897 41% • Staff: Salary inflation, increase in FTEs and allowance for 782 147 variable pay 61% 148 • General & Admin: Inflation, cost to service enlarged Group 316 and newly onboar
Slide 21: ECL charge €91m (30bps); Stage 2 increased €2.2bn to €8.3bn
ECL charge €91m (30bps); Stage 2 increased €2.2bn to €8.3bn Stage 2 composition (€bn) ECL (charge) / writeback (€m) H1 2023 9.4 8.3 Macroeconomic assumptions 16 6.8 5.0 6.0 3.2 Corp. & SME Other(1) (45) 4.0 Property 3.7 3.2 Post-model adjustments (PMA) (62) 1.1 Personal 2.1 3.7 0.3 0.4 0.3 1.4 1.4 M
Slide 22: Balance Sheet
Balance Sheet AIB Group plc 22
Slide 23: Balance sheet – strong funding & liquidity to support our customers
Balance sheet – strong funding & liquidity to support our customers Balance sheet (€bn) Jun 2023 Dec 2022 Performing loans 60.7 59.0 Assets Non-performing loans 2.1 2.2 Gross loans increased 3% to €62.8bn including €0.7bn Ulster Gross loans to customers 62.8 61.2 Bank corporate and commercial loans
Slide 24: Loan book movement in H1 2023
Loan book movement in H1 2023 Net loans movement: €1.6bn increase to €61.2bn (€bn) Gross loans (€bn) +5.6 (4.6) >10% (0.3) +0.7 +0.2 61.2 +3% 62.8 59.6 61.2 19.2 19.9 7.2 7.5 Dec-22 New lending Redemptions Redemptions Ulster Bank loans Other Jun-23 Performing NPEs migrated Gross loans New lending 34
Slide 25: Funding and Capital
Funding and Capital AIB Group plc 25
Slide 26: Strong funding and liquidity ratios
Strong funding and liquidity ratios Total funding composition with focus on stable funding sources Strong liquidity ratios with surplus over requirement €123.8bn €125.0bn 1.0 Liquidity metrics (%) Jun 2023 Dec 2022 1.2 16.2 14.7 Loan to deposit ratio (LDR) 59 58 9.2 8.6 Group Customer Liquidity cove
Slide 27: CET1 (FL) 15.7% well ahead of regulatory requirements
CET1 (FL) 15.7% well ahead of regulatory requirements Capital ratios fully loaded (FL) (%) CET1 (FL) 15.7% ahead of SREP 10.6% €55.3bn RWAs • 5.1% buffer to CET1 (FL) 15.7% €58.6bn RWAs • 5.9% buffer to transitional 16.5% 21.3% 20.4% CET1 15.7% decreased by 60bps reflecting: 3.0 2.8 + 150bps capital
Slide 28: 2023 Guidance and outlook
2023 Guidance and outlook Guidance FY 2023 Distributions outlook (1) Medium-term targets NII: >€3.6bn FY 2023 – FY 2025 NIM: >2.90% RoTE CET1 15.7% H1 2023 >13% in 2024 Other income: c. €780m + Organic capital generation + Capital efficiency initiatives CET1 +/- Regulatory developments >13.5% Costs:
Slide 29: Appendices
AIB Group plc n o 2 Oo c o foe roy <x
Slide 30: Market leading ESG Customer propositions and commitments
Market leading ESG Customer propositions and commitments Propositions Commitments Task Force on Climate- Green Mortgage for energy Widescale lending for projects Related Financial efficient homes across AIB, in Renewables, Housing, Haven, EBS brands & UK Disclosures Healthcare, Education UNEP FI – P
Slide 31: Average balance sheet
Average balance sheet H1 2023 H1 2022 Average Volume Interest Yield Average Volume Interest Yield €m €m % €m €m % Assets Customer loans 61,219 1,116 3.68 57,713 920 3.21 Investment securities 16,255 303 3.77 16,743 45 0.54 Loans to banks / other 44,203 660 3.01 47,210 (56) (0.24) Interest earning as
Slide 32: Customer loans
Customer loans €bn Performing Loans Non-Performing Loans Customer Loans Gross loans (1 Jan 2023) 59.0 2.2 61.2 New lending 5.6 - 5.6 Redemptions of existing loans (4.6) (0.3) (4.9) Portfolio acquisition 0.7 - 0.7 Net flow to NPE (0.3) 0.3 - Foreign exchange / other movements 0.3 (0.1) 0.2 Gross loan
Slide 33: Loan book by staging and coverage
Loan book* by staging and coverage Jun 2023 Total Loan book by staging – €62.6bn loan exposures Stage 1 Stage 2 Stage 3** Gross loan exposures (€bn) exposure Mortgages 28.7 1.1 0.7 30.4 Stage 1 loans decreased by €0.5bn to €52.4bn Personal 2.4 0.3 0.2 2.8 Property & Construction 5.1 3.7 0.5 9.3 prim
Slide 34: Loan book by sector
Stage movements by sector Jun 2023 Loan book by sector Gross loan (€bn) Stage 1 Stage 2 Stage 3* Total exposure At amortised Cost Mortgages 28.7 1.1 0.7 30.4 Personal 2.4 0.3 0.2 2.8 Concentration by sector (%) Jun 2023 Property & Construction 5.1 3.7 0.5 9.3 Agriculture 3 Hotels, Bars & Restaurants
Slide 35: ECL coverage by stage
ECL coverage by stage Dec 2022 Jun 2023 Stage 1 Stage 2 Stage 3* Total exposure Stage 1 Stage 2 Stage 3* Total exposure ECL Coverage ECL Coverage Mortgages 0.1% 3.6% 28.1% 0.9% Mortgages 0.1% 3.2% 28.3% 0.9% Personal 1.2% 14.9% 67.3% 6.3% Personal 1.1% 13.7% 64.8% 6.5% Property & Construction 0.9% 5
Slide 36: Asset quality by portfolio
Asset quality by portfolio At amortised cost At FVTPL €bn Mortgages Personal Property Corporate & SME Total Total Total Jun-23 Customer loans 30.4 2.8 9.3 20.1 62.6 0.2 62.8 Total ECL cover (%) 1% 6% 4% 4% 2.6% of which NPEs 0.6 0.2 0.5 0.7 2.0 0.1 2.1 of which legacy NPEs* 0.1 0 0 0 0.2 0.2 of whic
Slide 37: Mortgages & Personal lending
Mortgages & Personal lending Total Mortgages Total Mortgages Dec-22 Jun-23 Dec-22 Jun-23 4% 2% 2% 4% 5% 4% 94 95% 96% 94% % €30.3bn €30.4bn €30.3bn €30.4bn Stage 1 Stage 2 Stage 3 Owner-occupier Buy-to-let ROI Mortgages Personal lending Dec-22 Jun-23 Dec-22 Jun-23 17% 15% 25% 24% 23% 23% 60% 75% 76%
Slide 38: Property and Corporate/SME
Property and Corporate/SME Property €9.4bn Corporate/SME €20.1bn Residential Investment Agriculture Student Accomodation 42% Energy 5% 12% 23% 14% 9% Manufacturing Housing associations Office 15% Hotels & Licensed premises 16% 10% 24% 21% Retail Resi dev Retail/wholesale & Other Distribtuion 9% Comm
Slide 39: NPEs at 3.3%; target c.3% by end 2023
NPEs at 3.3%; target c.3% by end 2023 NPEs (€bn) 3.5% 3.3% Legacy NPE Non-legacy NPE 35% 37% 2.2 0.1 2.1 15% 0.3 0.3 35% 27% 0.8 0.7 15% €0.2bn €1.9bn 0.6 0.6 5% 65% 8% 0.2 0.2 30% 0.7 0.6 Dec-22 Net inflow Redemptions Restructures Jun-23 0.3% 3.0% Mortgages Personal Property Corporate and SME Mortg
Slide 40: Asset quality – internal credit grade by ECL staging
Asset quality – internal credit grade by ECL staging* Jun 2023 Dec 2022 €m Stage 1 Stage 2 Stage 3 POCI** Total Stage 1 Stage 2 Stage 3 POCI Total Strong 40,139 3,198 - 4 43,341 40,708 1,159 - 3 41,870 Satisfactory - 3 - 3 11,484 2,270 13,757 11,365 1,772 13,140 Total strong / - - satisfactory 51,62
Slide 41: Debt securities €16.2bn; primarily held for liquidity purposes
Debt securities €16.2bn; primarily held for liquidity purposes Debt Securities Government securities €5bn €bn Incl. €3.3bn 2% 0.1 covered bonds 16% 2.1 6.2 0.2 1.8 2.9 82% 1.7 0.2 0.5 0.6 Bank securities Supranational banks Asset backed Corporate securities Government and government securities secur
Slide 42: Reported capital ratios
Reported capital ratios Transitional capital ratios Fully loaded capital ratios Jun 23 Dec 22 Jun 23 Dec 22 Total risk weighted assets (€m) 58,724 55,558 Total risk weighted assets (€m) 58,582 55,333 Capital (€m) Capital (€m) Shareholders equity excl AT1 and dividend 11,133 10,985 Shareholders equit
Slide 43: Regulatory capital requirements
Regulatory capital requirements Regulatory Capital requirements Jun-23 Dec-23* Dec-24* Pillar 1 4.50% 4.50% 4.50% Pillar 2 requirement (P2R) 1.55% 1.55% 1.55% Capital Conservation Buffer (CCB) 2.50% 2.50% 2.50% O-SII Buffer 1.50% 1.50% 1.50% Countercyclical Buffer (CCyB) 0.56% 1.05% 1.45% Total CET1
Slide 44: Macroeconomic scenarios and sensitivities
Macroeconomic scenarios and sensitivities Macroeconomic scenario - Base (%) 2023 2024 2025 2026 2027 Composition of balance sheet by interest rate type at Jun 2023** Republic of Ireland 57% GDP growth 4.0 3.7 4.0 3.5 3.0 Interest Residential property price growth 1.0 2.0 2.5 2.5 2.5 rate 75% insensi
Slide 45: Credit ratings
Credit ratings As at 30 Jun 2023 AIB Group plc (HoldCo) A3 BBB Long term issuer rating Outlook Stable Stable Investment grade AIB p.l.c. (OpCo) A1 A Long term issuer rating Outlook Stable Stable Investment grade 45
Slide 46: Other information
Other information 2023 guidance NII >€3.6bn NIM >2.90% Other income c. €780m Costs c. €1.8bn with a CIR in the low-40%s CoR At the lower end of through-the-cycle range of 30-40bps Bank levies & regulatory fees c. €165m Exceptional costs c. €150m Customer loans >10% growth Inclusive of acquisitions o
Slide 47: Contact details
Contact details Our Investor Relations Department are happy to facilitate your requests for any further information 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