Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — H1 2016 Earnings Presentation
52 slides from Bank Of Ireland's earnings presentation, Jun 30, 2016
Slide 1: Interim Results Announcement
Interim Results Announcement 30 June 2016
Slide 2: Slide 2
Slide 3: H1 2016 progress and Financial Results
1 H1 2016 progress Richie Boucher, CEO 2 Financial Results Andrew Keating, CFO 1
Slide 4: H1 2016 Progress
H1 2016 Progress Richie Boucher
Slide 5: Business Highlights
Business Highlights Continuing to deliver on strategic priorities Strength of our customer franchises reflected in our financial performance Continue to be the largest lender to the Irish economy in H1 2016 Customers Growth in core loan books of €1.1bn; new lending up 14% on H1 2015 Reduced
Slide 6: Underlying PBT of €560m
Underlying PBT of €560m Total income of €1,587m H1 2015 H2 2015 H1 2016 Net interest income of €1,135m, lower than H2 2015 due primarily to the impact of the low Total income €1,759m €1,513m €1,587m interest rate environment, lower liquid asset income and FX impact of c.€30m Net interest margin
Slide 7: Core loan books growing; continuing reduction in NPLs
Core loan books growing; continuing reduction in NPLs Core loan books grew by €1.1bn in H1 2016; Dec 15 Jun 16 New lending of €6.9bn during H1 2016; 14%2 increase on H1 2015 Redemptions of €7.1bn, of which €1.3bn related to Customer loans (net) €84.7bn €80.2bn cash from defaulted loans (€0.5bn
Slide 8: Favourable Macroeconomic Environment in H1 2016
Favourable Macroeconomic Environment in H1 2016 Retail Unemployment Residential Sales Rate Property Prices Economic ROI: 5.3% ROI: 7.8% ROI: 6.9% Indicators UK: 4.3% UK: 4.9% UK: 5.1% Latest Year-on-Year Change1 Latest Rate2 Latest Year-on-Year Change3 Ireland Employment, consumer spending and pro
Slide 9: Benefitting from Irish growth with international diversification
Benefitting from Irish growth with international diversification Ireland Gross customer loans at June 2016 (~70% of total income) Consumer, €1.7bn Retail and commercial bank; Ireland’s only bancassurer Property and Construction, #1 or #2 market positions across all principal product lines €7.6bn
Slide 10: Investing in technology and supporting our customers
Investing in technology and supporting our customers Further developing our customer channels, propositions and partnerships Supporting Enterprise through our branch network Developing valuable Workbench customer relationships During National Enterprise Week in 500+ Start-ups have used our The first
Slide 11: Summary
Summary Focussed on delivering strategic objectives Track record of protecting Ireland / UK Economies Business Model and generating capital Core fundamentals of Irish Experienced senior leadership Strong retail & commercial and UK economies have been team franchises; diversified business stron
Slide 12: Financial Results
Financial Results Andrew Keating
Slide 13: Group Income Statement
Group Income Statement Underlying profit before tax of €560m Net interest income of €1,135m, lower than H1 2015 H2 2015 H1 2016 H2 2015 due primarily to the impact of the low (€m) (€m) (€m) interest rate environment, lower liquid asset Total income 1,759 1,513 1,587 income and FX impact of c.€30m
Slide 14: All trading divisions are contributing to the Group's profitability
All trading divisions are contributing to the Group’s profitability Retail Ireland, Retail Ireland €309m Underlying PBT of €309m Market share of new mortgage lending of 28% in Q1 2016; fixed rate strategy providing value, certainty and stability to our customers and the Group Bank of Ireland L
Slide 15: Net interest income
Net interest income Impacted by lower liquid asset yields Net interest margin drivers Net interest income Net interest income of €1,135m; impacted in H1 2016 by 2.15% 2.21% 2.17% 2.11% the low interest rate environment, lower liquid asset yields and FX translation effects 269 bps 269 bps 264 bps 2
Slide 16: Loans and advances to customers
Loans and advances to customers Continued growth in core loan books New lending volumes Core loan books grew by €1.1bn in H1 2016 +16% +12% +5% New lending of €6.9bn during H1 2016; an increase of 14%1 on H1 2015 €3.5bn Redemptions of €7.1bn, of which €1.3bn related to; €3.0bn €2.8bn €2.5bn
Slide 17: Other Income
Other Income Business income stable and in line with H2 2015 Business income H1 2015 H2 2015 H1 2016 (€m) (€m) (€m) Includes fee income from customer activity in our Retail ROI, BOI Life, Retail UK and Corporate & Treasury divisions Retail Ireland 167 164 156 Business income stable and in line w
Slide 18: Operating Expenses, Levies and Regulatory charges
Operating Expenses, Levies and Regulatory charges Focused on cost control; continue to invest Cost / income ratio of 56% H1 2015 H2 2015 H1 2016 (€m) (€m) (€m) Total staff costs of €454m in H1 2016; increase vs. H2 2015, driven primarily by the impact of the Career and Total staff costs 446 448
Slide 19: Asset Quality
Asset Quality
Slide 20: Non-performing loans and impairment charges
Non-performing loans and impairment charges Significant reduction in non-performing loans and impairment charges Non-performing loan volumes Non-performing loan volumes1 – €9.9bn €2.1bn reduction during H1 2016 €14.7bn €1.4bn Reductions in all asset classes €12.0bn €1.4bn €9.9bn Defaulted loan
Slide 21: Non-performing loans by portfolio
Non-performing loans by portfolio Reducing across all asset classes ROI Mortgages UK Mortgages €3.5bn €3.0bn €0.7bn €2.6bn €0.7bn €0.6bn €1.2bn €1.2bn €2.8bn €0.9bn €2.3bn €2.0bn €0.7bn €0.7bn €0.6bn €0.5bn €0.5bn €0.3bn Jun 15 Dec 15 Jun 16 Jun 15 Dec 15 Jun 16 n Defaulted Loans Probationary Mortga
Slide 22: UK Customer Loans
UK Customer Loans £28.8bn (€35.0bn) UK Mortgages – £20.5bn UK Mortgages Analysis Total UK mortgages of £20.5bn; (NPLs1 - 4%; Defaulted loans Scotland, Wales, £0.8bn - 2%) £0.9bn Greater Average LTV of 62% on total book Northern Ireland, £0.9bn London, Average LTV of 69% on new mortgages £4.4bn
Slide 23: Funding & Capital
Funding & Capital
Slide 24: Balance Sheet
Balance Sheet Capital and Liquidity available to support growth Dec 15 Jun 16 Strong liquidity ratios (€bn) (€bn) Net Stable Funding Ratio – 119% Customer loans 85 80 Liquidity Coverage Ratio – 116% Liquid assets 24 22 Loan to Deposit Ratio – 103% BOI Life assets 16 16 Customer deposits – €78b
Slide 25: Capital
Capital1 Continued organic capital generation offset by IAS19 pension deficit Transitional CET1 ratio C ontinued organic capital generation offset by IAS19 0.4% 0.7% (0.15%) (0.20%) (0.45%) accounting standard pension deficit; F ully loaded CET1 ratio of 10.7% T ransitional CET1 ratio of 12.8%
Slide 26: Additional Information
Additional Information
Slide 27: Additional Information
Additional Information Slide No. BOI Overview Business profile 26 Historic financial results 28 Income Statement Divisional performance 30 Net interest income analysis 31 Other income analysis (net) 32 Non-core Items 33 Irish mortgage loan book 34 UK mortgage loan book 35 Asset
Slide 28: BOI Overview: Business profile
BOI Overview: Business profile Ireland: Leading bank in a growing economy with a well structured market Comprehensive multi-channel distribution c.250 branches c.1,770 – 71% of consumers are c.440k active 830k service calls platform Self-service now digitally active mobile customers monthly / 24 x 7
Slide 29: BOI Overview: Business profile
BOI Overview: Business profile Attractive international franchises provide further opportunities for growth Partnership based consumer banking Acquisition Finance franchise in UK Trusted brands, established customer base and expanding product range Well recognised lead arranger / c.1.4m Savings c.
Slide 30: BOI Overview: Income Statement
BOI Overview Income Statement1 y/e Dec 12 y/e Dec 13 y/e Dec 14 y/e Dec 15 Jun 16 (€m) (€m) (€m) (€m) (€m) Total income 1,862 2,646 2,974 3,272 1,587 Net interest income 1,755 2,133 2,358 2,454 1,135 Other income 495 642 653 828 470 ELG fees (388) (129) (37) (10) (18) Operating expenses (1,589) (1,5
Slide 31: BOI Overview: Summary Balance Sheet
BOI Overview Summary Balance Sheet1 Dec 12 Dec 13 Dec 14 Dec 15 Jun 16 (€bn) (€bn) (€bn) (€bn) (€bn) Net customer loans2 93 85 82 85 80 Liquid assets 33 27 25 24 22 Other assets 9 6 7 6 8 Total Assets 135 118 114 115 110 Customer deposits 75 74 75 80 78 Wholesale funding 39 27 20 14 13 Private sourc
Slide 32: Income Statement: Divisional performance
Income Statement Divisional performance Underlying profit / (loss) before tax Underlying profit / (loss) Additional gains 6 months ended Jun 16 and additional gains before tax (€m) (€m) (€m) Retail Ireland 219 90 309 Bank of Ireland Life 54 - 54 Retail UK 89 5 94 Corporate & Treasury 191 65 256 Grou
Slide 33: Net interest income analysis
Income Statement Net interest income analysis H2 2014 H1 2015 H2 2015 H1 2016 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) (%) (€bn) (€m) (%) (€bn) (€m) (%) (€bn) (€m
Slide 34: Other income analysis (net)
Income Statement Other income analysis (net) H1 2015 H2 2015 H1 2016 (€m) (€m) (€m) Retail Ireland 167 164 156 Bank of Ireland Life 81 73 76 Retail UK 5 4 5 Corporate and Treasury 71 82 86 Group Centre and Other (5) (16) (6) Business Income 319 307 317 Other gains VISA Europe share disposal - - 95 L
Slide 35: Non-core items
Income Statement Non-core items H1 2015 H2 2015 H1 2016 (€m) (€m) (€m) Gain / (Charge) arising on the movement in Group’s credit spreads (8) 19 19 Gross-up for policyholder tax in the Life business 10 1 5 Investment return on treasury stock for policyholders (1) 1 2 Loss on liability management exer
Slide 36: ROI Mortgages: €24.6bn
ROI Mortgages: €24.6bn ROI Mortgages (gross) Market share €25.6bn €25.0bn €24.6bn €2.3bn €3.9bn €4.6bn H1-15 H2-15 H1-16 €8.9bn €8.1bn €7.7bn New Lending Volumes1 €0.5bn €0.9bn €0.6bn €14.4bn €12.9bn Market share 26% 31% 28%4 €12.3bn Dec 14 Dec 15 Jun 16 n Tracker n Variable Rates n Fixed Rates Tr
Slide 37: UK Residential Mortgages
UK Residential Mortgages: £20.5bn/€24.8bn UK Residential Mortgages (gross) UK Residential Mortgages (gross) £20.5bn £20.5bn £20.5bn £20.5bn £19.8bn £19.8bn £2.6bn £2.4bn £2.9bn £4.2bn £6.9bn £7.8bn £7.6bn £7.4bn £6.1bn £7.8bn £4.9bn £4.5bn £9.5bn £10.4bn £10.7bn £8.7bn £8.3bn £9.1bn Dec 14 Dec 15 Ju
Slide 38: Profile of customer loans at Jun 16
Asset Quality Profile of customer loans1 at Jun 16 (gross) ROI UK RoW Total Total Composition (Jun 16) (€bn) (€bn) (€bn) (€bn) (%) Mortgages 24.6 24.8 - 49.4 58% Non-property SME and corporate 11.8 4.12 4.4 20.3 24% SME 9.2 2.0 0.0 11.2 13% Corporate 2.6 2.1 4.4 9.1 11% Property and construction 7.6
Slide 39: Non-performing loans by portfolio
Non-performing loans by portfolio Non-performing loans reducing across all portfolios Impairment Impairment Advances Non-performing Non-performing Defaulted Defaulted Impairment provisions Composition (Jun 16) as % of provisions as % loans loans as % of loans loans as % of provisions (€bn) non-perfo
Slide 40: ROI Mortgages: €24.6bn
ROI Mortgages: €24.6bn Owner Occupied Non-performing loans Portfolio Performance Reduced NPLs1 by €0.4bn to €2.6bn in H1 2016 32% 33% Defaulted loans component of €2.0bn; down 49% since reported June 2013 peak €1.6bn €1.4bn Continued trend of probationary mortgages returning to €0.4bn €0.3bn p
Slide 41: Available for Sale Financial Assets
Asset Quality Available for Sale Financial Assets ROI UK France Other Jun 16 Dec 15 Carrying Value €bn €bn €bn €bn €bn €bn Sovereign bonds 1.9 0.7 0.8 1.3 4.7 5.7 Senior debt - - 0.2 1.4 1.6 1.5 Covered bonds 0.3 0.7 0.6 1.8 3.4 2.2 Subordinated debt 0.3 - - - 0.3 0.3 Asset backed securities - 0.1 -
Slide 42: CET1 ratios – June 2016
Capital CET1 ratios – June 2016 Transitional ratio Fully loaded ratio (€bn) (€bn) Total equity 8.7 8.7 Less Additional Tier 1 (0.8) (0.8) Deferred tax1 (0.3) (1.3) Pension deficit 0.4 - Available for sale reserve (0.3) - Removal of national filters (0.1) - Intangible assets and goodwill (0.5) (0.5)
Slide 43: Regulatory Capital Requirements
Regulatory Capital Requirements Requirements expected to be reviewed annually 12.8% O-SII buffer +1.5% phased in from 10.25% +1.0% July 2019 +0.5% 2016 CET1 Transitional SREP CET1 Ratio SREP requirement from 2017 requirement (Incl. Capital onwards not known at this point Conservation Buffer) June 20
Slide 44: Risk weighted assets (RWA)
Risk weighted assets (RWA) RWA Density1 Customer lending Avg. Credit Risk Weights2 As at June 2016 (Based on regulatory exposure class) EAD3 RWA Avg. Risk (€bn) (€bn) Weight ROI mortgages 25.0 6.6 26% UK mortgages 24.3 5.0 20% SME 21.2 14.7 69% Corporate 12.7 12.8 101% Other Retail 4.3 2.6 60% 46% 4
Slide 45: Ordinary stockholders' equity and TNAV
Ordinary stockholders’ equity and TNAV 2015 2016 Movement in ordinary stockholders’ equity (€m) (€m) Ordinary stockholders’ equity at beginning of period 7,392 8,308 Movements: Profit attributable to stockholders 940 439 Available for sale (AFS) reserve movements (81) (148) Distribution on other equ
Slide 46: Defined Benefit Pension Schemes
Defined Benefit Pension Schemes Group IAS19 Pension Deficit Group IAS19 pension deficit of €1.2bn at Jun 16 (€0.74bn at Dec 15) 3.65% Primary drivers of the increase in the deficit were 2.20% 2.30% E uro and UK AA corporate bond discount rates decreased from 1.60% 2.3% to 1.6% and 3.8% to 2.75
Slide 47: Defined Benefit Pension Schemes
Defined Benefit Pension Schemes Group has developed a framework for pension funding and investment decision-making as part of long-term plan Management of Group’s DB pension position involves a multi-year programme, categorised into 3 broad areas. Activity in these areas includes; 1 Review Liabi
Slide 48: Reimbursing and rewarding taxpayers support
Reimbursing and rewarding taxpayers support Jan 09 – Jun 16 State Aid repaid Risk to the State dealt with - ELG expired c.14% Shareholding From 2009 - 2011, c.€4.8bn cash invested by the State + Cumulative c.€6bn cash returned to the State State continues to hold valuable c.14% equity shareh
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 Alan Hartley tel: +353 76 623 4850 alan.hartley@boi.com Barry McLoughlin tel: +353 76 624 5753 barry.mcloughlin@boi.com Niall Murph
Slide 50: Forward-Looking statement
Forward-Looking statement This document contains certain forward-looking statements with respect to certain of the Bank of Ireland Group’s (the ‘Group’) plans and its current goals and expectations relating to its future financial condition and performance, the markets in which it operates, and its
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