Permanent Tsb Group Holdings Plc · EURONEXT:PTSB
Permanent Tsb — Irish Life & Permanent — H1 2003 Earnings Presentation
42 slides from Permanent Tsb's earnings presentation, Sep 3, 2003
Slide 1: Interim Results 2003 – 3rd September 2003
www.irishlifepermanent.ie 3rd September 2003
Slide 2: Index
Index Section Page Introduction 1- 3 Group Financial Results 4- 6 Life Financials - Ireland 7 - 10 Bank Financials 11 - 16 Associate & Exceptional Items 17 - 18 Capital & Dividend 19 - 21 Review of Life Business 22 - 27 Review of Banking Business 28 - 32 Change Programmes & Outlook 33 - 35 Additiona
Slide 3: Interim Results 2003 Overview
Interim Results 2003 Overview ❚ Good performance in more difficult market ❚ Banking out-performance compensates for weaker life and pensions market ❚ Cost reductions / margin squeeze ❚ Strengthening market position 3
Slide 4: Financial Review
Life & Permanent .. Financial Review
Slide 5: Total Profit after Tax
Total Profit after Tax 30 June 30 June 2003 2002 Change €m €m % Total Contribution 189.5 166.7 14 Short Term Investment fluctuations 6.7 (59.9) Goodwill (5.9) (5.8) Exceptional items & Economic variance (49.4) 109.1 Total Profit before tax 140.9 210.1 (33) Taxation & Levy (30.3) (20.7) Minority Inte
Slide 6: Total Contribution
Total Contribution 30 June 30 June 2003 2002 Change €m €m % Ireland & UK • Life Assurance 96.9 109.4 (11) • Banking & Other 74.8 44.5 68 171.7 153.9 12 • Share of Associate 16.3 4.9 • Other Investment Earnings - 3.8 188.0 162.6 16 US 1.5 4.1 Total Contribution 189.5 166.7 14 6
Slide 7: Life Assurance - Contribution
Life Assurance - Contribution 30 June 30 June 2003 2002 Change €m €m % Ireland New Business 18.2 36.3 Existing Business • Unwind of Discount Rate 41.2 42.5 • Experience Variances 10.4 12.9 • Assumption Changes 19.9 1.3 Expected Investment returns 1.0 1.3 Other Income 2.6 4.1 93.3 98.4 (5) UK 3.6 11.
Slide 8: Life Assurance - Ireland: Value of New Business/Margins
Life Assurance - Ireland Value of New Business/Margins 30 June 30 June 2003 2002 Change VNB €m €m % Life 16.0 33.1 ILIM 2.2 3.2 18.2 36.3 (50) Sales Life 132.1 219.7 ILIM 20.7 48.5 152.8 268.2 (43) Margins % % Life 12.1 15.1 ILIM 10.6 6.6 Total Margin 11.9 13.5 8
Slide 9: Life Assurance - Ireland: Experience Variances and Assumption Changes
Life Assurance -Ireland Experience Assumption Variances Changes 30 June 30 June 30 June 30 June 2003 2002 2003 2002 €m €m €m €m Persistency 0.6 7.2 - - Risk 10.4 4.3 - - Other (0.6) 1.4 19.9 1.3 10.4 12.9 19.9 1.3 9
Slide 10: Life Assurance - Costs
Life Assurance - Costs 30 June 30 June 2003 2002 Change €m €m % Ireland • Commissions & fees 35.5 34.2 4 • Operating costs 96.2 95.2 1 131.7 129.4 US & UK 34.1 44.1 Corporate 3.1 2.3 168.9 175.8 10
Slide 11: Banking & Other - Contribution
Banking & Other - Contribution 30 June 30 June 2003 2002 Change €m €m % Net Interest Income 163.5 159.7 Gain on disposal of hedge securities 26.0 - Other Income (net) 15.8 16.1 205.3 175.8 17 Expenses (124.2) (124.2) Bad & Doubtful Debts (6.3) (7.1) Contribution 74.8 44.5 68 11
Slide 12: Banking - Margins
Banking - Margins €m % 350 325 3 300 280 250 1.98 1.90 1.78 2 200 183 183 1.70 150 1.58 100 1 1999 2000 2001 2002 Jun-03 Net Interest Income Net Interest Margin 12
Slide 13: Banking - Margins Movement
Banking - Margins 2003 Movement % FY 2002 1.78 Retail (0.05) Funding (0.03) HY 2003 1.70 Including gain on hedge portfolio 0.13 HY 2003 1.83 13
Slide 14: Banking & Other - Non Interest Income
Banking & Other - Non Interest Income 30 June 30 June 2003 2002 Change €m €m % Fees & Commissions receivable 22.2 21.1 5 Fees & Commissions payable (15.7) (12.7) Dealing profits 5.5 1.2 Other income 0.9 3.6 Property Management 2.9 2.9 15.8 16.1 (2) Note: Bank Embedded Value earnings €13.7m (2002: €2
Slide 15: Banking & Other - Expenses
Banking & Other - Expenses 30 June 30 June Change 2003 2002 €m €m % Banking 114.9 118.8 (3) Corporate & Other 9.3 5.4 124.2 124.2 Cost/Income Ratio % % Reported 57 69 Incl. Commission 56 67 Incl. Bank EV Earnings 53 61 15
Slide 16: Banking - Debt Provisions
Banking - Debt Provisions 30 June 30 June 2003 2002 €m €m Opening Balance 85.6 77.7 Charge for Period 6.3 7.1 Amounts Written Off (3.5) (2.8) Closing Balance 88.4 82.0 % % Reserve Ratio 0.62 0.65 Arrears Ratio 0.25 0.27 16
Slide 17: Associate - Allianz-Irish Life
Associate - Allianz-Irish Life 30 June 30 June 2003 2002 €m €m Contribution 16.3 4.9 Short term investment fluctuations 0.8 (20.1) 17.1 (15.2) Note: Contribution includes expected/normalised investment returns 17
Slide 18: Exceptional Items & Economic Variance
Exceptional Items & Economic Variance 30 June 30 June 2003 2002 €m €m Disposal of businesses (49.6) 103.2 Profit on disposal of branch properties 3.0 4.3 (46.6) 107.5 Economic Variance* (2.8) 1.6 (49.4) 109.1 * Impact of changes in embedded value economic assumptions 18
Slide 19: Capital & Reserves
Capital & Reserves 30 June Capital generated 2003 €m Banking and other • earnings 65.0 • property revaluation 80.4 Life net worth movement • earnings 73.7 • US disposal / other 75.8 Associate 14.5 309.4 Post Balance sheet Tier 2 issue 150.0 19
Slide 20: Capital Ratios
Capital Ratios 30 June 31 Dec 2003 2002 Bank capital adequacy 10.0% 10.0% Life solvency cover (Irish Life) 2.2 times 1.7 times NAV per share €7.61 €7.06 20
Slide 21: Interim Dividend
Interim Dividend 30 June 30 June Change 2003 2002 € € % Dividend 15.0c 14.3c 5 EPS* 58.2c 53.8c 8 *Total contribution after tax and levy 21
Slide 22: Business Review
Life & Permanent .. Business Review 22
Slide 23: Life Assurance Market
Life Assurance Market ❚ Slow down in new business Ø Post SSIA product Ø Investor confidence ❚ Changes in pension market Ø Personal Retirement Savings Accounts (PRSAs) Ø Seasonality of payments ❚ Competitive environment Ø Distribution and margins Ø Market share Ø Large players best positioned 23
Slide 24: Ireland - Life Assurance Sales Growth
Ireland - Life Assurance €m Sales Growth 160 H1 2003 Total €152.8m 140 H1 2002 Total €268.2m 120 SSIAs 100 -58% 80 -3% 60 +5% 40 -57% 20 +106% 0 ILI ILIM Corporate Retail 24
Slide 25: Retail Life - Products
Retail Life - Products €m 100 90 H1 2003 Total €63.5m 80 H1 2002 Total €152.6m 70 SSIAs 60 50 40 30 +14% +39% -14% 20 10 -96% 0 Protection/Risk Pensions Investments Savings 25
Slide 26: Retail Life - Distribution
Retail Life - Distribution Institutions 8% Brokers/IFAs Direct Sales Force 32% 25% Bancassurance 35% 26
Slide 27: Corporate Life - Products
Corporate Life - Products €m 45 -3% 40 2003 Total €62.2m 35 2002 Total €64.0m 30 25 20 -26% 15 +65% 10 5 0 Other Risk DC 27
Slide 28: Retail Banking
Retail Banking ❚ Strong residential mortgage market Ø Strong demand from first time buyers ❚ Historically low level of interest rates Ø Reducing margins Ø Sustaining mortgage growth ❚ Competitive environment Ø Regulatory changes Ø Competition review 28
Slide 29: Banking - New Lending
Banking - New Lending €m +31% 1,600 1,400 2003 Total €2,570m 2002 Total €2,063m 1,200 1,000 800 +50% 600 400 -21% 200 0 Ireland Consumer Commercial UK Mortgages Finance Mortgages 29
Slide 30: Banking - Loan Book
Banking - Loan Book 30 June 30 June 2003 2002 Change €m €m % Ireland Mortgages* 10,921 9,271 18 Consumer Finance 1,318 1,343 (2) Commercial 1,170 1,197 (2) 13,409 11,811 Stg£m Stg£m UK - Mortgages* 1,495 1,184 26 Total Lending* €15,566m €13,633m 14 * Including securitised assets 30
Slide 31: Residential Mortgage Lending
Residential Mortgage Lending 30 June 31 Dec 2003 2002 % % ❚ Ireland - LTVs First time buyers 79 77 Others 56 55 Average 66 65 ❚ RIPs Ø 11% of new lending in Ireland Ø 69% of CHL loan book ❚ Arrears at historic lows Ø Total arrears 0.25% of book Ø CHL arrears 0.02% of book 31
Slide 32: Banking - Resources
Banking - Resources 30 June 30 June 2003 2002 Change €m €m % Retail deposits • Current accounts 1,344 1,241 8 • Other 4,522 4,560 Corporate deposits 4,236 3,714 10,102 9,515 6 32
Slide 33: Programme
Programme ❚ Hold Retail Life operating costs at 2001 level out to 2005 ❚ Protect life new business margins Ø Target 15% ❚ Investment funded from cost savings 33
Slide 34: Transformation Programme
Transformation Programme ❚ On target to achieve merger cost synergies of €29m ❚ Next phase commenced Ø new mortgage system Ø branch re-tooling and re-organisation ❚ Target 50% cost / income ratio 34
Slide 35: Outlook
Outlook ❚ Economy ❚ Life Market ❚ Banking ❚ Trading 35
Slide 36: Additional Information
Additional Information ❚ Total contribution after tax ❚ Total profit after tax ❚ Embedded value movement - June 2003 ❚ Embedded value movement - Dec 2002 ❚ Banking - Regulatory Capital ❚ Life - Analysis of Retail Life Sales 36
Slide 37: Total Contribution After Tax
Total Contribution After Tax 30 June 30 June 2003 2002 Pre-tax Tax Post-tax Post-tax €m €m €m €m Ireland/UK • Banking & Other 74.8 (10.6) 64.2 37.9 • Life assurance 96.9 (13.0) 83.9 101.1 • Other investment earnings - - - 3.8 171.7 (23.6) 148.1 142.8 US - Life Assurance 1.5 (0.6) 0.9 2.9 Share of As
Slide 38: Total Profit After Tax
Total Profit After Tax 30 June 30 June 2003 2002 Pre-tax Tax Post-tax Post-tax €m €m €m €m Total Contribution 189.5 (26.7) 162.8 150.0 Investment fluctuations • Life 5.9 3.6 9.5 (38.1) • Associate 0.8 (0.1) 0.7 (20.1) Goodwill (5.9) - (5.9) (5.8) Economic variance (2.8) 0.4 (2.4) 1.5 Exceptional ite
Slide 39: Life Embedded Value - June 03
Life Embedded Value - June 03 Net Worth Value of Total Solvency in-force Capital €m €m €m €m Opening 1.1.2003 565.1 972.0 1,537.1 268.4 Profit after tax 73.7 18.2 91.9 Disposal of US business 67.1 (116.7) (49.6) Currency / Other 8.7 (14.8) (6.1) Movement 149.5 (113.3) 36.2 (2.9) Closing 30.06.2003 7
Slide 40: Life Embedded Value - Dec 02
Life Embedded Value - Dec 02 Net Worth Value of Total Solvency in-force Capital €m €m €m €m Opening 1.1.2002 363.1 1,029.4 1,392.5 254.2 Profit after tax 99.7 5.3 105.0 Disposal of IB business 131.8 (33.3) 98.5 Currency / Other 21.1 (29.4) (8.3) Inter-Group dividends (50.6) - (50.6) Movement 202.0 (
Slide 41: Bank Capital
Bank Capital 30 June 31 Dec 2003 2002 €m €m Risk Weighted Assets 10,203 9,481 Capital: Tier 1 3,228 3,227 less Goodwill (Irish Life & TSB) (1,527) (1,532) 1,701 1,695 Tier 2 Sub-debt 623 621 Other 139 53 Total Capital 2,463 2,369 less Embedded Value deduction (90%) (1,443) (1,435) 1,020 934 RAR 10.0
Slide 42: Life Assurance Sales - Retail
Life Assurance Sales* - Retail 30 June 30 June 2003 2002 Products €m €m Protection/Risk 17.0 12.2 Pensions 19.1 22.3 Investments 23.4 20.5 Savings 4.0 97.6 63.5 152.6 Distribution Bancassurance 22.4 64.4 Brokers/IFAs 20.1 34.8 Direct Sales Force 16.2 45.0 Institutions 4.8 8.4 63.5 152.6 * Annual pre
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