Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — FY2012 Earnings Presentation
60 slides from Bank Of Ireland's earnings presentation, February 2013
Slide 1: 2012 Results Announcement
2012 Results Announcement 31 December 2012
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Slide 3: 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
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Slide 5: Agenda
1 Group Chief Executive’s Review 2 Group Income Statement 3 Asset Quality 4 Funding & Capital 5 Additional Information 3
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Slide 7: Group Chief Executive's Review
Group Chief Executive’s Review Richie Boucher
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Slide 9: Introduction
Introduction 1 Delivering our Strategic Objectives 2 Rebuilding our Profitability 3 Strong Franchise Positions 5
Slide 10: Financial Highlights
6 Financial Highlights Delivering our Strategic Objectives Balance Sheet Metrics Completed E10.6bn of asset divestments - exceeded target, Dec 11 Dec 12 below assumed cost and ahead of schedule Loans / deposits ratio 144% 123% Strengthened loan to deposit ratio - 123% Successfully re-accessed
Slide 11: Delivering our Strategic Objectives
Delivering our Strategic Objectives Deleveraging Deposit Growth Loans and Advances to Customers 175% 144% 123% 120% E114bn E75-E80bn E102bn E75bn E71bn E93bn E90bn E65bn Dec 10 Dec 11 Dec 12 Target 14 Dec 10 Dec 11 Dec 12 Target 14 Reducing Wholesale Funding Robust Core Tier 1 Ratio Regulatory Minim
Slide 12: Rebuilding our Profitability - Focused on Key Levers
8 Rebuilding our Profitability - Focused on Key Levers Rebuilding Margins Ready for ELG Exit Net Interest Margin ELG Fees 1.33% 1.34% E239m E210m E212m 1.20% E176m 2011 H1 2012 H2 2012 H1 2011 H2 2011 H1 2012 H2 2012 Reducing the Cost of Operations Reducing the Cost of Risk People Employed Impairmen
Slide 13: Capital and Funding Transactions
Capital and Funding Transactions E1bn Asset Will continue Covered E250m Short term E1bn CoCo to engage Securities Tier 2 unsecured refinanced markets in (Irish Capital issuance 2013 Mortgages) H2 2012 2013 November December January February 2.5x 4x 4.9x Book cover Market access demonstrated across t
Slide 14: Repaying and Rewarding the State's Investments
10 Repaying and Rewarding the State’s Investments January 2009 - March 2013 15% Shareholding Since 2009 e4.8bn capital invested by the State E1.8bn Preference Stock Cumulative e3.8bn cash returned to the State State holds Preference E4.8bn E3.8bn stock of e1.8bn Cash Cash invested by returned
Slide 15: Irish Businesses
Irish Businesses Savings, Corporate Consumer Treasury pension and & business banking services investment banking distribution Strengthening market positions Product Market Share Bank of Ireland is no.1 or no.2 in all our Personal Current Accounts 36% principal product and market segments Mortgages 2
Slide 16: Investing in Irish Franchises
12 Investing in Irish Franchises Leading the Irish Mortgage market: Approved E1.7 billion in new mortgage lending in 2012 with E1 billion drawn in the year Represents c.40% of new lending in the Irish mortgage market Launched a new E2 billion mortgage fund in October 2012 Comprehensive pol
Slide 17: ROI Owner Occupied Mortgages - Forbearance Profile
ROI Owner Occupied Mortgages - arrears / forbearance profile Number of Accounts 162k1 145k 17k Legal 1% Late arrears - Restructure / Resolution 4% 89% Overpayment Forbearance 1% 3% Early Arrears 2% Performing Book Arrears Book 1 All % are of total. 9 out of 10 owner occupied accounts fully perform
Slide 18: International Businesses
14 International Businesses UK Post Office Northern Ireland Exclusive distribution rights for consumer financial Full service retail and commercial bank offering services throughout the UK Post Office’s 11,500 strong branch network Commenced in 2004, extended to 2023 on a mutually beneficial b
Slide 19: Rebuilding Profitability - Medium Term Targets
Focused on Medium Term Targets Measure 2011 2012 Target Progress Loans and advances €102bn €93bn c.€90bn to customers1 Financial Stability Group loan / deposit ratio 144% 123% 120% On track Buffer maintained Capital - Core tier 1 ratio for delivery 14.3% 14.4% over regulatory (PCAR / EBA basis
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Slide 21: Group Income Statement
Group Income Statement Andrew Keating
Slide 22: Group Income Statement
17 Group Income Statement Dec 11 Dec 12 Change Total Income €m €m €m Net interest margin of 1.25% Net Interest income 1,983 1,746 (237) E10bn reduction in average interest earning assets ELG fees (449) (388) 61 to E132bn Other income (net) 524 522 (2) Reduction in ELG fees of E61m Total income
Slide 23: Group Income Statement - Half Year Comparison
Group Income Statement 2012 H1 2012 H2 2012 H1 v H2 €m €m €m Net Interest income 1,746 857 889 Government guarantee fees (388) (212) (176) Other income (net) 522 255 267 Total income 1,880 900 980 Operating expenses (1,638) (842) (796) Operating profit pre-impairment 242 58 184 Impairmen
Slide 24: Rebuilding Net Interest Margin
19 Rebuilding Net Interest Margin Net Interest Margin Trend Interest Rate Environment Outlook remains - lower official rates for longer 1.25% 1.33% 1.34% Sharp reduction in official rates since Q4 2011 Impacts earnings from certain assets, capital and credit 1.20%1 balances Proactively Reprici
Slide 25: Exceptional Government Guarantee / ELG Fees
Exceptional Government Guarantee / ELG Fees Covered Liabilities E136bn Actions to Reduce ELG Fees Re du Covered liabilities - reduction of €110bn / 81% since ct io n Exceptional Guarantee was introduced in September 2008 E69bn E 11 0b n /8 2012 - €16bn reduction in liabilities covered by Excepti
Slide 26: Operating Expenses
21 Operating Expenses Total Operating Expenses Operating Expenses E1,785m E50m Overall costs in line with 2011 E1,645m E1,638m Lower staff costs including business disposals offset by investments, regulatory fees and impact of FX E20m E1,010m E860m E822m 2012 includes a charge of E30m for UK F
Slide 27: Asset Quality
Asset Quality
Slide 28: Loans and Advances to Customers
22 Loans and Advances to Customers - E100bn1 Portfolio Profile1 Geographic Profile2 Consumer ROW 3% 5% Property and Construction 19% Mortgages 55% ROI Non-Property UK 51% SME and 44% Corporate 23% Mortgages are 55% of Assets c.50% of Assets are outside ROI 1 Loans and advances to customers of E100bn
Slide 29: Impairment Charges
Impairment Charges Half Year Trend E1.1bn Impairment Charges Impairment charges of E1.7bn remain elevated reflecting E0.94bn economic conditions but trend is improving E0.31bn E0.84bn 2012 charge is 11% or E0.2bn lower than in 2011 E0.78bn E0.31bn E0.16bn Portfolios are performing broadly in l
Slide 30: ROI Owner Occupied Mortgages
24 ROI Owner Occupied Mortgages: €21bn Arrears - Loan Volumes Profile ( > 90 days past due) Repayment basis - 91% capital and interest 16.4% 15.3% 56% or €11.5bn are ECB tracker mortgages 14.5% House prices have started to stabilise 8.9% 9.4% 9.5% Urban / rural differential 8.2% Average of
Slide 31: ROI Buy to Let Mortgages
ROI Buy to Let Mortgages: €7bn Arrears - Loan Volumes Profile ( > 90 days past due) Repayment basis - 52% capital and interest 27.2% House prices have started to stabilise 25.4% Urban / rural differential 20.5% Average of 50% fall from peak values2 19.6% 18.3% BOI provisioning assumption 5
Slide 32: UK Residential Mortgages
26 UK Residential Mortgages: £22bn / €28bn Profile of UK Residential Mortgages Profile £28bn £2.3bn or 9% reduction in the portfolio during 2012 £25bn 33% decline since portfolio put in run-off in Q1 2009 £22bn £14bn £11bn Asset Quality £10bn Absolute arrears are reducing across each portfolio
Slide 33: Non-property SME & Corporate Loans
Non-property SME & Corporate Loans: €23bn Profile of Loans Defaulted Loans & Provision Stock E31bn E27bn E23bn E16bn E2.8bn E12bn E2.3bn E9bn E1.8bn E1.3bn E1.1bn E0.9bn E1.2bn E1.1bn E11bn E11bn E11bn E0.8bn E0.5bn E0.6bn E0.6bn E0.4bn E0.4bn E0.4bn E4bn E4bn E3bn E0.2bn E0.2bn E0.2bn Dec 10 Dec 11
Slide 34: Property & Construction Loans
28 Property & Construction Loans: E19.2bn Property & Construction Loans Defaulted Loans & Provision Stock E24.7bn E5.6bn E20.6bn E19.2bn E4.5bn E20.3bn E16.9bn E15.6bn E3.1bn E3.2bn E2.9bn E2.9bn E1.9bn E1.9bn E1.6bn E1.6bn E1.4bn E1.0bn E4.4bn E3.7bn E3.6bn Dec 10 Dec 11 Dec 12 Dec 10 Dec 11 Dec 12
Slide 35: Funding & Capital
Funding & Capital
Slide 36: Balance Sheet Deleveraging
29 Balance Sheet Deleveraging Loans and Advances to Customers Reduc tion E5 1bn / 3 5% Target c.E3b n / 3% E144bn E11bn E12bn E2bn c.E3bn E114bn c.E90bn E93bn Sep 08 Dec 10 Disposals Net FX Dec 12 Net Redemptions Loans Target Redemptions / Impairment Dec 14 / Impairment Asset disposal target of E1
Slide 37: Customer Deposits
Customer Deposits Deposit Growth Group 175% 144% 123% 120% E75bn - E80bn Deposit strategies leveraging the strength of our E75bn franchises and scale of our distribution E1bn E71bn E65bn Enhanced Post Office relationship demonstrates mutual E27bn E30bn endorsement and commitment E21bn Deposits
Slide 38: Wholesale Funding
31 Wholesale Funding Wholesale Funding Profile Monetary Authority Funding Ne Repaid €11bn of ECB drawings E70bn tR ep €3bn IBRC repo transaction terminated on a no gain / ay m no loss basis in Feb 2013 en ts of €12bn of other ECB drawings at Dec 12 include: E3 1b NAMA senior bonds of €4.4bn
Slide 39: Capital
Capital Core Tier 1 Ratio PCAR / EBA basis 14.4% Core Tier 1 Ratio (PCAR / EBA basis) 14.3% Core tier 1 ratio of 14.4% compared to a CBI regulatory requirement of 10.5% 9.7% €10.6bn1 or 16% reduction in RWA’s offset by losses in the year Accessing the Capital Markets Issued €250m of tier 2 subor
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Slide 41: Summary
Summary 1 Delivering our Strategic Objectives Exceeded our asset disposal target of E10bn Loan to deposit ratio substantially at medium term target Monetary Authority Funding has been significantly reduced Demonstrated access to the funding markets across the capital structure Capital rati
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Slide 43: Additional Information
Additional Information
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Slide 45: Additional Information
Additional Information Slide No. Summary Balance Sheet 37 Capital: Basel III Impacts 38 Stockholders’ Equity and Tangible Net Asset Value 39 Loans and Advances to customers 40 Defaulted Loans and Impairment Provisions 41 ROI Buy to Let Mortgages - Arrears / Forbearance Profile 42 Avail
Slide 46: Summary Balance Sheet
37 Summary Balance Sheet Dec 2011 Dec 2012 Group Balance Sheet Ebn Ebn Net loans and advances to customers1 102 93 Liquid assets 31 30 IBRC repo transaction2 - 3 BoI Life assets 12 13 Other assets 10 9 Total Assets 155 148 Customer deposits 71 75 Wholesale funding - private sources 28
Slide 47: Capital: Basel III Impacts
Capital: Basel III Impacts RWA's CT1 / CET1 CT1 / CET1 Capital Impact Comment Ebn Capital Ebn Ratio % As reported at 31 Dec 2012 56.5 8.1 14.4% Basel III Adjustments: - Deferred Tax (1.5) Will be reduced by future profits over time - Pension Deficit (1.2) Engagement with stakeholders has commenced.
Slide 48: Stockholders' Equity and Tangible Net Asset Value
39 Stockholders’ Equity and Tangible Net Asset Value Dec 11 Dec 12 Movement in Stockholders’ Equity €m €m Stockholders’ equity at beginning of period 7,351 10,202 Movements: Profit/(loss) attributable to stockholders 45 (1,824) Pension fund obligations (117) (789) Net new equity raised 2,557 - D
Slide 49: Loans and Advances to Customers
Loans and Advances to Customers ROI UK RoW Total Total Profile at 31 December 121 €bn €bn €bn €bn % Mortgages 27 28 - 55 55% Non-property SME and corporate 13 6 4 23 23% - SME 11 3 - 14 14% - Corporate 2 3 4 9 9% Property and construction 9 9 1 19 19% - Investment property 7 8 - 15 15% - Land and de
Slide 50: Defaulted Loans & Impairment Provisions
41 Defaulted Loans & Impairment Provisions Loans and advances to customers Advances Defaulted Loans2 Defaulted Loans as Impairment Impairment Provisions Composition and impairment €bn €bn % of advances provisions €bn as % of defaulted loans Residential mortgages 55.0 4.2 7.7% 1.6 37% ROI 27.5 3.
Slide 51: ROI Buy to Let Mortgages - Forbearance Profile
ROI Buy to Let Mortgages - Arrears / Forbearance Profile Number of Accounts 36k1 29k 7k Legal 5% Late arrears - Restructure / Resolution 8% 80% Overpayment Forbearance 1% 3% Early Arrears 3% Performing Book Arrears Book 1 All % are of total. 8 out of 10 buy to let accounts fully performing Buy t
Slide 52: Available for Sale Financial Assets
43 Available for Sale Financial Assets ROI UK Spain / Portugal Other Dec 12 Dec 11 Carrying Value Ebn Ebn Ebn Ebn Ebn Ebn Sovereign Bonds 5.4 0.1 - 0.1 5.6 4.5 Covered Bonds 0.1 0.7 1.1 1.3 3.2 3.5 Senior Bank Debt 0.7 0.2 - 0.7 1.6 1.4 Asset Backed Securities 0.1 0.3 0.1 0.1 0.6 0.9 Total 6.3 1.3 1
Slide 53: Divisional Performance
Divisional Performance Retail BIL Retail Corporate & Group Total 2012 ROI UK Treasury Centre €m €m €m €m €m €m Total income 995 189 408 690 (402) 1,880 Operating expenses (836) (92) (382) (183) (145) (1,638) Operating profit pre-impairment 159 97 26 507 (547) 242 Impairment charges (1,144) - (432) (
Slide 54: Other Income Analysis (Net)
45 Other Income Analysis (Net) 2011 €m 2012 €m Change €m Retail & Corporate Banking Businesses Retail & Corporate Banking Businesses 524 476 (48) Other income decreased by €48m in 2012 Bank of Ireland Life 169 133 (36) compared to 2011 reflecting current levels of business activity and changes to
Slide 55: Non-Core Items
Non-Core Items Loan book divestment - 2011/2012 2011 2012 Change Volume Loss Non-Core Items Loan Portfolios €m €m €m €bn €bn Gain on liability management exercises 1,789 69 (1,720) UK Mortgages 2.0 (0.2) Gains / (Charges) arising on the Project Finance 1.9 (0.3) movement in credit spreads on the Gro
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Slide 57: 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 Managemen
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Slide 60: Bank of Ireland regulatory information
Bank of Ireland is regulated by the Central Bank of Ireland. Bank of Ireland incorporated in Ireland with limited liability. Registered Office - Head Office, 40 Mespil Road, Dublin 4, Ireland. Registered Number – C-1.