Permanent Tsb Group Holdings Plc · EURONEXT:PTSB
Permanent Tsb — Irish Life & Permanent — H1 2004 Earnings Presentation
41 slides from Permanent Tsb's earnings presentation, Sep 1, 2004
Slide 1: Interim Results 2004
www.irishlifepermanent.ie 1 September 2004
Slide 2: Index
Index Section Page Introduction 3 Group Financial Results 5 Life Financials - Ireland 8 Bank Financials 12 Associate 17 Capital & Dividend 18 Review of Life Business 20 Review of Banking Business 25 Summary & Outlook 29 Additional Information Total Contribution after Tax 31 Total Profit after Tax 32
Slide 3: Market Context
Market Context Drivers Challenges n Very strong economy n Lower margin life products n Employment growth n Low interest rates n Record housing demand n Equity investor nervousness n Policy support for pensions n Competition 3
Slide 4: Interim Results 2004
Interim Results 2004 Actions Highlights n New mortgage lending in Ireland + 41% n Maximised sales n Individual pension sales + 63% n Seized pension opportunity n Operating costs down n Leveraged distribution strength n Underlying pre-tax operating profit + 15% n Tight cost control n Interim dividend
Slide 5: Financial Review
Financial Review Peter Fitzpatrick
Slide 6: Total Profit After Tax
Total Profit After Tax 1H 04 1H 03 Change €m €m % 7 Total Contribution* 186 190 (2) Investment fluctuations 10 7 39 Exceptionals & other items (4) (56) 192 141 36 32 Taxation & Levy (28) (30) Total Profit after tax 164 111 47 * Operating profit 6
Slide 7: Total Contribution
Total Contribution 1H 04 1H 03 Change €m €m % Ireland & UK 8 • Life Assurance 105 97 8 12 • Banking & Other 56 75* (26) 17 • General insurance [Associate] 25 16 56 186 188 US - 2 Total Contribution 186 190 (2) * Includes €26m gains on hedge securities 7
Slide 8: Life Assurance - Contribution
Life Assurance - Contribution 1H 04 1H 03 Change €m €m % Ireland 9 New Business 24 18 30 10 In-force Business 74 72 Other Income 3 3 101 93 8 UK 4 4 105 97 8 8
Slide 9: Life Assurance - New Business
Life Assurance - New Business 1H 04 1H 03 Change % 40 Life Value of new business €21m €16m 28 New business APE* €161m €132m 22 Margin 12.8% 12.1% 40 ILIM Value of new business €3m €2m 41 New business APE* €26m €21m 24 Margin 12.1% 10.6% * Annual premium equivalent 9
Slide 10: Life Assurance - In-force Business
Life Assurance - In-force Business 1H 04 1H 03 Change €m €m % Unwind of discount rate 47 41 14 38 Experience variances 9 10 38 Assumption changes 16 20 Expected investment return 2 1 74 72 10
Slide 11: Life Assurance - Costs
Life Assurance - Costs 1H 04 1H 03 Change €m €m % Ireland • Operating costs 78 81 (4) • Commission & fees 37 36 • Non-life subsidiaries 16 15 US & UK 3 34 Corporate 3 3 137 169 11
Slide 12: Banking & Other - Contribution
Banking & Other - Contribution 1H 04 1H 03 Change €m €m % Net Interest Income 172 163 5 Gain on disposal of hedge securities - 26 37 Fees receivable & other Income 28 32 37 Fees payable (21) (16) 179 205 15 Expenses (119) (124) 16 Bad & Doubtful Debts (4) (6) Contribution 56 75 (26) 12
Slide 13: Banking - Margin Change
Banking - Margin Change % FY 03 1.63 Retail (0.13) Treasury (0.02) Funding (0.04) 1H 04 1.44 13
Slide 14: Banking - Funding
Banking - Funding 1H 04 Total €25.5bn Mortgage Backed +15% FY 03 Total €22.6bn Promissory Notes Securitisation -6% Interbank -41% Borrowing Commercial Paper +28% Long Term Debt +26% Customer +14% Accounts €bn 0 2 4 6 8 10 12 14 14
Slide 15: Banking & Other - Costs
Banking & Other - Costs 1H 04 1H 03 Change €m €m % Banking 113 115 (2) Corporate & Other 6 9 119 124 Cost/Income Ratio % % Reported 64 57 Incl. Commission 62 56 Incl. Bank EV Earnings 58 53 15
Slide 16: Banking - Debt Provisions
Banking - Debt Provisions 1H 04 1H 03 €m €m Opening Balance 92 86 Charge for Period 4 6 Amounts Written Off (3) (4) Closing Balance 93 88 % % Reserve ratio 0.51 0.62 Arrears ratio 0.21 0.25 Arrears value €40m €38m 16
Slide 17: General Insurance [Associate]
General Insurance [Associate] 1H 04 1H 03 €m €m Contribution 25 16 Short term investment fluctuations 1 1 26 17 Note: Contribution includes expected/normalised investment returns 17
Slide 18: Capital Ratios
Capital Ratios 1H 04 FY 03 36 Bank Tier 1/ Total 10.1% 11.1% 35 Life solvency cover (Irish Life) 1.8 times 1.8 times NAV per share* €8.25 €7.81 * Includes shares held by policyholder funds 18
Slide 19: Dividend & EPS
Dividend & EPS 1H 04 1H 03 Change € € % Dividend 16.5c 15.0c 10 EPS* 33 - Contribution after tax 55.8c 58.2c (4) 32 - Total Profit after tax 60.7c 41.3c 47 * Includes shares held by policyholder funds 19
Slide 20: Business Review
Business Review David Went Life € Permanent
Slide 21: Total Life Sales - Ireland
Total Life Sales - Ireland 1H 04 Total €186m 1H 03 Total €153m +24% ILIM Corporate +14% Business +29% Retail €m 0 20 40 60 80 100 * Analysis on page 40 21
Slide 22: Retail Life - Products
Retail Life - Products 1H 04 Total €82m +107% 1H 03 Total €64m Savings Protection/Risk +2% Pensions +63% +8% Investments €m 0 10 20 30 40 * Analysis on page 41 22
Slide 23: Retail Life - Distribution
Retail Life - Distribution 1H 04 Total €82m Institutions +2% 1H 03 Total €64m +17% Bancassurance +22% Brokers/IFA +60% Direct Salesforce €m 0 10 20 30 40 * Analysis on page 41 23
Slide 24: Corporate Life - Products
Corporate Life - Products 1H 04 Total €71m 1H 03 Total €62m +1% Protection/Risk Defined +10% Benefit/Other Defined +19% Contribution €m 0 10 20 30 40 50 60 24
Slide 25: Banking - New Lending
Banking - New Lending 1H 04 Total €3,681m +41% 1H 03 Total €2,570m Commercial Consumer +13% Finance Ireland +41% Mortgages +76% UK Mortgages €m 0 500 1,000 1,500 2,000 2,500 25
Slide 26: Banking - Loan Book
Banking - Loan Book 1H 04 1H 03 Change €bn €bn % Ireland Mortgages* 13.2 10.9 21 Consumer Finance 1.4 1.3 6 Commercial 1.2 1.2 15.8 13.4 Stg£bn Stg£bn UK - Mortgages* 2.2 1.5 49 Total Lending* 19.1 15.6 23 * Including securitised assets 26
Slide 27: Banking - New Mortgage Lending
Banking - New Mortgage Lending 1H 04 FY 03 % % n Overall LTVs (% of advances) Ø First time buyers 82 80 Ø Others 60 57 Ø Average 68 67 n LTV Ranges (% of cases) Ø < 75% 62 65 Ø > 75%* 38 35 * Max LTV 92% 27
Slide 28: Banking - Customer Accounts
Banking - Customer Accounts n Customer account balances up 14% yoy n 20,000 new Loyalty current accounts n Current account balances up 18% yoy n 200,000 users of 28
Slide 29: Summary & Outlook
Summary & Outlook n Positive economic outlook n Key markets to perform well n Meeting challenges on margins & costs n Confident on second half trading 29
Slide 30: Additional Information
Additional Information n Total contribution after tax n Total profit after tax n Contribution EPS n Embedded value movement n Life - regulatory capital n Bank - regulatory capital n P&L - additional analysis n Sales - analysis of life assurance sales For further explanations of financial terms used
Slide 31: Total Contribution After Tax
Total Contribution After Tax 1H 04 1H 03 Pre-tax Tax Post-tax Post-tax €m €m €m €m Ireland/UK • Banking & Other 56 (10) 46 64 • Life assurance 105 (16) 89 84 161 (26) 135 148 US - Life Assurance - - - 1 Share of Associate 25 (4) 21 14 Levy* (6) (6) (6) Total Contribution 186 (36) 150 157 * Governmen
Slide 32: Total Profit After Tax
Total Profit After Tax 1H 04 1H 03 Pre-tax Tax Post-tax Post-tax €m €m €m €m Total Contribution 186 (36) 150 157 Investment fluctuations • Life 9 8 17 10 • Associate 1 - 1 1 Goodwill (6) - (6) (6) Economic variance - - - (3) Exceptional items 2 - 2 (48) Total Profit* 192 (28) 164 111 *Before minorit
Slide 33: Contribution EPS
Contribution EPS 1H 04 1H 03 Change €m €m % Total contribution 186 190 Taxation (30) (27) Government Levy (6) (6) 150 157 Average no of shares* 270m 269m EPS 55.8c 58.2c (4) * Includes shares held by policyholder funds 33
Slide 34: Embedded Value Movement
Embedded Value Movement Net Worth Value of Total Solvency in-force Capital €m €m €m €m Opening 1.1.2004 643 878 1,521 276 Contribution (Net) 34 55 89 Inv. Fluctuations (Net) 7 10 17 Currency / Other 2 4 6 Closing 30.06.2004 686 947 1,633 296 34
Slide 35: Life Regulatory Capital
Life Regulatory Capital €m €m 700 Equities €15m Fixed Interest €19m Property 600 €92m Free 500 Other Assets assets * €111m €390m 400 300 Solvency 200 Cash margin €448m requirement €296m 100 0 Shareholders’ Net Assets Regulatory Capital * Not all admissible for solvency cover 35
Slide 36: Bank Regulatory Capital
Bank Regulatory Capital 1H 04 FY 03 €m €m Risk Weighted Assets 12,779 11,382 Capital: Tier 1 3,360 3,351 less Goodwill (Irish Life & TSB) (1,517) (1,522) 1,843 1,829 Tier 2 Sub-debt 767 764 Other 137 133 Total Capital 2,747 2,726 less Embedded Value deduction (90%) (1,458) (1,466) 1,289 1,260 RAR 10
Slide 37: Banking & Other - Non Int Income
Banking & Other - Non Int Income 1H 04 1H 03 Change €m €m % Fees & Commissions receivable 23 22 2 Fees & Commissions payable (21) (16) Dealing profits - 6 Other income 2 1 Property Management 3 3 7 16 (57) Note: Bancassurance Embedded Value earnings €19m (H1 03: €14m) included in life assurance. 37
Slide 38: Life Assurance - In-force Business
Life Assurance - In-force Business Experience Assumption Variances Changes 1H 04 1H 03 1H 04 1H 03 €m €m €m €m Persistency 1 1 - - Risk 6 10 10 - Other 2 (1) 6 20 9 10 16 20 38
Slide 39: Exceptionals & Other Items
Exceptionals & Other Items 1H 04 1H 03 €m €m Disposal of businesses - (50) Profit on disposal of branch properties 2 3 Economic Variance* - (3) Goodwill (6) (6) (4) (56) * Impact of changes in embedded value economic assumptions 39
Slide 40: Life Assurance Sales
Life Assurance Sales Recurring Premium Single Premium* 1H 04 1H 03 1H 04 1H 03 €m €m €m €m Retail 50 35 32 29 Corporate 61 55 10 7 Investments - - 26 21 ILI - - 7 6 111 90 75 63 * Annual premium equivalent 40
Slide 41: Life Assurance Sales - Retail
Life Assurance Sales* - Retail 1H 04 1H 03 €m €m Products Protection/Risk 17 17 Pensions 31 19 Investments 25 24 Savings 9 4 82 64 Distribution Bancassurance 26 23 Brokers/IFAs 25 20 Direct Sales Force 26 16 Institutions 5 5 82 64 * Annual premium equivalent 41
Irish Life & Permanent — H1 2004 Earnings Presentation on 6ix