Aib Group Plc · EURONEXT:A5G
Aib — FY2022 Earnings Presentation
51 slides from Aib's earnings presentation, Mar 8, 2023
Slide 1: Backing our customers: Annual Financial Results 2022
BACKING OUR CUSTOMERS ANNUAL FINANCIAL RESULTS for the financial year ended 31 December 2022 AIB Group plc
Slide 2: Forward looking statement
Forward looking statement 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: 2022 Highlights
2022 Highlights Ireland to remain on course as a growth economy Domestic Irish economic growth of 8% in 2022, slower but positive growth expected in 2023 and 2024 New lending up 22% to €12.6bn, strong H2, up 33% versus H1 Strong profitability and increased distributions PAT: €765m driven by mo
Slide 4: Open and resilient Irish economy
Open and resilient Irish economy Solid Irish economic growth still expected despite headwinds Good growth forecast for 2023-24 despite headwinds Employment levels rise while unemployment remains low Irish inflation starts to decline % % % 2,600 12 12 2,500 11 16 10 10 12.0 2,400 8 12 9 2,300 8.2 8 6
Slide 5: Delivering on our strategy and adapting to changed environment
Delivering on our strategy and adapting to changed environment Entering final year of Strategy 2023 Medium-term targets Significant progress made in 2021 and 2022 with positive momentum going into 2023 2022 strategic progress RoTE(1) Legacy items Organic growth >13% Cost-savings programme In
Slide 6: Organic growth - new lending of €12.6bn
Organic growth - new lending of €12.6bn 22% increase in new lending; leading market shares ROI driving strong new lending growth €12.6bn new lending of which €3.3bn is green lending Drawdowns (€bn) Mortgages (€bn) Property / Corporate & SME(1) (€bn) 12.6 +48% +11% +22% 4.6 6.3 7.0 10.4 3.1 4.7 FY 20
Slide 7: Maximising the opportunity of changing banking landscape
Maximising the opportunity of changing banking landscape Growing customer numbers with increased digital adoption Earnings accretive loan book acquisitions Customer base in excess of 3 million Change in customer behaviour shifting to digital 3.2 (€bn) (m) 2.7 2.7 2.8 2.8 2.8 No of daily mobile inter
Slide 8: Opportunity to meet customer needs and build diversified revenues
Opportunity to meet customer needs and build diversified revenues Unique proposition in underserved market AIB now ready to offer enhanced proposition to AIB customers in the Irish market which is generally recognised as being under-insured, under- pensioned & under-invested Irish wealth market c.€1
Slide 9: 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 2022 Progress #1 Sustainable Irish bank €10bn green lending by 2023 €7.9bn green lending since 2019, strong growth across renewables and energy efficien
Slide 10: Growing shareholders return
Growing shareholders return 79% increase in proposed 2022 distributions and increasing free-float Increasing distributions to shareholders (€m) 2022 proposed ordinary distributions: 50% payout Cash dividend of 6.2c per share (2021: 4.5c) +79% +35% Approved share buyback €215m (2021: €91m) +136%
Slide 11: Strongly positioned in a changing banking landscape
Strongly positioned in a changing banking landscape AIB is Ireland’s leading financial services provider, #1 digital bank & sustainability leader Medium-term #1 Comprehensive product suite targets Personal bank & mortgage provider Enhancing our capacity to be at the heart of our customers’ financial
Slide 12: Financial Performance
Financial Performance AIB Group plc 12
Slide 13: Financial performance FY 2022
Financial performance FY 2022 Profit after tax €765m 21% increase in total income Total income €2,895m Net interest income €2,159m (+20%) and other income €736m (+25%) Costs €1,659m(1) up 8%, FTEs 9,590 at Dec 2022 Costs up 5% on an underlying basis(2) Gross loans €61.2bn increased 5% from Dec
Slide 14: Income Statement
Income Statement AIB Group plc 14
Slide 15: Income statement – profit after tax €765m
Income statement – profit after tax €765m Summary income statement (€m) FY 2022 FY 2021 Net interest income 2,159 1,794 Net interest income increased by 20% driven by increasing interest rates and Other income(1) 736 590 higher average loan volumes Total operating income 2,895 2,384 Other income
Slide 16: Net interest income €2,159m; up 20%
Net interest income €2,159m; up 20% NII – material movements NII €2,159m up €365m (+20%) from FY 2021 impacted by: • -€133m higher cost of liabilities including: €365m increase in NII; 32bps increase in NIM Q4 Exit NIM • -€101m other liabilities reflecting interest rate impacts 2.18% (1) and highe
Slide 17: Drivers of >€3bn NII guidance for FY23
Drivers of >€3bn NII guidance for FY23 Period end ECB NII >€3.0bn / NIM >2.40% in 2023, deposit rate 2% 3.5% assuming ECB deposit rate of 3.5% assumptions Asset income driven by higher rate 0.1 >€3.0bn environment c. €2.8bn Liabilities: Deposit beta(1) to evolve + - + - + throughout 2023 €2.2b
Slide 18: Strong other income driven by fee and commission
Strong other income driven by fee and commission Net fee and commission income (€m) FY 2022 FY 2021 Other income €736m up 25% Customer accounts 226 208 Lending related fees 50 50 Fee and commission income €588m up €108m (+22%) Card 112 78 • Increase reflected higher transaction volumes Wealth /
Slide 19: Costs €1,659m; 5% increase on an underlying basis
Costs €1,659m; 5% increase on an underlying basis Operating expenses(1) (€m) Costs €1,659m, up 8% or 5% increase on an underlying basis(3) 1,659 driven by: 1,534 305 284 • Salary and other inflation • Full year impact of Goodbody 512 575 • Cost to onboard customers from exiting banks • Increased d
Slide 20: Small ECL charge €7m; 87% of loans in Stage 1
Small ECL charge €7m; 87% of loans in Stage 1 ECL stock material movements (€bn) ECL writeback / (charge) (€m) H1 2022 H2 2022 FY 2022 Macroeconomic assumptions 48 (17) 31 Other(1) 87 (48) 39 €0.3bn decrease in ECL stock Post-model adjustments 174 (251) (77) 1.9 Total ECL writeback/(charge) 309 (316
Slide 21: Balance Sheet
Balance Sheet AIB Group plc 21
Slide 22: Balance sheet – strong funding & liquidity to support our customers
Balance sheet – strong funding & liquidity to support our customers Balance sheet (€bn) Dec 2022 Dec 2021 Performing loans 59.0 55.3 Assets Non-performing loans 2.2 3.1 Gross loans increased 5% to €61.2bn including €2.1bn Ulster Gross loans to customers 61.2 58.4 Bank corporate and commercial loan
Slide 23: Loan book growth in 2022
Loan book growth in 2022 Net loans movement: €3.1bn increase to €59.6bn (€bn) Gross loans (€bn) +12.6 (10.3) (0.6) (0.8) +2.1 +0.3 (0.2) +5% 61.2 58.4 56.5 59.6 16.0 19.2 8.2 7.2 Dec-21 New lending Redemptions Redemptions Portfolio sales Ulster Bank ECL Other Dec-22 Performing NPEs loans migrated Gr
Slide 24: Expect >8% growth in gross loans in 2023
Expect >8% growth in gross loans in 2023 Mortgages Corporate(1) Energy, Climate Action & Infrastructure(1) €bn €bn (ECAI) €bn 1.9 2.9 29.4 30.3 4.0 8.7 3.1 7.5 Dec-21 Dec-22 2023 illustrative Dec-21 Dec-22 2023 illustrative Dec-21 Dec-22 2023 illustrative ROI UK Personal Commercial / SME(1) Property
Slide 25: NPEs at 3.5% declined 31% in 2022; target c.3% by end 2023
NPEs at 3.5% declined 31% in 2022; target c.3% by end 2023 NPEs (€bn) 5.4% 3.5% 32% Legacy NPE Non-legacy NPE 3.1 0.3 35% 0.6 1.1 0.5 0.1 2.2 15% 38% 26% 0.8 0.8 16% €0.2bn €1.9bn 0.2 0.6 64% 9% 5% 0.2 1.0 27% 0.7 Dec-21 Net inflow Redemptions Portfolio sales Restructures Dec-22 0.4% 3.2% Mortgages
Slide 26: Funding and capital
Funding and capital AIB Group plc 26
Slide 27: Strong funding driven by increased customer deposits
Strong funding driven by increased customer deposits Total funding (€bn) €123.8bn Liquidity metrics (%) Dec 2022 Dec 2021 €124.5bn 4.6 4.9 Loan to deposit ratio (LDR) 58 61 39.4 Liquidity coverage ratio (LCR) 192 203 NBFI (1) 36.0 Corporate / SME Customer accounts Net stable funding ratio (NSFR) 164
Slide 28: CET1 (FL) 16.3% well ahead of regulatory requirements
CET1 (FL) 16.3% well ahead of regulatory requirements CET1 (FL) 16.3% ahead of SREP 10.23% Capital ratios fully loaded (FL) (%) 6.1% buffer to CET1 (FL) 16.3% €52.4bn RWAs €55.3bn RWAs 7.7% buffer to transitional 17.9% CET1 16.3% decreased by 30bps reflecting: 21.9% 21.3% + 150bps capital ge
Slide 29: Distributions outlook
Distributions outlook FY 2023 – FY 2025 + Organic capital generation CET 1 + Capital efficiency initiatives 16.3% CET1 Proforma - Ordinary distributions >13.5% 15.9%(1) - Additional distributions FY 2022 - Inorganic initiatives(2) - Regulatory headwinds Distributions Existing policy 40%-60% payout
Slide 30: 2023 Guidance and evolving environment
2023 Guidance and evolving environment Guidance FY 2023(1) Evolving environment NII: >€3.0bn Two banks exiting NIM: >2.40% Enhance shareholder value and deliver sustainable returns Rising interest rates Other income: c. €750m Medium-term targets Costs: <€1.75bn Inflationary pressures RoTE Cost CET1
Slide 31: Appendices
APPENDICES AIB Group plc
Slide 32: Balance sheet geared for rising rates
Balance sheet geared for rising rates Composition of balance sheet by interest rate type at Dec 2022* NII sensitivity as at Dec 2022 (€m) -100bps -50bps -25bps +25bps +50bps +100bps 58% Interest rate Euro (324) (154) (76) 72 146 288 insensitive 75% Sterling (45) (22) (11) 11 22 45 Other (mainly US$)
Slide 33: 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, Disclosures Haven, EBS brands & UK Healthcare, Education UNEP FI – P
Slide 34: Average balance sheet
Average balance sheet FY 2022 FY 2021 Average Volume Interest Yield Average Volume Interest Yield €m €m % €m €m % Assets Customer loans 58,681 1,957 3.33 57,697 1,846 3.20 Investment securities 16,456 192 1.17 17,676 65 0.37 Loans to banks / other 49,073 183 0.37 38,028 (114) (0.30) Interest earning
Slide 35: Customer loans
Customer loans €bn Performing Loans Non-Performing Loans Customer Loans Gross loans (1 Jan 2022) 55.3 3.1 58.4 New lending 12.6 - 12.6 Redemptions of existing loans (10.3) (0.6) (10.9) Portfolio acquisition 2.1 - 2.1 Portfolio sales (0.3) (0.5) (0.8) Net flow to NPE (0.3) 0.3 - Foreign exchange / ot
Slide 36: Loan book by staging and coverage
Loan book* by staging and coverage Dec 2022 Total Loan book by staging – €61.0bn loan exposures Stage 1 Stage 2 Stage 3** Gross loan exposures (€bn) exposure Mortgages 28.4 1.2 0.7 30.3 Personal 2.3 0.3 0.2 2.7 Stage 1 loan exposures increased by €4.5bn to Property & Construction 6.8 1.4 0.4 8.6 €
Slide 37: Stage movements
Stage movements Dec 2022 Stage movements (excluding Mortgages & Personal) Gross loan exposures (€bn) Stage 1 Stage 2 Stage 3* Total exposure (excluding Mortgages & Personal) Stage 1 loan exposures increased €3.0bn primarily due to Property & Construction 6.8 1.4 0.4 8.6 Ulster Bank migrated loans,
Slide 38: ECL coverage by stage Property and Non Property
ECL coverage by stage Property and Non Property Dec 2022 ECL Coverage (excluding Mortgages & Personal) ECL Coverage (excluding Stage 1 Stage 2 Stage 3* Total exposure Mortgages & Personal) Hotels, Bars and Restaurants has the overall highest cover rate at Property & Construction 1.2% 8.5% 29.4% 3.
Slide 39: Asset quality by portfolio
Asset quality by portfolio €bn Mortgages Personal Property Corporate & SME Total Dec 2022 Customer loans* 30.3 2.7 8.8 19.4 61.2 Total ECL cover (%) 1% 7% 4% 4% 2.7% of which NPEs 0.6 0.2 0.6 0.8 2.2 of which legacy NPEs 0.2 0.0 0.0 0.0 0.2 of which non legacy NPEs 0.5 0.2 0.5 0.7 1.9 ECL on NPE 0.2
Slide 40: Asset quality – total portfolio
Asset quality – total portfolio Total portfolio (€bn) Loans at amortised cost by geography 58.4 61.2 32% Dec-21 Dec-22 35% 2.2 3.5% 3.1 5.4% 4.0 6.5% 4.5 7.8% 4% 4% 4% 4% 15% 13% 86.9% 55.1 50.7 90.0% 79% 77% Dec-21 Dec-22 ROI UK North America ROW Strong / Satisfactory Criticised NPE ECL/NPE coverag
Slide 41: Asset quality - mortgages
Asset quality - mortgages Credit quality (€bn) RoI mortgages Dec-21 Dec-22 29.4 30.3 30% 31% 2% 1.0 3% 0.7 22% 1.2 4% 17% 1.4 5% 40% 23% 38% 60% 92% 28.4 €28.3bn €29.3bn 27.0 94% Tracker Variable Fixed Residential mortgage split Dec-21 Dec-22 Dec-21 Dec-22 6% 5% Strong / Satisfactory Criticised NPE
Slide 42: Asset quality – Personal portfolio
Asset quality – Personal portfolio Personal (€bn) Lending split Dec-21 Dec-22 2.7 2.7 64% 9% 64% 23% 25% 0.2 0.2 7% 0.2 6% 0.2 7% 77% 75% 2.3 85% 2.4 86% Credit cards Loans/overdrafts Dec-21 Dec-22 Strong / Satisfactory Criticised NPE ECL/NPE coverage 42
Slide 43: Asset quality – property & construction
Asset quality – property & construction Property & construction* (€bn) Loans at amortised cost by segment 8.8 29% 0.6* 6% Dec-21 Dec-22 7.6 0.4 4% 28% 11% 0.8 0.5 6% 4% 3% 6% 6% 13% 18% 7.9 90% 83% 72% 6.3 78% Dec-21 Dec-22 Strong / Satisfactory Criticised NPE Investment Land and development Contrac
Slide 44: Asset quality – Corporate & SME
Asset quality – Corporate & SME Corporate & SME (€bn) Loans at amortised cost by sector 19.4 Dec-22 18.7 35% Agriculture 29% 6% 0.8 4% 1.1 11% 13% 2.2 Energy 2.5 15% 9% Manufacturing 14% Hotels & Licensed 16.4 85% premises 15.1 81% 21% Retail/wholesale & Other Distribtuion Transport 11% Financial &
Slide 45: Asset quality – internal credit grade by ECL staging
Asset quality – internal credit grade by ECL staging* Dec 2022 Dec 2021 €m Stage 1 Stage 2 Stage 3 POCI** Total Stage 1 Stage 2 Stage 3 POCI Total Strong 40,708 1,159 - 3 41,870 36,521 895 - 4 37,420 Satisfactory - 3 - 3 11,365 1,772 13,140 11,023 2,220 13,246 Total strong / - - satisfactory 52,073
Slide 46: Reported capital ratios
Reported capital ratios* Transitional capital ratios Fully loaded capital ratios Dec 22 Dec 21 Dec 22 Dec 21 Total risk weighted assets (€m) 55,558 52,637 Total risk weighted assets (€m) 55,333 52,358 Capital (€m) Capital (€m) Shareholders equity excl AT1 and dividend 10,985 12,427 Shareholders equi
Slide 47: Capital requirements
Capital requirements Capital requirements Dec-22 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) 0.18% 1.05% 1.45% Total CET1 10.23% 11.10% 11.50% AT
Slide 48: Loan book analysis and ECL sensitivities
Loan book analysis and ECL sensitivities Concentration by sector (%) FY 2022 ECL sensitivities* Agriculture 3 Customer loans Downside Downside Upside FYEnergy 2020 macroeconomic scenarios and 5 FY 2022 Base scenario 1 scenario 2 scenario Manufacturing 5 €m weightings: Reported 100% 100% 100% 100% •
Slide 49: Credit ratings
Credit ratings As at 31 Dec 2022 AIB Group plc (HoldCo) A3 BBB- Long term issuer rating Outlook Stable Positive Investment grade AIB p.l.c. (OpCo) A1 A- Long term issuer rating Outlook Stable Positive Investment grade 49
Slide 50: Other information
Other information 2023 guidance Dividend timetable NII >€3.0bn Event Date NIM >2.40% Full year results Wed, 8 March 2023 Other income c. €750m Ex-Dividend Date Thurs, 30 March 2023 Costs <€1.75bn Record Date Fri, 31 March 2023 Fri, 14 April 2023 @ 12:00 CoR c. 30-40bps through-the-cycle Currency/Tax
Slide 51: 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