Permanent Tsb Group Holdings Plc · EURONEXT:PTSB
Permanent Tsb — FY2021 Earnings Presentation
39 slides from Permanent Tsb's earnings presentation, Mar 2, 2022
Slide 1: Annual Results 2021
Annual Results 2021 We are a community serving the community
Slide 2: Forward Looking Statements
Forward Looking Statements This document contains forward-looking statements with respect to certain of the Permanent TSB Group Holdings plc’s (the ‘Bank’) intentions, beliefs, current goals and expectations concerning, among other things, the Bank’s operational results, financial condition, perform
Slide 3: Annual Results 2021
A N N U A L R E S U L T S 2021 Eamonn Crowley, Declan Norgrove, CEO Interim CFO
Slide 4: Business Update
A N N U A L R E S U L T S 2021 Business Update Eamonn Crowley, CEO
Slide 5: Strong Business Performance
Strong Business Performance Full Year 2021 Highlights €7.6 Billion • Signed Legally Binding Agreements to acquire €7.6 billion of Performing Assets from Ulster Bank Value Creation & Performing Strategic • Opportunity to grow the Bank with new customers, new colleagues while supporting communities As
Slide 6: Macroeconomics Supporting Improved Outlook
Macroeconomics Supporting Improved Outlook Domestic Performance Linked to Successful Easing of Restrictions Labour Market (%) Wage Inflation(%) Unemployment Rate Employment Growth • Labour market continues to rapidly recover 7.1% 6.0% • Inflationary pressure now beyond 5.2% big energy and transport
Slide 7: Housing Market Sentiment is Strong
Housing Market Sentiment is Strong Demand Continues to Exceed Supply House Price Growth (%) Mortgage Market (€bn) Housing Completions (000s) +25% +14% 28.4 Annual 14.4% 14.2 24.7 Demand = 12.0 20.6 20.4 30k to 33k 10.5 8.4 c.6% c.4% 2.2% 2020 2021 2022e 2023e 2020 2021 2022e 2023e 2020 2021 2022e 20
Slide 8: Continuing To Meet Customer Needs
Continuing To Meet Customer Needs Total New Lending of €2.1 Billion Total Customer New Lending (€bn) Total Mortgage Applications (€bn)1 Total Mortgage Drawdowns (€bn)1 & Market Share (%) & Market Share (%) CAGR +12% 3.4 17.8% 2.5 15.7%17.0% 2.0 2.1 3.3 14.5% 17.0% 3.2 15.1% 15.5% 15.3% 2.0 1.7 14.5%
Slide 9: A Purpose Led Strategy
A Purpose Led Strategy Strong Ambition, Purpose And Priorities Our Purpose Our Ambition To Work Hard Every Day to Build Trust To Be Ireland’s Best Personal with Our Customers - We are a And Small Business Bank Community Serving the Community Our Priorities Culture / Customers Digital Simplification
Slide 10: Customers
Customers Build Trust And Loyalty With Our Customers Enhance Leverage Re-Position Customer Journeys Digital Capabilities Our Brand Delivering On Our Priorities Growing & Meeting Changing Customer Needs NPS1 + 10 72 Hour 45% 2021 Targets 2024 Top 2 Mortgage New To Bank Market Approval Mortgage Positi
Slide 11: Transform
Transform Build A Sustainable Future For The Bank Digital Business Model Embed Development Simplification Our Values Delivering Digital Capability Simplifying Our Business Empowering Our Colleagues Suite of Personal Banking Products Branch Network Hybrid Workforce Capability End to End Online • Orga
Slide 12: Responsible And Sustainable Business
Responsible And Sustainable Business We Continue Doing Business In A Responsible Way A Clear Sustainability Strategy Our Impact in Action Underpinned by Living Our Purpose and Ensuring Strong Corporate Governance, Compliance and Fair Business Conduct • Addressing Climate Change & Supporting the Tran
Slide 13: Financial Performance
A N N U A L R E S U L T S 2021 Financial Performance Declan Norgrove, Interim CFO
Slide 14: Income Statement
Income Statement Higher Costs And Exceptional Items Impacting 2021 Profitability Grow Diversified Efficient Capital And Income Streams Organisation Resource Allocation FY21 FY20 YoY YoY 2021 Vs 2020 €m €m €m % • Net Interest Income reduced by 8% YoY, primarily due to deleveraging activity, higher co
Slide 15: Net Interest Income
Net Interest Income Net Interest Income 8% Lower While Actively Managing Deposit Costs 350 340 Net Interest Income (€m) Reduction in Net Interest Income is primarily as a result of: (16) 330 • Loan Sales in Q4’20 (€1.4bn) and Q4’21 (€0.4bn) 320 (9) (4) • The higher costs of holding excess liquidity
Slide 16: Performing Residential Loan Book
Performing Residential Loan Book Home Loan Mortgage Book Grows 4% Home Loan Book by Product (Mix %) Home Loan Yield (%) BTL1 Book by Product (Mix %) €bn 11.7 11.7 12.2 €bn 3.2 1.6 1.3 20% 17% 26% 2.97% 9% 11% 2.81% 14% 29% 38% 48% 2.69% 1% 2% 1% 90% 45% 41% 2.58% 87% 35% 2.49% 2.52% 84% FY '19 FY '2
Slide 17: Total SME Loan Book
Total SME Loan Book New Lending Driving 38% Growth In SME Loan Book Total SME Book Movement (€m)1 SME Yield (%) • SME Loan Book grew 38% YoY as the (36) Stock Flow pace of new lending exceeds outflows 98 4.77% • New Lending of €98m (+104% YoY), 3.98% 4.07% with a blended yield of 4.07% +38% 225 163
Slide 18: Operating Expenses
Operating Expenses Total Underlying Operating Expenses Increase By 8% Cost Base Analysis FY’21 FY’20 YoY YoY Movement In Underlying Operating Expenses (€m) €m €m €m % Staff Costs 140 148 -8 -5% +8% Other Costs 108 89 +19 +21% 300 295 1 Total Addressable Costs 248 237 +11 +5% 290 295 10 Depreciation
Slide 19: Continuing To Invest In Key Strategic Priorities
Continuing To Invest In Key Strategic Priorities Depreciation Increasing As We Pay For Investment Average Annual Investment Spend (€m)1 2019 – 2021 Commercial & Technology Mandatory Commercial & Technology Investment ~€113m • Modernising Architecture & Renovating Core Platforms 58 103 42 13 • Develo
Slide 20: €1m Impairment Release
€1m Impairment Release Reflecting Asset Quality And Macro-Economic Factors Cost of Impairment Release/(Charge) (€m) Risk1 103bps Provision Stock (€m) 0bps 800 728 +14 700 -85 604 Expected Credit Loss (€’m) FY 2021 FY 2020 -54 604 600 172 118 Model Results (59) (42) 500 Post Model Adjustments 54 (112
Slide 21: Asset Quality Improving
Asset Quality Improving NPL Ratio Reduced to 5.5% and Provision Coverage Broadly Stable Total Loan Book By Stage (€bn) Provisions By Stage (€bn) FY '20 FY '21 FY '20 FY '21 +10% NPL Ratio Reduced By 2.1% to 5.5% 10.6 11.7 -31% -28% 0.39 0.29 0.30 0.24 3.2 2.2 1.1 0.8 0.06 0.06 Stage 1 Stage 2 Stage
Slide 22: Strong Funding And Liquidity Position
Strong Funding And Liquidity Position Ratios Significantly Better Than European Peers Current Account Increase (%) Total Funding (€bn) • 95% Funded by Customer Deposits; • 88% from Retail Deposits (incl. Market Growth v PTSB Growth C/A’s) 25.0% 23.0% 18.2 19.1 20.1 0.4 0.3 20.0% 0.4 0.3 0.1 0.2 Secu
Slide 23: Capital Ratios Remain Above Regulatory Requirements
Capital Ratios Remain Above Regulatory Requirements Proforma CET1 Fully Loaded Ratio 15.1% Regulatory Capital Ratios (%) CET1 Fully Loaded Ratio Movement (%) Dec-20 Dec-21 Dec-21 (Proforma) RWAs RWAs 22.4% €8.5bn €8.4bn Proforma 21.0% 21.8% 16.5% 0.5% 0.3% -0.4% -0.4% 18.1% 15.5% 16.9% 17.4% 15.1% 1
Slide 24: Summary - 2021 Outturn
Summary - 2021 Outturn Growth Efficiency Returns • Strong Performance €2.1bn in Total New • Operating Expenses increased as • Return to Profitability from FY22 onwards Lending, +44% YoY investment in Digital Infrastructure supported by net accounting gains on the accelerated to support growth Ulster
Slide 25: Medium Term Outlook
A N N U A L R E S U L T S 2021 Medium Term Outlook Eamonn Crowley, CEO
Slide 26: Transformational Journey Over the Last Decade
Transformational Journey Over the Last Decade Consistent Progress to Becoming Ireland’s Third “Pillar” Bank 2011/2012 2016 2021 LDR% 227% > 111% > 75% System Funding €20bn > €1.4bn > €nil Total New Lending €0.1bn > €0.6bn > €2.1bn Mortgage Market Share 2% > 10% > 18% Underlying NIM %1 0.72% > 1.48%
Slide 27: Signed Legally Binding Agreement
Signed Legally Binding Agreement Potential Acquisition of €7.6 Billion of Assets From NatWest and Ulster Bank DAC • The Transaction envisages PTSB acquiring: • €7.6 billion (as of 30 June 2021) Retail and SME loans, • 25 branches; and • c.450 Ulster Bank staff may transfer to PTSB (subject to TUPE)
Slide 28: 2024 Business Model
2024 Business Model Digitally-Led Nationwide Great tech Everyday Banking Community Presence and great people Personalised Enhanced building a Customer Product sustainable Experiences Offering bank for the future. Diverse & Sustainability Inclusive Fully Workplace Integrated 27
Slide 29: Medium Term Goals
Medium Term Goals Growing Sustainable Profitability Underpinned By Ulster Bank Transaction 2021 2024 Underlying NIM1 1.76% > c.1.90% RoE%4 Medium Term c.9% Other Income €35m > c.€80m 2024 c.5% Cost / Income 82% > c.60% Ratio2 2021 Operating Profit3 €16m > c.€200m -0.4% Cost of Risk % 0bps > c.30bps
Slide 30: Appendix
A N N U A L R E S U L T S 2021 Appendix
Slide 31: Domestically Focused Retail And SME Bank
Domestically Focused Retail And SME Bank Business Overview Our Physical Landscape Business €13.9bn €7.1bn €10.6bn Performing Current Account Retail Deposit Loan Book Balances Balances Dublin Region 25 Branches Market Share South & East Region 25 Branches c.15% 13% 10% Residential Current Account Ret
Slide 32: Historical Financial Information – Income Statement
Historical Financial Information – Income Statement €m FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 Net Interest Income 313 341 356 379 407 Other Income 48 34 58 63 38 ELG Fees - - - - (2) Total Operating Income 361 375 414 442 443 Total Operating Expenses (Before (345) (323) (330) (331) (329) Exceptiona
Slide 33: Historical Financial Information – Balance Sheet
Historical Financial Information – Balance Sheet €bn Dec 2021 Dec 2020 Dec 2019 Dec 2018 Dec 2017 Total Loan Book (net) 14.2 14.2 15.6 15.9 18.4 Treasury Assets 6.7 5.9 3.6 3.8 3.5 Other Assets 1.3 0.8 1.1 2.1 0.9 Total Assets 22.2 20.9 20.3 21.8 22.8 ROI Retail Deposits (Incl. Current Accounts) 17.
Slide 34: Interest Income Analysis
Interest Income Analysis Average Balances (€bn) Yields (%) Interest Income (€m) FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 Tracker 6.6 8.1 1.3% 1.3% 85 104 Fixed and Variable 7.8 7.2 3.2% 3.6% 249 255 Consumer Finance 0.3 0.3 9.6% 8.4% 28 27 SME / CRE 0.2 0.2 3.8% 3.2% 9 7 Treasury Assets 6.5 4
Slide 35: Interest Expense Analysis
Interest Expense Analysis Average Balances (€bn) Cost of Funds (%) Interest Expense (€m) FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 Current Accounts 6.5 5.3 0.0% 0.0% 0 0 Retail Deposits 10.6 10.4 0.0% 0.1% 5 15 Corporate Deposits 1.5 1.9 0.5% 0.5% 8 10 Wholesale Funding 0.8 0.9 1.6% 1.1% 14 10
Slide 36: Asset Quality
Asset Quality 31-Dec 31-Dec Loans and Advances to Customers 2021 2020 Measured at Amortised Cost €m €m Home Loans 12,568 12,338 Buy To Let 1,623 2,009 Total Residential Mortgages 14,191 14,347 SME / CRE 196 181 Consumer Finance 358 327 Total Measured at Amortised Cost 14,745 14,855 Analysed By ECL S
Slide 37: NPLs and NPAs
NPLs and NPAs Stage 3 Analysis 31-Dec 21 Home Loan Buy-To-Let SME/CRE Consumer Finance Total €m €m €m €m €m NPL is < 90 Days 251 177 40 1 469 NPL is > 90 Days and < 1 year past due 32 89 1 6 128 NPL is 1-2 years past due 39 25 - 2 66 NPL is 2-5 years past due 36 10 - 1 47 NPL is > 5 years past due 6
Slide 38: Regulatory Capital
Regulatory Capital 31 Dec 21 31 Dec 20 Transitional Fully Loaded Transitional Fully Loaded €m €m €m €m Risk Weighted Assets 8,600 8,603 8,480 8,471 Capital Resources: Common equity tier 1 1,457 1,265 1,535 1,282 Additional Tier 11 123 123 190 198 Tier 1 Capital 1,580 1,388 1,725 1,480 Tier 2 Capital
Slide 39: Thank You
A N N U A L R E S U L T S 2021 Thank You End of Presentation
Permanent TSB Group Holdings — FY2021 Earnings Presentation on 6ix