Aib Group Plc · EURONEXT:A5G
Aib — Allied Irish Banks, p.l.c. — H1 2013 Earnings Presentation
34 slides from Aib's earnings presentation, Aug 1, 2013
Slide 1: Interim Results Presentation
Allied Irish Banks, p.l.c. 1 August 2013 Interim Results Presentation For the half year ended 30 June 2013
Slide 2: Forward Looking Statements
Forward Looking Statements Important Notice This presentation should be considered in parallel with AIB’s Half Year Financial Report for 2013, a copy of which including full disclosures and notes to the financial statements can be found at the following link: www.aibgroup.com/investorrelations A num
Slide 3: Agenda
Agenda David Duffy Group Performance Chief Executive Officer Paul Stanley Financial Performance, Funding Position and Capital Acting Chief Financial Officer Peter Rossiter Asset Quality Chief Risk Officer David Duffy Summary and Near-term Strategic Objectives Chief Executive Officer Allied Irish Ban
Slide 4: Group Performance
Group Performance David Duffy Chief Executive Officer
Slide 5: H1 2013 Highlights
H1 2013 Highlights Improving Operating Performance • Returned to pre-provision operating profit • Positive momentum in NIM • Total operating costs down significantly • Impairments trending lower in line with expectations • Reduction in loss before tax Balance Sheet Strengthening Continues • Loan to
Slide 6: H1 2013 Financial Highlights
H1 2013 Financial Highlights Operating Metrics H1 2012 H1 2013 19% increase in operating income and 14% reduction in costs year Operating Profit / (loss) before provisions (€ 110m) €162m on year excluding exceptional items Up 4bps year on year and 8bps from H2 2012, primarily driven by NIM (ex ELG)
Slide 7: Rebuilding Underlying Earnings Power
Rebuilding Underlying Earnings Power Return to Positive Operating Profit Margin Growth Operating Profit (1) (Pre-Provisions) (€m) NIM % 300 1.5 1.42 162 1.28 100 1.27 1.27 1.24 1.3 1.20 (100) (110) €375m Increase 1.0 (213) H1 2012 H2 2012 H1 2013 (300) H1 2012 H2 2012 H1 2013 NIM excl ELG NIM excl E
Slide 8: Strengthening the Balance Sheet
Strengthening the Balance Sheet Stabilising Funding Profile (1) Capital Ratios Remain Robust LDR (%) Capital Ratio (%) 140 €63.6bn €63.6bn €64.8bn 20 15.1 15.1 120 13 9.7 9.5 100 125% 7 115% 106% 80 0 June 2012 Dec 2012 June 2013 Dec 2012 June 2013 # Customer Account Base (1) Core Tier 1 (PCAR) Base
Slide 9: Supporting Economic Growth – over €3 bn in Lending Approvals June YTD
Supporting Economic Growth – over €3 bn in Lending Approvals June YTD Focused on SME & Corporate Customers • Sectoral approach to SME lending − Research reports and increased relationship management activity Over €3bn in Lending Approvals June YTD • SME lending approval YTD June increased 3% to c.16
Slide 10: Mortgage Customers in Financial Difficulty
Mortgage Customers in Financial Difficulty RoI Mortgage Portfolio Overview by Number of Accounts Summary – ROI Mortgages June 2013 • 8 out of 10 mortgage accounts fully performing − 85% of portfolio is owner occupier mortgages 15% • Exceeded Mortgage Arrears Resolution Target offers for Q2 2013(1) •
Slide 11: Financial Performance, Funding & Capital
Financial Performance, Funding & Capital Paul Stanley Acting Chief Financial Officer
Slide 12: Operating Performance: H1 2013
Operating Performance: H1 2013 Income Statement H1 H1 Operating Metrics €m 2012 2013 Net Interest Income (Before ELG) 783 718 • 5% increase yoy in net interest income from €568m to €595m including ELG costs ELG Fees (215) (123) − €92m reduction in ELG costs Net Other Income 203 321 Total Operating I
Slide 13: Improving Profitability and Margin Growth
Improving Profitability and Margin Growth…… Operating Profit Components of Return to Operating Profit €m €m 250 180 84 43 118 162 162 150 (20) 50 27 (110) (220) (213) (50) H1 2012 H2 2012 H1 2013 (150) (110) H1 2012 Interest Other Staff Costs Other H1 2013 Income Income (2) Net Interest Margin Compo
Slide 14: Supported by Significant Cost Reduction
…..Supported by Significant Cost Reduction Operating Expenses (1) Operating Expenses €m 1,000 14% reduction year on year • Total operating expenses reduced by €127m 881 • Staff costs reduced by €84m or 16% 754 750 349 − c. 2,300 (16%) reduction in staff numbers since June 2012 306 • General and admi
Slide 15: Funding Position Continues to Normalise and Improve
Funding Position Continues to Normalise and Improve Funding Sources Customer Accounts €bn • Customer accounts (1) increased by €1.2bn since Dec 12 to 140 €64.8bn at June 2013 122 • Customer accounts, 58% of the total funding requirement 116 − Increased 6% year on year 111 112 − Underlying customer d
Slide 16: Capital Position - Robust Capital Levels
Capital Position - Robust Capital Levels Core Tier One Ratio Capital % 20 • Capital ratios largely unchanged Flat Through H1 2013 • Total Capital of 17.4% at June 2013 vs. 17.6% at Dec 2012 • Core Tier 1 ratio of 15.1% • Basel III fully loaded equity ratio of 9.5% (1) 10 17.3 − 0.2% decrease Vs. yea
Slide 17: Asset Quality
Asset Quality Peter Rossiter Chief Risk Officer
Slide 18: Loan Book Composition and Credit Profile – Evidence of Stabilisation
Loan Book Composition and Credit Profile – Evidence of Stabilisation Total Loan Portfolio Profile by Value Total Loan Portfolio -- Geographic Profile by Value (1) % % 2% 1% 5% 17% 18% 49% 24% 79% 5% Residential Mortgages Other Personal Property & Construction SME Corporate ROI UK US ROW Credit Profi
Slide 19: Credit Impairments Significantly Reduced with Total Stock of Provisions Stable
Credit Impairments Significantly Reduced with Total Stock of Provisions Stable Credit Impairment Charge Credit Profile – Balance Sheet provisions €bn €bn 20 2.0 Unchanged 16.5 16.5 15.5 0.6 0.4 1.54 15 0.5 1.5 0.14 3.4 3.5 52% Lower 3.1 0.4 1.0 10 0.88 0.03 8.1 8.1 0.74 7.8 0.1 0.5 0.02 0.14 0.3 0.5
Slide 20: ROI Owner Occupied Mortgages: €31.1bn
ROI Owner Occupied Mortgages: €31.1bn Asset Profile Components by Value (€m) Arrears Profile & Provisions (€m) 6 Month Period Ending June 2012 Dec 2012 June 2013 1-90 days Past Due 1,704 1,863 1,994 of which Impaired 390 496 554 12% 90+ days past Due 3,090 3,424 3,771 of which Impaired 2,904 3,245 3
Slide 21: ROI Buy to Let Mortgages: €7.7bn
ROI Buy to Let Mortgages: €7.7bn Asset Profile Components by Value (€m) Arrears Profile & Provisions (€m) 6 Month Period Ending June 2012 Dec 2012 June 2013 1-90 Days Past Due 804 681 677 2% of which Impaired 410 425 448 90+ Days Past Due 2,114 2,013 2,302 36% of which Impaired 1,874 1,883 2,163 Imp
Slide 22: Property and Construction: €20.7bn
Property and Construction: €20.7bn Asset Profile (€20.7bn) Impairment Charge & Provisions (€m) 2% 6 Month Period Ending June 2012 Dec 2012 June 2013 2% Impaired Loans 12,421 13,830 13,491 Impairment Charge 290 491 272 31% Impairment Charge (bps) 242bps 426bps 253bps Total Specific Provisions 6,935 7
Slide 23: SME / Other Commercial Lending: €14.2bn
SME / Other Commercial Lending: €14.2bn Asset Profile (€14.2bn) Impairment Charge & Provisions (€m) 6 Month Period Ending June 2012 Dec 2012 June 2013 Impaired Loans 4,896 5,221 4,942 13% Impairment Charge 110 408 144 Impairment Charge (bps) 138bps 526bps 196bps 46% 24% Total Specific Provisions 2,8
Slide 24: Corporate Lending: €4.5bn Personal Lending: €4.4bn
Corporate Lending: €4.5bn Personal Lending: €4.4bn Asset Quality Profile (€4.5bn) Asset Quality Profile (€4.4bn) 1% 14% 4% 33% 52% 81% 9% 6% Satisfactory Watch Vulnerable Impaired Satisfactory Watch Vulnerable Impaired Impairment Charge & Provisions (€m) Impairment Charge & Provisions (€m) 6 Month P
Slide 25: Summary & Near Term Strategic Priorities
Summary & Near Term Strategic Priorities David Duffy Chief Executive Officer
Slide 26: Overall Summary
Overall Summary Improving Operating Performance • Returned to pre-provision operating profit • Positive momentum in NIM • Total operating costs down significantly • Impairments trending lower in line with expectations • Reduction in loss before tax Balance Sheet Strengthening Continues • Loan to dep
Slide 27: Leading Position in the Irish Banking Market
Leading Position in the Irish Banking Market aib.ie POS Mobile Banking Internet ATMs Phone Banking IBB 78m visits p.a (3) 348m 383k Active Banking 53m transactions 9.3m calls p.a. (3) 43k transactions in Customers (4) 739k Active p.a (3) customers (4) 2012 Customers (4) Number 1 in Personal Banking
Slide 28: Summary of Strategic Focus
Summary of Strategic Focus • Secure pre-provision operating profit for the full year − On-going reduction in credit provisions Focus On Commercial − Implement further cost savings Agenda − Continue progress in NIM and other financial and operational metrics 2013 • Progress on balance sheet and capit
Slide 29: Appendix
Appendix
Slide 30: Irish Economic Summary
Irish Economic Summary Unemployment Rate • Irish GDP fell in Q1 2013 but strong rise in GNP in the quarter % 16 − Forecasting GDP growth of 0.5% in 2013 and 2.2% in 2014 15.1 14.9 15 14.6 14.6 14.1 • Government Budget deficit declining at an encouraging pace 13.8 13.7 14 − On course for sub 3% budge
Slide 31: Customer Loan Book – Impairment and Provisioning
Customer Loan Book – Impairment and Provisioning Loan Book ROI UK Land & Investment SME / Other Sectoral Profile - June 2013 Personal Corporate Total Mortgages Mortgages Development Property Commercial (1) Amount in €bn’s Advances 38.8 2.7 6.3 13.6 14.2 4.4 4.5 84.5 Impaired 8.5 0.3 5.4 7.9 4.9 1.4
Slide 32: Summary Balance Sheet
Summary Balance Sheet Dec 2012 June 2013 Group Balance Sheet (€bn) (€bn) Net Loans & Advances to Customers 73 69 NAMA Bonds 17 16 Financial Investment Available for Sale 16 19 Other Assets 17 17 Total Assets 123 121 Customer Accounts 64 65 Wholesale Funding − Debt Securities 11 8 − Monetary Authorit
Slide 33: Capital Structure
Capital Structure Capital Adequacy information 31 December 2012 30 June 2013 State 2009 Preference Shares (€m) (€m) • €3.5bn perpetual, non-cumulative Preference Shares Core Tier 1 • 8% fixed non-cumulative annual coupon, no coupon step up, payable either Paid Up Share Capital and Related Share Prem
Slide 34: Criticised Loan Definitions
Criticised Loan Definitions Watch The credit is exhibiting weakness but with the expectation that existing debt can be fully repaid from normal cash flows Vulnerable Credit where repayment is in jeopardy from normal cash flows and may be dependent on other sources Impaired A loan is impaired if ther
Allied Irish Banks, p.l.c. — H1 2013 Earnings Presentation on 6ix