Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — FY2014 Earnings Presentation
56 slides from Bank Of Ireland's earnings presentation, Feb 27, 2015
Slide 1: 2014 Results Announcement
2014 Results Announcement 31 December 2014
Slide 2: Slide 2
Slide 3: 2014 progress, Financial Results, Priorities for 2015 and beyond
1 2014 progress Richie Boucher, CEO 2 Financial Results Andrew Keating, CFO 3 Priorities for 2015 and beyond Richie Boucher, CEO 1
Slide 4: 2014 Progress
2014 Progress Richie Boucher
Slide 5: 2014 Progress
2014 Progress Delivering on strategic priorities Increased new lending by >50% to €10bn Customers Largest lender to the Irish economy during 2014; doubled UK mortgage lending Reduced defaulted loans to €14.3bn; a reduction of €4bn from peak Underlying profit of €921m; c.€1.5bn improvement ov
Slide 6: Improved Underlying PBT by €1.5bn
Improved Underlying PBT by €1.5bn Underlying PBT of €921m - an improvement of c.€1.5bn 2013 2014 over 2013 Increased Total income by €328m (12%) in 2014, primarily Net interest reflecting higher net interest income and lower ELG costs 1.84% 2.11% margin Maintained tight cost control whilst inv
Slide 7: Strong organic capital generation
Strong organic capital generation Increased CET 1 ratios by 250 - 300bps Customer loans reduced by €2.4bn (constant currency - €4.5bn) Dec 13 Dec 14 New lending of €10bn during 2014; >50% increase on 2013 Redemptions of c.€14bn; >€3bn relating to ROI Customer loans (net) €84.5bn €82.1bn mortga
Slide 8: Favourable macroeconomic environment and outlook
Favourable macroeconomic environment and outlook ROI GDP and unemployment UK GDP and unemployment 13.1% 11.3% 10.0% 8.8% 5.0% 7.6% 4.2% 6.3% 3.8% 5.6% 5.4% 2.6% 2.6% 2.4% 1.7% 0.2% 2013 2014(f) 2015(f) 2016(f) 2013 2014 2015(f) 2016(f) n Annual real GDP growth Unemployment rate (annual average) n An
Slide 9: Continue to proactively support and benefit from Irish economic growth
Continue to proactively support and benefit from Irish economic growth >50,000 c.120,000 business loan applications new current accounts opened approved >24,000 c.€500m paid out by New Ireland under acres of land for which we customer protection products in approved funding the past 5 years >27,000
Slide 10: Ireland - Leading bank in a growing economy with a well structured market
Ireland - Leading bank in a growing economy with a well structured market #1 or #2 positions across all principal product lines Providing 1 in every 3 new mortgages; low yielding tracker mortgages reduced by €1.5bn in 2014 Consumer 27% share of savings market; deposit pay rates lower Banking
Slide 11: International - Significant progress in 2014; outlook positive
International - Significant progress in 2014; outlook positive With our Post Office partner, a leading UK challenger consumer bank with c.3m customers Benefits flowing through from ongoing network investment by Post Office Customer offering strengthened by launch of Post Office Money brand M
Slide 12: Financial Results
Financial Results Andrew Keating
Slide 13: Group Income Statement
Group Income Statement Improved Underlying PBT by €1.5bn Increased Net interest income by €225m, reflecting 2013 (€m) 2014 (€m) higher NIM of 2.11% (annualised), partially offset by lower average interest earning assets Total income 2,646 2,974 Net interest income 2,133 2,358 Other income of €65
Slide 14: Net interest income
Net interest income Increased Q4 Net Interest Margin to 2.22% Net interest margin trend Net interest income - €2,358m Delivered net interest income growth of €225m (11%), +50bps driven by higher NIM, partially offset by lower average interest earning assets NIM 2.15% Full year 2014 NIM improved
Slide 15: Loans and advances to customers
Loans and advances to customers Group new lending up >50% to €10bn New lending volumes Customer loans reduced by €2.4bn (€4.5bn at constant FX) to €82.1bn New lending amounted to €10bn in 2014, up >50% vs. 2013 Increase vs. 2013 +46% ROI Mortgages >40% ROI SME >20% ROI Corporate >100% €5.7bn UK
Slide 16: Operating expenses
Operating expenses Reduced cost / income ratio to 55% Cost / income ratio of 55% (2013: 60%) 2013 2014 (€m) (€m) Operating expenses impacted by relative strength of sterling (€18m) Total staff costs 824 823 Total staff costs in line with 2013 - Staff costs 691 685 Reduced staff costs by €6m
Slide 17: Asset Quality
Asset Quality
Slide 18: Defaulted loans and impairment charges
Defaulted loans and impairment charges Defaulted loan volumes Defaulted loan volumes €4bn reduction €2.8bn reduction during 2014; all asset classes reduced; €18.3bn €4bn reduction since peak in Jun 13 €17.1bn €16.7bn €14.3bn Expect further reductions in 2015 and beyond; pace influenced by a rang
Slide 19: ROI Mortgages: €25.6bn
ROI Mortgages: €25.6bn Owner Occupied Owner Occupied loans: €19.9bn 38% Reduced defaulted loans by 18% to €1.7bn in 2014 42% 40% Arrears down and at <50% of industry1; 9 out of 10 accounts €2.2bn €2.1bn up to date €1.7bn 94% on a capital and interest repayment basis (Dec 13: 93%) 51% or €10.
Slide 20: Defaulted loans by portfolio
Defaulted loans by portfolio Defaulted loans reducing across all portfolios ROI Mortgages UK Mortgages €3.9bn €3.8bn €3.2bn €0.6bn €0.6bn 49% 46% €0.5bn 44% 25% 24% 23% Jun 13 Dec 13 Dec 14 Jun 13 Dec 13 Dec 14 n Defaulted Loans Coverage Ratio n Defaulted Loans Coverage Ratio Non property SME and Co
Slide 21: Funding & Capital
Funding & Capital
Slide 22: Balance Sheet
Balance Sheet Capital and Liquidity available to support growth Strong liquidity ratios Dec 13 (€bn) Dec 14 (€bn) Net Stable Funding Ratio - 114% Customer loans 85 82 Liquidity Coverage Ratio - 98% Liquid assets 27 25 Loan to Deposit Ratio - 110% BOI Life assets 14 16 Customer deposits - €75bn
Slide 23: Capital
Capital Strong organic increase in CET 1 ratios in 2014 Capital Ratios Significant pace of organic capital accretion in 2014 ECB’s Comprehensive Assessment passed with 18.3% substantial capital buffers 14.8% 14.1% Robust CET 1 ratios 12.3% Transitional CET 1 ratio of 14.8%; 250bps increase d
Slide 24: Focused on growing sustainable earnings
Building on strong 2014 performance Grow revenue Continue to grow Net interest income supported by further NIM expansion and balance sheet growth Continue to increase other income Focused Control cost on growing Maintain tight control over costs sustainable while continuing to invest earnings Reduce
Slide 25: Priorities for 2015 and beyond
Priorities for 2015 and beyond Richie Boucher
Slide 26: Priorities for 2015 and beyond
Priorities for 2015 and beyond Continue to develop relationships with existing and new customers Meet increasing Irish credit appetite as the economy continues to grow, with confidence returning Customers Support customers re-financing from other institutions Significantly grow our PO partne
Slide 27: Summary
Summary Growing Irish and UK economies On track to deliver Strong franchises in these markets attractive Retail and commercial focused business model Market-leading franchises in well structured Irish market and Leading challenger bank in UK, growing share sustainable returns for Focused and m
Slide 28: Additional Information
Additional Information
Slide 29: Additional Information
Additional Information Slide No. BOI Overview Business profile 28 Historic financial results 30 Financial targets 32 Income Statement Divisional performance 33 Other income analysis (net) 34 Non-core items 35 ECB tracker mortgage loan book 36 Asset Quality Profile of customer l
Slide 30: BOI Overview
BOI Overview Ireland: Leading bank in a growing economy with a well structured market Comprehensive multi-channel distribution c.250 branches c.1,750 c.57% of customers c.300k 24 x 7 platform self-service are active online active mobile devices & mobile channel users customers Wealth Consumer Manage
Slide 31: BOI Overview
BOI Overview Attractive international franchises provide further opportunities for growth Challenger consumer banking franchise in GB Acquisition finance Trusted brand, established customer base and expanding product range Well recognised lead arranger / underwriter c.1.6m c.200k Retail FX c.540k
Slide 32: BOI Overview - Income Statement
BOI Overview Income Statement1 y/e Dec 10 y/e Dec 11 y/e Dec 12 y/e Dec 13 y/e Dec 14 (€m) (€m) (€m) (€m) (€m) Total income 2,802 2,058 1,862 2,646 2,974 Net interest income 2,511 1,983 1,755 2,133 2,358 Other income 634 524 495 642 653 ELG fees (343) (449) (388) (129) (37) Operating expenses (1,785
Slide 33: BOI Overview - Summary Balance Sheet
BOI Overview Summary Balance Sheet1 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 (€bn) (€bn) (€bn) (€bn) (€bn) Net Customer Loans2 115 102 93 85 82 Liquid assets 30 31 33 27 25 Other assets 9 10 9 6 7 Total Assets 154 143 135 118 114 Customer deposits 65 71 75 74 75 Wholesale funding 70 51 39 27 20 Private So
Slide 34: BOI Overview - Financial targets
BOI Overview Financial targets Metrics Target 2013 2014 Status Balance Sheet Loans and advances to c.€90bn c.€85bn c.€82bn On track customers1 Group loan / deposit ratio ≤120% 114% 110% ✔ Buffer Transitional CET 1 ratio maintained >10% 12.3%2 14.8% ✔ ELG covered liabilities Fully €5bn €3bn ELG fees
Slide 35: Income Statement - Divisional performance
Income Statement Divisional performance Retail Bank of Retail Corporate Group Group Year ended Dec 14 Ireland Ireland Life UK & Treasury Centre (€m) (€m) (€m) (€m) (€m) (€m) Operating profit / (loss) before impairment 505 133 312 641 (290) 1,301 charges Impairment (charges) / reversals (226) - (228)
Slide 36: Income Statement - Other income analysis (net)
Income Statement Other income analysis (net) 2013 2014 (€m) (€m) Retail Ireland 303 323 Bank of Ireland Life 131 145 Retail UK 7 9 Corporate and Treasury 122 152 Group Centre and other (5) (24) Business income 558 605 Other valuation items Fair value movement on Contingent Capital Note (CNN) embedde
Slide 37: Income Statement - Non-core items
Income Statement Non-core items 2013 2014 (€m) (€m) Impact of changes to pension benefits in the Group sponsored defined benefit schemes 274 93 Cost of restructuring programme (90) (56) One off payment in respect of career and reward framework - (32) Gross-up for policyholder tax in the Life busines
Slide 38: ECB tracker mortgage loan book
ECB tracker mortgage loan book Irish tracker book (gross) Margin impacts 2014 €16.9bn (bps) €15.9bn €14.4bn Customer pay rate at Dec 112 - ECB repo rate1 5 - Average fixed spread 107 Cost of funds2 109 Net interest margin 3 Dec 12 Dec 13 Dec 14 Volume of loans Net interest margin Reduced by €1.5bn
Slide 39: Profile of customer loans at Dec (gross)
Asset Quality Profile of customer loans1 at Dec 14 (gross) ROI UK RoW Total Total (€bn) (€bn) (€bn) (€bn) (%) Mortgages 25.6 25.4 - 51.0 57% Non-property SME and corporate 12.2 4.42 3.7 20.3 23% SME 9.6 2.5 - 12.1 14% Corporate 2.6 1.9 3.7 8.2 9% Property and construction 8.4 6.6 0.2 15.2 17% Invest
Slide 40: Defaulted customer loans & impairment provisions
Asset Quality Defaulted customer loans & impairment provisions Impairment Impairment Advances Defaulted Loans Defaulted Loans Composition (Dec 14) (€bn) (€bn) as % of advances Provisions Provisions as % of (€bn) defaulted loans Residential mortgages 51.0 3.7 7.3% 1.6 43% ROI 25.6 3.2 12.6% 1.5 46% U
Slide 41: ROI Owner Occupied mortgages - book profile - Dec 14
Asset Quality ROI Owner Occupied mortgages - book profile - Dec 14 Up to date book Arrears book Number of Accounts (145k) Number of Accounts (13k) Early Arrears 1% Late Arrears 1% Forbearance & Overpayment 92% 3% Resolution - Consensual / Legal process 3% 9 out of 10 mortgage accounts are in the u
Slide 42: ROI Buy To Let mortgages - book profile - Dec 14
Asset Quality ROI Buy To Let mortgages - book profile - Dec 14 Up to date book Arrears book Number of Accounts (27k) Number of Accounts (6k) Early Arrears 2% Late Arrears 4% Forbearance & Overpayment 81% 4% Resolution - Consensual / Legal process 9% 8 out of 10 mortgage accounts are in the up to d
Slide 43: UK Residential mortgages: £19.8bn / €25.4bn
UK Residential mortgages: £19.8bn / €25.4bn Defaulted loan volumes UK residential mortgage books continue to perform well Economic conditions continuing to improve £507m £492m £457m £395m Reducing impairment charges reflect improving economic and property market conditions and continuing low l
Slide 44: SME & Corporate loans: €20.3bn
SME & Corporate loans: €20.3bn ROI SME - €9.6bn UK SME - £1.9bn / €2.5bn Corporate - €8.2bn €2.9bn €2.7bn €2.7bn €2.5bn €1.1bn €1.4bn €1.4bn €1.3bn €1.3bn £553m €0.7bn £476m €0.6bn £344m €0.4bn €0.4bn £327m £241m €0.3bn £238m £152m €0.2bn €0.2bn £145m Jun 13 Dec 13 Jun 14 Dec 14 Jun 13 Dec 13 Jun 14
Slide 45: Property & Construction loans: €15.2bn
Property & Construction loans: €15.2bn Investment Property - €12.5bn Land and Development - €2.7bn €5.9bn €5.8bn €5.7bn €4.7bn €3.0bn €2.8bn €2.8bn €2.1bn €2.2bn €2.3bn €2.4bn €2.1bn €1.9bn €1.9bn €2.0bn €1.8bn Jun 13 Dec 13 Jun 14 Dec 14 Jun 13 Dec 13 Jun 14 Dec 14 n Defaulted Loans Provision Stock
Slide 46: Available for Sale Financial Assets
Asset Quality Available for Sale Financial Assets ROI UK Spain Other Dec 14 Dec 13 Carrying Value (€bn) (€bn) (€bn) (€bn) (€bn) (€bn) Sovereign bonds 6.4 0.7 0.3 0.9 8.3 6.6 Covered bonds 0.3 0.5 0.6 1.1 2.5 2.7 Senior debt 0.7 - - 1.6 2.3 2.3 Subordinated debt 0.2 - - - 0.2 0.1 Asset backed securit
Slide 47: CET ratios
Capital CET 1 ratios Transitional ratio Fully loaded ratio (€bn) (€bn) Total equity 8.7 8.7 Deferred Tax 1 - (1.5) Pension Deficit 0.7 - Available for sale reserve (0.6) - Removal of National Filters (0.2) - Other Items2 (1.0) (1.1) Common Equity Tier 1 Capital (including 2009 Preference Shares) 7.6
Slide 48: Defined Benefit Pension Schemes
Defined Benefit Pension Schemes Group IAS19 Pension Deficit Increase in the Group’s IAS19 deficit since Dec 13 5.30% driven by a reduction in the discount rate1 of 145bps in 3.90% 2014; partially offset by increases in asset values and 3.65% 2.20% liability assumption changes including inflation €
Slide 49: Reimbursing and rewarding taxpayers support
Reimbursing and rewarding taxpayers support Jan 09 - Feb 15 c.14% Risk to the State dealt with - ELG expired Shareholding Since 2009, c.€4.8bn cash invested by the State Cumulative c.€6bn cash returned to the State State aid repaid State continues to hold valuable c.14% equity c.€4.8bn c.€
Slide 50: Ordinary stockholders' equity and TNAV
Ordinary stockholders’ equity and TNAV 2013 2014 Movement in ordinary stockholders’ equity (€m) (€m) Ordinary stockholders’ equity at beginning of the year 6,759 6,528 Movements: (Loss) / profit attributable to stockholders (483) 786 Dividends on preference stock (240) (141) Foreign exchange movemen
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Slide 52: 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 Mark Spain tel: +353 76 623 4850 mark.spain@boi.com Barry McLoughlin tel: +353 76 624 5753 barry.mcloughlin@boi.com Kate Butler tel
Slide 53: 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
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