Permanent TSB Group Holdings PLC · EURONEXT:PTSB
Permanent TSB — H1 2017 Earnings Presentation
39 slides from Permanent TSB's earnings presentation, Oct 29, 2017
Slide 1: Interim Results for the Six Months
w permanent tsb Group Holdings plc INTERI FOR THE SIX MONTH
Slide 2: Forward Looking Statements
Forward Looking Statements This document contains certain 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 results of operations, financial conditio
Slide 3: Agenda
Agenda Jeremy Masding Strategy and Business 3 Chief Executive Officer Eamonn Crowley Financial Performance 17 Chief Financial Officer 2
Slide 4: Financial Highlights
Financial Highlights Rebuilding Sustainable Profitability • Profitable in H1 17 PBT1 €53m • Strong Growth in Pre-Impairment Profit Pre-Impairment Profit2 +18% (€12m) YoY NIM +38bps YoY to 1.81% • Steady Growth Of Core Income NII3 +2% (€3m) YoY • Ongoing Cost Management Operating Expenses3 +1% (€2m)
Slide 5: Operational Construct
Operational Construct Permanent TSB Asset Management Unit Retail and SME Unit (NPLs) Treated Untreated 4
Slide 6: Retail and SME Unit
Retail and SME Unit wn permanent tsb ° Group Holdings plc
Slide 7: Strategy
Strategy Clear Strategy Focused On Maximising Shareholder Value Over Time Vision To Be The Bank Of Choice For What We Do And How We Do It – Trusted, Valued and Principled Core Relationship Omni-Channel People and Risk Operational Capabilities Driven Customer Offering Culture Awareness Excellence Exp
Slide 8: Domestically Focused Retail And SME Bank
Domestically Focused Retail And SME Bank Important Part Of Ireland’s Banking Landscape Business 77 Branches Omni-Channel Offering Gross Loan Book €21.0bn Current Account Balances €3.5bn Irish Retail Deposit Balances €10.4bn Market Share Residential Mortgage Balances1 17% Current Account Balances2 13
Slide 9: Business Highlights
Business Highlights 61% Growth In Total New Lending YoY Current Accounts and Customer Deposits New Customer Lending YTD Current Account Balances €3.5bn 5%1 Mortgage Lending €341m 62% Retail Deposit Balances2 €10.4bn 2%1 Term Lending €43m 59% Loan To Deposit Ratio 110% 1%1 SME Lending €8m 138% Mortga
Slide 10: Customer Activity
Customer Activity Strong Customer Acquisition and Activity +23% YoY (21k) + 7% YoY (559k) Customer New Personal and Base Digital Customers SME Current Accounts +6% YoY (817k) +5% YoY (490k) +12% YoY (60m) Customer Active Active Current Payment Card Activity Customers1 Account Customers2 Transactions
Slide 11: Omni-Channel Offering
Omni-Channel Offering Continuing To Extend Our Customer Reach Branch Digital Voice Intermediaries 25% Of New Term 28% YoY Increase Significant Investment Successful Partnership Lending in the Number of In Branch With Drawdowns YTD Customer Calls Evolution Programme c.150 Active Brokers Via Digital C
Slide 12: Asset Management Unit (NPLs)
Asset Management Unit (NPLs) 11
Slide 13: NPL Strategy
NPL Strategy Scale Restructuring Phase Now Concluded Evolution of Forbearance Strategy (€bn) Targeted NPL Reduction -36% • NPLs Have Reduced by 36% since 2013 through H1 2017 Cures, Charge Offs and €5.8bn / 28% NPL Ratio Disposals • 53% of NPLs Have Been 9.1 Restructured On A Case 8.3 53% By Case Ba
Slide 14: Treated NPLs
Treated NPLs Successful Strategy Of Keeping Customers In Their Homes And Maximising Value For The Bank Medium Term Strategy 80% HLs c.40k • Move To Performing Assessments 20% Completed since 2013 • Improve Customer BTLs 53% 93% 3.6% Solutions Treated Conformance Cash Yield (c.€120m • Maximise Cash (
Slide 15: Untreated NPLs
Untreated NPLs Targeting Accelerated Reduction Medium Term Strategy Closures Technically Held • Target Accelerated Reduction via Trending To Closure 26% • Mortgage To Rent CRE And Unsecured 31% 47% • Customer Solutions In Assessment e.g. Assisted Untreated Voluntary Sales 61% HLs (€2.7bn) 10% • Asse
Slide 16: Summary And Outlook
Summary And Outlook permanent tsb 1s Group Holdings plc
Slide 17: Summary And Outlook
Summary And Outlook Well Positioned For Profitable Growth • Building sustainable financial performance • Growing with a supportive Irish macro-economic background • Developing strong business momentum via omni-channel approach • Executing ambitious NPL reduction target • Embedding strong Management
Slide 18: Financial Performance
Financial Performance Eamonn Crowley Chief Financial Officer 17
Slide 19: Income Statement
Income Statement Pre-Impairment Profit +18% €m H1 16 YoY H1 17 Vs H1 16 Underlying H1 17 H1 16 (Underlying1) (Vs. Underlying) Net Interest Income (NII) 204 198 2012 +3 +2% 2% growth in NII mainly due to reduction in Cost of Funds partly offset by lower Treasury Income ELG Fees (1) (3) (3) +2 +67% No
Slide 20: Net Interest Income and NIM
Net Interest Income and NIM NIM +38bps YoY to 1.81% Net Interest Income (€m) NIM Analysis NII 167 191 198 196 204 NIM Asset Yield Cost Of Funds Underlying 201 +2% 63 20 12 8 2.25% 2.26% 65 57 2.11% 2.14% 2.11% 46 29 29 1.81% 1.30% 1.43% 1.52% 250 239 236 237 226 1.28% 1.00% 0.88% -69 -50 -40 0.75% 0
Slide 21: Operating Expenses
Operating Expenses Operating Expenses Broadly Flat YoY Operating Expenses (€m) €m H1 17 H1 161 YoY YoY % (underlying) Staff Costs 75 71 +4 +6% Total 137 123 1421 1292 144 Other Costs 58 61 -3 -5% Depreciation & Amortisation 11 10 +1 +10% 10 11 10 Operating Expenses 144 142 +2 +1% 8 8 61 59 58 52 57
Slide 22: Impairment and Provision Coverage
Impairment and Provision Coverage Low Impairment Charge; Provision Coverage Remains Appropriate Impairment Charge and Cost of Risk NPLs and Coverage Ratio % H1 17 H1 161 (Underlying) Home Loans 5 (33) 44 41 41 42 43 Buy-To-Lets (1) (38) Total Residential Mortgages 4 (71) Other 2 (13) Total Charge /
Slide 23: Loan Book
Loan Book Progressing Towards Performing Loan Book Growth in 2019 Gross Loan Book of €21.0bn Residential Mortgage Book of €20.5bn Cash Yield1 2.0% 3%/ €0.6bn 13%/ 21%/ Cash Yield1 €2.7bn 3.6% €4.3bn 15%/ €3.1bn 12%/ 64%/ 72%/ €2.4bn €13.2bn €15.2bn Performing Treated NPLs Untreated NPLs Tracker Mana
Slide 24: Funding And Liquidity
Funding And Liquidity Strong Funding and Liquidity Position Funding Base €20.9bn June 17 Dec 16 Retail Deposits LDR 110% 111% 1% 1% LCR1 145% 166% 5% C&I Deposits NSFR 107% 105% 12% Encumbrance Ratio 27% 32% Secured Market Repos 13% Issued Debt (Secured • 81% Funded by Customer Deposits and Unsecure
Slide 25: Capital Position
Capital Position Capital Level Above Minimum Requirements CET1 Capital % Transitional Fully Loaded 17.2 17.1 • Regulatory Minimum on a Transitional Basis (SREP) – CET1 11.45%; Total Capital 14.95% 14.9 15.0 • RWAs of €10.6bn (Dec 16: €10.6bn) • Capital Ratios includes a preliminary Dec 16 Jun 17 dow
Slide 26: Summary
Summary • Sustainable Underlying Profitability • Strong and Stable Funding Base • Capital Ratios above Regulatory minimum requirements • Stable Balance Sheet to support growth 25
Slide 27: Appendix
Appendix Macroeconomic Environment (1/2) 27 Macroeconomic Environment (2/2) 28 Historical Financial Results 29 Segmental Income Statement 30 Interest Income Analysis 31 Interest Expenses Analysis 32 Non-Interest Income 33 Balance Sheet 34 Asset Quality 35 NPLs 36 Treasury Portfolio Overview 37 Regul
Slide 28: Macroeconomic Environment (1/2)
Macroeconomic Environment (1/2) Strong Growth In The Domestic Economy Domestic GDP Government Debt (GDP) 26.3% 120% 8.5% 105% 5.2% 5.0% 79% 75% 72% 1.1% 2013 2014 2015 2016 2017e Dec 13 Dec 14 Dec 15 Dec 16 Dec 17e Consumer Spending (Growth) Labour Market Unemployment Rate Total Employment Growth 4.
Slide 29: Macroeconomic Environment (2/2)
Macroeconomic Environment (2/2) Continued Recovery In The Housing Market Housing Completions (000s) Mortgage Market Normal Market Demand CAGR +22% 30.0 €12.8bn 21.4 €7.5bn 17.8 14.9 €4.9bn €5.7bn 12.7 €3.9bn 2015 2016 2017e 2018e 2014 2015 2016 2017e 2020e House Price Growth (YoY) Household Debt / D
Slide 30: Historical Financial Results
Historical Financial Results €m FY 2016 FY 2015 FY 2014 FY 2013 Net Interest Income 394 358 329 309 Other Income 71 34 38 48 ELG Fees (4) (14) (59) (105) Total Operating Income 461 378 308 252 Total Operating Expenses (341) (317) (389) (300) Pre-Impairment Profit / (Loss) 120 61 (81) (48) Impairment
Slide 31: Segmental Income Statement
Segmental Income Statement Group Core Non-Core €m H1 2017 H1 2016 H1 2017 H1 2016 H1 2017 H1 2016 Interest Income 255 294 255 263 - 31 Interest Expense (51) (96) (51) (53) - (43) Net Interest Income (excl. ELG) 204 198 204 210 - (12) ELG Fees (1) (3) (1) (3) - - Other Income 18 38 18 38 - - Total Op
Slide 32: Interest Income Analysis
Interest Income Analysis Gross Average Balances (€bn) Gross Yields1 Interest Income (€m) H1 2017 H1 2016 H1 2017 H1 2016 H1 2017 H1 2016 Tracker 13.1 13.7 X 1.1% 1.2% = 74 79 Fixed and Variable 7.5 7.4 X 3.8% 4.0% = 141 149 Consumer Finance 0.3 0.3 X 10.3% 9.3% = 16 16 CRE 0.3 0.5 X 2.0% 2.1% = 3 5
Slide 33: Interest Expenses Analysis
Interest Expenses Analysis Average Balances (€bn) Cost of Funds Interest Expense (€m) H1 2017 H1 2016 H1 2017 H1 2016 H1 2017 H1 2016 Current Accounts 3.5 3.1 X 0.0% 0.0% = 1 - Retail Deposits 10.2 10.7 X 0.5% 0.7% = 25 37 Corporate Deposits 2.9 3.2 X 0.9% 1.4% = 13 22 IOM Deposits 0.3 0.4 X 0.9% 1.
Slide 34: Non-Interest Income
Non-Interest Income Non-Interest Income (€m) €m H1 17 H1 16 Retail Banking and Credit Card Fees 22 22 Brokerage and Insurance 5 5 Other Fee Income 1 1 Total Fee and Commission Income 28 28 19 13 Fee and Commission Expense (10) (9) Net Fee and Commission Income 18 19 21 19 20 19 18 Other Income* - 19
Slide 35: Balance Sheet
Balance Sheet €bn Jun 2017 Dec 2016 Trackers 13.2 13.6 Variable 7.2 7.3 Fixed 0.6 0.5 Total Loan Book (Gross) 21.0 21.4 Impairment Provisions (2.5) (2.5) Total Loan Book (net) 18.5 18.9 Treasury Assets 3.9 4.0 Other Assets 0.7 0.7 Total Assets 23.2 23.6 ROI Retail Deposits (Incl. Current Accounts) 1
Slide 36: Asset Quality
Asset Quality 30 June 2017 ROI Residential mortgages Home loan Buy-to-let CRE Consumer Finance Total €m €m €m €m €m Excellent 9,164 1,109 15 161 10,449 Satisfactory 1,368 2,482 114 63 4,027 Fair Risk 849 300 28 31 1,208 Neither past due nor impaired 11,381 3,891 157 255 15,684 Past due but not impai
Slide 37: NPLs
NPLs 30 June 2017 ROI Residential mortgages Home loan Buy-to-let Commercial Consumer Finance Total €m €m €m €m €m Not impaired no arrears 596 156 3 - 755 Not Impaired < 90 days in Arrears 53 4 - - 57 Not Impaired > 90 days in Arrears 110 4 - - 114 Impaired loans 3,330 1,401 67 58 4,856 Non-performin
Slide 38: Treasury Portfolio Overview
Treasury Portfolio Overview H1 2017 FY 2016 Treasury Portfolio Mix Asset Type Balance (€bn) Gross Yield%1 Balance (€bn) Gross Yield%2 Debt Securities 2.6 2.2 2.7 2.4 33% Government 2.5 2.2 2.4 2.6 NAMA 0.1 3.7 0.3 1.72 64% Loans and Advances to 3% Credit Institutions 1.3 0.0 1.3 0.0 (Cash and Equiva
Slide 39: Regulatory Capital
Regulatory Capital 30 Jun 171 31 Dec 16 Transitional Fully Loaded Transitional Fully Loaded €m €m €m €m RWAs 10,629 10,629 10,593 10,593 Capital Resources: CET1 Capital 1,8222 1,592 1,827 1,579 Additional Tier 1 62 47 98 82 Tier 1 Capital 1,884 1,639 1,925 1,661 Tier 2 Capital 68 63 78 68 Total Capi
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