Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — Debt Investor Presentation (November 2008)
44 slides from Bank Of Ireland's debt investor presentation, November 2008
Slide 1: Bank of Ireland - Debt Investor Presentation
Bank of Ireland - Debt Investor Presentation For the 6 months ended 30 September 2008
Slide 2: 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 go
Slide 3: Contents
Contents 1. Bank of Ireland overview 2. Irish economy 3. Liquidity, funding & capital strategy 4. Group loan book & asset quality 5. Conclusion 6. Appendices i. Group financial highlights – September 2008 ii. Additional Group loan book analysis iii. Contacts 3
Slide 4: Group overview
Bank of Ireland Group overview A diversified financial services group established in 1783 Total assets: €192bn* Strong funding and contingent liquidity strategy Group priorities – Strengthen capital ratios – Improve key funding metrics – Actively and prudently manage credit risk – Rigorously
Slide 5: Group overview
Bank of Ireland Group overview The landscape for financial services has changed dramatically Considerable turbulence in financial markets Extreme lack of liquidity in wholesale funding markets – some improvement in recent weeks Widespread intervention by governments and financial authorities
Slide 6: Contents
Contents 1. Bank of Ireland overview 2. Irish economy 3. Liquidity, funding & capital strategy 4. Group loan book & asset quality 5. Conclusion 6. Appendices i. Group financial highlights – September 2008 ii. Additional Group loan book analysis iii. Contacts 6
Slide 7: Irish economy contracting…
Irish economy contracting… Irish GDP: Irish economy contracting Irish economy contracting in the face of three 7 shocks; 5 – Housing market correction 3 – Global credit crunch – Oil spike in first half of 2008, which kept 1 inflation high and prevented monetary easing -1 GDP is likely to fall ag
Slide 8: …but strong Government finances
…but strong Government finances Irish Government finances have been very Government debt / GDP ratio (%) healthy in recent years 80 70 – The General Government Budget recorded an average surplus of 1.6% of GDP over the 60 last 10 years vs. EU average of -2.1% 50 40 Ireland’s 2008 General Governm
Slide 9: Irish Government supply
Irish Government supply Irish Government issuance & redemption volumes €bn The NTMA have forecasted 15 Issuance Redemptions Irish debt issuance of 10 €18.4bn in 2009 5 On a gross basis, this 0 represents an increase of €2bn versus 2008 -5 -10 Due to a redemption of 2004 2005 2006 2007 2008 1 2
Slide 10: Correction in Irish housing market
Correction in Irish housing market Falling house completions Falling house completions - swift supply-side 100,000 response to drop in house prices 90,000 80,000 Increase in supply of rental property has put 70,000 60,000 downward pressure on rents 50,000 40,000 Mortgage lending growth in Irel
Slide 11: Contents
Contents 1. Bank of Ireland overview 2. Irish economy 3. Liquidity, funding & capital strategy 4. Group loan book & asset quality 5. Conclusion 6. Appendices i. Group financial highlights – September 2008 ii. Additional Group loan book analysis iii. Contacts 11
Slide 12: Balance sheet funding strategy
Balance sheet funding strategy Funding strategy Sept 2008 Sept 2007 Total liabilities Total liabilities Pro-active approach to asset and liability management €192bn* €186bn* Growth in assets subject to – Increase in customer deposits – Availability and quality of term wholesale funding (maturity
Slide 13: Group deposits
Group deposits Strong deposit gathering capabilities Divisional profile of deposits Sept 2008 yoy % RFSI – leading franchise growth – 276 branches – 1.3m customers - multiple accounts Group total €91bn 19% – Focus on retaining and growing market share Capital Markets – relationship driven Retail
Slide 14: Wholesale funding profile
Wholesale funding profile Total €78bn as at 30 Sept 2008 Wholesale funding decreased from €85bn at Sept Securitisation - 8% 2007 to €78bn at Sept 2008 reflecting increasing ‘customer deposits’ funding of the balance sheet ACS - 9% 29% of wholesale funding has a maturity greater Senior debt - 23%
Slide 15: Strong contingent liquidity position
Strong contingent liquidity position At Sept 2008 the Group had c.€47 billion of eligible collateral – Of which, c.€39 billion would provide immediate access to monetary authorities should liquidity be required Focus on optimising the liquidity embedded in our assets Contingent liquidity initi
Slide 16: Strong funding position
Strong funding position Strong funding metrics Sept 2008 March 2008 Sept 2007 Loan to deposit ratio 159% 157% 174% Customer deposits as % of total assets* 47% 47% 41% Wholesale funding as % of total assets* 41% 41% 46% % customer loans funded by customer deposits & term 79% 82% 80% funding (funding
Slide 17: Strengthening our capital base
Strengthening our capital base • Continued to improve capital ratios in 6 months to 30 Sept 2008 - controlling risk- weighted asset growth, suspending dividend payments to ordinary stockholders and profit generation • Dividend payments will not resume until return of more favourable economic and fin
Slide 18: Contents
Contents 1. Bank of Ireland overview 2. Irish economy 3. Liquidity, funding & capital strategy 4. Group loan book & asset quality 5. Conclusion 6. Appendices i. Group financial highlights – September 2008 ii. Additional Group loan book analysis iii. Contacts 18
Slide 19: Profile of loans & advances to customers - €145bn at Sept 08
Profile of loans & advances to customers - €145bn at Sept 2008 Group loan book Group Loan Book – Business Line Group loan book €145bn (before provisions €0.8bn) at 30 Sept 2008 Residential mortgages RoI - 19% Significant Residential mortgage book - 44%, 44% UK – 25% 19% in Ireland and 25% in the
Slide 20: Impairment charge at Sept 2008 – by portfolio
Impairment charge at 30 Sept 2008 – by portfolio Total loans and advances to customers - €145bn at 30 Sept 2008 Group impairment charge on loans Residential mortgages 4bps and advances to customers for 6 months ended 30 Sept 2008 – 38bps (annualised) Impairment charge by portfolio for 6 months
Slide 21: Impairment charge and stock of balance sheet provisions
Impairment charge and stock of balance sheet provisions Capital Markets – Group Retail Ireland UK Financial Services Corporate Banking Sept Mar Sept Sept Mar Sept Sept Mar Sept Sept Mar Sept 2008 2008 2007 2008 2008 2007 2008 2008 2007 2008 2008 2007 Total loans (point in 145 136 134 55 54 52 29 26
Slide 22: UK Residential mortgages – €36bn/£29bn
UK Residential mortgages – €36bn/£29bn Book - segment split UK mortgages 57% of total Group mortgages (25% of total Group loans and advances to customers) Book growth Sept 2008 vs Sept 2007: ↑16% New business split – 6 mths to Sept 2008: 88% fixed rate; 12% variable – 6 mths to Sept 2007: 79%
Slide 23: Irish Residential mortgages – €27bn
Irish Residential mortgages – €27bn Irish mortgages 43% of total Group mortgages (19% of total Group Book - segment split loans and advances to customers) Book growth Sept 2008 vs Sept 2007: ↑7% New business product split: – 6 mths to Sept 2008: 24% FTB; 24% Trade-up/down; 25% BTL: 27% Equity
Slide 24: Property & construction lending - €38bn Sept 2008
Property & construction lending - €38bn Sept 2008 Geographic and sector profile* Overall portfolio – Sept 2008 Investment Development Landbank Total Property & construction lending of €38 Ireland billion - 26% of the Group loan book at 30 Sept 2008 Landbank - - 9% 9% Residential 4% 6% - 10% Seve
Slide 25: Asset quality across other lending portfolios Sept 2008
Asset quality across other lending portfolios Sept 2008 SME/Corporate lending portfolio of €37bn - 38% Ireland, 35% UK and 27% RoW SME/ SME portfolio in UK and Ireland well diversified across a range of sectors - Corporate impacted by general downturn in levels of economic activity lending Cor
Slide 26: Outlook for asset quality
Outlook for asset quality Likely acceleration of Impairment charge by portfolio loan loss experience due to increasing severity of economic Residential mortgages c.8bps slowdown in Ireland Guidance and the UK. March 2009 We now expect Property & construction – c.135bps of which impairment charge for
Slide 27: Profile of Available for Sale Financial Assets
Profile of Available for Sale Financial Assets Portfolio of Available-for-sale (AFS) financial assets: €27.7bn (Mar 2008 €29.3bn) Profile of Liquid asset portfolio at 30 Sept 2008: €25bn (Mar 2008 €26.4bn) ABS portfolio at 30 Sept 2008: €2.7bn (Mar 2008 €2.9bn) AFS Average life of portfolio
Slide 28: Contents
Contents 1. Bank of Ireland overview 2. Irish economy 3. Liquidity, funding & capital strategy 4. Group loan book & asset quality 5. Conclusion 6. Appendices i. Group financial highlights – September 2008 ii. Additional Group loan book analysis iii. Contacts 28
Slide 29: Conclusion
Conclusion Bank of Ireland – a strong and responsible issuer Irish economy faces challenges – Significant slowdown expected in the near future – Robust Irish Government finances can support forecasted downturn with strong debt/GDP ratios and solid AAA ratings – Significant portion of Government
Slide 30: Contents
Contents 1. Bank of Ireland overview 2. Irish economy 3. Liquidity, funding & capital strategy 4. Group loan book & asset quality 5. Conclusion 6. Appendices i. Group financial highlights – September 2008 ii. Additional Group loan book analysis iii. Contacts 30
Slide 31: Profit before tax by Division
Profit before tax by Division PBT by Division Group Divisional profitability** Sept 08 Sept 07 % €m €m Change Retail Ireland 286 381 (25) Life UKFS 1% Bank of Ireland Life 3 72 (96) 20% Capital Markets 283 309 (8) Retail 40% UKFS 148 240 (38) Group Centre (70) (51) (37) Capital Underlying PBT 650 95
Slide 32: Retail Ireland
Retail Ireland 40% Operating profit 1% Key metrics - Sept 08 vs Sept 07 – Total income ↓2%: higher net interest income offset by lower other income - severe economic slowdown with more moderate lending growth and lower new Total income 2% to €918m business activity in Private Banking and other fee
Slide 33: Bank of Ireland Life
Bank of Ireland Life 1% Key metrics – Sept 08 vs Sept 07 Significant reduction in operating profit and PBT Performance impacted by continued Total income 12% to €120m volatility in equity markets – Lower sales of new business Costs flat at €54m – Increase in investment valuation variance Operati
Slide 34: Capital Markets
Capital Markets 39% PBT – Business Analysis Corporate Banking Sept 08 Sept 07 % Strong PBT growth ↑13% €m €m Change Corporate loan book ↑22% Corporate Banking 211 187 13 – Strong volume growth with margin improvement – book Global Markets 84 93 (10) well diversified by sector and geography – Slo
Slide 35: UK Financial Services (Sterling)
UK Financial Services 20% (Sterling) PBT – Business Analysis Business Banking Strong lending growth, loan book ↑22% with Sept 08 Sept 07* % improved pricing partly offset by higher funding costs £m £m Change and deposit margin attrition Operating profit ↑14% to £108m Business Banking 57 89 (36)
Slide 36: Loan & deposit volume growth
Loan & deposit volume growth Volume growth* Sept 2008 vs Sept 2007 Retail Financial Capital UKFS Group Services Ireland Markets Sterling 60% Customer Deposits 50% Deposits 44% 40% Corporate Business Loans Loans 34% Mortgage Loans Deposits Business 30% Loans Mortgage 22% 22% Loans Loans Deposits & 16
Slide 37: Net interest margin
Net interest margin Net interest margin Margin improvement - drivers Sept 2008 Sept 2007 Sept 2008 vs Net interest income excluding €1518m €1421m Sept 2007 (bps) impact of IFRS income classifications Balance sheet structure/asset mix +6 Average interest earning assets €178bn €173bn Net interest marg
Slide 38: Contents
Contents 1. Bank of Ireland overview 2. Irish economy 3. Liquidity, funding & capital strategy 4. Group loan book & asset quality 5. Conclusion 6. Appendices i. Group financial highlights – September 2008 ii. Additional Group loan book analysis iii. Contacts 38
Slide 39: Residential Mortgages – Ireland
Residential Mortgages – Ireland Average Loan to Value – new business Retail Ireland Sept 2008 Sept 2007 Sept 2006 Owner Occupied 68% 70% 73% Investors 58% 61% 62% Mortgages – arrears profiles Retail Ireland 1-3 mths 3-6 mths 6-12 mths 12+ mths Total Sept 2008 (%) 0.76 0.36 0.28 0.27 1.66 Mar 2008 (%
Slide 40: Residential Mortgages - UK
Residential Mortgages - UK Average Loan to Value – new business UK Sept 2008 Sept 2007 Sept 2006 Standard 63% 65% 61% Specialised Buy-to-let 70% 74% 75% Self-certified 73% 73% 71% Mortgages – arrears profiles UK 1-3 mths 3-6 mths 6-12 mths 12+ mths Total Sept 2008 (%) 1.64 0.49 0.21 0.06 2.40 Mar 20
Slide 41: Property & construction Investment lending €25bn
Property & construction Investment lending €25bn 65% of total property & construction lending of €38bn at Sept 2008 Property & construction investment lending - Investment portfolio Geographic and sector profile Geographic profile of investment portfolio Investment - 42% in Ireland, 54% in the UK
Slide 42: Property & construction Development and landbank €13bn
Property & construction Development and landbank €13bn 35% of total property & construction lending of €38bn at Sept 2008 Development and landbank lending - Geographic and sector profile Development and landbank portfolio Profile of development and landbank portfolio Development Landbank Total - 5
Slide 43: Contents
Contents 1. Bank of Ireland overview 2. Irish economy 3. Liquidity, funding & capital strategy 4. Group loan book & asset quality 5. Conclusion 6. Appendices i. Group financial highlights – September 2008 ii. Irish & UK mortgage book analysis iii. Contacts 43
Slide 44: Contacts
Contacts For further information please call: Group Treasurer Sean Crowe tel: +353 1 604 2212 sean.crowe@boimail.com Wholesale Liabilities Paul Flynn tel: +353 1 799 3140 paul.flynn@boigm.com John Barry john.barry@boigm.com Darach O’Leary darach.oleary@boigm.com Capital Management Brian Kealy tel: +
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