Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — FY2009 Earnings Presentation
53 slides from Bank Of Ireland's earnings presentation, May 19, 2009
Slide 1: Preliminary Results Announcement
Preliminary Results Announcement For the year ended 31 March 2009 19 May 2009
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: Richie Boucher, Group Chief Executive
Richie Boucher Group Chief Executive
Slide 4: Turbulent trading conditions
Turbulent trading conditions Global Ireland Unprecedented turbulence in Severe slowdown in the pace of financial markets - significant economic activity – property deterioration in economic Reduced liquidity sector in particular conditions Falling asset prices Rising concern over ability of
Slide 5: Significant reduction in underlying profit
Significant reduction in underlying profit Group Profitability Group Performance Mar 09 vs Mar 08 Mar 09 Mar 08 Impairment charge - 102bps 17bps loans and advances to Underlying PBT €332m (81%) customers (Loss) / profit before tax (€7m) - Cost / income ratio 52% 51% Underlying EPS 30.2c (80%) Return
Slide 6: Divisional performance
Divisional performance % of Group PBT by Division* Retail Financial Services Ireland 4% Retail Ireland PBT (97%) to €20m Capital Markets 89% Life PBT (129%) to (€31m) UK Financial Services 7% * Excludes Group Centre / Loss in Life Company Capital Markets PBT (27%) to €474m % of Group PBT by geograph
Slide 7: Series of supportive Irish Government initiatives
Series of supportive Irish Government initiatives September 2008 - guaranteed customer deposits, wholesale funding and certain other liabilities for 2 years - extension for certain issuance beyond September 2010 Irish Government (April 2009) commitment to Invested €3.5bn in 8% coupon preference
Slide 8: Stabilisation immediate management priority
Stabilisation immediate management priority Priority Progress Metric* Capital Re-capitalisation Government investment of €3.5bn completed 31 Equity tier 1 6.2% March 2009 following extensive due diligence - Core tier 1 9.5% including stress testing Balance sheet de-leverage Withdrawn from in
Slide 9: Bank of Ireland committed to rebuilding trust
Bank of Ireland committed to rebuilding trust Strategic bias is Ireland and our international Ireland businesses where Bank of Ireland has clear Bank of Ireland is no. 1 or no. 2 in all our product competitive strengths and capabilities and market segments across all business units Market Market
Slide 10: John O'Donovan, Chief Financial Officer
John O’Donovan Chief Financial Officer
Slide 11: Today's presentation of preliminary results
Today’s presentation of preliminary results Section 1: Total Balance Sheet* €184 billion at 31 March 2009 Asset Quality Liabilities Assets Loans and advances to customers 45% Customer deposits 73% Loans and Section 2: advances to customers Funding and capital 40% Wholesale funding 15% Available for
Slide 12: Section 1: Asset Quality
Bank of Ireland Group G) Section 1: Asset Quality 12
Slide 13: Profile of loans & advances to customers - €136bn
Profile of loans & advances to customers - €136bn at March 2009 Group loan book Group loan book €136bn (before provisions €1.8bn) at 31 March 2009 Residential RoI - 21% mortgages - UK – 23% Significant residential mortgage book - 44% of 44%/€59bn the loan portfolio, 21% in Ireland and 23% in the
Slide 14: Group loan book grade profile
Group loan book grade profile Mar 09 (€136bn)* High quality 53.5% Quantum of ‘challenged’ loans were €15.7 Satisfactory 27.3% billion at 31 March 2009 compared to €4.1 Acceptable 9.3% billion at 31 March 2008 Lower quality but not past due/ impaired 1.7% ‘Challenged’ loans include ‘impaired’ loans,
Slide 15: Stock of balance sheet provisions and impairment charge
Stock of balance sheet provisions and impairment charge – loans and advances to customers UK Financial Group Retail Ireland Capital Markets Services Mar 09 Mar 08 Mar 09 Mar 08 Mar 09 Mar 08 Mar 09 Mar 08 Total loans and advances to 136 136 55 54 29 26 52 56 customers (point in time) (€bn) Impaired
Slide 16: Impairment by portfolio
Impairment by portfolio Total loans and advances to customers Mar 09 – 102bps Mar 08 – 17bps - €136bn at 31 March 2009; €136bn at 31 March 2008 Residential Residential mortgages – 20bps mortgages – 1bp Group impairment charge on loans and Ireland - 23bps Ireland – 1bp advances to customers year
Slide 17: UK Residential mortgages
UK Residential mortgages – £29bn/€31bn March 2009 UK mortgages 52% of total Group mortgages (23% of Group loans and Book - segment split advances to customers) Book growth slowing - withdrawal from intermediary sourced mortgage business (Jan 09) - strategic decision to de-leverage Group balance
Slide 18: Irish Residential Mortgages
Irish Residential Mortgages – €28bn March 2009 Book - segment split Irish mortgages 48% of total Group mortgages (21% of total Group loans and advances to customers) Book growth in line with the market: – Mar 09 vs Mar 08: ↑5% – Mar 09 vs Dec 08: ↑1% (annualised) – Mar 09 vs Sept 08: ↑4% (annual
Slide 19: Property & construction lending – €34bn
Property & construction lending – €34bn March 2009 Geographic and sector profile* Overall portfolio – Investment Development Landbank Total March 2009 Ireland Property & construction lending of €34bn – Landbank - - 10% 10% 25% of the Group loan book at 31 March Residential 4% 7% - 11% 2009 Commerc
Slide 20: Property & construction – Investment lending €22bn
Property & construction – Investment lending €22bn March 2009 65% of total property & construction lending of €34bn Property & construction investment lending - Investment portfolio Geographic and sector profile Investment Investment lending €22bn – 65% of property & construction loans Geographi
Slide 21: Property & construction – Development and landbank €12bn
Property & construction – Development and landbank €12bn March 2009 35% of total property & construction lending of €34bn Development and landbank lending - Geographic and sector profile Development and landbank portfolio Development Landbank Total Development and landbank lending €12bn – 35% of p
Slide 22: Asset quality across other lending portfolios
Asset quality across other lending portfolios March 2009 SME/corporate lending portfolio of €37bn - 43% Ireland, 30% UK and 27% RoW SME/ SME portfolio in UK and Ireland although well diversified across a range of sectors corporate is impacted by general downturn in levels of economic activity le
Slide 23: Outlook for asset quality
Outlook for asset quality In February 2009 - we indicated an expected Economic assumptions (circa €6bn loan losses) loan impairment charge of c. €4.5 billion in the 3 year period to March 2011, indicating that if Ireland key economic indicators deteriorated there was House price falls peak to trou
Slide 24: Section 2: Funding and capital
Section 2: Funding and capital 24
Slide 25: Balance sheet funding
Balance sheet funding Mar 09 Mar 08 Balance sheet funding Total liabilities Total liabilities Growth in assets subject to €184bn* €185bn* – Increase in customer deposits – Availability and quality of wholesale funding – Maintenance of prudent liquidity buffers Maintaining and building robust con
Slide 26: Group deposits
Group deposits Competitive and price-sensitive deposit Divisional profile of deposits markets (constant currency at Mar 08 exchange rates) Deposits at March 2009 in line with March 2008 (constant currency) yoy % Mar 09 Mar 08 growth Gaining market share in Irish resources - 27% of total market f
Slide 27: Wholesale funding profile
Wholesale funding profile Total €74bn as at Total €75bn as at 31 Mar 09 31 Mar 08 Wholesale funding decreased from €75bn at 9% / €6bn Securitisation March 2008 to €74bn at March 2009 11% / €8bn 27% of wholesale funding has a maturity greater 34% / Senior debt / 34% / ACS than one year at March 2
Slide 28: Funding position
Funding position Funding metrics Mar 09 Sept 08 Mar 08 Loan to deposit ratio 161% 159% 157% Customer deposits as % of total assets* 45% 47% 47% Wholesale funding as % of total assets* 40% 41% 41% % customer loans funded by customer deposits and 77% 79% 82% term funding (funding with remaining maturi
Slide 29: Capital position
Capital position Strengthening capital position Capital – Basel II Government supported recapitalisation – Mar 09 Mar 08 investment of €3.5bn in 8% coupon preference stock and warrants over 25% of % €bn % €bn enlarged ordinary stock Equity tier 1 6.2% 6.5 5.6% 6.6 Balance sheet de-leverage - cea
Slide 30: Section 3: Income Statement
Section 3: Income Statement 30
Slide 31: Group Income Statement
Group Income Statement Group Income Statement Non-core items (including non-core items) Mar 09 Mar 08 % Change €m €m Total income Mar 09 Mar 08 €m €m Total income* 3957 4276 (7) Profit on disposal of business assets - 33 Operating expenses (2409) (2157) 12 Gross-up for policyholder tax in the Life (
Slide 32: Total income & operating expenses
Total income & operating expenses 5% Total income (excluding non-core items) €3,909m €4,120m Strong net interest income growth* ↑6% offset by weaker ‘other income’* ↓32% Income drivers: Net Interests €2,917m - Positive impact of improved lending margins and strong treasury €3,092m Income perform
Slide 33: Divisional income and cost growth
Divisional income and cost growth 5% Income - Mar 09 Income - Mar 08 Costs - Mar 09 Costs - Mar 08 6% 6% 11% 5% 6% 10% 3% 23% 1% Group Retail Ireland Life Capital Markets UKFS (STG) Cost income ratio* Mar 09 Mar 08 Group (incl. investment variance in the Life Co.) 52% 51% Retail Ireland 56% 53% Life
Slide 34: Net interest margin
Net interest margin Net interest margin Margin improvement - drivers Mar 09 Mar 08 Net interest income (after Mar 09 vs impact of IFRS income Mar 08 (bps) classifications) €3092m €2917m Average interest earning Balance sheet structure/asset mix +6 assets €177bn €175bn Lending margins +8 Net interest
Slide 35: (Loss)/profit before tax by Division
(Loss)/profit before tax by Division (Loss)/profit before tax by Division Mar 09 Mar 08 % Change €m €m Retail Ireland 20 716 (97) Bank of Ireland Life (31) 108 (129) Capital Markets 474 651 (27) UKFS (euro equivalent) 35 463 (92) UKFS (Stg£) (£10m) (£330m) (97) Group Centre (166) (144) (15) Underlyi
Slide 36: Retail Ireland
Retail Ireland Retail – Income Statement Adverse impact of rapid and severe contraction in Irish economy, property market downturn, stock market Mar 09 Mar 08 % weakness & higher funding costs €m €m Change *Net interest income ↓1% – tighter liability spreads, higher Net interest income 1452 1429
Slide 37: Bank of Ireland Life
Bank of Ireland Life BoI Life – Income Statement Significant reduction in operating profit and profit before tax Mar 09 Mar 08 % Income impacted by continued volatility in €m €m Change equity markets Operating income 210 274 (23) – Lower volumes of new business • APE sales ↓44% to March 2009 Ope
Slide 38: Capital Markets
Capital Markets PBT – Business Analysis Corporate Banking Mar 09 Mar 08 % Operating profit before impairment ↑32% €m €m Change – Income ↑23% – strong growth in lending and higher margins. Lending ↑10% – pace of growth slowing Corporate Banking 247 375 (34) – Good cost control – costs ↓7% Global Ma
Slide 39: UK Financial Services (Sterling)
UK Financial Services (Sterling) PBT – Business Analysis Business Banking Operating profit ↑6% - strong cost management Mar 09 Mar 08* % Loss before tax of £81m £m £m Change Impairment charge of £292m March 2009 vs £18m March 2008 Business Banking (81) 181 (145) – 84% of impairment charge in l
Slide 40: Outlook
Outlook Facing into a difficult year – Lower levels of business activity – Higher levels of impairment – Further pressure on liability spreads Remain focused on key priorities – Engaging with customers – Strengthening our capital – Effectively managing our funding – Actively managing our asset q
Slide 41: Questions & Answers
Bank of Ireland Group G) Questions & Answers
Slide 42: Supplementary
Bank of Ireland Group G) Supplementary
Slide 43: Supplementary
Supplementary EPS calculation Income Statements – Capital Markets and UKFS Ireland and UK mortgage analysis – LTV new business – Arrears profiles Profile of available for sale assets Geographic analysis of profit before tax and shareholders Property & construction lending (€bn) Loan an
Slide 44: EPS calculation
EPS calculation Mar 09 Mar 08 % €m €m Change Profit before tax (7) 1933 (100) Tax 41 (229) Minority interests & pref. dividend 25 (19) A Profit attributable to shareholders 59 1685 (97) After tax impact of non-core items 244 (197) B Profit attributable to shareholders 303 1488 (80) excluding non-cor
Slide 45: Income Statements – Capital Markets and UKFS
Income Statements – Capital Markets and UKFS Income Statement – Capital Markets Income Statement – UKFS** Mar 09 Mar 08 % €m €m Change Mar 09 Mar 08 % £m £m Change Net interest income 1482 1030 Other income (237) 90 Net interest income 627 579 8 Total income 1245 1120 11 Other income 115 119 (3) Ope
Slide 46: Residential Mortgages – Ireland
Residential Mortgages – Ireland Average Loan to Value – new business Retail Ireland Mar 09 Mar 08 Mar 07 Owner Occupied 63% 70% 74% Investors 57% 59% 63% Mortgages – arrears profiles Retail Ireland 1-3 mths 3-6 mths 6-12 mths 12+ mths Total Mar 09 (%) 1.06 0.73 0.62 0.58 2.98 Sept 08 (%) 0.76 0.36 0
Slide 47: Residential Mortgages - UK
Residential Mortgages - UK Average Loan to Value – new business UK Mar 09 Mar 08 Mar 07 Standard 60% 66% 57% Specialist Buy-to-let 70% 71% 72% Self-certified 66% 75% 75% Mortgages – arrears profiles UK 1-3 mths 3-6 mths 6-12 mths 12+ mths Total Mar 09 (%) 1.87 0.76 0.47 0.26 3.36 Sept 08 (%) 1.64 0.
Slide 48: Profile of Available for Sale Financial Assets - €26.9bn
Profile of Available for Sale Financial Assets - €26.9bn March 2009 Portfolio of Available-for-sale (AFS) financial assets: €26.9bn (Mar 08: €29.3bn) Profile of Liquid asset portfolio at 31 March 2009: €25.2bn (Mar 08 €26.4bn) Average life of liquid asset portfolio to maturity – 2.57 years AFS
Slide 49: Geographic analysis
Geographic analysis Profit before tax by geography Split of shareholder base – Mar 09 – Mar 09 Ireland 46% Ireland 11% Retail 52% UK 54% UK 7% US 22% Europe/Rest of World 8% 49
Slide 50: Property & construction lending March 2009 (€34bn)
Property & construction lending March 2009 (€34bn) Geographic and sector profile Investment - €bn Development - €bn Landbank - €bn Total - €bn Ireland Landbank 3.6 3.6 Residential 1.2 2.2 3.4 Commercial 7.2 1.1 8.3 Total Ireland 8.4 3.3 3.6 15.3 UK (GB/NI) Landbank 1.7 1.7 Residential 1.7 2.4 4.1 Co
Slide 51: Loan & deposit volume growth
Loan & deposit volume growth Volume growth* Mar 09 vs Mar 08 Retail Financial Capital UKFS Group Services Ireland Markets Sterling Deposits +15% 15% Corporate Business Loans Loans Mortgage Loans Loans 10% Mortgage Loans +8% +7% +5% Deposits & Deposits 5% Business Credit Balances Loans -7% -10% -1% -
Slide 52: For further information please call: Investor Relations
Investor Relations For further information please call: Investor Relations Geraldine Deighan tel: +353 1 604 3501 geraldine.deighan@boimail.com Diarmaid Sheridan tel: +353 1 604 3124 diarmaid.sheridan@boimail.com Olivia Reid tel: +353 1 604 3512 olivia.reid@boimail.com Ghislaine Egan tel: +353 1 604
Slide 53: Preliminary Results Announcement
Preliminary Results Announcement For the year ended 31 March 2009 19 May 2009