Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — Debt Investor Presentation (August 2022)
62 slides from Bank Of Ireland's debt investor presentation, August 2022
Slide 1: 2022 Debt Investor Presentation
20 22 2022 Debt Investor Presentation 30 June 2022
Slide 2: Slide 2
Slide 3: Bank of Ireland Overview
3 Bank of Ireland 2022 Interim Results – Debt Investor Presentation Bank of Ireland Overview
Slide 4: Strong business performance and strategic progress in H1 22
4 Strong business performance and Bank of Ireland 2022 Interim Results – Debt Investor Presentation strategic progress in H1 22 H1 22 €419m • Total income modestly higher vs H1 21 (excluding additional gains, valuation items and acquisitions) Performance Underlying profit • Maintaining cost discipli
Slide 5: Irish economy resilient despite external pressures
5 Irish economy resilient despite Bank of Ireland 2022 Interim Results – Debt Investor Presentation external pressures Ireland1 • Irish economy well positioned to face global economic uncertainties – Notwithstanding external headwinds, Ireland is forecast to be the EU's fastest-growing economy for a
Slide 6: Responsible and Sustainable Business (RSB) strategy
6 Responsible and Sustainable Business Bank of Ireland 2022 Interim Results – Debt Investor Presentation (RSB) strategy supports our purpose to enable our Customers, Colleagues and Communities to thrive RSB – Progress in H1 2022 Pillar 1 Pillar 2 Pillar 3 Enabling all Enhancing Supporting the Collea
Slide 7: Continued strategic progress in the UK
7 Continued strategic progress in the UK Bank of Ireland 2022 Interim Results – Debt Investor Presentation Strong operating performance in H1 2022 Retail UK H1 2021 H1 2022 Net interest income £268m £292m • 9% increase in net interest income reflects higher net interest margin (+34bps y/y), supporte
Slide 8: Irish market leader in Wealth
8 Irish market leader in Wealth Bank of Ireland 2022 Interim Results – Debt Investor Presentation Davy acquisition further strengthens already well diversified Wealth and Insurance model Attractive wealth market backdrop Enhanced market leading capabilities Strong market position reflects confidence
Slide 9: Retail Ireland franchise will be enhanced by KBC acquisition
9 Retail Ireland franchise will be enhanced Bank of Ireland 2022 Interim Results – Debt Investor Presentation by KBC acquisition1 KBC portfolios will materially enhance Retail Ireland performing strongly Irish franchise Leading Irish retail and SME offering with KBC transaction going through final a
Slide 10: Unique growth opportunity from structural change in Irish retail banking
10 Unique growth opportunity from Bank of Ireland 2022 Interim Results – Debt Investor Presentation structural change in Irish retail banking market Once-in-a generation Delivering positive Bank of Ireland opportunity for customer and response customer acquisition1 commercial outcomes H1 2021 Ulster
Slide 11: Operational Performance
11 Bank of Ireland 2022 Interim Results – Debt Investor Presentation Operational Performance
Slide 12: Strong business performance in H1 2022
12 Strong business performance in H1 2022 Bank of Ireland 2022 Interim Results – Debt Investor Presentation H1 2021 H1 2022 • H1 22 performance3 reflects positive business income (€m) (€m) momentum and continued focus on cost reduction, Net interest income 1,080 1,072 offset by market and TLTRO impa
Slide 13: Net interest income modestly higher excluding TLTRO impacts
13 Net interest income modestly higher Bank of Ireland 2022 Interim Results – Debt Investor Presentation excluding TLTRO impacts Net interest income movement • Net interest income H1 performance modestly higher in H1 22 vs H1 21 excluding TLTRO impacts €18m (€48m) – Lower funding costs due to improv
Slide 14: Net interest income positively geared to higher interest rates
14 Net interest income positively geared Bank of Ireland 2022 Interim Results – Debt Investor Presentation to higher interest rates Net interest income sensitivity to parallel shift in Key simplifying assumptions interest rates (annualised) • An instantaneous and sustained parallel movement in all i
Slide 15: Net lending of €1.0bn in Corporate and Retail Ireland
15 Net lending of €1.0bn in Corporate and Bank of Ireland 2022 Interim Results – Debt Investor Presentation Retail Ireland; UK deleveraging of €2.0bn in line with strategy New lending1 by division Signs of inflection in Irish retail lending trends • Total new lending of €7.7bn in H1 22 €7.7bn €7.2bn
Slide 16: Business income +16% reflecting improving momentum
16 Business income1 +16% reflecting Bank of Ireland 2022 Interim Results – Debt Investor Presentation improving momentum H1 2021 H1 2022 • Wealth & Insurance +9% y/y from higher new life (€m) (€m) business and improved performance on the existing book Wealth and Insurance 105 114 Retail Ireland 101
Slide 17: Costs 1% higher; 1% lower ex Davy and one-off investment
17 Costs 1% higher; 1% lower ex Davy Bank of Ireland 2022 Interim Results – Debt Investor Presentation and one-off investment Cost Movement €8m €12m (€25m) €17m €849m €837m €829m H1 21 Cost efficiencies Inflation/FX H1 221 Davy operating costs Investment in one-off H1 22 reported costs growth opport
Slide 18: Non-core costs
18 Non-core costs Bank of Ireland 2022 Interim Results – Debt Investor Presentation H1 2021 H1 2022 • Transformation programme charge (€23m) primarily Non-core items relates to Retail UK restructuring (€m) (€m) Transformation programme costs (69) (23) • Acquisition costs (€25m) relates to the Davy t
Slide 19: H1 2022 net impairment charge of €47m
19 H1 2022 net impairment charge of €47m Bank of Ireland 2022 Interim Results – Debt Investor Presentation IFRS 9 models Loan loss experience and Macro-economic update and management adjustment portfolio activity €59m gain €106m charge • Gain of €19m from improved macroeconomic outlook and model upd
Slide 20: Well diversified loan book with progress on NPEs
20 Well diversified loan book with Bank of Ireland 2022 Interim Results – Debt Investor Presentation progress on NPEs Group loan book Loan book strongly collateralised >80% secured n Consumer • Weighted average LTV of Ireland mortgages 53%; H1 22 €5.5bn new lending 74% n Property & Construction 7% n
Slide 21: Prudent asset quality coverage levels
21 Prudent asset quality coverage levels Bank of Ireland 2022 Interim Results – Debt Investor Presentation in face of economic uncertainty Group loan book by stage Stock of impairment loss allowance of €1.9bn €4.3bn €4.1bn 32.2% 33.6% • June 2022 coverage of 2.5% unchanged vs Dec 2021; €12.4bn €10.3
Slide 22: Capital & MREL
22 Bank of Ireland 2022 Interim Results – Debt Investor Presentation Capital & MREL
Slide 23: Capital ratios remain strong
23 Capital ratios remain strong Bank of Ireland 2022 Interim Results – Debt Investor Presentation Fully Loaded CET1 ratio 60bps (10bps) (30bps) RWAs RWAs €46.2bn 20bps (80bps) €47.3bn (10bps) 16.0% 15.5% Dec-21 Net organic capital 1 Credit impairment RWA2 Foreseeable distribution Pension / Other Dav
Slide 24: Regulatory Ratios
24 Regulatory Ratios Bank of Ireland 2022 Interim Results – Debt Investor Presentation Regulatory CET1 ratio RWAs RWAs €46.4bn €47.4bn 60bps (25bps) (35bps) (30bps) 20bps (80bps) (10bps) 17.0% 16.0% Dec-21 CRD Phasing Net organic Credit RWA Forseeable Pension / Other Davy transaction Jun-22 capital
Slide 25: Balance Sheet
25 Balance Sheet Bank of Ireland 2022 Interim Results – Debt Investor Presentation Dec-21 Jun-22 Funding & Liquidity (€bn) (€bn) • LDR reduced modestly from 82% to 81% Customer loans 76 75 • Liquid assets increased by c.€2bn primarily due to, higher gross deposit balances of €1.3 billion (constant c
Slide 26: Significant buffer to potential MDA restrictions
26 Significant buffer to potential MDA1 Bank of Ireland 2022 Interim Results – Debt Investor Presentation restrictions Regulatory CET1 ratio vs. MDA Threshold • Regulatory CET1 ratio of 16.0% at Jun 2022 – Continued phase-in of existing transitional MDA 6.2% MDA Buffer 4.7% adjustments expected to c
Slide 27: Risk weighted assets (RWAs) / Leverage ratio
27 Risk weighted assets (RWAs) / Bank of Ireland 2022 Interim Results – Debt Investor Presentation Leverage ratio Customer lending average credit risk weights – June 20221,2 EBA Transparency Exercise 2021 Country by Country Average IRB risk weights (Based on regulatory exposure class) Residential Mo
Slide 28: Mortgages: IRB RWA density vs European peers
28 EBA Transparency Exercise 20211 Bank of Ireland 2022 Interim Results – Debt Investor Presentation Bank of Ireland’s IRB RWA density across major loan portfolios exceeds a wide distribution of European peers IRB Lending: SME Lending 2 IRB RWA: Corporate Lending 3 120% 80% 70% 100% 60% 80% 50% 40%
Slide 29: Regulatory capital requirements
29 Regulatory capital requirements Bank of Ireland 2022 Interim Results – Debt Investor Presentation Pro forma CET1 regulatory capital requirements 2021 2022 2023 Pillar 1 – CET1 4.50% 4.50% 4.50% Pillar 2 Requirement (P2R) 1.27% 1.27% 1.27% Capital Conservation Buffer (CCB) 2.50% 2.50% 2.50% Irelan
Slide 30: Credit Ratings
30 Credit Ratings Bank of Ireland 2022 Interim Results – Debt Investor Presentation Instrument Ratings BOIG GovCo (Stand alone BOIMB ratings) BOIG GovCo BOIG GovCo BOIG GovCo (ACS)3 Aaa Aaa Aaa AAA AAA AAA AAA Investment Grade C baa11 A1 Aa1 Aa1 Aa1 AA+ AA+ AA+ AA+ Stable Stable Aa2 Aa2 Aa2 AA AA AA
Slide 31: Corporate Structure
31 Corporate Structure Bank of Ireland 2022 Interim Results – Debt Investor Presentation Holding company Capital / MREL Bank of Ireland Group plc (BOIG) AT1 Tier 2 Senior unsecured 100% The Governor and Company of the Bank of Ireland (GovCo) Senior unsecured Operating subsidiaries 1 Funding 100% 100
Slide 32: Summary highlights
32 Summary highlights Bank of Ireland 2022 Interim Results – Debt Investor Presentation • Strong organic capital generation in 2022; capital outlook supports continued growth and Capital investment • CET1 target >13.5%; accommodates increased countercyclical buffers • IRB RWA density across largest
Slide 33: Green Bond Framework
33 Bank of Ireland 2022 Interim Results – Debt Investor Presentation Green Bond Framework
Slide 34: Green Bond Framework
34 Green Bond Framework Bank of Ireland 2022 Interim Results – Debt Investor Presentation Green Bonds are an important part of the Group’s Responsible and Sustainable Business Strategy as we look to finance our customers’ transition to the low carbon economy and take an active role in combating clim
Slide 35: Use of Proceeds
35 Use of Proceeds Bank of Ireland 2022 Interim Results – Debt Investor Presentation Green Bond Eligibility Criteria Impact UN SDG Principles Eligible Category • Residential property with an energy efficiency rating within the Top 15% in Annual energy Ireland, equivalent to BER of ‘B3’ or better eff
Slide 36: Green Bond Allocation Report
36 Green Bond Allocation Report Bank of Ireland 2022 Interim Results – Debt Investor Presentation Green Eligible Assets Portfolio Green Liabilities Eligibility Number of Amount (EUR) ISIN Settlement Date Maturity Date Amount (EUR) Criteria Loans Green Buildings 9,466 3,345,136,689 XS2311407352 10-Ma
Slide 37: Outlook
37 Bank of Ireland 2022 Interim Results – Debt Investor Presentation Outlook
Slide 38: Summary
38 Summary Bank of Ireland 2022 Interim Results – Debt Investor Presentation • Strong business performance in H1 22 reflected in financial performance • Net interest income positively geared to higher interest rates • Maintaining rigorous cost discipline, notwithstanding inflationary headwinds • Vig
Slide 39: Financial benefits of acquisitions
39 Financial benefits of acquisitions Bank of Ireland 2022 Interim Results – Debt Investor Presentation €20.0bn Material enhancement of Wealth franchise €18.5bn €16.4bn €1.0bn • Momentum in Davy wealth business translating into €15.1bn strong profit growth; reflects quality of franchise €13.1bn €0.8
Slide 40: 2022 outlook
40 2022 outlook Bank of Ireland 2022 Interim Results – Debt Investor Presentation Profitability Asset Quality Capital • Total income (excluding • Impairment charge to be • Strong organic capital acquisitions) lower than 20bps subject to no generation in 2022; capital material change in economic outl
Slide 41: Appendix
41 Bank of Ireland 2022 Interim Results – Debt Investor Presentation Appendix
Slide 42: Appendix
42 Appendix Bank of Ireland 2022 Interim Results – Debt Investor Presentation Page No. • BOI overview - customer loans / new lending volumes 43 • Ireland mortgage loan book 44 • Income statement – Net interest income analysis 45 – Structural hedge / Liquid assets / Net interest margin / Negative int
Slide 43: Overview of customer loans
43 Overview of customer loans Bank of Ireland 2022 Interim Results – Debt Investor Presentation Profile of customer loans1 at June 2022 (Gross) Ireland UK RoW Total Total Composition (Jun 22) (€bn) (€bn) (€bn) (€bn) (%) Mortgages 22.3 18.4 0.0 40.7 53% Non-property SME and corporate 10.7 5.6 5.3 21.
Slide 44: Ireland Mortgages: €22.3bn
44 Ireland Mortgages: €22.3bn Bank of Ireland 2022 Interim Results – Debt Investor Presentation New Lending volumes and Market Share Ireland Mortgages (gross) 25% 24% €23.0bn €22.9bn 23% 23% €22.4bn €22.3bn €11.2bn €12.2bn €13.1bn €13.8bn €1.3bn €3.2bn €2.9bn €1.0bn €0.9bn €1.0bn €2.5bn €2.2bn €8.7b
Slide 45: Income statement
45 Income statement Bank of Ireland 2022 Interim Results – Debt Investor Presentation Net interest income analysis H2 2020 H1 2021 H2 2021 H1 2022 Average Gross Gross Average Gross Gross Average Gross Gross Average Gross Gross Volumes Interest Rate Volumes Interest Rate Volumes Interest Rate Volumes
Slide 46: Structural hedge, liquid assets, net interest margin and negative interest rates
46 Structural hedge, liquid assets, net interestBank of Ireland 2022 Interim Results – Debt Investor Presentation margin and negative interest rates Structural hedge 1 Liquid assets 2 Structural hedge & liquid assets Average • Structural hedge and liquid asset income reducing as €35.1bn €38.3bn €31.
Slide 47: Non-performing exposures by portfolio
47 Non-performing exposures by portfolio Bank of Ireland 2022 Interim Results – Debt Investor Presentation Non-performing Non-performing Impairment loss Advances Impairment loss Composition (Jun-22) (€bn) exposures exposures as % of allowance (€bn) allowance as % of (€bn) advances non-performing exp
Slide 48: Portfolio by stage
48 Portfolio by stage Bank of Ireland 2022 Interim Results – Debt Investor Presentation Gross carrying amount Composition (Jun-22) Impairment loss allowance ILA % (before impairment loss allowance) of gross Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Sectoral analysis by st
Slide 49: Non-property SME and Corporate by stage
49 Non-property SME and Corporate by stage1,2 Bank of Ireland 2022 Interim Results – Debt Investor Presentation Gross carrying amount Composition (Jun-22) Impairment loss allowance ILA % (before impairment loss allowance) of gross Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total
Slide 50: Residential mortgages / Consumer loans
50 Residential mortgages / Consumer loans Bank of Ireland 2022 Interim Results – Debt Investor Presentation Gross loans by stage Residential mortgages Residential mortgages Consumer • Mortgage portfolios 53% of Group loan book €43.3bn – Average LTV of 53% of stock €1.8bn €40.7bn – 94% of the portfol
Slide 51: Non-property SME and corporate / Property & Construction
51 Non-property SME and corporate / Bank of Ireland 2022 Interim Results – Debt Investor Presentation Property & Construction Gross loans by stage Non-property SME and corporate Non-property SME Property and construction • 28% of Group loan book, well diversified by geography and corporate and secto
Slide 52: Forward looking information – macro-economic scenarios
52 Forward looking information Bank of Ireland 2022 Interim Results – Debt Investor Presentation – macro-economic scenarios Ireland United Kingdom 30 June 2022 2022 2023 2024-2026 2022 2023 2024-2026 Central scenario - 45% probability weighting GDP growth1 5.6% 4.6% 3.6% 3.7% 1.2% 1.6% GNP growth1 5
Slide 53: ILA sensitivity to macro-economic scenarios
53 ILA sensitivity to macro-economic Bank of Ireland 2022 Interim Results – Debt Investor Presentation scenarios The following table indicates the approximate extent to which impairment loss allowance (ILA), excluding Group management adjustments, would be higher or lower than reported were a 100% w
Slide 54: Ireland mortgages
54 Ireland mortgages Bank of Ireland 2022 Interim Results – Debt Investor Presentation Continued proactive arrears management >90 days arrears1 >90 days arrears • Bank of Ireland is significantly below the industry average Industry Average for both Owner Occupier (32% of industry average) and Buy to
Slide 55: Ordinary shareholders’ equity and TNAV
55 Ordinary shareholders’ equity and TNAV Bank of Ireland 2022 Interim Results – Debt Investor Presentation Dec-21 Jun-22 Movement in ordinary shareholders’ equity (€m) (€m) Ordinary shareholders’ equity at beginning of period 8,587 10,304 Movements: Profit / (Loss) for the period 1,055 279 Share bu
Slide 56: Capital – Strong fully loaded and regulatory CET1 ratios
56 Capital – Strong fully loaded and regulatoryBank of Ireland 2022 Interim Results – Debt Investor Presentation CET1 ratios Capital ratios – 30 June 2022 Regulatory ratio Fully loaded ratio (€bn) (€bn) Total equity 12.0 12.0 Less Additional Tier 1 (1.0) (1.0) Deferred tax 1 (0.8) (1.1) Intangible a
Slide 57: Return on tangible equity (RoTE)
57 Return on tangible equity (RoTE) Bank of Ireland 2022 Interim Results – Debt Investor Presentation H1 2022: Headline vs Adjusted Adjustments H1 2022 Additional gains Adjusted for H1 2022 Pension Headline & valuation items, CET1 ratio Adjusted Surplus (€m) net of tax at 13.5% (€m) Profit for the p
Slide 58: Cost income ratio: June 2022
58 Cost income ratio: June 2022 Bank of Ireland 2022 Interim Results – Debt Investor Presentation Headline vs Adjusted H1 2022 Pro forma H1 2022 Headline adjustments Pro forma (€m) (€m) (€m) Net interest income 1,072 – 1,072 Other income – Business income 320 – 320 – Additional gains 83 – 83 – Other
Slide 59: Defined benefit pension schemes
59 Defined benefit pension schemes Bank of Ireland 2022 Interim Results – Debt Investor Presentation Group IAS19 Defined Benefit Pension (deficit)/surplus Total Group defined benefit pension scheme assets (%) 3.45% €7.2bn €7.2bn €8.4bn €8.9bn €9.6bn €7.7bn 2.10% 2.00% 1.30% 1.35% 55% 58% 0.80% €1.38
Slide 60: Forward-looking statement
60 Forward-looking statement Bank of Ireland 2022 Interim Results – Debt Investor Presentation This document contains forward-looking statements with respect to certain of the Bank of Ireland Group plc (the ‘Company’ or ‘BOIG plc’) and its subsidiaries’ (collectively the ‘Group’ or ‘BOIG plc Group’)
Slide 61: Contact Details
61 Contact Details Bank of Ireland 2022 Interim Results – Debt Investor Presentation For further information please contact: • Group Chief Financial Officer Mark Spain tel: +353 12 50 8900 ext. 43291 mark.spain@boi.com • Investor Relations Darach O’Leary tel: +353 12 50 8900 ext. 44711 darach.oleary
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Bank of Ireland Group — Debt Investor Presentation (August 2022) on 6ix