Permanent TSB Group Holdings PLC · EURONEXT:PTSB
Permanent TSB — FY2015 Earnings Presentation
44 slides from Permanent TSB's earnings presentation, 2016
Slide 1: Annual Results 2015
Annual Results 2015 For the 12 months ended 31 December 2015 Annual Results 2015
Slide 2: Forward Looking Statements
Forward Looking Statements A number of statements we make in our presentation, and in the accompanying slides, will not be based on historical fact but will be “forward-looking” statements within the meaning of US Securities legislation. The words "expect", "anticipate", "intend", "plan", "estimate"
Slide 3: Agenda
Agenda Progress & Strategy 3 Financial Performance 9 Summary & Outlook 25 2015 Annual Results 2
Slide 4: Progress & Strategy
Progress & Strategy Jeremy Masding Group CEO Annual Results 2015 3
Slide 5: Delivering Financial Performance
Delivering Financial Performance Profit / (Loss) Before Net Interest Cost Income Impairment Exceptional Items Margin Ratio¹ (Charge) / Write-Back €26m 112bps 84% (€35m) FY14 (€39m) FY14 90bps FY14 126% FY14 €42m CET1 NPLs €6.1bn Loan to Deposit 125% Ratio (Fully 15.0% Dec 2014 €8.3bn Ratio Dec 2014
Slide 6: Delivering Competition In The Irish Market
Delivering Competition In The Irish Market Mortgage Drawdowns Personal Lending Current Accounts Retail Deposits €459m €60m €3bn €11bn +2% YOY +40% YOY 43,000 New In line with Accounts in 2015 expectations Good Momentum in SME Launch 30 Branches Innovative New Products Extended Opening Credit Cards &
Slide 7: Delivering Arrears Management Solutions
Delivering Arrears Management Solutions ROI Residential Mortgages >90 DPD By >720 DPD By Exceeded Mortgage Arrears Resolution Targets (MART) Cases Cases Proposed Concluded Meeting Terms Overall Arrears Levels¹ -21% -9% 89% 69% 94% -46% Since Peak Since Since Dec 2014 Dec 2014 Target 85% Target 55% T
Slide 8: Embedding Our Purpose & Strategy
Embedding Our Purpose & Strategy We will maximise by developing a personal while operating within Our shareholder value banking relationship with the strict boundaries of Purpose over time our customers our risk appetite We set out our Strategic Priorities and Medium Term Financial Targets in our Eq
Slide 9: Progressing Against Our Medium Term Targets
Progressing Against Our Medium Term Targets FY 2014 FY 2015 2018 Target Balance Sheet Group LDR 138% 125% <130% Group CET1 Ratio (Fully Loaded) 12.4% 15.0% >11% Income Statement Core Bank NIM 121bps 142bps c.170bps Core Bank Cost:Income Ratio 115% 78% c.50% Core Bank Underlying Cost of Risk1 38bps (
Slide 10: Financial Performance
Financial Performance Patricia Carroll Interim Group CFO Annual Results 2015 9
Slide 11: Income Statement – Group
Income Statement – Group €m FY 2015 FY 2014 Change • Net Interest Income and NIM - Net Interest Income increased by €29m reflecting higher NIM Net Interest Income 358 329 29 - NIM growth driven by falling Cost of Funds which fell from 1.57% in Other Income 34 38 4 2014 to 1.11% ELG Fees (14) (59) 45
Slide 12: Income Statement – Good Momentum
Income Statement – Good Momentum €m H2 2014 H1 2015 Change H2 2015 Change Net Interest Income 171 167 191 Other Income 5 14 20 ELG Fees (27) (9) (5) Total Operating Income 149 172 206 Total Operating Expenses (181) (147) (140) Bank Levy & BRRD Contribution (27) - (30) Pre-Impairment (Loss) / Profit
Slide 13: Net Interest Margin
Net Interest Margin • Cost of Funds fell from 1.57% in 2014 to 1.11% in 2015 Group NIM and NIM Drivers • Retail Deposit Costs continued to fall due to rate reductions in Retail Deposits. Blended PTSB ROI Retail Rate of 67bps vs Blended Market Rate 0.82% 0.82% 0.88% 0.90% 1.00% 1.28% of 44bps1 at end
Slide 14: Total Operating Expenses
Total Operating Expenses €m FY 2015 FY 2014 Change • Cost Income Ratio continues to decline driven by positive Staff Costs 121 119 2 momentum in both Total Operating Income and Total Operating Expenses Staff Pension Costs 11 11 - • Staff Costs increased marginally Total Staff Costs 132 130 2 • Avera
Slide 15: Asset Quality – Impairment Charge
Asset Quality – Impairment Charge Breakdown by Portfolio (€m) FY 2015 FY 2014 Change Performance ROI Home Loans (12) 123 135 • Charge of €35m for 2015 compared to a €42m Credit in 2014 ROI BTLs 66 (156) 222 • Both periods contain model parameter updates reflecting experience adjustments Total ROI Re
Slide 16: Asset Quality – Arrears Performance
Asset Quality – Arrears Performance Home Loan - # Cases 0-90 DPD Home Loan - # Cases >90 DPD 16.0% 6.0% 3.6% 12.0% 8.8% 3.0% 8.0% 3.4% 8.2% 4.0% 0.0% 0.0% Jun-12 Dec-13 Dec-14 Dec-15 Jun-12 Dec-13 Dec-14 Dec-15 PTSB Industry PTSB Industry Buy To Let - # Cases 0-90 DPD Buy To Let - # Cases >90 DPD 8.
Slide 17: Asset Quality – NPL Definition
Asset Quality – NPL Definition PTSB’s NPL Definition NPLs are defined as: - Loans that are impaired; - Loans which are greater than 90 days in arrears; - Loans which the borrower is considered unlikely to repay the total loan balance without realisation of the underlying collateral; and - Loans whic
Slide 18: Asset Quality – NPL Composition
Asset Quality – NPL Composition Included in the below a total of €0.5bn (2014: €0.5bn) loans that are not impaired and less than 90 DPD (€bn) ROI Home Loan NPLs ROI Buy To Let NPLs 4.5 -7% 4.2 -7% 3.93 0.2 0.1 0.8 27% 0.9 0.2 0.9 2.5 45% In Treatment -12% 2.2 0.3 56% -18% 1.1 1.83 0.1 1.2 0.2 0.8 31
Slide 19: Asset Quality – NPL Metrics
Asset Quality – NPL Metrics Dec 2015 Dec 2014 Change • Total NPLs decreased by 27% mainly due to disposals and also Total Loan Book reduced new defaults and sustained loan cures Gross Loans (€bn) 25.8 32.0 6.2 • Total NPLs as % of Gross Loans remains elevated; however, Total NPLs (€bn) 6.1 8.3 2.2 c
Slide 20: Summary Balance Sheet – Group
Summary Balance Sheet – Group €bn Dec 2015 Dec 2014 Change Net Loans 23.0 27.2 (4.2) Movements in Assets Treasury Assets 5.5 7.1 (1.8) • Net Loans decreased mainly due to deleveraging of CHL and CRE Assets Held For Sale 0.1 1.0 (0.9) portfolios Other Assets 0.7 1.0 (0.1) • Treasury Assets reduced du
Slide 21: Funding
Funding Retail Deposits • Irish Retail Deposits represent 42% of Total Funding €33.3bn €26.3bn • Reduction due to rate actions manageable • IOM represents 2% of Total Funding 1% 12% Current Accounts 23% 18% • Represent 11% of Total Funding 15% Corporate & Institutional Deposits • Represent 15% of To
Slide 22: Deleveraging
Deleveraging Non-Core Loan Book Summary (€bn) (€bn) RoI UK Non-Core Loan Book at Constant Exchange Rate1 CRE Perf. CRE NPL CHL IPI2 Total Gross Loans 0.3 0.2 3.3 0.3 4.1 11.0 Provisions 0.0 0.1 0.1 0.0 0.2 9.7 Net Loans 0.3 0.1 3.2 0.3 3.9 NPLs - 0.2 0.2 0.0 0.4 NPL% of Gross - 100% 5% 1% 9% Loans P
Slide 23: RWAs
RWAs • RWAs reduced mainly due to deleveraging of Non-Core 41% portfolios 42% • RWA Intensity: - Remains at 42% 14.8 12.3 - Will increase once residual UK mortgages are deleveraged (which carry lower risk weights) Dec-14 Dec-15 - Majority of the Lending Exposures are risk weighted using IRB approach
Slide 24: Capital
Capital CET1 Transitional CET1 17.1% 14.2% 17.0% 3.0% 3.1% 0.3% 14.2% (3.5%) 17.1% 14.2% 15.0% 12.4% Dec-14 Dec-14 RWA RWA Loss Loss After Tax Capital Capital Raise Prudential Prudential Filters Dec-15 Dec-15 Dec-14 Dec-15 After Tax Raise and other Filters movements Transitional Fully Loaded And Oth
Slide 25: Summary
Summary Return to Pre-Exceptional Profits Net Interest Margin improved to 1.12% Total Operating Expenses down by 19% Non-Performing Loans declined by €2.2 billion or 27% CET1 Ratio increased to 15.0% (Fully Loaded) and 17.1% (Transitional) Annual Results 2015 24
Slide 26: Summary & Outlook
Summary & Outlook Jeremy Masding Group CEO Annual Results 2015 25
Slide 27: Risks & Opportunities
Risks & Opportunities Risks Opportunities Increasing Continuing Volatility Strengthening Risk, In The UK Growing Domestic Governance and Control Regulatory Costs Economy Asset Market Foundations Constrained Lending From Continuing ‘Lower for Longer’ Limited Housing Reducing Cost of Improvement in In
Slide 28: Recap / Priorities for 2016 and Beyond
Recap / Priorities for 2016 and Beyond Return to Asset Further Stable Robust Recap Underlying Quality Progress on Funding Capital Profitability Improving Deleveraging Base Levels Priorities Maintaining Building a Safe, Developing Returning To Effective Maximising Stable Clear Competitive Sustainable
Slide 29: Annual Results 2015
Annual Results 2015 For the 12 months ended 31 December 2015 Annual Results 2015 For the 12 months ended 31 December 2015 Annual Results 2015
Slide 30: Appendices
Appendices Trading Conditions 30 Segmental Income Statement 31 Interest Income 32 Interest Expenses 33 Tracker Mortgage Book and Margin 34 Other Income Analysis 35 Impairments – Write-Back Potential 36 Loan Book Profile 37 Asset Quality – NPL Composition 38 Loans In Forbearance 39 Negative Equity Ba
Slide 31: Trading Conditions
Trading Conditions 15 GDP to expand to close to 7% Unemployment Rate 10 14.00% % change, year on 12.00% 10.20% 5 8.80% 0 Net Trade Change in Stocks Investment -5 Government Spending Consumer Spending GDP -10 2012 2013 2014 2015 2000 2002 2004 2006 2008 2010 2012 2014 Recovery in Consumer Spending %
Slide 32: Segmental Income Statement
Segmental Income Statement Group Core Non-Core €m FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 Interest Income 694 874 567 675 127 199 Interest Expense (336) (545) (207) (341) (129) (204) Net Interest Income (excl. ELG) 358 329 360 334 (2) (5) ELG Fees (14) (59) (14) (59) - - Other Income 34 38 33 35 1
Slide 33: Interest Income
Interest Income Gross Average Balances (€bn) Gross Yields2 Interest Income (€m) FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 Core Bank Tracker 14.1 15.0 X 1.2% 1.3% = 169 191 Core Bank Fixed and Variable 7.7 8.0 X 4.0% 4.0% = 310 321 Consumer Finance 0.4 0.3 X 8.9% 9.8% = 32 34 ROI Non-Core 1.5 2.4 X 2
Slide 34: Interest Expenses
Interest Expenses Average Balances (€bn) Cost of Funds Interest Expense (€m) FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 Current Accounts 2.8 2.5 X 0.0% 0.0% = 1 1 Retail Deposits (ex Current Accounts) 11.3 11.4 X 1.1% 1.8% = 126 203 Corporate Deposits 2.7 2.2 2.1% 2.6% = 58 59 X Institutional Deposit
Slide 35: Tracker Book And Margin
Tracker Book And Margin Gross Irish Tracker Book (€bn) Tracker Margin Impact at FY2015 15.3 (bps) Group Core Bank Average Customer Rate 120 120 14.8 - ECB Repo Rate1 5 5 14.2 - Average Fixed Spread 115 115 Cost of Funds -111 -82 Net Interest Margin Impact 9 38 1. Average ECB bank rate for the year D
Slide 36: Other Income Analysis
Other Income Analysis (€m) FY2015 FY2014 Retail Banking And Credit Card Fees 45 44 Brokerage And Insurance 9 10 Other Fee Income 2 2 Total Fee And Commission Income 56 56 Fee and Commission Expense (17) (19) Net Fee And Commission Income 39 37 Net Trading (Expense) / Income (4) 5 Net Other Operating
Slide 37: Impairments – Write-Back Potential
Impairments – Write-Back Potential CSO House Price Index Key Messages -30% -35.8% -35% • No significant changes to any house prices assumptions in the -40% Group’s impairment models in 2015 -36.2% -45% • House prices increased by 6.6% in 2015; Dublin 2.6%, Rest of -50% Ireland 10.2% -55% • Dublin pr
Slide 38: Loan Book Profile
Loan Book Profile Dec 2015 (€bn) ROI HL ROI BTL UK HL UK BTL CRE Consumer Total Gross Loans 16.0 5.6 0.2 3.3 0.4 0.3 25.8 Performing Loans 12.1 3.8 0.2 3.1 0.3 0.2 19.7 NPLs 3.9 1.8 0.0 0.2 0.1 0.1 6.1 Provisions Stock 1.5 1.0 0.0 0.0 0.1 0.1 2.7 PCR¹ % 38% 55% 25% 38% 66% 93% 44% Dec 2014 (€bn) ROI
Slide 39: Asset Quality – NPL Composition
Asset Quality – NPL Composition Included in the below a total of €0.5bn (2014: €0.5bn) loans that are not impaired and less than 90 days in arrears ROI Home Loan NPLs (€bn) Dec-15 0.6 1.1 0.2 1.2 0.1 0.9 3.9 -13% %>90 DPD 89% 100% 0% 2% 60% 31% NPL Cover 51% 38% 21% 34% 32% 25% Dec-14 0.6 1.4 0.2 1.
Slide 40: Loans in Forbearance
Loans in Forbearance €4.5bn in Active Forbearance, 69% NPLs & 71% Home Loan ROI Home Loan in Forbearance - NPLs €2.2bn ROI BTL in Forbearance - NPLs €0.9bn 4% 2% 10% 4% Trials Trials 13% 14% Split Mortgage Split Mortgage Term Extension/ Term Extension/ 49% 11% Capitalisation Capitalisation 18% Part
Slide 41: Negative Equity Balances
Negative Equity Balances €1.7bn at December 15, down 29% from December 14 ROI Home Loans and Buy-To-Let Mortgages €3.8bn 1.6 €2.4bn €1.7bn 1.1 0.9 2.2 1.3 0.8 Dec-13 Dec-14 Dec-15 Performing Non-Performing Annual Results 2015 40
Slide 42: Treasury Portfolio Overview
Treasury Portfolio Overview Treasury Portfolio Mix Asset Type Balance (€bn) Gross Yield%1 Debt Securities 3.8 2.6 30% Government 3.1 3.0 Corporate - - 57% NAMA 0.7 1.42 13% Loans and Advances to Credit Institutions 1.6 0.1 (Cash and Equivalents) • o/w Restricted in Securitisation Vehicle 0.3 Governm
Slide 43: Liquidity
Liquidity Liquidity Buffer (€bn) Liquidity Portfolio Composition 5.3 Irish RMBS 3.8 33% NAMA Credit Line Bonds 5% 20% Government Bonds 2015 2014 42% • Reduction in the Liquidity Buffer is due to redemption of NAMA bonds and an increase in the amount of encumbered assets • Total Liquidity Buffer of €
Slide 44: Regulatory Capital
Regulatory Capital 31-Dec-15 31-Dec-14 Transitional Fully Loaded Transitional Fully Loaded €bn €bn €bn €bn RWAs 12.2 12.3 14.8 14.8 Capital Resources: CET1 Capital 2.1 1.8 2.1 1.8 Additional Tier 1 0.1 0.1 0.0 0.0 Tier 1 Capital 2.2 2.0 2.1 1.8 Tier 2 Capital 0.1 0.1 0.1 0.1 Total Capital 2.3 2.0 2.
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