Aib Group Plc · EURONEXT:A5G
Aib — Debt Investor Presentation (November 2019)
36 slides from Aib's debt investor presentation, November 2019
Slide 1: Investor presentation – Tier 2
Investor presentation – Tier 2 AIB Group plc
Slide 2: Disclaimer
Disclaimer IMPORTANT: You must read the following before continuing. The following applies to the presentation materials contained in this document, and you are therefore advised to read this carefully before reading, accessing or making any other use of the presentation materials. In accessing the
Slide 3: Disclaimer
Disclaimer This presentation is confidential and is being submitted to selected recipients only. It may not be reproduced (in whole or in part), distributed or transmitted to any other person without the prior written consent of the Issuer. The information contained in this presentation has not been
Slide 4: Q3 2019 Trading update highlights
Q3 2019 Trading update highlights Solid operational performance and planning for the future CET1 (FL) post-TRIM impact 16.5%; indicative 2020 SREP includes 15bps reduction in P2R to 3.00% NIM 2.42% includes 7bps excess liquidity impact; stable customer loan yields & spread between deposit costs has
Slide 5: Credit ratings
Credit ratings Investment grade status for AIB Group plc AIB Group plc (HoldCo) Baa3 BBB BBB- Long term issuer rating Outlook Positive Stable Stable Investment grade AIB p.l.c. (OpCo) A3 BBB+ BBB+ Long term issuer rating Outlook Positive Stable Stable Investment grade 5
Slide 6: SREP – minimum CET1 requirement
SREP – minimum CET1 requirement Minimum CET1 requirement 11.55% - FY 2019 SREP – CET1 requirements (%) FY 2019 FY 2020 FY 2021 Pillar 1 – CET1 4.50 4.50 4.50 Pillar 2 requirement (P2R)(1) 3.15 3.00 3.00 Capital conservation buffer (CCB) 2.50 2.50 2.50 Other systemically important institution (OSII)
Slide 7: Key Financials – H1 2019
Key Financials – H1 2019 AIB Group plc
Slide 8: Growing Irish economy
Growing Irish economy Continuing positive market dynamic Irish economic growth* improving; Brexit risk remains Total employment levels rising as unemployment falls % 10 2,400 8.2 14 2,200 5 3.7 3.9 3.3 9 3.1 2.7 2,000 1,800 4 0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2018* 2019 2020 2013 2013 2014 20
Slide 9: Delivering continued momentum
Delivering continued momentum Increased new lending; leading market shares Continuing increase in new lending New lending across all asset classes(1) Drawdowns (€bn) Mortgages (€bn) Personal lending (€bn) 6.0 1.2 1.3 5.5 0.4 0.5 H1 2018 H1 2019 H1 2018 H1 2019 2.4 2.5 Property (€bn) Corporate & SME
Slide 10: Financial highlights H1 2019
Financial highlights H1 2019 Solid operational and financial performance Pre-exceptional PBT €567m NIM 2.46%; widening spread between customer loans and deposits Costs €744m, up 6% year on year; renewed focus on cost discipline New lending €6bn up 8%; mortgage lending up 8% NPE(1) €4.7bn (
Slide 11: Income statement
Income statement Pre-exceptional PBT €567m; underlying business performing well Summary income statement (€m) H1 2019 H1 2018* Net interest income 1,050 1,049 Net interest income stable Other income 319 322 Total operating income 1,369 1,371 Other income €319m – fees and Total operating expenses
Slide 12: Net interest margin (NIM)
Net interest margin (NIM) In excess of 2.40%+ medium-term target NIM – material movements NIM 2.46% 4 bps 1 bps (4 bps) Higher loan yields (3.47%) offset by 2.50% 2.48% (2 bps) (2 bps) 2.46% • lower investment securities yields • cost of MREL issuance • IFRS 16 lease impact H1 2018 Q4 18 Loan Yi
Slide 13: Other income
Other income Net fee and commission income, up 6% Net fee & commission income (€m) 217 230 Fees and commissions €230m, up 6% 35 36 24 year on year 23 36 37 • customer accounts and credit 20 26 related fee income increase 103 107 driven by higher volumes of transactions H1 2018 H1 2019 Customer acc
Slide 14: Costs
Costs Renewed focus on cost discipline Operating expenses (1) (€m) Costs €744m, up 6% year on year 51%(2) 744 54% Factors impacting costs: 702 338 351 • wage inflation 3% and higher average FTE 364 393 • elevated cost of our work out unit H1 2018 H1 2019 • increased depreciation from investment
Slide 15: Balance sheet
Balance sheet New lending growth supported by strong liquidity and capital ratios Balance sheet (€bn) Jun 2019 Dec 2018 Performing loans 58.0 56.8 Non-performing loans 4.7 6.1 Performing loans increased €1.2bn Gross loans to customers 62.7 62.9 Sustainable new lending exceeding Expected credit l
Slide 16: Gross performing loans
Gross performing loans Growing at sustainable levels; €1.2bn increase Mortgages (€bn) Growing the performing Personal (€bn) 29.0 loan book €58.0bn 28.9 2.7 2.7 56.8 58.0 Dec-18 Jun-19 Dec-18 Jun-19 Property (€bn) Corporate & SME (ex. property) (€bn) 19.6 18.6 6.5 6.8 Dec-18 Jun-19 Dec-18 Jun-19 Dec-
Slide 17: Momentum in NPE reduction continues
Momentum in NPE reduction continues NPE ratio 7.5%; on track to reach 2019 target of c.5% NPE trajectory (€bn) 31.0 27% 6.1 0.4 26% c.5% 1.0 0.7 4.7 0.8 0.5 0.7 4.6 3.5 NPE NPE BAU activity Portfolio NPE Dec 2019 Dec 2013 Dec 2018 Sale Jun 2019 UTP including >90 DPD Collateral Disposals Probationary
Slide 18: Momentum in NPE reduction continues
Momentum in NPE reduction continues Progress in mortgages – 47% not past due / <90 DPD NPEs (€bn) NPE - Mortgages (€bn) NPE PDH(1) – €2.2bn Arrears profile 27% 21% 6.1 26% 1.0 2.8 4.7 1.4 0.7 0.5 2.2 6.1 36% 0.4 0.9 0.4 47% 0.3 4.7 2.3 3.3 2.8 1.8 11% 6% Not Past Due Dec-18 Jun-19 NPE Net NPE < 90DP
Slide 19: Funding structure
Funding structure €3.3bn MREL issuance complete; investment grade maintained Total Funding (€bn) MREL requirement €92.2bn MREL requirement 28.22% (based on FY 2017 RWAs) by 2021 Customer Likely increase in MREL requirement due to regulatory Accounts: 75% of Total Funding effects such as increase
Slide 20: Capital ratios
Capital ratios Solid capital position Capital ratios fully loaded (%) CET1 17.3% reflects solid €51.4bn RWAs €52.7bn RWAs profit generation +80bps 19.1 TRIM impact 19.0 • AIB Mortgage model – 1.0 1.0 impact estimated 0.6 0.7 c.90bps CET1 17.5 17.3 • Corporate model – no FY 2018 H1 2019 update To
Slide 21: 2017-2019 medium-term financial targets
2017-2019 medium-term financial targets Focused on delivering sustainable performance Medium-term Metric targets Targets H1 2019 Commentary Net interest margin 2.40%+ 2.46% Strong NIM, impact of excess Maintain strong and stable NIM, 2.40%+ liquidity and MREL Cost income ratio <50% Below 50% by end
Slide 22: Appendix
Appendix AIB Group plc
Slide 23: Capital detail
Capital detail Transitional and fully loaded capital detail and ratios Transitional capital ratios Fully loaded capital ratios Risk weighted assets (€m) Jun 19 Dec 18 Risk weighted assets (€m) Jun 19 Dec 18 Total risk weighted assets 52,803 51,596 Total risk weighted assets 52,669 51,439 Capital (€m
Slide 24: Loans to customers
Loans to customers Summary of movement €bn Performing Loans Non-Performing Loans Loans to Customers Gross loans (opening balance 1 Jan 2019) 56.8 6.1 62.9 New lending 6.0 - 6.0 Redemptions of existing loans (4.8) (0.5) (5.3) Disposals - (1.0) (1.0) Net movement to non-performing (0.2) 0.2 - Other mo
Slide 25: Asset quality by portfolio
Asset quality by portfolio Continued progress in NPE reduction across all asset classes Corporate & SME €bn Mortgages PDH BTL Personal Property (ex Property) Total H1 2019 Customer loans 31.7 28.9 2.8 3.0 7.8 20.2 62.7 of which NPEs 2.8 2.3 0.5 0.3 0.9 0.7 4.7 ECL on NPE 0.6 0.5 0.1 0.1 0.3 0.2 1.2
Slide 26: Asset quality
Asset quality Improving asset quality in the loan book Credit quality (€bn) NPE deleveraging strategy (€bn) 62.9 62.7 7.5% 60 6.1 9.6% 4.7 7.5% 6 4.5 7.2% 3.9 6.2% 4.7 c.5% 4 40 52.3 54.1 2 83.2% 86.3% 20 0 Jun 2019 - Cash / Restructuring Portfolio sales 2019 0 NPEs redemptions / other & strategic D
Slide 27: Mortgages
Mortgages Improving asset quality; lower NPE Mortgages (€bn) RoI mortgages 32.3 31.7 Dec-18 Jun-19 20% 10% 21% 30 3.3 2.8 9% 2.4 8% 2.1 7% 14% 17% 20 30% 29% 26.6 82% 26.8 84% 10 56% 54% 0 Dec 18 Jun 19 €31.0bn €30.4bn Strong / Satisfactory Criticised NPE Tracker Variable Fixed ECL/NPE coverage • Co
Slide 28: Personal
Personal Lower NPE Personal (€bn) Portfolio €3.0bn comprises €2.3bn loans and €0.7bn credit card facilities 3.1 3.0 Demand remains strong, increased online approval 3 50% 0.4 11% 9% 52% 0.3 through internet and mobile credit application activity 0.3 9% 0.3 9% NPE 9% of portfolio down from 11%
Slide 29: Property
Property Improving asset quality; lower NPE Property (€bn) Portfolio €7.8bn down €0.1bn (2%) due to continued restructuring, write-offs, repayments and the sale of a 7.9 7.8 portfolio of loans 8 29% 31% 1.4 18% 0.9 12% 82% of the portfolio is strong / satisfactory, up 8% from 0.5 6% 6 0.6 8% Dec
Slide 30: Corporate & SME (ex property)
Corporate & SME (ex property) Improvement in asset quality of new lending and reduction in NPE Corporate & SME (ex property) (€bn) Portfolio €20.2bn, up €0.7bn 19.6 20.2 Overall improvement in asset quality from upward grade 20 5% 31% 0.7 3% 36% 1.0 1.1 6% migration in the portfolio and new lend
Slide 31: Asset quality – internal credit grade by ECL staging
Asset quality – internal credit grade by ECL staging Continued improvement in asset quality across all asset classes* H1 2019 Dec 2018 €m Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total Strong 40,563 950 - 12 41,525 39,148 923 - 3 40,074 Satisfactory 11,173 1,332 - 2 12,507 10,
Slide 32: Loan book analysis
Loan book analysis Breakdown by sector and location Concentration by sector (%) Jun 2019 Concentration by location (%) Jun 2019 Agriculture 3 Republic of Ireland 77 Energy 2 United Kingdom 14 Manufacturing 5 North America 5 Property & construction 12 Rest of World 4 Distribution 8 Total 100 Transpor
Slide 33: Investment securities
Investment securities €16.3bn portfolio of debt securities Key components €bn Analysis of government securities €bn 10.0 8.4 8.0 7.9 6.3 6.2 6.0 5.0 5.2 5.0 4.0 1.1 0.9 0.8 1.1 2.0 1.1 0.1 0.1 0.5 0.5 0.7 0.4 0.4 0.0 0.0 Government Supernational banks Euro bank securities Non Euro bank Ireland Nethe
Slide 34: Average balance sheet
Average balance sheet NIM 2.46% H1 2019 H1 2019 H1 2018 (1) Average Volume Interest Yield Average Volume Interest Yield €m €m % €m €m % Assets Customer loans 61,577 1,058 3.47 60,728 1,038 3.45 Investment securities 16,666 106 1.28 15,238 113 1.50 Loans to banks 7,643 16 0.41 8,644 9 0.19 Interest e
Slide 35: Return on tangible equity
Return on tangible equity (PAT – AT1 coupon + DTA utilisation) / (FL CET1 @ 13% + DTA) H1 2019 €m PAT 361 (-) AT1 coupon 18 Profit (1) (+) DTA utilisation 28 Profit on Profit (numerator) 371 CET1 @ RWA 52,669 13% of CET1 at 13% RWA 6,847 RWAs + DTAs (+) DTA 2,676 CET1 Adjusted CET1 (denominator) 9,5
Slide 36: Contacts
Contacts Our Investor Relations Department will be happy to facilitate your requests for any further information Name Email Telephone Niamh Hore niamh.a.hore@aib.ie +353 1 6411817 Head of IR Janet McConkey janet.e.mcconkey@aib.ie +353 1 6418974 Head of Debt IR Siobhain Walsh siobhain.m.walsh@aib.ie
AIB Group — Debt Investor Presentation (November 2019) on 6ix