Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — H1 2024 Earnings Presentation
60 slides from Bank Of Ireland's earnings presentation, Jul 31, 2024
Slide 1: HY 2024 Interim Results Announcement
20 HY 2024 Interim Results 24 Announcement 31 July 2024 1
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Slide 3: Group CEO Myles O’Grady: HY 2024 Performance
Co ers lle om ag st Purpose ue Cu s HY 2024 Performance Helping you Group CEO rs Thrive de So et ol h ci re Myles O’Grady y a Sh Bank of Ireland – The National Champion Bank Stronger Simpler Sustainable relationships business company 3
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Slide 5: Strong strategic and financial performance through our business model
Strong strategic and financial performance through our business model Consistent +4% +2% +21% strategic delivery Irish loans1 New customers2 AUM (vs Jun 23) Strong financial performance €1.1bn 44% 18.9% PBT (+5% y/y) CIR3 ROTE4 Commencing interim 170bps 15.4% €352m distributions Capital generation5
Slide 6: c.75% of profits from Ireland; supportive domestic macro environment
c.75% of profits from Ireland; supportive domestic macro environment Strong labour market1 Household finances in good shape1 €160 120% 2.8 9.0% 2.7 €150 8.0% 110% 2.6 €140 7.0% Millions 2.5 Billions €130 100% 2.4 6.0% 2.3 €120 5.0% 90% 2.2 €110 2.1 4.0% Q120 Q320 Q121 Q321 Q122 Q322 Q123 Q323 Q124 €
Slide 7: Strong Irish retail performance
Strong Irish retail performance Irish residential mortgages Everyday Banking +4% 41% €79.7bn +3% y/y Net Irish mortgage Irish mortgage market share Irish customer balances Customer fee income2 book growth1 (41% H123) (stable vs Dec 2023) Stable deposit trends in H1 and Increased supply of new homes
Slide 8: Unique wealth offering; Ireland’s only bancassurer
Unique wealth offering; Ireland’s only bancassurer Wealth and Insurance AUM growth driving fee income €51bn €2.1bn H1 Wealth and Insurance income €80m €166m €176m +6% y/y AUM (+21% y/y) Net inflows (+84% y/y) €51bn €42bn Crystallising the opportunity from positive demographics €39bn and increasing h
Slide 9: Corporate and Retail UK performing well, in line with strategy
Corporate and Retail UK performing well, in line with strategy Corporate and Commercial Retail UK Ireland SME and Corporate Property and International Corporate £167m £17.6bn +5% Net lending -3% Net lending Underlying PBT Total net lending 1 1 (+43% y/y) (+2%1) Strategic refresh completed: focus on
Slide 10: Strategic pillars support growth and improved Stakeholder outcomes
Strategic pillars support growth and improved Stakeholder outcomes Stronger relationships +2% +12 New customers1 Relationship NPS Growing Customer (+5pts y/y) numbers +5% y/y -19% y/y Simpler business Active digital users2 Customer Better Customer complaints3 outcomes Sustainable company €12.5bn #1
Slide 11: Strategic execution driving Shareholder value creation
Strategic execution driving Shareholder value creation... Higher capital-generative business model Supporting significant capital distributions1 72% ROTE c.7% 17.3% > FY23 (adjusted) 310-320bps €1,150m H224 39% 340bps 10% H124 €350m c.140bps 170bps €104m 2017 - 2022 2023 2024 FY 21 FY 22 FY 23 FY 24
Slide 12: …and consistent delivery on medium term targets
…and consistent delivery on medium term targets 2023-2025 FY23 HY24 Financial Targets Performance Performance Return on Tangible Equity (ROTE) c.15% 17.3% 18.9% Cost-to-Income Ratio (CIR) < 50% 42% 44% c.40% payout Interim dividend 35c DPS Ordinary dividend c.40-60% policy provides flexibility c.40%
Slide 13: Unique opportunity as The National Champion Bank
Unique opportunity as The National Champion Bank Strategic clarity Differentiated and focus Strong capital business model generation Positioned to deliver attractive returns into the medium term Delivering on all Highly attractive 2023-2025 markets financial targets 13
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Slide 15: HY 2024 Financials
HY 2024 Financials Group CFO Mark Spain 15
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Slide 17: H1 2024 – financial summary
H1 2024 – financial summary €1.1bn €81.5bn Total customer loans PBT (+5% y/y) (+2% vs Dec 23) 44% Cost-to-Income Ratio1 2.9% NPE ratio (Dec 23 3.1%) 18.9% Return on Tangible Equity2 170bps Capital generation3 Strong performance supporting upgraded FY24 guidance For footnotes please refer to slide 30
Slide 18: H1 2024 financial performance
H1 2024 financial performance H1 2023 H1 2024 y/y% (€m) (€m) Very strong financial performance Net interest income 1,802 1,802 0% Business income 350 367 5% PBT 5% higher y/y Additional gains, valuation and other items 49 27 -45% • NII +2% like-for-like1; business Total Income 2,201 2,196 0% Operati
Slide 19: Net interest income performing in line with guidance
Net interest income performing in line with guidance Net interest income movement H1 24 NII +2% on like-for-like basis • Liquid asset income increased from higher rates €65m • Lending income higher reflecting Irish (€242m) franchise momentum €220m • Funding costs higher reflecting market and custome
Slide 20: Structural hedge supporting NII resilience
Structural hedge supporting NII resilience Structural hedge (gross fixed leg income)1 Hedge supports NII stability through the Avg volume €44bn €65bn Avg rate 0.45% 1.49% c.€64bn cycle, with a proportion of customer balances ~1.72% and equity hedged c.€1.1bn % €972m > 10 Total hedge c.€64bn, c.€9bn
Slide 21: Strong retail deposit franchise
Strong retail deposit franchise Total customer balances Everyday Banking – Term % H1 deposit trends • Total deposits stable at €101bn €100bn €101bn 6.5% 8.2% • Everyday Banking deposits stable, reflecting underlying growth and flows €80.1bn €79.7bn to Davy €6.5bn €6.5bn €5.2bn €6.5bn • €1.3bn flow t
Slide 22: Loan book growth across our key retail portfolios
Loan book growth across our key retail portfolios Group loan book movement (net lending) H1 performance Net lending in Ireland of €1.0bn driven by €0.9bn €81.5bn mortgages (+€0.7bn) and SME/Corporate €0.4bn (€0.3bn) (+€0.3bn) €1.0bn €0.9bn (€0.2bn) UKPL Retail UK supported by growth in mortgages €79
Slide 23: Total business income (incl. JVs) +6%
Total business income (incl. JVs) +6% H1 2023 H1 2024 (€m) (€m) H1 performance +6% • Wealth and Insurance +6% driven by Wealth and Insurance 166 176 Davy wealth income Retail Ireland 74 76 • Retail Ireland +3% from higher cards income Retail UK (18) (5) • Retail UK reflects lower partnership Corpora
Slide 24: Operating expenses in line; guidance improved on levies
Operating expenses in line; guidance improved on levies H1 performance +6% y/y • Net growth of €32m reflects inflation and BAU investment, partially offset by Operating expenses1,2 movement efficiencies • Additional investment of €22m to drive future efficiencies €22m FY24 outlook €32m €961m • Opera
Slide 25: Improved asset quality - NPE ratio now 2.9%
Improved asset quality - NPE ratio now 2.9% Group loan book segment mix (net) n Consumer Diversified loan book with strong €5.6bn collateralisation n Commercial 7% Real Estate (CRE) • c.60% of lending to mortgages; weighted €6.9bn 9% average LTV of 54%, H124 new lending n Ireland mortgages 40% €32.9
Slide 26: Impairment charge materially better; FY24 guidance upgraded
Impairment charge materially better; FY24 guidance upgraded Impairment charge components1 Loan loss experience and portfolio (annualised) Cost of risk activity charge of (€94m) • (€102m) portfolio activity charge (25bps 23bps (12bps) 1bps 12bps annualised) • €8m release from affordability assessment
Slide 27: Capital performance supports upgraded FY24 guidance
Capital performance supports upgraded FY24 guidance H1 performance Fully Loaded CET1 RWAs RWAs €52.5bn €52.2bn Net organic capital1 generation of 170bps RWA2 reflects 20bps investment in lending, offset by 30bps CRT benefit Interim dividend 70bps reflects DPS 35c (40% payout on H124 PAT) 170bps 10bp
Slide 28: Strong performance supporting upgraded FY24 guidance
Strong performance supporting upgraded FY24 guidance Income Operating expenses NII c.€3.55bn 5-6% higher vs 2023 Total business income (incl. JVs) Levies €125m - €130m mid-single digit % higher vs 2023 Strong capital generation of 310 - 320bps Cost of risk ROTE c.20bps > FY23 ROTE (2023: 17.3%) On t
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Slide 30: Footnote glossary
Footnote glossary Slide 5: Strong strategic and financial performance through our business model Slide 11: Strategic execution driving Shareholder value creation… 1. Annualised H1 2024 1. Cumulative payout from ordinary dividends and share buybacks 2. New Irish bank channel customer relationships as
Slide 31: Footnote glossary (cont)
Footnote glossary (cont) Slide 24: Operating expenses in line; guidance improved on levies 1. Operating expenses excluding levies and regulatory charges of €111m 2. H123 operating expenses include €8m of expenses related to UK personal loans portfolio which was transferred to non-core from 1 Sept 20
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Slide 33: Appendix
= Bank of Ireland Appendix 33
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Slide 35: Appendix
Appendix Slide No. • BOI overview – customer loans / new lending volumes 36 • Ireland mortgages 37 • UK customer loans 38 • Net interest income analysis 39 • Asset quality – Non-performing exposures by portfolio 40 – Portfolio by stage 41 – Residential mortgages / Consumer loans 42 – Non-property SM
Slide 36: Overview of customer loans
Overview of customer loans Profile of customer loans1 at Jun 2024 (gross) Composition (Jun 24) Ireland (€bn) UK (€bn) RoW (€bn) Total (€bn) Total (%) Mortgages 33.1 15.9 0 49.0 59% Non-property SME & Corporate 10.7 4.8 5.2 20.7 25% SME 7.2 1.6 0 8.8 11% Corporate 3.4 3.3 5.2 11.9 14% Property & Cons
Slide 37: Ireland mortgages: €32.7bn
Ireland mortgages: €32.7bn New lending volumes and market share Ireland mortgages (gross) 41% 41% €32.0bn €32.7bn €22.4bn €22.5bn 24% €23bn €23.3bn 23% 23% €2.4bn €13.1bn €15.6bn €2.1bn €1.3bn €2.5bn €3.6bn €4.4bn €0.9bn €1.0bn €1.6bn €6.8bn €5.3bn €5.4bn €5.0bn H1 2020 H1 2021 H1 2022 H1 2023 H1 20
Slide 38: UK customer loans £21.3bn (€25.2bn)
UK customer loans £21.3bn (€25.2bn) UK mortgages – £13.4bn; NPEs 2.6% • Average LTV of 59% on existing stock at Jun 2024; average LTV of 75% on new UK mortgages in H1 2024 • 73% of the current mortgage portfolio value originated since 2010; of these, 81% are standard owner occupier mortgages • Owner
Slide 39: Net interest income analysis
Net interest income analysis H2 2022 H1 2023 H2 2023 H1 2024 Average Gross Gross Average Gross Gross Average Gross Gross Average Gross Gross volumes interest rate volumes interest rate volumes interest rate volumes interest rate (€bn) (€m) (%) (€bn) (€m) (%) (€bn) (€m) (%) (€bn) (€m) (%) Ireland loa
Slide 40: Non-performing exposures by portfolio
Non-performing exposures by portfolio Non-performing Impairment loss Advances Non-performing exposures Impairment loss Composition (Jun 24) (€bn) (€bn) exposures as % of allowance (€bn) allowance as % of advances non-performing exposures Residential mortgages 49.0 0.9 1.9% 0.2 24% – Ireland 33.1 0.
Slide 41: Portfolio by stage
Portfolio by stage Gross carrying amount Composition (Jun 24) Impairment loss allowance (before impairment loss allowance) ILA % of Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total gross loans Sectoral analysis by stage €m €m €m €m €m €m €m €m €m €m Residential Mortgages 44,967
Slide 42: Residential mortgages / Consumer loans
Residential mortgages / Consumer loans Gross loans by stage Residential mortgages Residential mortgages Consumer • Mortgage portfolios 59% of Group loan book €48.8bn €5.8bn €5.8bn €47.3bn €0.9bn €0.1bn – Average LTV of 54% on stock €0.2bn €0.9bn – 88% of the portfolio has LTV < 80% €2.9bn €0.8bn €0.
Slide 43: Non-property SME and Corporate / Property and Construction
Non-property SME and Corporate / Property and Construction Gross loans by stage Non-property SME and Corporate Non-property SME and Corporate Property & Construction • 25% of Group loan book, well diversified by geography and sector €7.2bn €7.2bn €20.5bn €20.7bn €0.4bn €0.4bn • €0.3bn decrease in St
Slide 44: Forward Looking Information (FLI) – macroeconomic scenarios
Forward Looking Information (FLI) – macroeconomic scenarios Ireland United Kingdom 30 June 2024 2024 2025 2026-2028 2024 2025 2026-2028 Central scenario - 45% probability weighting Modified domestic demand growth1,2 2.0% 2.4% 2.8% n/a n/a n/a GDP growth2 1.7% 3.2% 3.2% 0.6% 0.3% 1.5% GNP growth2 2.1
Slide 45: ILA sensitivity to macroeconomic scenarios
ILA sensitivity to macroeconomic 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% weighting applied to the central, upside and downside future macroecono
Slide 46: Capital and liquidity
Capital and liquidity Dec 23 Jun 24 Liquidity (€bn) (€bn) • Funding and liquidity remains strong from stable customer deposits Customer loans 80 81 and MREL issuance Liquid assets 44 44 Customer deposits: €100.8bn Wealth and Insurance Assets 25 26 • At 30 Jun 2024, overall Group customer deposit vol
Slide 47: Ordinary shareholders’ equity and TNAV
Ordinary shareholders’ equity and TNAV Dec 23 Jun 24 Movement in ordinary shareholders’ equity (€m) (€m) Ordinary shareholders’ equity at beginning of period 10,489 11,592 Movements: Profit for the period 1,601 877 Share buy back - repurchase of shares (125) (358) Dividend paid to ordinary sharehold
Slide 48: Fully Loaded CET1 ratio
Fully Loaded CET1 ratio Fully loaded ratio (€bn) Fully loaded ratio (€bn) Capital ratios – 30 June 2024 Dec 23 Jun 24 Total equity 12.6 12.6 Foreseeable distribution1 (1.2) (0.5) H1 profits2 - (0.5) Less Additional Tier 1 (1.0) (1.0) Deferred tax3 (0.8) (0.7) Intangible assets and goodwill (1.0) (1.
Slide 49: Regulatory capital requirements
Regulatory capital requirements Pro forma CET1 regulatory capital requirements 2023 2024 2025 Pillar 1 – CET1 4.50% 4.50% 4.50% Pillar 2 Requirement (P2R) 1.27% 1.32% 1.32% Capital Conservation Buffer (CCB) 2.50% 2.50% 2.50% Ireland Countercyclical Buffer (CCyB) 0.63% 0.99% 0.99% UK Countercyclical
Slide 50: Risk Weighted Assets (RWAs) / Leverage ratio
Risk Weighted Assets (RWAs) / Leverage ratio EBA transparency exercise 2023 Customer lending average credit risk weights – Jun 20241, 2 Country by country average IRB risk weights (Based on regulatory exposure class) Residential Mortgages – Jun 2023 EAD 3 RWA Avg. Risk Sweden 4.9% (€bn) (€bn) Weight
Slide 51: Divisional P&L
Divisional P&L Operating profit Underlying profit / 6 months ended Jun 24 pre-impairment (loss) before tax (€m) (€m) Retail Ireland 544 540 Wealth and Insurance 47 47 Retail UK (€) 147 195 Retail UK (£) 126 167 Corporate and Commercial 690 613 Group Centre and other (304) (304) Group 1,134 1,091 Ope
Slide 52: Non-core items
Non-core items • Transformation programme charge related to property strategy, H1 2023 H1 2024 Non-core Items voluntary redundancy scheme and programme management (€m) (€m) costs Transformation programme costs 7 (25) • Acquisition costs relating to Davy transaction - Cost of restructuring programme
Slide 53: Return on Tangible Equity (ROTE)
Return on Tangible Equity (ROTE) Headline vs. Adjusted Adjustments H1 2024 Additional gains Adjusted for H1 2024 Pension Headline & valuation items, CET1 ratio Adjusted Surplus (€m) net of tax at 14.0% (€m) Profit for the period 877 Coupon on Additional Tier 1 securities (34) Preference share divide
Slide 54: Underlying Cost-to-Income Ratio
Underlying Cost-to-Income Ratio Headline vs. Adjusted H1 2024 Pro forma H1 2024 Headline adjustments Pro forma (€m) (€m) (€m) Net interest income 1,802 1,802 Other income – Business income 367 367 – Additional gains and other valuation items 27 (27) 0 Total Income 2,196 (27) 2,169 Costs – Operating
Slide 55: Defined benefit pension schemes
Defined benefit pension schemes Group IAS19 defined benefit pension (deficit)/surplus Total Group defined benefit pension scheme assets (%) 3.80% 3.60% 3.40% €8.4bn €8.9bn €9.6bn €6.9bn €7.1bn €6.9bn 1.30% 1.35% 65% 69% 66% 66% 69% 69% 0.80% €0.80bn €0.6bn €0.7bn €0.68bn 23% 21% 24% 29% 25% 26% 12%
Slide 56: Sustainable Company: Practical, meaningful stakeholder outcomes in H124
Sustainable Company: Practical, meaningful stakeholder outcomes in H124 Supporting the Green €12.5bn Ecosaver Mortgage Transition Sustainable finance +24% y/y Launched H1 2024 - Better BER. Target €15bn by 2025, and €30bn by 2030 Better interest rate. Better Financial Wellbeing Enhancing Financial #
Slide 57: Forward-Looking Statement
Forward-Looking Statement This document contains forward-looking statements with respect to certain of Bank of Ireland Group plc (the ‘Company’ or ‘BOIG plc’) and its subsidiaries’ (collectively the ‘Group’ or ‘BOIG plc Group’) plans and its current goals and expectations relating to its future fina
Slide 58: Contact details
Contact details For further information please contact: • Group Chief Financial Officer Mark Spain tel: +353 1 250 8900 ext. 43291 mark.spain@boi.com • Investor Relations Darach O’Leary tel: +353 87 948 0650 darach.oleary@boi.com Eamonn Hughes tel: +353 87 202 6325 eamonn.hughes@boi.com Owen Callan
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Bank of Ireland Group — H1 2024 Earnings Presentation on 6ix