Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — Debt Investor Presentation (March 2021)
61 slides from Bank Of Ireland's debt investor presentation, March 2021
Slide 1: 2020 Debt Investor Presentation
20 20 2020 Debt Investor Presentation 31 December 2020
Slide 2: Bank of Ireland Overview
2 Bank of Ireland 2020 Debt Investor Presentation Bank of Ireland Overview
Slide 3: Summary
3 Summary Bank of Ireland 2020 Debt Investor Presentation • Return to profitability in H2 2020 2020 €374m • 6th straight reporting period of reductions; costs reduced by further Performance Underlying loss 4% vs. 2019 before tax • Irish mortgage market share increased 2% to 25.5% in 2020 • Impairmen
Slide 4: Customers at the core of our response to COVID-19
4 Customers at the core of our response to COVID-19 Bank of Ireland 2020 Debt Investor Presentation Payment Breaks – Customers better than expected outcomes Relationship NPS1 improved by +5 points in 2020 vs. 2019 Active payment breaks – 94% now concluded2 with Overall RNPS Score Top 3 Drivers of RN
Slide 5: Enabling our Colleagues and Communities to thrive
5 Enabling our Colleagues and Communities to thrive Bank of Ireland 2020 Debt Investor Presentation Colleagues Communities Strong improvement in Engagement & Culture Supporting our Communities during the Pandemic 80% Irish mortgage €2.0bn new 75% market share lending to increased by 2% 25.5% Irish S
Slide 6: Continued economic strengthening in 2021 expected
6 Continued economic strengthening in 2021 expected Bank of Ireland 2020 Debt Investor Presentation Ireland • Ireland is a very open economy; imports and exports sum to c.240% of GDP, and leveraged to international 18.7% developments 16.0% • Ireland’s 2020 performance benefited from strong exports;
Slide 7: As 2021 progresses, Irish recovery expected to become more broad-based
7 As 2021 progresses, Irish recovery expected to Bank of Ireland 2020 Debt Investor Presentation become more broad-based Bank of Ireland Pulse shows sentiment • As of 22 February, total COVID-19 vaccine doses holding up, particularly for housing equivalent to c.7% of the population had been 120 admi
Slide 8: Making good progress on Responsible and Sustainable Business
8 Making good progress on Responsible and Bank of Ireland 2020 Debt Investor Presentation Sustainable Business1 New RSB strategy “Investing in Tomorrow” launched Pillar 1 Pillar 2 Pillar 3 Enabling all Enhancing Supporting the colleagues to thrive Financial Wellbeing Green Transition Developing digi
Slide 9: Operational Performance
9 Bank of Ireland 2020 Debt Investor Presentation Operational Performance
Slide 10: 2020 Financials recovering in H2
10 2020 Financials recovering in H2 Bank of Ireland 2020 Debt Investor Presentation FY 20191 FY 2020 • Net interest income 2% lower vs. 2019 (€m) (€m) • Business income3 21% lower; improved H2 performance Net interest income 2,167 2,115 Business income 666 561 • 4% reduction in operating expenses wi
Slide 11: Net interest income declines on surplus liquidity and low rate environment
11 Net interest income declines on surplus liquidity Bank of Ireland 2020 Debt Investor Presentation and low rate environment Net interest income / NIM Net interest income and NIM lower from surplus liquidity and low rates €2,180m €2,167m €2,115m • Pricing discipline maintained across all portfolios
Slide 12: Growth in new lending in H2
12 Growth in new lending in H2 Bank of Ireland 2020 Debt Investor Presentation Group loan book movement Lending trends in 2020 €0.7bn (€14.0bn) • Overall loan book declined by €2.9bn due to FX and €13.3bn credit impairment (€1.1bn) (€1.8bn) • Gross new lending1 of €13.3bn; down 19% vs. 20192 Stable
Slide 13: Lower business income reflects lower economic activity
13 Lower business income reflects lower Bank of Ireland 2020 Debt Investor Presentation economic activity FY 2019 FY 2020 Lower business income reflects COVID-19 impact on (€m) (€m) economic activity Wealth and Insurance 277 214 • 23% decrease in Wealth and Insurance from lower sales Retail Ireland
Slide 14: c.€1.7bn cost target achieved one year early; new €1.5bn target for 2023
14 c.€1.7bn cost target achieved one year early; Bank of Ireland 2020 Debt Investor Presentation new €1.5bn target for 2023 Cost Movement €65m / 4% net reduction reflects • Wage inflation of 2.6% (€90m) €25m • COVID-19 costs €25m; €90m / 5% reduction excluding COVID-19 costs • Lower pension costs of
Slide 15: FY 2020 impairment charge €1.1bn; H1 €0.9bn
15 FY 2020 impairment charge €1.1bn; H1 €0.9bn Bank of Ireland 2020 Debt Investor Presentation Group management IFRS 9 models adjustment (including Actual loan loss experience macro-economic update payment breaks) €515m €181m €437m • Updated IFRS 9 models • Lower than expected • Actual loan loss exp
Slide 16: Impairment coverage increased to 2.9%
16 Impairment coverage increased to 2.9% Bank of Ireland 2020 Debt Investor Presentation Net impairment charge Impairment coverage increased from 1.6% to 2.9% €512m • Net impairment charge €1.1bn1 / 134bps (FY 2019: €388m 27bps) – Ireland mortgage impairment charge reflects macro-economic outlook of
Slide 17: Macro-economic conditions, outlook and loss experience driving stage migration
17 Macro-economic conditions, outlook and loss Bank of Ireland 2020 Debt Investor Presentation experience driving stage migration Gross loans by stage Stage migration and stock of ILA €80.5bn • €10.2bn increase in Stage 2 loans since 2019 reflecting 1 €78.5bn1 €3.1bn €4.5bn €5.6bn deteriorated macro
Slide 18: NPE ratio increases to 5.7%
18 NPE ratio increases to 5.7% Bank of Ireland 2020 Debt Investor Presentation NPE movements Non-performing exposures • NPEs increased by €1.0bn and NPE ratio increased from 6.3% 4.4% 5.7% 4.4% in 2019 to 5.7% in 2020 • Broadly stable NPEs in H2; government fiscal measures €0.4bn €0.6bn supportive •
Slide 19: Capital & MREL
19 Bank of Ireland 2020 Debt Investor Presentation Capital & MREL
Slide 20: Robust capital ratio performance despite COVID-19
20 Robust capital ratio performance despite COVID-19 Bank of Ireland 2020 Debt Investor Presentation Fully loaded CET1 ratio 40bps (110bps) 125bps (20bps) 75bps (75bps) RWAs (65bps) €49.9bn RWAs Impairment (230bps) (10bps) €48.0bn EL offset 80bps RWA reduction 40bps +10bps 13.8% Net impact (110bps)
Slide 21: Regulatory Ratios
21 Regulatory Ratios Bank of Ireland 2020 Debt Investor Presentation Regulatory CET1 ratio 40bps (50bps) 130bps (25bps) (65bps) 75bps (75bps) RWAs RWAs €50.1bn (15bps) €48.4bn (25bps) Impairment (230bps) EL offset 60bps IFRS 9 addback 80bps +10bps RWA reduction 40bps Regulatory Capital Net impact (5
Slide 22: Balance Sheet
22 Balance Sheet Bank of Ireland 2020 Debt Investor Presentation Dec 2019 Dec 2020 Funding & Liquidity (€bn) (€bn) • LDR reduced from 95% to 86% on foot of reduction in Customer loans 79 77 customer loans and growth in customer deposits Liquid assets 27 31 • Growth in customer deposits reflected in
Slide 23: Meaningful buffer to potential MDA restrictions
23 Meaningful buffer to potential MDA1 restrictions Bank of Ireland 2020 Debt Investor Presentation Regulatory CET1 ratio vs. MDA Threshold • Regulatory CET1 ratio of 14.9% at Dec 2020 – Continued phase-in of existing transitional adjustments expected to consume c.20-40bps per annum to 2025 – Previo
Slide 24: Risk Weighted Assets (RWAs) / Leverage Ratio
24 Risk Weighted Assets (RWAs) / Leverage Ratio Bank of Ireland 2020 Debt Investor Presentation Customer lending average credit risk weights – Dec 20201/2 EBA Transparency Exercise 2020 (Based on regulatory exposure class) Country by Country Average IRB risk weights Residential Mortgages – Jun 2020
Slide 25: IRB RWA density vs European peers (EBA Transparency Exercise 2020)
25 EBA Transparency Exercise 20201 Bank of Ireland 2020 Debt Investor Presentation Bank of Ireland’s IRB RWA density across major loan portfolios exceeds a wide distribution of European peers IRB Lending: SME2 IRB RWA: Corporate3 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10
Slide 26: Regulatory Capital Requirements
26 Regulatory Capital Requirements Bank of Ireland 2020 Debt Investor Presentation Pro forma CET1 Regulatory Capital Requirements 2019 2020 2021 Pillar 1 – CET1 4.50% 4.50% 4.50% Pillar 2 Requirement (P2R) 2.25% 1.27% 1.27% Capital Conservation Buffer (CCB) 2.50% 2.50% 2.50% Ireland Countercyclical
Slide 27: MREL Requirement
27 MREL Requirement Bank of Ireland 2020 Debt Investor Presentation 27.78% • Dec 2020 MREL ratio of 24.6% (10.3% on a leverage basis) 24.95% 4%1 • Interim binding MREL requirements, to be met by 1 Jan 2022, of 24.95% on an RWA basis and 7.59% on a leverage 4%1 basis • MREL RWA requirement consists o
Slide 28: Credit Ratings
28 Credit Ratings Bank of Ireland 2020 Debt Investor Presentation Instrument Ratings BOIG GovCo (Stand alone BOIMB ratings) BOIG GovCo BOIG GovCo BOIG GovCo (ACS)2 Aaa Aaa Aaa AAA AAA AAA AAA Investment Grade C baa2 A2 Aa1 Aa1 Aa1 AA+ AA+ AA+ AA+ Stable Stable Aa2 Aa2 Aa2 AA AA AA AA Aa3 Aa3 Aa3 AA-
Slide 29: Corporate Structure
29 Corporate Structure Bank of Ireland 2020 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% 100% New Ireland
Slide 30: Summary highlights
30 Summary highlights Bank of Ireland 2020 Debt Investor Presentation • Continued pre-impairment organic capital generation; Strong capital position with fully loaded CET1 ratio of 13.4%, regulatory CET1 ratio 14.9% Capital • Optimisation of capital structure materially complete; MDA headroom increa
Slide 31: Green Bond Framework
31 Bank of Ireland 2020 Debt Investor Presentation Green Bond Framework
Slide 32: Green Bond Framework
32 Green Bond Framework Bank of Ireland 2020 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 climate change through
Slide 33: Use of Proceeds
33 Use of Proceeds Bank of Ireland 2020 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 efficiency Green • Re
Slide 34: Outlook
34 Bank of Ireland 2020 Debt Investor Presentation Outlook
Slide 35: Proven track record of cost reduction; new €1.5bn target for 2023
35 Proven track record of cost reduction; new €1.5bn Bank of Ireland 2020 Debt Investor Presentation target for 2023 Consistent Broad-based Efficient • Costs reduced by c.10% vs. 2017, • Cost reduction broad-based across • €306m in gross cost savings since FY 2017 despite underlying wage inflation a
Slide 36: Further strategic progress in the UK in 2020
36 Further strategic progress in the UK in 2020 Bank of Ireland 2020 Debt Investor Presentation Retail UK 2019 2020 Progress on UK repositioning continued in 2020 Net interest income £494m £497m • Underlying PBT Other income (£13m) (£2m) – Stable net interest income; supported by rising margins on C
Slide 37: Wealth & Insurance business provides Group with unique platform to grow income
37 Wealth & Insurance business provides Group Bank of Ireland 2020 Debt Investor Presentation with unique platform to grow income • Unique proposition as Ireland’s only universal bancassurer 38% 35% – Market leading positions in life and pensions and savings of Group Bank channel – In-house product
Slide 38: 2021 outlook continues to be impacted by COVID-19
38 2021 outlook continues to be impacted by COVID-19 Bank of Ireland 2020 Debt Investor Presentation Profitability Asset Quality Capital • 2021 total income expected • Subject to no further • 2021 CET1 ratios expected to to be broadly in line with 2020 deterioration in the economic remain broadly in
Slide 39: Appendix
39 Bank of Ireland 2020 Debt Investor Presentation Appendix
Slide 40: Appendix
40 Appendix Bank of Ireland 2020 Debt Investor Presentation Slide No. • BOI overview – customer loans / new lending volumes 41 • Ireland mortgage loan book 42 • Income Statement – Net interest income analysis 43 – Structural hedge, liquid assets and negative rate deposits 44 – Interest rate sensitiv
Slide 41: BOI Overview
41 BOI Overview Bank of Ireland 2020 Debt Investor Presentation Profile of customer loans1 at Dec 20 (Gross) Ireland UK RoW Total Total Composition (Dec 20) (€bn) (€bn) (€bn) (€bn) (%) Mortgages 22.9 21.8 0.0 44.7 57% Non-property SME and corporate 10.6 5.0 4.3 19.9 25% SME 7.1 1.7 0.0 8.8 11% Corpo
Slide 42: Ireland Mortgages: €22.9bn
42 Ireland Mortgages: €22.9bn Bank of Ireland 2020 Debt Investor Presentation New Lending volumes and Market Share ROI Mortgages (gross) €23.7bn €23.0bn €22.9bn 27% 25.5% 24% €9.5bn €11.2bn €12.2bn €4.4bn €3.2bn €2.9bn €2.3bn €2.3bn €2.1bn €9.8bn €8.7bn €7.9bn 2018 2019 2020 Dec 18 Dec 19 Dec 20 n N
Slide 43: Net interest income analysis
43 Income Statement Bank of Ireland 2020 Debt Investor Presentation Net interest income analysis H1 2019 H2 2019 H1 2020 H2 2020 Average Gross Gross Average Gross Gross Average Gross Gross Average Gross Gross Volumes Interest Rate Volumes Interest Rate Volumes Interest Rate Volumes Interest Rate (€b
Slide 44: Structural hedge, liquid assets and negative rate deposits
44 Structural hedge, liquid assets and negative Bank of Ireland 2020 Debt Investor Presentation rate deposits Structural Hedge1 Liquid Assets Structural hedge & liquid assets Average • Interest income from structural hedge and liquid assets €33.3bn €35.6bn €23.4bn €27.6bn volume reducing from low in
Slide 45: Interest Rate Sensitivity
45 Interest Rate Sensitivity Bank of Ireland 2020 Debt Investor Presentation The table below shows the estimated sensitivity of the Group’s income (before tax) to an instantaneous and sustained 1% parallel movement in interest rates Dec 19 Dec 20 Estimated sensitivity on Group income (1 year horizon
Slide 46: Payment Breaks
46 Payment Breaks Bank of Ireland 2020 Debt Investor Presentation Overview of total payment breaks granted and remaining outstanding as at 12 February 2021 % returned % with approved Total payment Total payment Payment breaks Payment breaks % of payment Ireland to pre-COVID-19 additional breaks gran
Slide 47: Non-performing exposures by portfolio
47 Non-performing exposures by portfolio Bank of Ireland 2020 Debt Investor Presentation Non-performing Non-performing Impairment Impairment loss Advances Composition (Dec 20) (€bn) exposures exposures as % loss allowance allowance as % of (€bn) of advances (€bn) non-performing exposures Residential
Slide 48: Portfolio by stage
48 Portfolio by stage Bank of Ireland 2020 Debt Investor Presentation Gross carrying amount Composition (Dec 20) 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 stage loans €m €m €m
Slide 49: Non-property SME and corporate by stage
49 Non-property SME and corporate by stage1,2 Bank of Ireland 2020 Debt Investor Presentation Gross carrying amount Composition (Dec 20) 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
Slide 50: Residential Mortgages & Consumer Loans
50 Residential Mortgages & Consumer Loans Bank of Ireland 2020 Debt Investor Presentation Gross loans by stage Residential mortgages Residential Mortgages Consumer • Mortgage portfolios 57% of Group loan book €46.3bn €44.7bn – Average LTV of 60% on stock €1.7bn €2.2bn €1.7bn €2.5bn €5.7bn €5.3bn – 8
Slide 51: Non-property SME and Corporate & Property and Construction
51 Non-property SME and Corporate & Property Bank of Ireland 2020 Debt Investor Presentation and Construction Gross loans by stage Non-property SME and corporate Non-property SME and Property and construction • 25% of Group loan book, well diversified by geography corporate and sector €20.4bn €19.9b
Slide 52: Forward Looking Information – macro-economic scenarios
52 Forward Looking Information – macro-economic Bank of Ireland 2020 Debt Investor Presentation scenarios Republic of Ireland United Kingdom 31 Dec 2020 2021 2022 2023-2025 2021 2022 2023-2025 Central scenario 1 – 45% probability weighting GDP growth1 5.1% 3.6% 3.0% 6.3% 4.0% 1.9% GNP growth1 5.1% 3
Slide 53: Ireland Mortgages
53 Ireland Mortgages Bank of Ireland 2020 Debt Investor Presentation Continued proactive arrears management >90 days arrears1 >90 days arrears • Bank of Ireland is significantly below the industry Industry Average average for both Owner Occupier (30% of industry average) and Buy to Let (26% of indus
Slide 54: Ordinary shareholders’ equity and TNAV
54 Ordinary shareholders’ equity and TNAV Bank of Ireland 2020 Debt Investor Presentation 2019 2020 Movement in ordinary shareholders’ equity (€m) (€m) Ordinary shareholders’ equity at beginning of period 9,243 9,625 Movements: Profit (Loss) attributable to shareholders 448 (707) Dividend paid to or
Slide 55: Capital – Strong fully loaded and regulatory CET1 ratios
55 Capital – Strong fully loaded and regulatory CET1 ratios Bank of Ireland 2020 Debt Investor Presentation Capital ratios – Dec 2020 Regulatory ratio Fully loaded ratio (€bn) (€bn) Total equity 9.6 9.6 Less Additional Tier 1 (1.0) (1.0) Deferred tax (0.7) (1.1) Intangible assets and goodwill (0.5)
Slide 56: Transformation Investment / Operating expenses
56 Transformation Investment / Operating expenses Bank of Ireland 2020 Debt Investor Presentation Transformation Investment: €1.4bn (2016-2021) Transformation Investment Average of €275m p.a. • Average annual investment of €275m from 2018-2021; equates to CET1 capital of c.50-60bps • Investment of €
Slide 57: Cost income ratio: Dec 2020
57 Cost income ratio: Dec 2020 Bank of Ireland 2020 Debt Investor Presentation Headline vs. Adjusted FY 2020 Pro forma FY 2020 Headline adjustments Pro forma (€m) (€m) (€m) Net interest income 2,115 – 2,115 Other income – Business income 561 – 561 – Additional gains 5 (5) – – Other valuation items (
Slide 58: Defined Benefit Pension Schemes
58 Defined Benefit Pension Schemes Bank of Ireland 2020 Debt Investor Presentation Group IAS19 Defined Benefit Pension (Deficit) / Surplus Total Group Defined Benefit Pension Scheme Assets (%) 2.10% 2.00% 1.60% €7.1bn €7.2bn €7.2bn €8.4bn €8.9bn 1.30% 0.80% 58% 55% 65% 65% 69% (€0.14bn) (€0.13bn) 17
Slide 59: Forward – Looking statement
59 Forward – Looking statement Bank of Ireland 2020 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’) plans and its c
Slide 60: Contact Details
60 Contact Details Bank of Ireland 2020 Debt Investor Presentation For further information please contact: • Group Chief Financial Officer Myles O’Grady tel: +353 12 50 8900 ext. 43291 myles.ogrady@boi.com • Investor Relations Darach O’Leary tel: +353 12 50 8900 ext. 44711 darach.oleary@boi.com Owen
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