Permanent TSB Group Holdings PLC · EURONEXT:PTSB
Permanent TSB — Irish Life & Permanent — H1 2007 Earnings Presentation
49 slides from Permanent TSB's earnings presentation, 2007
Slide 1: 2007 Interim Results
2007 Interim Results www.irishlifepermanent.ie 1 2007 Interim Results
Slide 2: Index
Index Section Page Highlights 5 Review of the Life business 6 Review of the Banking business 12 Total profit after tax 21 Life operating profit 23 Bank operating profit 26 Associate operating profit 29 Capital and Dividend 30 Outlook 32 Additional information Group Earnings Analysis of PAT and EPS 3
Slide 3: Business Review
Business Review Denis Casey Group Chief Executive 3 2007 Interim Results
Slide 4: Interim Results 2007: Market Backdrop
Interim Results 2007 Market Backdrop Economy performing strongly Long-term savings market experiencing exceptional growth Slowdown in housing market Irish Life & Permanent Continued strong growth Market share robust Excellent financial results Low risk business 4 2007 Interim Results
Slide 5: Highlights
Highlights Life Assurance Life sales 41% ILIM inflows 124% Operating profit 45% Banking permanent tsb loan book growth 23% 35,000 new current accounts opened Operating profit 23% Operating EPS 26% 5 2007 Interim Results
Slide 6: Life Business
Life Business Pensions market buoyant SSIAs boost lump sum sales Product margins stable Life market share 30% Fund management performance 6 2007 Interim Results
Slide 7: Life & Investment Sales
Life & Investment Sales Total Life & Investment sales €594m, up 66% [H1 06 €358m] €m +124% 250 +54% 200 H1 07 150 +24% H1 06 100 50 +25% 0 Retail Corporate ILIM ILI * APE basis 7 2007 Interim Results
Slide 8: Retail Life Products
Retail Life Products Total Retail Life Sales €208m, up 54% [H1 06: €135m] Fund performance and SIPPs boost pension sales Cross-selling to SSIA & current account customers Mix Growth % S% Investments 34 +54 Pension 37 +67 Protection / Risk 14 +3 Savings 15 +114 * APE basis 8 2007 Interim Results
Slide 9: Retail Life Distribution
Retail Life Distribution All distribution channels performing strongly Increased bancassurance penetration Up-skilling distribution for HNW and mass-affluent Mix Growth % S% Bancassurance • permanent tsb 29 +51 42% • Institutions 13 +115 Direct Sales force 27 +37 Brokers / IFAs 31 +55 * APE basis 9
Slide 10: Corporate Life
Corporate Life Total Corporate Life Sales €122m, up 24% [H1 06: €98m] Increase in single premiums - annuities, PRBs, AVCs Strong performance in protection / risk business Mix Growth % S% Defined Contribution 69 +20 Annuities / Other 18 +22 Protection / Risk 13 +60 * APE basis 10 2007 Interim Results
Slide 11: Investment Management
Investment Management Consistent growth in Funds under Management* Growing market share Active and passive fund management out-performance €bn 35 36 31 30 25 24 Institutional 21 Life Company 18 17 14 12 6 0 2002 2003 2004 2005 2006 H1 07 * Excludes ILI 11 2007 Interim Results
Slide 12: Banking Business
Banking Business Strong loan book growth Product pricing / margins Mortgage market share 21% Successful customer acquisition strategy 12 2007 Interim Results
Slide 13: Bank New Lending
Bank New Lending Total new lending €6.3bn [H1 06: €6.4bn] Irish residential mortgage lending slower Capital Home Loans (UK) growing strongly €bn 5 4 -19% 3 H1 07 H1 06 2 +64% +10% 1 +5% 0 Ireland UK Mortgages Consumer Commercial Mortgages Finance 13 2007 Interim Results
Slide 14: Bank Loan Book
Bank Loan Book Total loan book €37.0bn, up 23% yoy [H1 06: €30bn] Improved retention contributes to loan growth Credit experience excellent across all lines €bn 25 +21% 20 15 H1 07 H1 06 10 +34% 5 +16% +27% 0 Ireland UK Mortgages Consumer Commercial Mortgages Finance 14 2007 Interim Results
Slide 15: Bank Credit Quality - LTVs
Bank Credit Quality - LTVs H1 07 2006 2005 2004 New Mortgage Lending % % % % Home Loans First Time Buyers 85 87 84 81 Second Time Buyers 57 58 61 60 Average 70 71 69 68 BTL / RIPs Average 67 68 65 65 Equity Release Average 54 51 51 49 Total New Lending* 65 66 64 63 * Weighted average 15 2007 Interim
Slide 16: Bank Credit Quality - Arrears
Bank Credit Quality - Arrears Residential Mortgages (Ireland) 000’s 000’s 12 200 No. of Mortgages (RHS) 190 10 180 8 170 160 6 No. in Arrears * LHS 150 4 140 2002 2003 2004 2005 2006 H1 07 * > 1 month 16 2007 Interim Results
Slide 17: Capital Home Loans (UK)
Capital Home Loans (UK) Loan Book €8.0bn, up 34% yoy [H1 06: €5.9bn] Expanding capacity and coverage in BTL market Excellent credit quality - loan book indexed LTV 66%; arrears (by case number) 0.3% (CML: 1.15%) €bn 10 Total CHL Loan Book 8.0 8 6.9 6 5.4 3.9 4 2.6 2 0 2003 2004 2005 2006 H1 07 17 20
Slide 18: Customer Acquisition
Customer Acquisition “Switch” current account strategy success 42,000 accounts opened: 35,000 new and 7,000 upgrades Increased cross-selling 000’s 450 Total number of Current Accounts 423 400 384 350 299 300 250 226 202 200 150 2003 2004 2005 2006 H107 18 2007 Interim Results
Slide 19: Financial Review
Financial Review Peter Fitzpatrick Group Finance Director 19 2007 Interim Results
Slide 20: Key Messages
Key Messages Life sales / bank lending growth Margins in line Strong operating profit growth Low risk appetite 20 2007 Interim Results
Slide 21: Group Profit After Tax
Group Profit After Tax H1 07 H1 06 Change €m €m % Total EPS Operating profit 321 242 33 c H1 07 105.0 Investment variances 21 1 Economic assumptions (11) (29) H1 06 74.0 Other (3) 0 Profit before tax 328 214 53 Taxation (36) (11) Profit after tax 292 203 44 Minority (3) (1) Total profit after tax 28
Slide 22: Group Operating Profit
Group Operating Profit H1 07 H1 06 Change €m €m % Life Assurance 194 134 45 Operating EPS c Banking 111 90 23 H1 07 102.8 305 224 36 H1 06 81.3 General Insurance 18 19 (Associate) Other (2) (1) Operating profit 321 242 33 Taxation (38) (20) Operating profit after tax 283 222 28 22 2007 Interim Resul
Slide 23: Life Operating Profit
Life Operating Profit H1 07 H1 06 Change €m €m % New Business 82 65 26 In-force business: • Total expected return 75 56 • Experience variances 21 8 • Assumption changes 16 5 Operating profit 194 134 45 23 2007 Interim Results
Slide 24: Life New Business Margins
Life New Business Margins H1 07 H1 06 Life New Business IRR New Business Contribution €m €m Life 68 55 H1 07 13.6% ILIM 14 10 FY 06 12.1% Sales - APE Life 350 249 ILIM 244 109 Margin - APE % % Life 19.5 21.8 ILIM 5.9 9.6 24 2007 Interim Results
Slide 25: Life Costs
Life Costs H1 07 H1 06 Change €m €m % Retail & Corporate 95 86 10 ILIM 8 7 Other (1) 6 102 99 3 25 2007 Interim Results
Slide 26: Banking Operating Profit
Banking Operating Profit H1 07 H1 06 Change €m €m % Cost / Income Ratio H1 07 H1 06 Net interest income 241 199 21 % % Other income 22 23 Reported 56 58 Trading income 5 6 Incl. Commission 53 56 268 228 18 Incl. Bank EV Earnings 49 52 Expenses (150) (134) Impairment provisions (8) (7) Investment gai
Slide 27: Net Interest Margin
Net Interest Margin H1 07 Movement bps Assets H1 07 FY 06 Dec 2006 119 €bn €bn Lending 37.0 33.8 Wholesale funding (4) Retail mortgages (5) Liquidity 5.5 9.7 Liability spreads 4 Treasury 2 Other (1) June 2007 115 27 2007 Interim Results
Slide 28: Bank Funding
Bank Funding Diversified funding strategy in place Balanced mix of long / short term funding Untapped €4bn mortgage pro-note facility with ECB, to increase to €6bn Securitisation 8% Retail Deposits 18% Long Term Commercial Debt Deposits 30% 17% IB/Repo Fr CD 4% ECP USCP 5% 12% 5% €42bn Funding - mix
Slide 29: General Insurance Operating Profit
General Insurance Operating Profit H1 07 H1 06 Change €m €m % Combined Ratio % Underwriting results 6 21 H1 07 93 Investment return 8 2 FY 06 71 Property disposal 8 0 22 23 Taxation (4) (4) Operating profit 18 19 (5) 29 2007 Interim Results
Slide 30: Capital
Capital Life Capital Movement Solvency Cover €m % Net Worth Dec 2006 747 180 Earnings 150 Capital usage (107) 43 Dividend (230) Net Worth June 2007 560 169 Perpetual Debt 200 Bank Capital Risk asset ratio 11.2% 30 2007 Interim Results
Slide 31: EPS & Dividend
EPS & Dividend H1 07 H1 06 Change cent cent % Operating EPS 102.8 81.3 26 Total EPS 105.0 74.0 42 Interim Dividend 22.5 20.1 12 [annualised 10%] 31 2007 Interim Results
Slide 32: Outlook
Outlook 2007 outcome Ireland fundamentals unchanged Favourable demographics Strong economy Attractive market for financial services Irish Life & Permanent Group Ambitious plans Investing in business Optimistic on growth opportunities 32 2007 Interim Results
Slide 33: Additional Information
Additional Information Page 34 Group profit after tax 35 Total profit after tax 36 Operating profit after tax 37 Operating EPS 38 IFRS (Statutory) profit after tax 39 IFRS / EV reconciliation 40 Other activities operating profit 41 Bank capital 42 Bank liquidity 43 Bank non-interest income 44 Embedd
Slide 34: Group Profit After Tax
Group Profit After Tax H1 07 H1 06 Change €m €m % Operating profit 321 242 33 Investment variances 21 1 Economic assumptions (11) (29) Income - property unit trusts* 7 0 Other (3) 0 Profit before tax 335 214 Taxation (36) (11) Profit after tax 299 203 Minority - property unit trusts* (7) (1) Minorit
Slide 35: Total Profit After Tax
Total Profit After Tax H1 07 H1 06 Pre-tax Tax Post-tax Post-tax €m €m €m €m Operating profit 321 (38) 283 222 Investment fluctuations 21 2 23 0 Economic assumptions (11) 0 (11) (19) Other changes / Credits (3) 0 (3) - 328 (36) 292 203 Discontinued / Minority (3) 0 (3) (1) Total profit 325 (36) 289
Slide 36: Operating Profit After Tax
Operating Profit After Tax H1 07 H1 06 Pre-tax Tax Post-tax Post-tax €m €m €m €m Life assurance 194 (17) 177 124 Banking 111 (20) 91 80 Other activities (2) (1) (3) (1) 303 (38) 265 203 Associate 18 0 18 19 321 (38) 283 222 36 2007 Interim Results
Slide 37: Operating EPS
Operating EPS H1 07 H1 06 Change €m €m % Operating profit 321 242 Taxation (38) (20) Operating PAT 283 222 28 Average no. of shares 275m 273m EPS 102.8c 81.3c 26 Note: “own shares” included for EPS calculation 37 2007 Interim Results
Slide 38: IFRS (Statutory) Profit After Tax
IFRS (Statutory) Profit After Tax H1 07 H1 06 Change €m €m % Life assurance 141 48 194 IFRS Life Earnings Movement H1 07 €m Banking 111 90 23 Economic Variance 14 General Insurance 18 19 Investment fluctuations 59 Surplus on Investment contracts 16 Other (5) (1) New Business effect 9 93 Interest on
Slide 39: IFRS / EV Reconciliation
IFRS / EV Reconciliation H1 07 S’Holders Total Profit* Equity after Tax €m €m Embedded Value basis 3,351 292 Investment business • Value of in-force (912) (104) • Deferred costs & fees 86 26 • Restatement of liabilities 36 (6) Own shares adjustment (63) 17 Owner occupied property - (5) Minority inte
Slide 40: Other Activities Operating Profit
Other Activities Operating Profit H1 07 H1 06 €m €m Cornmarket / IPSI 11 8 Springboard (1) 0 10 8 Corporate costs (12) (9) (2) (1) 40 2007 Interim Results
Slide 41: Bank Capital
Bank Capital H1 07 FY 06 €bn €bn Risk weighted assets 22.3 20.6 Capital: Tier 1 4.5 4.4 Less Goodwill (Irish Life & TSB) (1.6) (1.5) 2.9 2.9 Tier 2 1.5 1.4 Total Capital 4.4 4.3 Less Embedded Value deduction (1.9) (2.1) Available Capital 2.5 2.2 RAR 11.2% 10.4% 41 2007 Interim Results
Slide 42: Bank Liquidity
Bank Liquidity Liquidity invested as follows: €bn Prime RMBS: 80% AAA Money Market 2.0 10% AAA UK BTL Sovereign 1.5 10% AA & A Financial FRNs 1.3 Prime RMBS 0.2 All GBP & Euro Other reserves 0.5 5.5 42 2007 Interim Results
Slide 43: Banking Non Interest Income
Banking Non Interest Income H1 07 H1 06 Change €m €m % Fees & Comms (rec’d) 26 26 Fees & Comms (payable) (4) (3) 22 23 (4) Trading income 5 6 27 29 (7) Note: Bancassurance Embedded Value operating profit €37m [H1 06: €28m] included in life assurance 43 2007 Interim Results
Slide 44: Embedded Value Change
Embedded Value Change Net Worth VIF Total Required Capital €m €m €m €m Opening 01 Jan 2007 747 1,354 2,101 560 Operating profit 46 131 177 Investment fluctuations 3 20 23 Economic assumptions (6) (5) (11) Capital movements (230) - (230) Closing 30 Jun 2007 560 1,500 2,060 588 * All movements net of
Slide 45: Life New Business Margin - PVNBP
Life New Business Margin - PVNBP H1 07 H1 06 Life New Business IRR New Business Contribution €m €m Life 68 55 H1 07 13.6% ILIM 14 10 FY 06 12.1% Sales - PVNBP Life 2,357 1,674 ILIM 2,443 1,089 Margin - PVNBP % % Life 2.9 3.3 ILIM 0.6 1.0 45 2007 Interim Results
Slide 46: Life Variances & Assumptions
Life Variances & Assumptions Experience Variances Assumption Changes H1 07 H1 06 H1 07 H1 06 €m €m €m €m Persistency 5 0 0 0 Risk 14 7 0 0 Expenses / Other 2 1 16 5 21 8 16 5 46 2007 Interim Results
Slide 47: Life & Investment Sales
Life & Investment Sales Recurring Premium Single Premium H1 07 H1 06 H1 07 H1 06 €m €m €m €m Retail 115 77 928 575 Corporate 93 81 291 173 ILIM - - 2,443 1,089 ILI - - 204 163 Total 208 158 3,866 2,000 APE Basis 208 158 386 200 PVNBP Basis 934 763 3,866 2,000 47 2007 Interim Results 2006 Interim Res
Slide 48: Retail Life Sales
Retail Life Sales H1 07 H1 06 Change €m €m % Products Pension 77 46 67 Investments 71 46 54 Protection / Risk 30 29 3 Savings 30 14 114 208 135 Distribution Bancassurance 59 39 51 Direct Sales force 56 41 37 Brokers / IFAs 65 42 55 Institutions 28 13 115 208 135 48 2007 Interim Results
Slide 49: Contact Information
Contact Information Please contact our Investor Relations Department for any further information or visit our group website at www.irishlifepermanent.ie Contact details: Barry Walsh barry.walsh@irishlife.ie +353 1 704 2678 Orla Brannigan orla.brannigan@irishlife.ie +353 1 704 1345 Marie Gilsenan mar
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