Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — H1 2017 Earnings Presentation
49 slides from Bank Of Ireland's earnings presentation, Jun 30, 2017
Slide 1: Interim Results Announcement
Interim Results Announcement 30 June 2017
Slide 2: Slide 2
Slide 3: H1 2017 Continued Progress
H1 2017 Continued Progress Achieving our objectives
Slide 4: Business Highlights
Business Highlights Continuing to deliver on strategic priorities Ireland’s Largest lender to Irish economy Leading Bank Growing market shares in business banking and residential mortgages Strategic International businesses continue to provide diversification and attractive business Diversific
Slide 5: Financial Highlights
Financial Highlights Underlying profit before tax of €480m Net interest margin Impaired loans Fully loaded CET1 ratio 2.11% 2.27% 2.32% €9.6bn €6.2bn €5.4bn 11.3% 12.3% 12.5% H1 2016 H2 2016 H1 2017 Dec 15 Dec 16 Jun 17 Dec 15 Dec 16 Jun 17 Underlying profit before tax of €480 million - expanded N
Slide 6: Supportive economic backdrop
Supportive economic backdrop Irish and UK economies have been growing Irish and UK economies are growing Unemployment rate falling in Ireland, Demand driven increase in house albeit at different rates remains low in UK prices with constrained supply 11.9% 5.1% 9.4% 4.8% 7.9% 7.8% 6.3% 4.6% 4.5% 4.5%
Slide 7: Benefitting from Irish growth with international diversification
Benefitting from Irish growth with international diversification Ireland Gross Customer loans at June 2017 (~70% of total income) Consumer, €2.0bn Ireland’s leading retail and commercial bank and Ireland’s only bancassurer Property and Construction, Largest lender to the Irish economy. Growing m
Slide 8: Business Transformation – Focus on Retail Ireland
Business Transformation – Focus on Retail Ireland Transforming today to ensure long term sustainability and competiveness Simplification Digitisation Community Simplifying products and propositions to Delivering digital capability to meet changing Supporting our customers in their local prepare for
Slide 9: Financial Results
Financial Results
Slide 10: Group Income Statement
Group Income Statement Underlying profit before tax of €480m Net interest income of €1,151m, in line with H1 2016 H1 2016 H1 2017 notwithstanding an adverse FX translation impact of (€m) (€m) c.€35m Total income 1,587 1,520 Other income of €369m primarily reflecting; Net interest income 1,135 1,
Slide 11: Net interest income
Net interest income NIM benefitting from new lending and lower funding costs Net interest margin drivers Net interest income - €1,151m Net interest income in line with H1 2016 notwithstanding 2.11% 2.27% 2.32% an adverse FX translation impact of c.€35m 264bps 277bps 287bps NIM H1 2017 NIM of 2.3
Slide 12: Loans and advances to customers
Loans and advances to customers Continued growth in core loan books New lending volumes2 Core loan books1 grew by €0.5bn in H1 2017 €6.8bn €6.6bn New lending2 of €6.6bn in H1 2017 broadly in line with H1 €1.9bn 2016 on a constant currency basis; €1.9bn Retail Ireland new lending increased by 9
Slide 13: Other Income
Other Income Sustainable and diversified business income Includes fee income from customer activity in our Retail ROI, H1 2016 H1 2017 BOI Life, Retail UK and Corporate & Treasury divisions (€m) (€m) Modest growth (3%) in sustainable and diversified business Retail Ireland 156 157 income compare
Slide 14: Operating Expenses, Core Banking Platforms Investment, Levies and Regulatory charges
Operating Expenses, Core Banking Platforms Investment, Levies and Regulatory charges Focussed on cost control; continue to invest Operating expenses H1 2016 H1 2017 (€m) (€m) €881m in H1 2017; broadly flat vs. H1 2016 Total staff costs of €452m in H1 2017 includes impact of Career and Reward fra
Slide 15: Impaired loans and impairment charge
Impaired loans and impairment charge Continued reduction during H1 2017 Impaired loans Asset Quality continues to improve Impaired loans1 of €5.4bn €8.0bn €0.8bn reduction during H1 2017; down 65% from reported peak in June 2013 €6.2bn €5.4bn Non-performing exposures (NPEs) of €8.1bn (see slid
Slide 16: Balance Sheet
Balance Sheet Capital and Liquidity available to support growth Dec 16 Jun 17 Strong liquidity ratios (€bn) (€bn) Net Stable Funding Ratio – 121% Liquidity Coverage Ratio – 120% Customer loans 78 77 Loan to Deposit Ratio – 103% Liquid assets 21 22 Customer deposits – €74.7bn BOI Life assets 17
Slide 17: Capital
Capital1 Strong organic capital generation Transitional CET1 ratio movement Strong organic capital generation in H1 2017; robust 85bps (20bps) capital ratios (10bps) (15bps) 0.2% Core Banking Platforms investment in H1 2017 of €105m (CET1 ratio impact of c.20bps); €55m expensed in income 14.4% s
Slide 18: Summary
Summary Focussed on a clear set of strategic priorities Strong retail & commercial franchises; diversified business model Growing Irish market shares in business banking and residential mortgages Track record of protecting and generating capital; expect dividend payments to recommence at a modest le
Slide 19: Additional Information
Additional Information
Slide 20: Slide 20
Slide 21: Additional Information
Additional Information Slide No. BOI Overview Business profile 20 Historic financial results 22 Profile of customer loans at Jun 17 (gross) 24 Income Statement Divisional performance 25 Net interest income analysis 26 Interest Rate Sensitivity 27 Non-core Items 28 Core Banking Pl
Slide 22: BOI Overview: Business profile
BOI Overview: Business profile Ireland: Leading bank in a growing economy with a well structured market Comprehensive multi-channel distribution c.250 branches c.1,650 75% of consumers are 61% of transactions 700k service calls platform Self-service now digitally active via mobile or tablet monthly
Slide 23: BOI Overview: Business profile
BOI Overview: Business profile Attractive international franchises provide diversification and further opportunities for growth within a disciplined risk appetite Partnership based consumer banking Acquisition Finance franchise in UK Trusted brand and established customer base Well recognised lead a
Slide 24: BOI Overview
BOI Overview Income Statement1 y/e Dec 13 y/e Dec 14 y/e Dec 15 y/e Dec 16 H1 2017 (€m) (€m) (€m) (€m) (€m) Total income 2,646 2,974 3,272 3,105 1,520 Net interest income 2,133 2,358 2,454 2,283 1,151 Other income (net) before additional gains 549 448 591 671 353 Additional gains 93 205 237 171 16 E
Slide 25: BOI Overview
BOI Overview Summary Balance Sheet Dec 13 Dec 14 Dec 15 Dec 16 Jun 17 (€bn) (€bn) (€bn) (€bn) (€bn) Customer loans1 85 82 85 78 77 Liquid assets 27 25 24 21 22 BOI Life assets 14 16 16 17 17 Other assets 6 7 6 7 6 Total assets 132 130 131 123 122 Customer deposits 74 75 80 75 75 Wholesale funding 27
Slide 26: BOI Overview
BOI Overview Profile of customer loans1 at Jun 17 (gross) ROI UK RoW Total Total Composition (Jun 17) (€bn) (€bn) (€bn) (€bn) (%) Mortgages 24.0 23.1 - 47.1 59% Non-property SME and corporate 11.5 4.32 3.8 19.6 24% SME 8.7 1.9 0.0 10.6 13% Corporate 2.8 2.4 3.8 9.0 11% Property and construction 6.2
Slide 27: Income Statement
Income Statement Divisional performance Underlying profit / (loss) before tax Underlying profit / (loss) Additional gains 6 months ended Jun 17 and additional gains before tax (€m) (€m) (€m) Retail Ireland 312 1 313 Bank of Ireland Life 40 - 40 Retail UK - € 64 6 70 Retail UK - £ 55 5 60 Corporate &
Slide 28: Income Statement
Income Statement Net interest income analysis H1 2016 H2 2016 H1 2017 Average Gross Gross Average Gross Gross Average Gross Gross Volumes Interest Rate Volumes Interest Rate Volumes Interest Rate (€bn) (€m) (%) (€bn) (€m) (%) (€bn) (€m) (%) Ireland Loans 36.5 552 3.04% 36.0 554 3.07% 35.5 548 3.12%
Slide 29: Interest Rate Sensitivity
Interest Rate Sensitivity 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 2015 Dec 2016 Estimated sensitivity on Group income (1 year horizon) (€m) (€m) 100bps higher c.120m c.140m 100bps
Slide 30: Income Statement
Income Statement Non-core items H1 2016 H1 2017 (€m) (€m) Gross-up for policyholder tax in the Life business 5 8 Gain / (charge) arising on the movement in the Group’s credit spreads 19 (4) Loss on liability management exercises (19) - Investment return on treasury stock for policyholders 2 - Loss o
Slide 31: Core Banking Platforms Investment Programme
Core Banking Platforms Investment Programme Implementation plan for Core Banking Platforms 2016 2017 2018 2019 2020 Outcome Implementing new system Launch to Critical enabler to achieving Key Activities customers <50% cost income ratio target and data cleansing commences in medium term Phased migr
Slide 32: Loans and advances to customers
Loans and advances to customers New business volumes Retail UK Corporate & Treasury Retail Ireland (incl. Ireland) €2.5bn €2.3bn €0.2bn £2.0bn €0.2bn £1.9bn €1.9bn €1.9bn £0.6bn £0.5bn €0.6bn €0.7bn €1.5bn £0.1bn £0.1bn €1.5bn £1.4bn £1.3bn €1.3bn €1.2bn €0.8bn €0.6bn H1 2016 H1 2017 H1 2016 H1 2017
Slide 33: ROI Mortgages: €24.0bn
ROI Mortgages: €24.0bn ROI Mortgages (gross) Market share €25.0bn €24.3bn €24.0bn €3.9bn €5.3bn €6.3bn H1 2016 H2 2016 H1 2017 €8.1bn €7.2bn €6.5bn New Lending Volumes3 €0.6bn €0.8bn €0.8bn €12.9bn €11.8bn Market share 27% 24% 26%4 €11.2bn Dec 15 Dec 16 Jun 17 n Tracker n Variable Rates n Fixed Rate
Slide 34: UK Mortgages: £20.3bn/€23.1bn
UK Mortgages: £20.3bn/€23.1bn UK Mortgages (gross) UK Mortgages (gross) £20.5bn £20.4bn £20.3bn £20.5bn £20.4bn £20.3bn £2.6bn £2.2bn £2.1bn £6.9bn £8.5bn £9.2bn £7.6bn £7.4bn £7.4bn £4.9bn £4.0bn £3.6bn £10.4bn £10.8bn £10.8bn £8.7bn £7.9bn £7.5bn Dec 15 Dec 16 Jun 17 Dec 15 Dec 16 Jun 17 n Standar
Slide 35: Non-performing exposures
Non-performing exposures Group aligning with EBA definition of non-performing exposures Non-performing exposures at Dec 2016 – €9.4bn Non-performing exposures at June 2017– €8.1bn Other / Probationary, Other / €0.7bn Probationary, Forborne €0.6bn Collateral Forborne Realisation, Collateral €1.9bn Re
Slide 36: Non-performing exposures by portfolio
Non-performing exposures by portfolio Non-performing Impaired Impaired Specific Specific impairment Impairment Composition (Jun 17) Advances Non-performing exposures as % loans loans as % provisions impairment provisions as % (€bn) exposures1 provisions of impaired (€bn) of advances (€bn) of advance
Slide 37: ROI Mortgages
ROI Mortgages >90 days arrears1 Portfolio Performance Industry Average €22.3bn or 93% of mortgages at H1 2017 are on a capital and interest repayment basis (Dec 16: 93%) 92% of mortgage accounts are in the up to date book; 9 out of 10 accounts in forbearance are meeting the terms of Industry Ave
Slide 38: UK Customer Loans £28.6bn (€33.5bn)
UK Customer Loans £28.6bn (€33.5bn) UK Mortgages – £20.3bn UK Mortgages Analysis Total UK mortgages of £20.3bn; (NPEs - 2%; impaired loans - 1%) Wales, Scotland, £0.8bn Average LTV of 61% on total book (2016: 62%) £0.9bn Greater Average LTV of 73% on new mortgages (2016: 71%) Northern Ireland,
Slide 39: Available for Sale Financial Assets
Asset Quality Available for Sale Financial Assets ROI UK France Other Jun 17 Dec 16 Carrying Value €bn €bn €bn €bn €bn €bn Sovereign bonds 3.0 0.6 0.8 1.6 6.0 5.2 Senior debt - - 0.3 2.0 2.3 1.7 Covered bonds 0.1 0.7 0.5 2.0 3.3 3.5 Subordinated debt 0.3 - - - 0.3 0.3 Asset backed securities - 0.1 -
Slide 40: CET1 ratios – June 2017
Capital CET1 ratios – June 2017 Transitional ratio Fully loaded ratio (€bn) (€bn) Total equity 9.5 9.5 Less Additional Tier 1 (0.8) (0.8) Deferred tax1 (0.4) (1.2) Pension deficit 0.1 - Available for sale reserve (0.1) - National filters (0.1) - Intangible assets and goodwill (0.7) (0.7) Other items
Slide 41: Capital Guidance and Distribution Policy
Capital Guidance and Distribution Policy Expect to maintain a CET1 ratio in excess of 12% on a transitional basis and on a fully Capital loaded basis by the end of the phase-in period Guidance Includes meeting applicable regulatory capital requirements plus an appropriate management buffer Aim
Slide 42: Regulatory Capital Requirements
Regulatory Capital Requirements Supervisory Review and Evaluation Process (SREP1) requirement 14.4% Capital Conservation Buffer (CCB) of 2.5% phased in over 4 years from 2016 1.5% O-SII1 Buffer phased in over 3 years from July 2019 +1.5% +P2G OSII +0.5% +1.0% CCB - 1.875% 2.5% 2.5% 2.5% 1.25% CCB Tr
Slide 43: Risk weighted assets (RWA)
Risk weighted assets (RWA) RWA Density1 Customer lending Avg. Credit Risk Weights2/3 (Based on regulatory exposure class) EAD4 RWA Avg. Risk (€bn) (€bn) Weight ROI mortgages 24.6 7.6 31% UK mortgages 22.8 4.6 20% SME 17.4 12.3 71% Corporate 10.8 11.1 103% Other Retail 4.9 3.1 65% 47% 46% Total custo
Slide 44: Defined Benefit Pension Schemes
Defined Benefit Pension Schemes The Group has developed a framework for pension funding and investment decision making as part of its long-term strategic planning Management of the Group’s sponsored Defined Benefit pensions schemes involves a multi-year programme, categorised into 3 broad areas.
Slide 45: Defined Benefit Pension Schemes
Defined Benefit Pension Schemes IAS19 requires that the rate used to discount Defined Benefit pension liabilities be selected by reference to market yields on high quality corporate bonds with a corresponding duration. However, only a small number of long duration AA Euro corporate bonds are in is
Slide 46: Ordinary stockholders’ equity and TNAV
Ordinary stockholders’ equity and TNAV 2016 H1 2017 Movement in ordinary stockholders’ equity (€m) (€m) Ordinary stockholders’ equity at beginning of period 8,308 8,597 Movements: Profit attributable to stockholders 793 371 Distribution on other equity instruments – additional tier 1 coupon (73) (24
Slide 47: Reimbursing and rewarding taxpayer’s support
Reimbursing and rewarding taxpayer’s support Jan 09 – Jun 17 From 2009 - 2011, c.€4.8bn cash invested by the State C umulative c.€6bn cash returned to the State c.14% S tate continues to hold valuable c.14% equity Shareholding shareholding State Aid completely repaid in 2013 + Irish State’s
Slide 48: Contact details
Contact details For further information please contact: Group Chief Financial Officer Andrew Keating tel: +353 76 623 5141 andrew.keating@boi.com Investor Relations Alan Hartley tel: +353 76 623 4850 alan.hartley@boi.com Niall Murphy tel: +353 76 624 1385 niallj.murphy@boi.com Colin Wallace tel:
Slide 49: Forward-Looking statement
Forward-Looking statement This document contains certain forward-looking statements with respect to certain of the Bank of Ireland Group’s (the ‘Group’) plans and its current goals and expectations relating to its future financial condition and performance, the markets in which it operates, and its
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