Bank Of Ireland Group Plc · EURONEXT:BIRG
Bank Of Ireland — Debt Investor Presentation (June 2024)
64 slides from Bank Of Ireland's debt investor presentation, Jun 30, 2024
Slide 1: HY 2024 Debt Investor Presentation
HY 2024 20 Debt Investor Presentation 24 30 June 2024 1
Slide 2: Overview
= Bank of Ireland Bank of Ireland Overview
Slide 3: 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 4: 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 5: 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 6: 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 7: 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 8: 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 9: 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 10: 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 11: 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 11
Slide 12: Operational Performance
= Bank of Ireland Operational Performance
Slide 13: 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 14: 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 15: 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 16: 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 17: 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 18: 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 19: 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 20: 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 21: Capital, MREL & Liquidity
= Bank of Ireland Capital, MREL & Liquidity
Slide 22: 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 23: Regulatory Capital Ratios
Regulatory Capital Ratios Regulatory Capital Metrics Dec 23 Jun 241 CET1 • Movement in Regulatory CET1 ratio driven CET1 Ratio 14.5% 15.4% by capital generation (+170bps), RWA (+10bps), interim dividend (-70bps) and CRD phasing impact (-20bps) Tier 1 Items/ Instruments: 1.9% 1.9% Tier 1 & Total Capi
Slide 24: Significant buffer to potential MDA restrictions
Significant buffer to potential MDA1 restrictions Regulatory CET1 Ratio2 vs MDA Threshold Regulatory CET1 Ratio vs MDA Threshold MDA 4.1% • Regulatory CET1 ratio of 15.4%2 at Jun 2024 is aligned with the Buffer n Buffer Fully Loaded ratio 1.51% n CCyB 1.50% n O-SII • There was a c.40bps increase in
Slide 25: Balance sheet
Balance sheet Dec 23 Jun 24 Funding & Liquidity (€bn) (€bn) • Funding and liquidity remains strong from stable customer deposits Customer loans 80 81 and MREL issuance • LDR increased (80% to 81%), NSFR reduced (157% to 153%) and LCR Liquid assets 44 44 increased (196% to 199%) Wealth and Insurance
Slide 26: 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 27: 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 28: EBA Transparency Exercise 2023
EBA Transparency Exercise 20231 Bank of Ireland’s IRB RWA density across major loan portfolios exceeds a wide distribution of European peers IRB RWA: SME Lending2 IRB RWA: Corporate Lending3 120% 120% 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 1 2 BOI 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Slide 29: 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 30: Credit ratings
Credit ratings Instrument ratings BOIG BOIG (Stand alone (Senior ratings) BOIG GovCo BOIMB (ACS)1 BOIG GovCo BOIG GovCo ratings) Aaa Aaa Aaa C AAA AAA AAA AAA Investment Grade Aa1 Aa1 Aa1 AA+ AA+ AA+ AA+ baa1 A3 Aa2 Aa2 Aa2 AA AA AA AA Positive Positive Aa3 Aa3 Aa3 AA- AA- AA- AA- A1 A1 S A1 A+ A+ A
Slide 31: Summary highlights
Summary highlights • Strong capital generation of 170bps in H1 2024; 310-320bps expected in FY 2024, +c.45bps versus prior guidance Capital • Future capital issuance influenced by market conditions and refinancing/ growth • IRB RWA density across largest customer loan portfolios continues to exceed
Slide 32: Green Bond Framework
= Bank of Ireland Green Bond Framework 32
Slide 33: Green Bond Framework
Green Bond Framework Green Bond issuance is 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 sustainable finance. Green Bond Framework P
Slide 34: Our ESG Ratings
Our ESG Ratings Agency Rating scale 2024 2023 Comment The Group participates in The Group’s score improved slightly a number of ESG ratings and from 17.9 to 16.7 in May with the Scale of 0 – 100, benchmarks with a focus on next annual update expected in Q3 with a lower score 16.7 17.9 2024. The Grou
Slide 35: Use of Proceeds (Green Bond Framework 2024)
Use of Proceeds (Green Bond Framework 2024) ICMA GBP Eligible Category Eligibility Criteria Impact UN SDG Residential and Commercial Buildings in Ireland • Residential and commercial buildings built before January 2021 belonging to the top 15% low carbon buildings in Green Ireland (BER label of B2 o
Slide 36: 2021 Green Bond Framework – FY23 Allocation Report
2021 Green Bond Framework – FY23 Allocation Report 2021 Green Bond Framework Green Eligible Assets Portfolio Green Liabilities Eligible Portfolio (FY23) Number Amount Maturity Amount Eligibility Criteria of Loans (EUR) ISIN Date (EUR) 3% 1% (€250m) 7% (€118m) Green Buildings - Residential 22,626 7,6
Slide 37: 2024 Green Bond Framework – Identified assets
2024 Green Bond Framework – Identified assets 2024 Green Bond Framework Eligible Portfolio (FY23) As of FY23, Bank of Ireland has Some of the Eligible Green identified circa €4bn of Eligible Assets under the new 2024 6% 3% (~€250m) (~€115m) Green Assets under the new Green Bond Framework are 14% (~€
Slide 38: Footnote glossary
Footnote glossary Slide 3: Strong strategic and financial performance through our business model 2. Users who have logged into Banking 365 in the last 90 days 1. Annualised H1 2024 3. Ireland retail banking and New Ireland Assurance subsidiary 2. New Irish bank channel customer relationships as a pr
Slide 39: Footnote glossary (cont)
Footnote glossary (cont) Slide 18: Operating expenses in line; guidance improved on levies Slide 23: Regulatory Capital Ratios 1. Operating expenses excluding levies and regulatory charges of €111m 1. The CET1 ratio for June 2024 including interim profits was 15.4%. In accordance 2. H123 operating e
Slide 40: Footnote glossary (cont)
Footnote glossary (cont) Slide 28: EBA Transparency Exercise 2023 Slide 35: Use of proceeds 1. Charts represent 30 June 2023 figures published by the EBA for ABN AMRO, AIB 1. In line with the EU EPBD directive, Ireland carries out a cost optimal analysis to define Group, BBVA, Banco de Sabadell, Ban
Slide 41: Appendix
= Bank of Ireland Appendix 41
Slide 42: Appendix
Appendix Slide No. • BOI overview – customer loans / new lending volumes 43 • Ireland mortgages 44 • UK customer loans 45 • Net interest income analysis 46 • Asset quality – Non-performing exposures by portfolio 47 – Portfolio by stage 48 – Residential mortgages / Consumer loans 49 – Non-property SM
Slide 43: 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 44: 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 45: 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 46: 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 47: 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 48: 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 49: 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 50: 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 51: 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 52: 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 53: 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 54: 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 55: 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 56: 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 57: 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 58: 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 59: 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 60: 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 61: 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 62: Corporate Structure
Corporate Structure 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 Assurance Bank of Ireland Mortgage Bank Unlimited
Slide 63: 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
Slide 64: Slide 64
Bank of Ireland Group — Debt Investor Presentation (June 2024) on 6ix