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Investor Presentation

AIB
June 2017
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Company.
Transaction Summary

Issuer Allied Irish Banks, p.l.c. (AIB)

Selling Shareholder Irish Department of Finance

100% secondary shares


Offer Size Base deal size expected to be 25% of AIB
Over-allotment option expected to be up to 15% of the base deal size

ISE
Listing LSE

Private placement to institutional investors in Ireland, the UK and internationally


Within the US to QIBs in reliance on Rule 144A or another exemption from registration under the US Securities Act
Offer Structure Outside the US in reliance on Regulation S
Retail intermediaries offering available to Irish and UK residents solely through Irish-based designated intermediaries

Price range: 3.90-4.90


Price Range Implied market capitalisation: 10.6bn - 13.3bn

Conditional trading on the ISE and LSE expected to start on 23 June 2017
Timing Admission expected on 27 June 2017

AIB: 180 days following admission


Lock-Up Irish Department of Finance: 180 days following admission

Joint Global Coordinators: Bank of America Merrill Lynch, Davy and Deutsche Bank
Joint Bookrunners: Citigroup, Goldman Sachs, Goodbody, J.P. Morgan and UBS
Syndicate Structure Co-Lead Manager: Investec Bank
Sponsors: Goodbody and Morgan Stanley
Source: Company Information
2016 Performance & Strategic
Objectives

Bernard Byrne
Chief Executive Officer
Key Investment Highlights
Market Leader with Highly Attractive Prospects

Leading Franchise in a Growing Economy with Attractive Banking Dynamics

Business Model Re-Engineered, Simplified, and Digitally-Enabled with a Customer First Strategy Driving
Commercial Success

Strong Risk Management Framework Resulting in Improved Asset Quality and Impaired Loan Reduction

Stable Funding Model and Significant Capital Generation, Delivering Robust Capital Ratios

Sustainable Financial Performance Underpinning Strong Momentum to Double Digit Returns and Capital Return to
Shareholders

Source: Company Information

Page 4
Profitable, Strong Capital Generation and Delivering Shareholder Returns
Dividend Payment Proposed

1.7bn Strong sustainable profit on a total and underlying basis


Profit before tax Enhanced by one-offs and lower yoy provision writebacks
1.9bn in FY 2015

2.25% Positive upward NIM trajectory; exit NIM of 2.42% (Q4 2016)
Net Interest Margin (1) Stable asset yields; lower funding costs and positive impact of
28bps increase in 2016
repayment of 1.6bn CoCo (4)
9.1bn; 5.1bn net (3) Further reduction in impaired loans
Impaired loans
4bn reduction on Dec 15 Primary restructuring period concluding

15.3% (2) Strong capital ratios; generating significant capital


CET1 ratio (2)
230bps higher than Dec15 Payment of 1.8bn on the maturity of the CoCo (4)

250m Sustainable performance delivering further returns to


Dividend payment paid
First Dividend since H1 2008 (5) shareholders

NPS +45 - Q4 2016 Customer First strategy driving significant improvement in


Net Promoter Scores (6) customer experience
+29 increase since Q4 2014

(1) Excludes Eligible Liabilities Guarantee (ELG)


(2) Fully loaded CET1 ratio of 15.6% [excluding proposed dividend payment of 250m]
(3) Net of specific provisions
(4) Contingent Capital Notes; 1.8bn includes accrued dividend
(5) To ordinary shareholders
(6) Transactional Net Promoter Score - measures customer experience with a companys products or service and the customers loyalty to the brand. It is an index ranging from -100 to 100 that measures the willingness of customers to recommend a
companys product or services to others Page 5
Four Pillar Strategy Driving Sustainable Performance
Focused on Delivering Long Term Shareholder Outcomes

We will be at the heart of our customers financial lives by always being useful, always informing and always providing an
exceptional customer experience.
Strategic Ambition
We will deliver a bank with compelling, sustainable capital returns and a considered, transparent and controlled risk profile.

Four Pillars of Strategic


Customer First Simple and Efficient Risk and Capital Management Talent and Culture
Plan

Targeted Shareholder
Strong Customer Franchise Capital Accretion & Capital Return Sustainable Long-Term Growth
Outcomes

Source: Company information

Page 6
Growing Economy with Attractive Market Dynamics
Well Positioned for Growth

Economic Growth Expected Despite Brexit Uncertainties Total Employment Levels Rising as Unemployment Falls
Real GDP Growth, % Unemployment Rate (%) Total Employment (000s)
17.0 2,150
4.0 3.6 3.2
1.6 1.8 11.0 1,925
1.5

5.0 1,700
2017F 2018F 2019F 2009Q4 2010Q4 2011Q4 2012Q4 2013Q4 2014Q4 2015Q4 2016Q4
Ireland Eurozone Unemployment Rate Total Employment (rhs)
Source: European Commission for 2017 and 2018 and Department of Finance for 2019 Source: CSO

Increased House Completions Volume and Prices SME Credit Market Forecast to Return to Growth (1)
# of Completions (000s) Price (Index from 100) bn, 20102020
100 140 Forecast
Forecast
54.6 45.1 42.7 41.7 38.6
32.1 30.0 30.0 30.0 31.2 32.4
50 90

0 40
2002 2004 2006 2008 2010 2012 2014 2016 2018F 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F
Housing Completion (lhs) Forecast (lhs) Business Credit Forecast
Dublin Prices (rhs) Ex-Dublin Prices (rhs)
Source: CSO, Department of Housing, AIB ERU Source: CBI; BPFI; Internal Data; AIB/PwC Analysis

(1) Excluding Financial Intermediation & Property (Real Estate, L&D Activities)
Page 7
Strong Franchise with Competitive Market Position
The Leading Irish Bank with Retail and Commercial Focus

Retail & Commercial Banking (1) Wholesale, Institutional & Corporate Banking (1) AIB UK AIB GB & Northern Ireland

Largest retail and commercial bank in Ireland Corporate Banking relationship-driven model >360k retail and SME customers
FTB focused challenger in Northern
2.3m personal & SME customers with sector specialisms Ireland
No. 1 distribution network with 297 locations and An Post Real Estate Finance centralised origination GB Niche Business
Bank NI First Trust AIB GB
partnership and management
Leading market shares and leading position in digital Specialised Finance structured finance, Group Treasury & Support Functions
enablement mezzanine finance
Multi-brand approach Syndicated & International Finance Treasury activities
Central control & support functions

Net Customer Loans by Segment Net Customer Loans by Product Operating Profit by Segment
% % %
UK Non-Property Residential UK
15% Business Mortgages 11%
27% 55% WIB
WIB 18%
15% Other RCB
Property &
RCB Personal 71%
Construction
70% 13% 5%

FY 2016 Total: 61.0bn (2) FY 2016 Total: 61.0bn (2) FY 2016 Total: 1.3bn (2,3)

(1) RCB = Retail & Commercial Banking, WIB = Wholesale, Institutional & Corporate Banking
(2) Due to rounding, sum of values in pie charts may not equal total net loans figure shown Page 8
(3) Pre-provision Operating Profit (Before Group Treasury and Services)
Investment in Strategic Priorities Delivering Results
Customer First approach

Customer First Simple & Efficient Risk & Capital Management Talent & Culture

Focused Investment of 870m (2015-2017)

Customer need driven by data Resilient and agile technology Risk adjusted return on capital Strategy defines talent need
and analytics insights platform measurement (RARoC) Customer first culture and
Clear Focus Omni-Channel distribution of Business process management Clear risk appetite conduct a priority
simple & innovative products delivering outcomes efficiently Credit capability Risk aware
and services

Personal Loan Customer Journey Mortgage Proposition Transforming Customer Experience


Highest scoring customer journey Multi-brand approach Strategic pillars delivering enhanced
customer experience
3-hour journey time via online channel Strategic frontbook / backbook pricing
NPS Development
Digital end-to-end & lower cost to serve Online application 45
Delivering Transactional 36
# of Mortgage Applications (2016) 16
& Measuring K by Brand; % Increase YoY
Personal Loan NPS (1) by Channel (Q4 16) +27%
Success +21%
Q4 2014 Q4 2015 Q4 2016
27.7 Personal Relationship (2)
+40% 11 16
73 90 17.7 +36%
62
5.5 4.5
(5)
Branch Phone Online AIB EBS Haven Total 2014 2015 2016
Source: Company Information
(1) Change in survey methodologies for relationship NPS measurement in 2015 and again 2016
(2) Net Promoter Score - measures customer experience with a companys products or service and the customers loyalty to the brand. It is an index ranging from -100 to 100 that measures the willingness of customers to
recommend a companys product or services to others Page 9
Customer First Driving Commercial Success
Tangible Customer and Efficiency Outcomes

Continuously innovate to Relentlessly deliver


Understand our customers Serve through our omni-
Customer First provide suitable solutions simplification and
needs channel distribution model
for customers digitalisation

No. 1 Physical & Digital Channel Investment in Key Customer Propositions Resulting in Tangible Customer &
Distribution Network in Ireland Efficiency Outcomes

Prioritised OTC (1) transactions reduced by 50%


3,000 FTE Reduction 2012 -
investment in between 2013 and 2016
2016
206 71 20 Business Mobile 2.0
Branches Locations Centres Mobile penetration at 32%, upper
quartile globally (2)
Focus on improving 450m reduction in costs to
customer journeys 2015
Mobile App - Internet Partnership Mobile interactions increased to 30
>650K active Banking with An Post per month (3)
mobile users 1.1m online in 1,100 Significant 67% of transactional
users Locations investment in
analytics and 53% of all key products purchased customers active on digital
Complete Consistent Connected propositions via online channels channels

Source: Company Information


(1) OTC Over the Counter transactions
(2) Source: RCB Customer Analytics
(3) Banking transactions conducted on mobile including quick balance view Page 10
Proven Return on Investment
Growing Levels of Customer Interaction and Digital Engagement

2013 2016
501K 28K
148K Mobile Kiosk / Tablet
Mobile Interactions Logins
Interactions
208K
Internet 240K
Banking 18K
Internet
Logins Over 1.2m Contact
Banking
802K daily daily Centre Calls
Logins
interactions interactions
77K 18K
Branch Contact 100K 325K
Transactions 351K Centre Calls Branch ATM
ATM Transactions Withdrawals
Withdrawals

Branch Transactions:
36% increase in daily 6,000 calls transferred from
Mobile now busiest channel Teller -36% FTEs Reduced by c.3,000
interactions branch to contact centres
Self Service +52%
Significant investment across channels leaving AIB well positioned for growing demand
Source: Company Information

Page 11
Resulting in Increased New Lending and Market Share Gains
Leading Market Shares in Key Sectors

Increase in New Lending Momentum Across Key Sectors Leading Market Shares

Drawdowns (bn) Mortgage Lending (bn) Stock


8.7 37% 36% 44% 36%
8.5 2.0
1.3 1.7 26%
22%
1.9
2.6 2014 2015 2016
5.7
(2) (3)
2.9 Personal Lending (bn) Personal Personal Mortgages Business Leasing Main
1.6 2.6 Current loans (1) Current Business
Accounts Accounts Loans
1.6 0.4 0.5 0.7

3.9 2014 2015 2016 Strong Market Share Position


3.3 (Stock)
2.5
SME and Corporate (5) Lending (bn) #1 Business Main Current
#1 Mortgages
3.7 4.0 Accounts
2014 2015 2016 2.4 #1 Personal Main Current Accounts #2 Business Main Loans
RCB WIB UK 2.6 2.9
1.6 #1 Personal Loans #1 Business Main Leasing
0.8 1.1 1.2
(4)
Drawdowns to approval rate of 67% in 2016 2014 2015 2016 #1 Personal Credit Cards #2 Business Credit Cards
SME Corporate Source: Ipsos MRBI AIB Personal Financial Tracker 2016; AIB SME Financial Monitor 2016, BPFI - 2016

Source: Company Information


(1) Amongst banks; excludes car finance
(2) New mortgage lending flow 2016
(3) Main Business Leasing Agreement
(4) Joint number 1 position
Page 12
(5) Corporate includes syndicated finance, real estate >10m, advisory and structured finance
Progress on Resolving Legacy Customer Issues
69% Reduction in Impaired Loans Since Peak

Tangible Progress in Reducing Impaired Loans Track record of Delivery


Impaired Loans (bn)
19.8bn reduction in impaired loans to 9.1bn since Dec 2013
55%
51%
Case by case restructuring including continued reduction in mortgage
arrears
28.9
47% Significant focus across EU to reach normalised levels
22.2
44%
Primary restructuring period concluding
0.7bn impaired mortgages in probationary period(2)

13.0 13.1 Improved quality of new lending


10.9
1.0bn 9.1
6.9
0.7bn 5.1
Progress on Industry tracker mortgage examination

2013 2014 2015 2016 Ongoing review with independent external oversight

Gross Impaired Loans Net Impaired Loans Provision created in December 2015

Specific Provisions as % of Gross Impaired Loans Redress and compensation to affected customers identified to date

Mortgages in probationary period 2,600 restored to the correct interest rate and compensated to date

(1) Net impaired loans calculated as gross impaired loans less specific provisions (excl. IBNR)
(2) Currently performing to terms
Page 13
Significant Capital Accretion Enabling Substantial Payments to the State
Enhanced by Dividend Payment

Strong Organic Capital Generation Significant Capital Repayments


Fully Loaded (FL) CET1 Ratio (%)
3.2bn paid in
1.6bn of capital
1.7bn paid in fees, coupons,
repaid in July
15.3% Dec 2015 dividends and
2016
levies
13.1%
11.8%

3.5bn
2009
Preference 13.1bn Total payments of
Shares 12.1bn 6.8bn
5.9% (1)

11.3bn
250m ordinary dividend paid for full year 2016

2014 2015 2016 Working towards annual payout ratio in line with normalised European
Shareholders Equity banks with capacity for excess capital levels to be returned to
shareholders through special dividends and/or buybacks all subject to
Lev.
Ratio 3.2% 7.9% 9.2% regulatory and Board approval
Source: Company Information
(1) Excludes 3.5bn 2009 Preference Shares Page 14
Focused on Delivering Sustainable Performance
Based on Strong Customer Franchise, Capital Accretion and Returns and Sustainable Growth

Investment
Investmentinin
Customer
CustomerFirst
First
agenda
agendadriving
driving
growth
growth

Target
Targetreturns
returnson
on Maintainstrong
Maintain strongand
tangible equity
tangible equity andstable
stableNIM
NIM
10%+ (1) 2.40%+
10%+(1) 2.40%+

Robust and efficient


Strong capital base
operating model CIR
with CET1 of 13%
<50%

Source: Company Information


(1) ROTE based on (PAT - AT1 coupon + DTA utilisation) / (CET1 @13% plus DTA)

Page 15
Summary
Momentum and Delivery

Continued strong financial performance and ongoing sustainable underlying profitability, with further
improvement in asset quality

Strong capital ratios, organic capital generation and normalised funding

Dividend payment to ordinary shareholders of 250m paid for 2016

Market leading franchise with customer first strategy and investment in digital and innovation driving
commercial success

Well positioned for future challenges and opportunities in a growing economy

Page 16
Financial
Performance

Mark Bourke
Chief Financial Officer
Continued Progress in 2017
Strong Profitability and Capital Generation in the Quarter
Trading Update Q1 2017 Strong profitability and capital generation in the quarter

Capital Generation 70bps of capital generated

Capital ratio Transitional CET 1 of 19.3% and Fully Loaded of 16%

Net Interest Margin 2.46% for Q1 2017 up from 2.42% for Q4 2016

New lending New lending up 10% on Q1 last year

Down 0.5bn since December 2016 to 8.6bn


Impaired loans
(NPEs 13.1bn)
(1) Average full year 2016
Page 18
Financial Highlights 2016
Key Performance Metrics in Line with Expectations

Sustainable underlying profitability underpinned by positive NII and margin trajectory


NIM 2.25%(1) - exit NIM 2.42%(2)

Stable earning loan book (ex-FX) driven by strong momentum in new lending
New Lending 8.7bn

Continued reduction in impaired loans; pace and quantum of writebacks moderating

Impaired Loans reduced from 13.1bn to 9.1bn

Robust capital position supporting growth and capital return


CET1 (FL) 15.3%

(1) Excludes Eligible Liabilities Guarantee (ELG)


(2) Q4 2016
Page 19
Income Statement
Sustainable Underlying Profitability

Summary income statement (m) 2016 2015 Operating income 2.6bn


Net interest income 2,013 1,927
net interest income up 4%
Other income 617 696
Total operating income 2,630 2,623
net interest margin up 28bps to 2.25%; continued positive NIM
trajectory
Total operating expenses (1) (1,377) (1,292)
Operating profit before provisions 1,253 1,331 underlying other income stable excluding one-off benefits
Bank levies and regulatory fees (112) (71)
Operating expenses increased 85m (+7%) in line with expectations
Provisions 298 923
Associated undertakings & profit on sale 36 28 investment programme
Operating profit before exceptionals 1,475 2,211 wage inflation and increased headcount in loan restructuring &
Exceptional items 207 (297) regulatory compliance functions
Profit before tax from continuing operations 1,682 1,914
Net provision writeback of 298m includes 281m new to impaired charge
Metrics 2016 2015
Net interest margin (excluding ELG) 2.25% 1.97% primary restructuring period concluding
Cost income ratio (1) 52.0% 49.0%
PBT of 1.7bn enhanced by one-off items
Return on average ordinary shareholders equity (2) 11.1% 12.4%
Return on assets 1.40% 1.30%

(1) Excludes exceptional items, bank levies and regulatory fees


(2) ROE: Profit attributable to ordinary shareholders after deduction of dividend on AT1 as % of average ordinary shareholders equity (excludes AT1)
Page 20
Average Balance Sheet
Further NIM Expansion Driven by Stable Asset Yields and Lower Funding Costs

Year ended 31 December 2016 Year ended 31 December 2015


Strong NIM(1) 2.25% (exit NIM 2.42%)
Average Balance(2) Interest Average Rate Average Balance(2) Interest Average Rate
m m % m m %
Assets
Loans and receivables to customers 62,116 2,248 3.62 64,868 2,363 3.64 Stable asset yield of c. 2.85%
NAMA senior bonds 3,644 11 0.30 7,614 31 0.41
Financial investments - AFS 14,925 182 1.22 19,503 398 2.04
Yield on customer loans stable includes
Financial investments - HTM 3,419 131 3.83 106 4 3.76
Other interest earning assets 6,077 18 0.30 7,181 25 0.36 impact of strategic SVR re-pricing actions
Average interest earning assets 90,181 2,590 2.87 99,272 2,821 2.84
Non interest earning assets 8,005 7,557 NAMA Senior Bonds redemptions
Total Assets 98,186 2,590 106,829 2,821
Liabilities and shareholders equity AFS yields falling as higher yielding assets
Deposits by banks 9,728 (13) (0.13) 15,734 4 0.03 roll off
Customer accounts 38,894 324 0.83 43,777 490 1.12
Subordinated liabilities 1,629 199 12.22 1,625 278 17.10
Other debt issued 7,474 50 0.67 7,475 92 1.23
Average interest earning liabilities 57,725 560 0.97 68,611 864 1.26 Reduced cost of funds to c. 1%
Non interest earning liabilities 28,056 25,985
Shareholders equity 12,405 12,233 Deposit re-pricing actions - customer
Total Liabilities and Shareholders' Equity 98,186 560 106,829 864 accounts lower at 0.83% (FY2015 1.12%)
Net Interest Income Excluding ELG (1) 2,030 2.25 1,957 1.97
ELG (17) (0.02) (30) (0.03) Positive mix from term deposits to
Net interest income including ELG 2,013 2.23 1,927 1.94
current accounts
2013 2014 2015 2016
NII (ex ELG) 1,518 1,746 1,957 2,030 Maturity of 1.6bn CoCo (July 2016)
NIM (%) 1.37 1.69 1.97 2.25 30bps FY NIM impact
Source: Company Information
(1) Net interest margin excluding ELG
(2) Interest on any assets or liabilities in hedge relationships include the net interest on the related derivatives; 2015 represented
Page 21
Other Income
Stable Net Fees and Commission Income

Net Fee & Commission Income


m
405 395 Stable underlying fee and commission income of 395m
84 77
48 51 Current accounts represent c. 50% of net fees and commission
85 83 income
188 184
Other business income fluctuated due to valuations on long term
2015 2016 customer derivative positions
Current accounts Card Credit Related Fees Other Fees & Commission Continued flow of income from other items in 2016
Other Income (m) 2016 2015 AFS disposals 31m
Net fee and commission income 395 405 NAMA bonds cashflow re-estimation 10m
Other business income 98 128
Settlements and other gains 83m
Business Income 493 533

Gains on disposal of AFS securities 31 85


Re-estimation of the timing of cash flows on NAMA bonds 10 6
Settlements and other gains 83 72
Other Items 124 163

Total Other Income 617 696


Source: Company Information

Page 22
Costs
Continued Focus on Cost Discipline While Progressing on Strategic Investment Programme

Operating expenses (1) Disciplined cost management


m 49% 52%
1,742 Significant reduction in cost base from 2012 - 365m (-21%)
1,465 1,397 1,377
1,292 2016 operating expenses 1,377m (+7%) in line with expectations
701
614 630 660
567

1,041 851
Factors impacting cost
767 725 717
Staff costs down 8m average FTE down 4% and incorporating
2012 2013 2014 2015 2016 wage inflation and outsourcing for future resilience
CIR% Staff Costs Other Costs
Continued investment in loan restructuring operations
Full time equivalent employees (2) Increased burden of regulatory compliance
#
13,459 Investment in strategic programmes
11,431 11,047 10,204 10,376
Total investment programme 870m (2015 to 2017)
Spend to date c. 600m (3) of which approx. 75% is capital
expenditure
Investment in line with strategic agenda delivering growth,
2012 2013 2014 2015 2016
efficiency and customer satisfaction
(1) Excluding exceptional items and bank levies
(2) Period end
(3) P&L impact of this investment spend is reflected in the P&L in operating expenses and in exceptional items for certain strategic elements.
Page 23
P&L - Other Items
Exceptional Benefits and Provision Writebacks Partially Offset by Regulatory Fees and Levies

Other PL items (m) 2016 2015


Bank levies and regulatory fees 112m(1)
Operating Profit Before Provisions 1,253 1,331
Bank Levy 60m
Bank Levies and Regulatory Fees (112) (71)
SRF(2) 18m
Provisions 298 923
DGS(2) 35m
Associated Undertakings & Profit on Sale 36 28
Net credit provision writeback of 294m(3) mainly due to case by case
Operating Profit Before Exceptionals 1,475 2,211
restructuring of customers in difficulty
Total Exceptional Items (m) 2016 2015
281m new to impaired charge in line with 2015
Operating Profit Before Exceptionals 1,475 2,211
452m net writeback of specific provisions
Restitution & Restructuring Expenses (58) (250)
123m IBNR release
Gain on Transfer of Financial Instruments 17 5

Profit on Disposal of Visa Europe 272 0 Exceptionals in 2016 include:


Termination Benefits (24) (37) 58m of restitution & restructuring expenses
Other Exceptional Items 0 (15) 17m gain on transfer of financial instruments

Profit Before Taxation 1,682 1,914 272m(4) profit on Visa Europe transaction
24m of termination benefits
(1) Includes other regulatory fees +1m UK FSCS
(2) Single Resolution Fund; Deposit Guarantee Scheme
(3) Excludes non-credit provision writebacks of 4m provision
(4) 188m cash, 19m deferred consideration, and 65m fair value of preferred stock in Visa Inc
Page 24
Balance Sheet
Well Funded Balance Sheet Management and Strong Capital Ratios; Well Positioned for Growth

Balance Sheet bn Dec-16 Dec-15


Assets
Gross loans to customers 65.2 70.2
Provisions (4.6) (6.8) Net loans 60.6bn
Net loans to customers 60.6 63.3
Financial investment (AFS & HTM) 18.8 20.0 Earning loans (ex FX) up 0.6bn driven by new lending 8.7bn
NAMA senior bonds 1.8 5.6
Other assets 14.4 14.3
Total Assets 95.6 103.1 Liabilities
Customer accounts 63.5 63.4
Monetary Authority funding 1.9 2.9 Customer accounts of 63.5bn up 1.9bn (ex FX)
Other market funding 5.8 11.0 Positive mix with increased demand deposits and current accounts
Debt securities in issue 6.9 7.0
Other liabilities 4.4 6.7 (+4.7bn) partly offset with lower treasury and corporate deposits
Total Liabilities 82.5 91.0 (-2.5bn) and retail (-0.3bn)
Shareholders equity 13.1 12.1
Shareholders equity increase 1bn in 2016, primarily due to profit of 1.4bn offset
Total Liabilities & Shareholders
95.6 103.1 by AFS reserves decrease 0.4bn
Equity
Key Metrics (%) Robust capital ratio CET 1 (FL) 15.3%
Loan deposit ratio 95 100
LCR 128 116
NSFR 119 111
CRD IV transitional CET 1 ratio 19.0 15.9
CRD IV fully loaded CET 1 ratio 15.3 13.0
bn
Risk weighted assets (Transitional) 54.2 58.5
Source: Company Information Page 25
Customer Loans
New Lending 8.7bn

Customer Loans (bn) Earning loans Impaired Loans Gross Loans Specific Provisions IBNR Provisions Net Loans
Opening Balance (1 January 2016) 57.0 13.1 70.1 (6.2) (0.7) 63.2
New lending volumes 8.7 0.0 8.7 0.0 0.0 8.7
New impaired loans (0.8) 0.8 0.0 (0.3) 0.0 (0.3)
Restructures and writeoffs (1) 1.5 (3.3) (1.8) 2.1 0.0 0.3
Redemptions of existing loans (9.1) (0.9) (10.0) 0.0 0.0 (10.0)
Foreign exchange movements (1.5) (0.2) (1.7) 0.1 0.0 (1.6)
Other movements 0.3 (0.4) (0.1) 0.2 0.2 0.3
Closing Balance (31 Dec 2016) 56.1 9.1 65.2 (4.1) (0.5) 60.6

Earning Loan Book Growth and improvement in quality of earning loans (ex FX)
Movements (excluding FX) Impaired Loans Reducing
New lending of 8.7bn and climbing towards redemption levels
bn bn
57.0 57.6 Strong momentum across key sectors mortgage lending in Ireland up 22% and
increased market share
13.1 9.1 New lending at higher grades and maintained margins
Continued reduction in impaired loans
Earning loans Impaired loans
Jan-16 Dec-16
Source: Company Information
(1) Includes non contractual writeoffs

Page 26
Earning Loans Increasing by Segment and Sector in Ireland
Impaired Loans are Reducing

Retail & Commercial Banking RoI Mortgages


bn bn
38.4 38.7
28.6 28.9

10.8 7.9 5.7 4.4

Earning loans Impaired loans Earning loans Impaired loans


Jan-16 Dec-16 Jan-16 Dec-16

Wholesale, Institutional and Corporate Banking Non-property business(1)


bn bn 8.5 8.6
8.3 8.9
1.7 1.2
0.6 0.2
Earning loans Impaired Loans
Earning loans Impaired Loans Jan-16 Dec-16
Jan-16 Dec-16

AIB UK Property & Construction(1)


bn bn
9.7 8.4
4.8 4.7 3.3 2.2
1.7 0.9

Earning loans Impaired Loans


Earning loans Impaired loans
Jan-16 Dec-16 Jan-16 Dec-16
Source: Company Information
Page 27
(1) In Ireland
Customer Loans
Corporate & SME Driving New Lending Growth

Dec 2016 Earning Loans 56.1bn Dec 2016 New Lending 8.7bn

Corporate &
SME (ex. Residential
Property) Mortgages
16.1bn; 28% 2.1bn; 24%
Corporate &
Residential SME (ex.
Mortgages Property) Other Personal
30.6bn; 55% 4.4bn; 50% 0.7bn;
Property &
9%
Construction
6.7bn; 12% Property &
Other Personal Construction
2.7bn; 5% 1.5bn; 17%

Mortgages 55% of total earning loans

Positioned for increase in mortgage market activity

Corporate & SME (ex property) 50% of new lending

Earning loan balances stable (ex FX) and growing across all key portfolios

Source: Company Information

Page 28
Asset Quality
Continued Progress as Impaired Loans Reduce Across All Sectors

Dec-16 Residential Property and Non-Property


Other Personal Total
bn Mortgages Construction Business Lending

Loans and receivables to customers 35.2 3.1 9.4 17.5 65.2


Impaired 4.6 0.4 2.7 1.4 9.1 Impaired loans net
Balance sheet provisions (specific + IBNR) 2.0 0.3 1.5 0.8 4.6
of specific
provisions 5bn
Specific provisions / impaired loans (%) 38% 58% 50% 51% 44%

Dec-15 Residential Property and Non-Property


Other Personal Total
bn Mortgages Construction Business Lending

Loans and receivables to customers 36.8 3.5 11.5 18.3 70.1


Impaired 6.0 0.7 4.3 2.1 13.1
Impaired loans net
Balance sheet provisions (specific + IBNR) 2.3 0.5 2.6 1.3 6.7
of specific
Specific provisions / impaired loans (%) 34% 70% 57% 55% 47% provisions 6.9bn

Year on Year Movements Residential Property and Non-Property


Other Personal Total
bn Mortgages Construction Business Lending

Impaired (1.4) (0.3) (1.6) (0.7) (4.0)


Balance sheet provisions (specific + IBNR) (0.3) (0.2) (1.1) (0.5) (2.1)
Source: Company Information

Page 29
Balance Sheet Provisions
Working Well Within Provision Stock While Maintaining Coverage

Residential Property and Non-Property


Other Personal Total
Balance Sheet Provisions Movement (bn) Mortgages Construction Business
Opening Balance Sheet Provisions 1 Jan 2016
Specific 2.0 0.5 2.5 1.2 6.2
IBNR 0.3 0.0 0.2 0.2 0.7
Balance Sheet Provisions 2.3 0.5 2.6 1.3 6.8

Income Statement - Credit Provision Charge / Writebacks


Specific (0.1) 0.0 (0.1) 0.0 (0.2)
IBNR 0.0 0.0 (0.1) (0.0) (0.1)
Total (0.1) 0.0 (0.1) (0.0) (0.3)

Balance Sheet Provisions Amounts Written Off / Other


Total (0.2) (0.2) (1.0) (0.5) (1.9)

Closing Balance Sheet Provisions 31 Dec 2016


Specific 1.7 0.3 1.4 0.7 4.0
IBNR 0.3 0.0 0.1 0.1 0.5
Balance Sheet Provisions 2.0 0.3 1.5 0.9 4.6
Source: Company Information

Page 30
Financial investments
18.8bn portfolio of Financial Investments including 3.4bn as HTM

Key components of AFS - debt securities (1) AFS - components of government securities
bn bn
8.7 8.0 5.4 5.1
3.5 3.4 4.6 4.5
2.0 1.7 0.3 0.3 1.2 0.9 1.2 1.1 0.7 0.6

Held to Maturity Government Supranational Euro Bank Irish France Italy Spain Rest of World
Securities Banks Securities Government
and Gov agencies Securities Dec 2015 Dec 2016
Dec 2015 Dec 2016

Maturity & yield profile of HTM & AFS securities (2) AFS - Debt Securities:
m % 15.4bn down from 16.5bn - in line with plans to reduce overall AFS
3.1% 2.1% 4.3% 1.2% 3.2% 1.7% 2.3%
8.2 holdings with lower liquidity requirements

3.9 Net gains from disposal of AFS debt securities in 2016 31m
1.8 2.1 1.2 0.9 0.1 Average yield on AFS of 1.22% and HTM 3.83%

< 1 year 1-5 year 5-10 year 10+ year Yield reducing as high yielding assets mature
AFS HTM Yield % Yield % Embedded value on AFS and HTM 0.8bn
c. 70% of the book maturing < 5yrs
(1) Excludes NAMA senior bonds of c. 1.8bn and NAMA sub bonds of 0.5bn Page 31
(2) Maturity and yield profile excludes swaps
Funding Structure
Stable Deposit Base Driving Strong Funding Position

Total Funding Customer deposits represent 69% of total funding


bn Low cost stable source of funds, LDR ratio 95%
98.7 92.0
Wholesale funding

Customer
7 year AIB Mortgage Banks ACS issuance 1bn
Accs: 63.4 Customer LCR 128% (minimum 70%, rising to 100% by 1 Jan 18)
Accs: 63.5 NSFR 119% (NSFR scheduled to be introduced in Jan 18)
13.9 SRB preferred resolution strategy
7.7
5.4 1.6 1.6 Single Point of Entry (SPE)
5.3
2.3 0.8 Hold Co
12.1 13.1 MREL(2) issuance manageable
Dec 2015 Dec 2016 Rating Agency Upgrades
(1)
Equity LT2 ACS / ABS / CP Senior Debt Deposits by Banks
Long-Term Rating AIB Mortgage Covered Bond Rating
AIB plc
Key Funding Metrics Dec-16 Dec-15 2014 2017 Bank 2016 2017
Loan to Deposit ratio (LDR) 95% 100% S&P BB BBB- S&P AA AAA
Liquidity Coverage ratio (LCR) 128% 116% Moodys Ba3 Baa2
Fitch BB BB+ Moodys Aa1 AAA
Net Stable Funding ratio (NSFR) 119% 111%
Source: Company Information
(1) Equity includes AT1
(2) MREL: Minimum required eligible liabilities
Page 32
Capital Ratios
Strong Capital Base with Fully Loaded CET 1 of 15.3% - Normalised Capital Stack

AIB Group - RWA (m) (Transitional)


Capital Ratios
Risk Weighted Assets (m) 31-Dec-16 31-Dec-15 Movement
% Credit risk 48,843 53,596 (4,753)
18.9 21.7 15.5 17.6
Market risk 288 457 (169)
Operational Risk 3,874 3,139 735

19.0 CVA / Other 1,230 1,357 (127)


15.9 13.0 15.3
Total Risk Weighted Assets 54,235 58,549 (4,314)

Transitional CET1 Fully Loaded CET1


= Total Capital % Dec-15 Dec-16 Robust capital position fully loaded CET1 of 15.3%
Capital accretive mainly due profit after tax 1.4bn offset by movement in AFS
Fully Loaded CET1 - Capital Movements reserves of 0.4bn
bn Dividend of 250m on ordinary shares paid for 2016
1.4 0.2 (0.4) RWA reduced by 4.3bn to 54.2bn as AIB continue to de-risk balance sheet
(0.3) (0.3)
decrease in credit risk of 4.7bn reflecting positive grade migration, redemptions
8.3 and FX impact 1.7bn which were partially offset by new drawdowns
7.7
Operational risk up 0.7bn due to higher average 3 year income
31 Dec 15 Profit in Pension AFS Dividend Other 31 Dec 16 AIBs 2017 SREP is 9.0%(1) (transitional CET1) and 12.5% (total capital ratio)
the period Significant buffer above MDA levels

Source: Company Information


(1) Excludes P2G

Page 33
How We Think About Returns
(PAT AT1 Coupon + DTA Utilisation) / (FL CET1 @ 13% + DTAs)

(m) 2016

PAT 1,356

(-) AT1 coupon 37

Profit (1) (+) DTA utilisation 97

Profit on Profit (Numerator) 1,416


CET1 @ 13%
RWAs 54,419
of RWAs +
DTAs CET1 at 13% RWAs 7,075
CET1 @
(+) DTAs 3,050
13% of DTAs
RWAs Adjusted CET1 (Denominator) 10,125

Average Adjusted CET1 (Denominator) 10,486

Profit on CET1 @ 13% of RWAs + DTAs 13.5% (2)

Source: Company Information


(1) PAT AT1 coupon + DTA utilisation = Profit
(2) ROTE reflects a strong underlying performance enhanced by one-off items (e.g. Visa transaction, writebacks)
Page 34
Medium Term Financial Targets
Focused on Delivering Sustainable Performance

Medium Term
Metric 2016 (3-5 Years) Guidance & Targets

Net Interest Margin (excl. ELG) 2.25% 2.40%+ Maintain strong and stable NIM, 2.40%+

Cost / Income Ratio 52% <50% Below 50% by end 2019 reflecting robust and efficient operating model

Fully Loaded CET1 Ratio 15.3% 13.0% Strong capital base with normalised CET1 target of 13%

RoTE 13.5% 10%+ 10%+ return using (PAT AT1 coupon + DTA utilisation) / (CET1 @13% plus DTA)

Working towards annual payout ratio in line with normalised European banks with capacity for excess capital levels to be returned to
Dividends
shareholders through special dividends and/or buybacks all subject to regulatory and Board approval

Source: Company Information

Page 35
Summary
Continued Momentum and Well-Positioned

Robust capital position supporting growth and capital return - 250m dividend paid

Sustainable underlying profitability with positive NII and margin trajectory

Stable earning loan book approaching inflection point

Continued focus on reducing impaired loans

Well-positioned for growth

Page 36
Appendix
Impact of Investment on the Target Architecture

Retail Customer Business Customer WIB Customer

4 1 CUSTOMER ENGAGEMENT CAPABILITY


SECURITY
Modular approach no big-bang IT Contact Relationship Manager /
CAPABILITY Mobile Tablet Web
Centre
Branch Advisory
solution
UI/UX Framework DTM

3 2
PROCESS CAPABILITY INFORMATIONAL & ANALYTICAL CAPABILITY
Continued investment in front WCM
API Management
end, customer engagement DAM
Reliable Messaging Service Customer Comm.
Security Hub
technology ID&V Roles & Service Implementation
Entitlement API Portal MRM Analytics Service Analytics
Event Bus
Modernised processing and Product Micro Aggregated Rules Customer
Hub BPM BAM / APM
analytical solutions to deliver FireEye & Dettica Configuration Services Services Engines Insights
advanced threat Management Payments/ Fraud
enhanced capability detection Credit Monitoring
ForcePoint data ODS CIF ECM
Fit for purpose security leveraging loss prevention
Infrastructure Alerting
Risk
Spark Predictive
industry best practices Integration Mediator
Analytics

Core replacement of our Treasury


& Payments System
5 CORE SYSTEM
Accounting Core EDW Hadoop
Finance & Risk
Reporting

HR Finance Treasury Payments Finance


Systems Applications

ETL Risk

New Technology Modernise/Replace Core Replacement Sustain

Source: Company Information

Page 38
Interest Rate Sensitivity

Sensitivity of Projected NII to Interest Rate Movements (1) Gross Loans by Interest Rate Sensitivity

Impact Over 12 Month Period (m) 2015 2016 (m) 2015 2016

Fixed Rate 5,996 5,527

+ 100 basis point parallel move in all Republic of Ireland 5,047 4,734
99 110
interest rates
United Kingdom 949 793

Rest of the World - -

Variable Rate 64,167 59,701


100 basis point parallel move in all
(99) (110)
interest rates Republic of Ireland 53,512 51,032

United Kingdom 10,533 8,549

Rest of the World 122 120

Total Gross Loans 70,163 65,228

Source: Company Information


(1) The analysis is subject to certain simplifying assumptions such as all interest rate movements occurring simultaneously and in a parallel manner. Additionally, it is assumed that no management action is taken in response to the rate movements

Page 39
Non-Performing Exposures Reconciliation to Impaired Loans

Impaired to NPE Reconciliation


Impaired:
IFRS accounting definition bn

2.9 14.1
NPEs:
EBA regulatory definition
1.2
Relevant for Regulatory Reporting (FINREP), EBA
stress testing & capital planning
0.9
9.1
Reconciliation
NPEs include 0.7
All 90 DPD (1) which are not impaired - Mortgages in
0.9bn Probationary Period (2)
Collateral Disposals - 1.2bn
Loans previously receiving forbearance
solution for a period of one year thereafter
- 2.9bn Non-impaired, post
restructuring (one year after)

Convergence of NPEs to Impaired driven by timing


lag on forbearance / restructured loans
Impaired 90 Days Past Due (Not Collateral Disposals Restructured Loans in NPEs
Impaired) Probationary Period
Source: Company Information
(1) Includes 90 DPD related to connected debt
(2) Currently performing to terms
Page 40
NPE Strategy: Continued Progress in Reducing Risk

Significant Progress to Date in Reducing NPE Targeting Further Deleveraging to European Norms

bn bn

30.7
28.9
26.2 FSG Cost 87m
22.2
35% FSG FTE c.1,100
18.0

14.1 European bank


13.0 29% 13.1 14.1 NPE ratio
10.8 c. 5% (3)
9.1
55% 6.9 22%
5.1 European
51% 19%
Norms
47% 14%
44%

2013 2014 2015 2016 2016 NPEs Out of BAU Restructures Portfolio Sales & Medium Term
Probationary Strategic
NPEs Impaired Loans Net Impaired Loans (1) Period Initiatives
Impaired Ratio NPE Ratio Impaired Loans Coverage (2)
Source: Company Information
(1) Net impaired loans calculated as impaired loans less specific provisions (excl. IBNR)
(2) Coverage metrics based on specific provisions (i.e. excl. IBNR provisions)
(3) ECB Risk Dashboard, Q3, 2016 Page 41
Tangible Success in Curing Impaired Loans

Coverage evolution reflects


mix of impaired loans and Impaired Loans Reduced Within Existing Balance Sheet Provisioning Levels and Without Significantly
current profile of the impaired Impacting Capital
book bn (8.0)
3.1
Customer
28.9 restructures
Coverage on Mortgages 38%
includes secondary
(2016)
facilities 3.6bn
(6.9) (2016) Utilisation of
Coverage on Non- provision stock to
New to Imparied (50%
Mortgages 51% (2016) lower 2016 vs 2014) write-off /
normalised levels Cash Collections writedown
Pro-forma add back of write- 4bn & Cures (8.0)
offs / provisions, increases without Loss 4bn
55%
coverage to c.70%

Improving LTV on mortgage 9.1


portfolio
LTV 2013 2016

44%
RoI Mortgage Stock 103% 74%

RoI Impaired
2013 New to Impaired Cash / Cures Fundamental Write-offs 2016
130% 103% Restructures
Mortgage
Provision Coverage
Source: Company Information

Page 42
ROI Residential Mortgages Arrears Significantly Lower

ROI Mortgage Portfolio Dec 2016 Impairment writeback


bn m

Buy-to-let Fixed
14% 10% 463
Owner-occupier
86% Tracker
35%
109
Variable
55%

33.4bn Dec-15 Dec-16

Impaired Loans
86% of the RoI mortgage portfolio is owner occupier and 14% is buy to let
bn Arrears levels down15% (1) YTD 2016 due to restructuring activity and
33% 34% 38% improving economic conditions
Arrears owner-occupier down 16% YTD 2016
8.2
5.7 4.4 Arrears buy-to-let down13% YTD 2016
Impaired loans down 1.3bn since Dec 15 to 4.4bn mainly due to
Dec-14 Dec-15 Dec-16
restructuring, write-offs and repayments
Specific Provisions / Impaired Loan Coverage Ratio
c. 0.7bn of forborne mortgages in probationary period currently
performing to terms
(1) Arrears by no of accounts
Page 43
Other Personal

Personal Loan Portfolio Dec 2016 Impairment writeback


bn m
Impaired
14%
Vulnerable
9% 22
Watch 8
4%
Satisfactory
73%
3.1bn Dec-15 Dec-16

Impaired Loans
Portfolio comprises 2.2bn loans and overdrafts and 0.9bn in credit
bn card facilities
69% 70% 58% Increase in demand for personal loans due to both improved economic
environment and expanded service offering (including on line approval
1.0 0.7 through internet, mobile and telephone banking) offset by
0.4
restructuring and redemptions
Dec-14 Dec-15 Dec-16
Decrease in specific provision cover 70% to 58% driven by the write-off
Specific Provisions / Impaired Loan Coverage Ratio of impaired balances with a high provision cover

Page 44
Property & Construction

Property & Construction Portfolio Dec 2016 Impairment writeback


bn m
Contractors Housing
4% Associations
Land & 3% 214
Development
16% 145

Investment
77%
Dec-15 Dec-16
9.4bn

Impaired Loans Overall portfolio has reduced by 2.1bn (19%) since Dec 15 primarily due to
restructuring activity and write-offs
bn
62% 57% 50% Investment Property (77% of the total portfolio) reduced by 0.8bn to
7.2bn largely due to loan redemptions (asset sales), restructures &
write-offs
8.8
4.3 2.7 1.8bn of which is in the UK
Dec-14 Dec-15 Dec-16 Impaired loans reduced by 1.6bn to 2.7bn in Dec 16
Specific Provisions / Impaired Loan Coverage Ratio Specific provision cover reduced from 57% in Dec 15 to 50% in Dec 16.

Page 45
Non-Property Business

Non-property business portfolio Dec 2016 Impairment writeback


bn m
Other Agriculture
26% 10%
225
Hotels & Licensed
Premises
16%
Retail/Wholesale/ 16
Other Services
33% Other Distribution
15% Dec-15 Dec-16
17.5bn

Impaired Loans Portfolio comprises Corporate and SME lending


bn 56% in Ireland, 27% in the UK and 16% in Group and International
59% 55% 51% Earning loans increased to 92% of the portfolio (Dec 15: 88%)
upward grade migration reflecting improved economic conditions
3.8
2.1 1.4 Impaired loans reduced by 0.7bn to 1.4bn in Dec 2016
Dec-14 Dec-15 Dec-16 Specific provision cover reduced to 51%
Specific Provisions / Impaired Loan Coverage Ratio

Page 46
ROI Mortgages Stock of Forbearance

of which: loans > 90 days of which: loans > 90 days


Dec 2016 - Total in arrears and/or impaired Dec 2015 - Total in arrears and/or impaired
Forbearance type by mortgage Number Balance (m) Number Balance (m) Number Balance (m) Number Balance (m)
Interest only 7,204 1,208 3,621 640 3,338 629 1,448 292
Reduced payment (greater than interest only) 1,800 388 1,043 231 1,400 315 781 181
Payment moratorium 1,833 281 438 58 682 95 314 44
Fundamental restructure 1,197 169 378 53 1,184 185 99 16
Restructure 1,107 110 903 84
Arrears capitalisation 16,509 2,452 6,829 1,087 18,854 2,779 9,279 1,475
Term extension 2,476 322 473 74 5,781 638 582 73
Split mortgages 3,204 511 731 125 2,902 455 1,183 179
Voluntary sale for loss 813 53 351 41 693 48 348 37
Low fixed interest rate 1,171 183 170 29 1,250 197 109 20
Positive equity solution 1,480 160 62 6 1,240 136 99 11
Other 580 94 292 51 16 4 0 0
Total 39,374 5,931 15,291 2,479 37,340 5,481 14,242 2,328

Delivering sustainable long term solutions to mortgage customers


Permanent forbearance solutions are reported within the stock of forbearance for 5 years.
Following restructure, loans are reported as impaired for a further 12 months (probationary period)
c. 0.7bn of forborne mortgages are in probationary period performing to terms

Page 47
Non-Mortgage Stock of Forbearance

Dec-16 Dec-15
Non-property Non-property
Property business Property business
Other and lending Other and lending
Personal construction Balance Personal construction Balance
Forbearance Type by Non-Mortgage Balance (m) Balance (m) Balance (m) Total (m) Balance (m) Balance (m) Balance (m) Total (m)
Interest only 58 235 191 484 71 203 188 462
Reduced payment (greater than interest only) 25 90 64 179 14 38 37 89
Payment moratorium 109 8 17 134 51 5 14 70
Arrears capitalisation 17 44 42 103 23 43 64 130
Term extension 141 193 202 536 123 207 154 484
Fundamental restructure 48 829 448 1,325 49 1,089 498 1,636
Restructure 187 355 530 1,072 304 556 617 1,477
Asset disposals 25 141 33 199 - - - -
Other 5 51 56 112 15 169 195 379
Total 615 1,946 1583 4,144 650 2,310 1,767 4,727

Non-mortgage forborne loans of 4.1bn at Dec 2016


47% of forborne loans in property and construction sector

1.5bn of fundamental restructures (including 0.2bn BTL mortgages)


new facilities (main & secondary) recognised at fair value at inception
main facilities reflects the estimated sustainable cashflows such that the main facility is repaid in full
carrying value of main facilities of 1.5bn with associated contractual secondary facilities of c. 3.1bn
82m recognised in the year on secondary facilities
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Credit RWAs Overview

Credit Risk Weighted Assets (Fully Loaded) Overview


AIB Group RWA (m) (FL) Average Risk Weight (%)
Risk Weighted Assets (m) 2014 2015 2016 2014 2015 2016
Standardised
Public Sector Entities 40 45 44 100% 100% 100%
Banks 73 58 - 24% 26% -
Corporates 6,786 8,118 7,544 100% 100% 100%
Retail 3,177 3,270 3,249 75% 75% 75%
Secured by Mortgages on Immovable
10,464 10,938 9,595 60% 59% 56%
Property
Exposures in Default 8,932 5,738 5,329 116% 119% 126%
Equity & High Risk 1,481 1,864 1,360 156% 158% 158%
Other 682 948 756 13% 20% 20%
Standardised Total 31,635 30,979 27,877
IRB
Public Sector Entities 576 376 337 5% 4% 3%
Banks 1,969 2,483 2,201 24% 30% 29%
Corporates 9,233 10,854 11,042 89% 99% 99%
Secured by Mortgages on Immovable
10,828 9,345 7,511 47% 43% 36%
Property
Other Items 107 68 59 70% 13% 11%
IRB Total 22,713 23,126 21,150
Group Total 54,348 54,105 49,027

Source: Company Information

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