Escolar Documentos
Profissional Documentos
Cultura Documentos
AIB
June 2017
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Company.
Transaction Summary
ISE
Listing LSE
Conditional trading on the ISE and LSE expected to start on 23 June 2017
Timing Admission expected on 27 June 2017
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
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
Page 4
Profitable, Strong Capital Generation and Delivering Shareholder Returns
Dividend Payment Proposed
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
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.
Targeted Shareholder
Strong Customer Franchise Capital Accretion & Capital Return Sustainable Long-Term Growth
Outcomes
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
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
No. 1 Physical & Digital Channel Investment in Key Customer Propositions Resulting in Tangible Customer &
Distribution Network in Ireland Efficiency Outcomes
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
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
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%+
Page 15
Summary
Momentum and Delivery
Continued strong financial performance and ongoing sustainable underlying profitability, with further
improvement in asset quality
Market leading franchise with customer first strategy and investment in digital and innovation driving
commercial success
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
Net Interest Margin 2.46% for Q1 2017 up from 2.42% for Q4 2016
Stable earning loan book (ex-FX) driven by strong momentum in new lending
New Lending 8.7bn
Page 22
Costs
Continued Focus on Cost Discipline While Progressing on Strategic Investment Programme
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
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
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
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%
Earning loan balances stable (ex FX) and growing across all key portfolios
Page 28
Asset Quality
Continued Progress as Impaired Loans Reduce Across All Sectors
Page 29
Balance Sheet Provisions
Working Well Within Provision Stock While Maintaining Coverage
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
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
Page 33
How We Think About Returns
(PAT AT1 Coupon + DTA Utilisation) / (FL CET1 @ 13% + DTAs)
(m) 2016
PAT 1,356
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
Page 35
Summary
Continued Momentum and Well-Positioned
Robust capital position supporting growth and capital return - 250m dividend paid
Page 36
Appendix
Impact of Investment on the Target Architecture
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
ETL Risk
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
+ 100 basis point parallel move in all Republic of Ireland 5,047 4,734
99 110
interest rates
United Kingdom 949 793
Page 39
Non-Performing Exposures Reconciliation to Impaired Loans
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)
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
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
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
Buy-to-let Fixed
14% 10% 463
Owner-occupier
86% Tracker
35%
109
Variable
55%
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
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Other Personal
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
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Property & Construction
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.
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Non-Property Business
Page 46
ROI Mortgages Stock of Forbearance
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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
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