group chairman, alan cook/media/files/i/irish-life-and... · this presentation relate only to...

1 Interim Financial Results 2015

A number of statements we make in our presentation, and in the accompanying slides, will not be based on historical fact but will be “forward-looking” statements within

the meaning of Section 27A of the US Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the US Exchange Act of 1934, as amended. The words

"expect", "anticipate", "intend", "plan", "estimate", "aim", "forecast", "project", "target", "goal", "believe", "may", "could", "will", "seek", "assume" and similar expressions

(or their negative) identify certain of these forward-looking statements. These forward-looking statements are statements regarding permanent tsb Group Holdings plc's

(the “Group's") intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects,

growth, strategies and the banking industry. The forward-looking statements in this presentation are based on numerous assumptions regarding the Group's present and

future business strategies and the environment in which the Group will operate in the future. Forward-looking statements involve inherent known and unknown risks,

uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results,

performance or achievements of the Group to be materially different from those expressed or implied by such forward looking statements. Many of these risks and

uncertainties relate to factors that are beyond the Group's ability to control or estimate precisely, such as future global, national and regional economic conditions, levels of

market interest rates, credit or other risks of lending and investment activities, competition and the behaviour of other market participants, the actions of regulators and

other factors such as changes in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions. Past

performance should not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future

performance. The Group expressly disclaims any obligation or undertaking to release any updates or revisions to these forward-looking statements to reflect any change

in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based after the date of this presentation

or to update or to keep current any other information contained in this presentation. Accordingly, undue reliance should not be placed on the forward-looking statements,

which speak only as of the date of this presentation.

permanent tsb Group Holdings plc undertakes no obligation to update the forward-looking statements contained in this presentation. Forward-looking statements made in

this presentation relate only to events as at the date on which they are made.

The securities referred to in this presentation have not been, and will not be, registered under the Securities Act, and may not be offered or sold in the United States

absent registration or an applicable exemption from registration requirements under the Securities Act.

This presentation should be considered with the Group’s Interim Financial Report for 2015 and all other relevant market disclosures, copies of which can be found at the

following link:

www.permanenttsbgroup.ie/investor-relations

Forward Looking Statements

2

Welcome

Group Chairman, Alan Cook


H1 2015 Highlights 4

Financial Performance 9

Key Topics 21

Summary 26

Table of Contents

4

H1 2015 Highlights

Group CEO, Jeremy Masding


H1 2015 Highlights

Group

H1 2015

H1 2014

Change

NIM 100bps 88bps 12 bps

Cost Income Ratio¹ 86% 114% 28 ppts

Impairment Charges (€24m) (€149m) €125m

Profit / (Loss) Before Exceptional Items

€1m (€171m) €172m

June 2015

Dec 2014

Change

Tangible Net Asset Value (TNAV) €2,185m €2,212m (€27m)

CET1 Ratio (Fully Loaded) 13.4% 12.4% 1.0%

Loan to Deposit Ratio 122% 138% 16 ppts

Significant reductions in Non-Performing Loans

Accelerated pace of Deleveraging

New business acquisition is improving

1. Underlying Basis Before Exceptional Items of €432m

Capital Plan delivered; €500m returned to the State

Group: Underlying Loss is reduced by €172m

Core Bank: Profit Before Exceptional Items of €9m

On Track To Achieve Medium Term Targets

Restructuring Plan approved


Delivering For Our Customers

Adapting To Our Customers’ Way

Of Banking

ROI Retail Deposits

Mortgage Drawdowns

Personal Lending

Up

€187m to

YoY

Remain broadly flat at

€11.4bn

4% increase

€2.7bn to

New Digital Strategy

Implementation

Website Redesigned,

Apps Launched

Key Product And Service Innovation

Acquiring New

Customers

Branch Network

Upgrading

Targeting Undeveloped

Business Areas

Since Dec 14

Term Lending pay-outs up

44% YoY

Of our Current Account customers

have downloaded our Mobile App

80

100

120

140

160

180

200

-

100

200

300

400

500

600

Jun-13 Dec-13 Jun-14 Dec-14 Jun-15

Th

ou

san

ds

Th

ou

san

ds

OTC Self Service Individual Mobile Logins (Rightside axis)

Current Accounts

5%


Delivering For Our Customers In Arrears

Overall Arrears Levels¹ > 90 days by cases

ROI Home Loan Arrears > 90 days by cases

ROI BTL Arrears > 90 days by cases

-15%²

-14%²

6.4

5.9

Dec-14 Jun-15

-18%²

• Close to 28,000 Long Term Forbearance treatments offered so far

• Continue to be ahead of the industry on early and late arrears across Home Loans and Buy To Let portfolios

• ROI residential mortgage NPLs reduced by 9%

• Continued fall in arrears > 90 Days (15%) and > 2 years (6%) since Dec 2014, based on number of cases³

• Actively managing to reduce the level of NPLs to improve risk weights and capital ratios

-9%

14,251 12,290 1,961

14%

3,003 2,448 555

18%

17,254 14,738 2,516

15%

1. ROI Residential Mortgages 2. Since Dec 2014 3. Cases does not include any shortfall cases post the sale of properties which have been taken into

possession (i.e. unsecured debt) but does include loans where the balances have been charged off i.e. transferred to an off-balance sheet recoveries ledger.

ROI Residential Mortgage NPLs (€bn)


FY 2014 H1 2015 2018 Target

Balance Sheet

Group LDR 138% 122% <130%

Group CET1 Ratio (Fully Loaded) 12.4% 13.4% >11%

Income Statement

Core Bank NIM 121bps 131bps c.170bps

Core Bank Cost:Income Ratio 86%¹ 80% c.50%

Core Bank Cost of Risk 40bps² 25bps <40bps

Core Bank RoE c.10.0%³

1. On an underlying basis adjusted for non-recurring items 2. Excludes writebacks 3. RoE target based on a notional Fully Loaded CET1 ratio of 11%

Performance Versus Medium Term Targets

9

Financial Performance

Group CFO, Glen Lucken


Group Income Statement

€m H1 2015 H1 2014 Change

Net Interest Income 167 158 9

Other Income 14 33 19

ELG Fees (9) (32) 23

Total Operating Income 172 159 13

Total Operating Expenses (147) (181) 34

Pre-Impairment Profit / (Loss)

25 (22) 47

Impairment Charge (24) (149) 125

Profit /(Loss) Before Exceptional Items

1 (171) 172

Exceptional Items (Net) (432) -

Loss Before Tax (431) (171)

Key Metrics H1 2015 H1 2014 Change

Net Interest Margin 100bps 88bps 12bps

Cost Income Ratio 86% 114% 28ppts

Cost of Risk¹ 18bps 100bps 82bps

• Moderate increase in Net Interest Income of €9m reflecting higher NIM

• NIM growth driven by falling Cost of Funds which fell from 1.57% in FY2014 to 1.30% in H1 2015

• Other Income down by €19m due to a number of one-off gains in H1 2014

• ELG Fees significantly reduced as more covered liabilities matured in 2015

• Total Operating Expenses were down by €34m: in part due to lower provisions for “Legacy Legal and Compliance Related Costs” in H1 2015

• Legacy Legal and Compliance related Costs reduced from €40m last year to €10m

• Cost Income Ratio continues to decline to 86% from 114% driven by higher Total Operating Income and lower Total Operating Expenses

• Impairment Charge reduced significantly by €125m mainly driven by higher level of loan cures and lower new default flow

• Exceptional Items include €380m of net loss on Deleveraging and €52m in relation to loss on repurchase of the Contingent Convertible Capital Note

• Loss Before Exceptional Items reduced by €172m 1. Annualised Cost of Risk


Core Bank Income Statement

€m H1 2015 H1 2014 Change

Net Interest Income 167 164 3

Other Income 13 30 17

ELG Fees (9) (32) 23

Total Operating Income 171 162 9

Total Operating Expenses (137) (165) 28

Pre-Impairment Profit/ (Loss)

34 (3) 37

Impairment Charge (25) (101) 76

Profit/(Loss) Before Exceptional Items

9 (104) 113

Key Metrics H1 2015 H1 2014 Change

Net Interest Margin 131bps 119bps 12bps

Cost Income Ratio 80% 102% 22 ppts

Cost of Risk¹ 25bps 98bps 73 bps

• Net Interest Income remained flat against last year

• NIM growth driven by falling cost of funds which fell from 1.21% in FY2014 to 0.99% in H1 2015

• Other Income down by €17m due to one-off gains in H1 2014

• ELG Fees reduced significantly as more covered liabilities matured in 2015

• Total Operating Expenses were down by €28m; in part due to lower provisions for Legacy, Legal and Compliance Related Costs

• Cost Income Ratio continues to decline to 80% from 102% primarily driven by lower Total Operating Expenses

• Impairment Charge reduced significantly by €76m mainly driven by higher level of loan cures and lower new default flow

• Profit Before Exceptional Items of €9m, improved by €113m

1. Annualised Cost of Risk


Net Interest Margin

2.63% 2.48% 2.50%

2.32% 2.25%

1.96% 1.75% 1.70%

1.44% 1.30%

H1 13 H2 13 H1 14 H2 14 H1 15

Asset Yield Cost of Funds

2.66% 2.49% 2.49% 2.40% 2.30%

1.73% 1.44%

1.30% 1.17% 0.99%

H1 13 H2 13 H1 14 H2 14 H1 15

Asset Yield Cost of Funds

0.82% 0.82% 0.88% 0.90% 1.00%

0.93% 1.05% 1.19% 1.23% 1.31%

NIM

NIM

Group NIM Drivers H1 2015 FY 2014

Asset Yields Balance¹ Avg. Yield² Balance¹ Avg. Yield²

€bn % €bn %

Treasury Assets³ 6.0 2.03 7.1 2.62

Core Bank Loans 19.7 2.54 20.1 2.57

Non-Core Loans 4.3 1.69 8.1 1.87

Total 30.0 2.25 35.3 2.41

Cost Of Funds

Deposits 19.6 1.41 20.4 1.68

Wholesale Funding 7.3 1.12 7.6 1.53

Subordinated Liabilities 0.0 16.7 0.4 18.1

System Funding 3.7 0.05 4.9 0.19

Total 30.6 1.30 33.3 1.57

• Asset Yields have reduced by 16bps mainly due to a reduction in Treasury Asset yields linked to the maturity of high yield portfolios

• Cost of Funds continue to fall due to rate actions in Retail Deposits. Blended PTSB ROI Retail Rate is 96bps at end June; Blended Market Rate was 63bps at end April

• The cost of Corporate and Institutional Deposits continues to fall

• Repaid CoCo and maturity of an expensive MTN in the first half also contributed to the overall fall in the Cost of Funds

• Cost of Funds for Q2 was 1.14%; Q2 NIM was 1.17%

• Changes to SVR pricing impact expected to be c.7/8bps on NIM – expect to be fully offset by Cost of Funds reduction

1. Balances at period end. Loan balances presented are net of provisions 2. Gross Interest Income/Average Net Loans 3. Treasury Assets include Debt Securities and Loans and Advances to Banks

Group NIM and NIM Drivers

Core Bank NIM and NIM Drivers


Operating Expenses

€m H1 2015 H1 2014 Change

Staff Cost 64 60 4

Staff Pension Cost 5 6 1

Total Staff Cost 69 66 3

Depreciation and Amortisation

10 9 1

Other Costs 68 106 38

Total Operating Expenses 147 181 34

Average No. of Staff 2,348 2,263 85

Cost Income Ratio 86% 114% 28 ppts

• Staff Cost increased marginally compared with H1 2014

• Average number of employees increased by c.4% due to investment in regulatory and control related functions

• Other Expenses reduced by €38m due to fall in one-off provisions for Legacy Legal and Compliance related costs

• Cost Income Ratio continues to decline driven by both growth in total income and reduction in total operating expenses


Asset Quality – Impairment Charge

Breakdown by Portfolio (€m)

H1 2015

H1 2014

Change

ROI Home Loans 32 129 97

ROI BTLs (10) (14) 4

Total ROI Residential Mortgages 22 115 93

Consumer Finance (2) (3) 1

CRE 1 19 18

UK Residential Mortgages 3 18 15

Total Charge 24 149 125

Performance

• Charge of €24m for H1 2015 against €149m in H1 2014 driven by significantly lower new defaults and increasing no. of NPLs curing

• Charge on new defaults higher than the backbook

• Reduction is seen across all the portfolios

Model Calibration

• No significant changes to any provisioning assumptions; minor refinements to the provision models based on loss experience

• Write-backs from house price improvements remains a potential upside to capital over and above medium term guidance

€6.4bn

€5.9bn

-113bps

-63bps

-13bps

37bps

87bps

137bps

€5.0bn

€5.2bn

€5.4bn

€5.6bn

€5.8bn

€6.0bn

€6.2bn

€6.4bn

€6.6bn

FY 2014 H1 2015

ROI Resi Mtg NPLs Cost of Risk

110ps

ROI Residential Mortgage NPLs and Cost of Risk

22bps


Asset Quality – Arrears Performance

9.5% 8.9%

9.9%

8.0%

10.0%

12.0%

14.0%

Jun-14 Sep-14 Dec-14 Mar-15 Jun-15

PTSB Industry

12.4%

11.3%

21.2%

8.0%

13.0%

18.0%

23.0%

28.0%


PTSB Industry

3.7% 3.5%

4.1%

0.0%

2.0%

4.0%

6.0%


PTSB Industry

3.5%

3.5%

4.5%

0.0%

2.0%

4.0%

6.0%

8.0%


PTSB Industry

Continue to be ahead of the industry across all categories

1. Late Arrears = >90 Days 2. Early Arrears =<90 Days

The above PTSB data is published on the same basis as the industry data. It does not include any shortfall in cases post the sale of properties which have been taken into possession (i.e. unsecured debt) but does include loans where the balances have been charged off i.e. transferred to an off-balance sheet recoveries ledger.

Late Arrears¹ – Home Loans (Case Numbers) Late Arrears¹ – BTL (Case Numbers)

Early Arrears² – BTL (Case Numbers) Early Arrears² – Home Loans (Case Numbers)


Asset Quality – Balance Sheet

ROI HL: Gross Loans €16.1bn

June 2015

Dec 2014

Change

> 90 Days Cases (#) 12,290 14,251 1,961 • Early and late arrears continue to reduce significantly

• NPLs decreased by 6%; >90 Days arrears (cases) reduced by 14%

• PCR has increased to 40% and remains robust

• Loans in Long Term Treatment increased by 1ppt

• HPI provision assumption remains appropriate including a >10ppts buffer relative to CSO Peak-To-Trough Index

NPLs (€m) 3,982 4,226 244

Provision Charge 32 129 97

Provision Stock (€m) 1,564 1,574 10

Provision Coverage Ratio¹ 40% 38% 2ppt

% Loans in Long Term Treatments (by value)

20% 19% 1ppt

ROI BTL: Gross Loans €5.8bn

June 2015

Dec 2014

Change

> 90 Days Cases (#) 2,448 3,003 555 • Early and late arrears continue to reduce significantly

• NPLs decreased by 14% partly due to disposals; >90 Days arrears (cases) reduced by 18%

• PCR has increased to 60% and remains robust

• 22% loans in Long Term Treatment

• HPI provision assumption remains appropriate including a >10ppts buffer relative to CSO Peak-To-Trough Index

NPLs (€m) 1,918 2,241 323

Provision Reversal (10) (14) 4

Provision Stock (€m) 920 1,099 179

Provision Coverage Ratio¹ 60% 59% 1ppt

% Loans in Long Term Treatments

(by value) 22% 22% -

14,251 12,290 1,961

14%

3,003 2,448 555

18%

17,254 14,738 2,516

15%

1. Calculated as Impairment provisions as a % of loans greater than 90 days in arrears and/or impaired


Summary Group Balance Sheet

€bn June 2015

Dec 2014

Change

Net Loans 22.9 27.2 (4.3)

Treasury Assets 5.9 7.2 (1.3)

Assets Held For Sale 1.1 1.0 0.1

Other Assets 3.8 0.9 2.9

Total Assets 33.7 36.3 (2.6)

Customer Deposits 19.6 20.4 (0.8)

Wholesale Funding 7.3 7.6 (0.3)

ECB Funding 3.7 4.9 (1.2)

Other Liabilities 0.8 1.1 (0.3)

Total Liabilities 31.4 34.0 (2.6)

Total Equity (incl. AT1) 2.3 2.3 -

Total Equity and Liabilities 33.7 36.3 (2.6)

Movements in Assets

• Loan balances decreased mainly due to Deleveraging

• Treasury Assets reduced in line due to maturities and NAMA bond redemptions

• Assets Held For Sale include €0.5bn of Irish CRE loans and £0.5bn of CHL mortgages currently being marketed

• Other Assets includes consideration receivable on the derecognition of the £2.5bn CHL sale which is completing end July (P&L impact taken at 30 June 2015)

Movements in Liabilities

• Customer Deposits reduced as Corporate & Institutional Deposits priced away and reduction in repos

• Wholesale Funding reduced due to repurchase of CoCo and maturity of an MTN offset by a €0.3bn new issuance earlier in the year

• ECB Funding is 12% of funding base; down from 34% at peak


Funding

61% 64%

15% 12%

23% 24%

1% 0%

Dec-14 Jun-15

Customer Deposits System

Wholesale Subordinated Liabilities

€33.3bn €30.6bn

Key Funding Metrics June 2015

Dec 2014

Change

NSFR 95%¹ 91% 4%

LDR 122% 138% 16 ppts

Current Accounts

• Represent 9% of Total Funding; grown by 4%

Retail Deposits

• Represent 40% of Total Funding

• Remain stable despite rate action to date

• Focussed on maintenance

Corporate & Institutional Deposits

• Represent 15% of Total Funding

• Priced away as Current Account volumes build up and Non-Core assets are disposed

Wholesale

• New €300m of senior unsecured issued

• May consider more such issuances over the medium term

System

• Represents 12% of Total Funding

• Will continue to be part of the funding stack as a strategic choice

Funding Composition

Total Funding

1. Based on latest estimate


Liquidity

Government Bonds 31%

NAMA Bonds 20%

Irish RMBS 44%

Credit Line 5%

0.2

5.1

2011 2015

1. HQLAs: High Quality Liquid Assets 2. Ratio of the stock of high quality liquid assets to expected net cash outflows over the next 30 days under

a stress scenario. CRD IV requires that this ratio exceed 60% on 1 January 2015 and 100% on 1 January 2018

• Liquidity position has improved significantly since 2011

• Total liquidity buffer of €5.1bn made up of cash, cash equivalents and unencumbered collateral; HQLA¹ of €2.7bn

• Basel 3 Liquidity Coverage Ratio² of 135%

• Deleveraging expected to generate c.€3bn of cash being returned to the Group:

- Continue to build liquidity portfolio

- Provides opportunity to re-price aggressively the non-retail deposit base

- Available for general corporate purposes

Liquidity Buffer (€bn)

Liquidity Portfolio Composition


Capital

• Robust CET1 ratios with significant buffer for loss management and to regulatory minimum

• Total Leverage Ratio¹ of 5.3% on a Fully Loaded basis (31 Dec 2014: 4.5%)

• RWAs reduced due to Deleveraging

• RWA Intensity² (57%) to increase in the short term as deleveraged UK mortgages carry lower risk weightings

• TNAV broadly unchanged as impact from losses on Deleveraging was offset by equity raise

14.2%

15.4%

2.7%

2.1%

0.7%

0.2%

0.1%

Dec-14 Capital raise Loss onDeleverage

RWA LAT(ExcludingDeleveraging)

PrudentialFilters and

other reservemovements

1. The leverage ratio is calculated by dividing Tier 1 Capital by gross balance sheet exposure (total assets and off-balance sheet exposures) 2. Risk Weighted Assets divided by Net Loans to Customers (including Assets Held For Sale)

14.2% 15.4%

12.4% 13.4%

Dec-14 Jun-15

Transitional Fully LoadedRWA

€14.8bn €13.6bn Transitional CET1 Dec 14 V June 15

2,212 2,185

373 40

432 24

16

TNAV at31.12.2014

Equity Raise UnderlyingProfit

ExceptionalItems

AFS ReserveMovement

CFH ReserveMovement

TNAV at30.06.2015

Movement in TNAV (€m)

Capital Ratios and RWAs

21

Key Topics

Group CFO, Glen Lucken


Impairments – Model Recalibration Key Messages

• No significant changes to any provisioning assumptions (house prices, repossession levels and collateral haircuts) in the Group’s impairment models from year end 2014

• Minor refinements to the provision models based on loss experience

• Market indices and activity have not demonstrated sufficient levels or stability of movement to warrant recalibration

House Prices

• No assumption changes from December 2014

• CSO Index virtually unchanged from December 2014

• Provision Model Forecast HPI retains buffer to CSO index

Note: Sensitivity assumes all other factors remain the same

1. Impact relates to progression from 2014 to 2016 HPI assumption while maintaining a buffer

2. ESRI and Goodbody modelled on basis of curve (buffer removed)

3. HPI curve with buffer is aligned to MTP curve with a differential of circa 12% through time.

(48)% (46)%

(43)% (42)%

(34)% (31)%

(37)%

(28)%

(50)%

(45)%

(40)%

(35)%

(30)%

(25)%

2014 2015 2016 2017 2018

Current Model ESRI Goodbody

HPI Curves Impact¹

Current assumption

Current Estimate Roadshow Upside to Medium Term Plan

Medium Term Plan 2015-2018

€95m

ESRI-HPI² €335m €325m

Goodbody-HPI³ €500m €475m

PTSB HPI Assumptions More Conservative Than External Forecasts

-38.1%

-40.8%

-60%

-55%

-50%

-45%

-40%

-35%

-30%

Jan-13 Jun-15

CSO (Dublin)

CSO (non Dublin)

CSO House Price Index


Impairments – Performance

• Performance positive with all-in Impairment Charge of €24m equating to 18bps (annualised) of Net Loans (Gross Loans minus Provisions Stock) for the Group and 25bp for the Core Bank

• The overall charge is below medium term expectations for the on-going Cost of Risk of 40bps owing to provision release on prior period defaults

• New defaults rates fell by 49% in the first half compared to H1 2014 and decreased across all portfolios, driven in particular by the improving economic conditions

• The underlying charge on new defaults was 54bps for the ROI Residential Mortgages

• Hence, no changes to the previously announced medium term target cost of risk of 40bps

104

-20

20

146

56 57

-50

0

50

100

150

200

H1 2014 H2 2014 H1 2015

Net Charge New Defaults

Impairment Charge on New to Default Cases (€m)


Tracker Mortgage Book And Margin

Tracker Margin Impact at H1 2015

(bps) Group Core Bank

Average Customer Rate 118 118

- ECB Repo Rate¹ 5 5

- Average Fixed Spread 113 113

Cost of Funds (130) (99)

Net Interest Margin (12) 19

1. Average ECB bank rate for the period

15.6

15.3 15.1

14.8

14.3

Jun 13 Dec 13 Jun 14 Dec 14 Jun 15

Irish Tracker Book (€bn)


Deleveraging

Non-Core Loan Book Summary

34.0 32.0

26.9

22.0

3.9

1.0

0

5

10

15

20

25

30

35

40

2013 2014 H1 2015

Gross Loans Core Non-Core Held For Sale

Note: CRE Performing and CRE Non Performing both include a Residential and a Commercial Segment 1. Irish Permanent Isle of Man (IoM) Limited

• €1.5bn Irish CRE sale completed in June and was capital accretive

• £2.5bn CHL sale legal closure expected shortly (P&L impact taken already); residual £2.5bn to be sold in accordance with RP commitments

• Sale agreed for €0.5bn of the remaining Irish CRE NPL portfolio (capital impact c.€25m)

• Geared Property Loans (c.€0.2bn included in CRE NPLs) expected to be sold by end 2015

• Performing CRE transferred to Core Bank

• Loan book continues to reduce; new lending expect to overtake repayments in 2017/18

(€bn) RoI UK

Total CRE Perf. CRE NPL CHL IPI¹

Gross Loans 0.4 0.7 3.5 0.3 4.9

Provisions 0.0 0.4 0.1 0.0 0.5

Net Loans 0.4 0.3 3.4 0.3 4.4

NPLs - 0.7 0.2 0.0 0.9

NPL% of Gross Loans

- 100% 4% 1% 18%

PCR % - 52% 49% 69% 58%

RWAs (€bn) 0.4 0.2 1.5 0.1 2.2

Gross Loans At Constant FX Rate (€bn)

26

Summary

Group CEO, Jeremy Masding


Mortgage Redress Programme – Recap

• We have acknowledged the serious failure by the Group in the management of certain mortgage accounts (the majority of failures for impacted accounts occurred between 2006 and 2011)

• The majority of the impacted accounts (1,152) were accounts of permanent tsb. A further 220 were accounts of Springboard Mortgages Ltd, which is a subsidiary of permanent tsb.

• We have apologised unreservedly on behalf of the Group to all impacted customers

• Focus now is on implementing the MRP, addressing position of impacted customers, learning from this issue and moving forward

• The cost of this programme consists of the Redress cost and the Compensation payments, which may rise somewhat depending on the outcome of appeal cases which may be taken by impacted customers. Further costs may arise from, for example, fines and professional fees.

• The Group has made a provision for this in its financial statements and the Board considers the level of provision to be appropriate.


Risks & Opportunities

• Improved Economic Backdrop

• Growth In Lending Market

• Reduction In Cost Of Funds

• Improved Underlying Cost Of Risk

• Impairment Write-Backs Driven By HPI Movement

Opportunities

• Cost of BRRD Levies and DGS Contributions

• Retention of Human Capital

• Constrained Housing Supply

• International Issues (e.g. Grexit, Brexit)

Risks


Recap, Priorities & Outlook

Capital Raise

Restructuring Plan

Deleveraging

Recap

Improving NIM

Competitive Proposition

Serving Customers

Managing Costs

Delivering Total

Shareholder Return

Improved Results

Priorities

Managing Risk & Control

• On track to deliver Board’s full year expectations

• Fully committed to the Medium Term Targets

Outlook

30

Additional Information


Slide No.

Trading Conditions 32

Segmental Income Statement

33

Interest Income / Interest Expenses Analysis 34

Other Income Analysis 36

Loan Book Profile 37

NPL Composition 38

Loans In Forbearance Treatments 39

Negative Equity Balances 40

Treasury Portfolio Overview

41

Regulatory Capital 42


Trading Conditions

4.8

3.7 3.4 3.3

2014 2015(f) 2016(f) 2017(f)

11.3

9.6

8.2 7

2014 2015(f) 2016(f) 2017(f)

0

2

4

6

8

0

10

20

30

40

50

Mar-11 May-15

Th

ou

san

ds

Th

ou

san

ds

50

80

110

140

Jan-06 May-15

Dublin (Right Axis)

National Ex Dublin Dublin (Right Axis)

National Ex Dublin

Stock Of Properties Listed For Sale

GDP Unemployment Rate %

Residential Property Price Index (Base Jan 2005 = 100) (Base Jan 2005 = 100)

Source: CSO

Source: CSO Source: CSO

Source: CSO


Segmental Income Statement

Group Core Non-Core

€m H1 2015 H1 2014 H1 2015 H1 2014 H1 2015 H1 2014

Interest Income 378 453 294 356 84 97

Interest Expense (211) (295) (127) (192) (84) (103)

Net Interest Income (excl. ELG) 167 158 167 164 - (6)

ELG Fees (9) (32) (9) (32) - -

Other Income 14 33 13 30 1 3

Total Operating Income 172 159 171 162 1 (3)

Total Operating Expenses (147) (181) (137) (165) (10) (16)

Pre-Provision Profit/(Loss) 25 (22) 34 (3) (9) (19)

Impairments (Charge) / Write-back (24) (149) (25) (101) 1 (48)

Profit/(Loss) Before Exceptional Items 1 (171) 9 (104) (8) (67)

Exceptional Items (Net) (432) -

Loss Before Taxation (431) (171)

Taxation 21 (29)

Loss For The Period (410) (200)


Interest Income

Gross Average Balances (€bn) Gross Yields Interest Income (€m)

H1 2015 H1 2014 H1 2015 H1 2014 H1 2015 H1 2014

Core Bank Tracker 14.6 15.3 1.2% 1.3%

86 100

Core Bank Fixed and Variable 7.5 7.8 4.3% 4.0%

159 156

Consumer Finance 0.4 0.4 10.2% 9.9%

18 18

ROI Non-Core 1.8 2.5 2.4% 2.6%

21 32

UK Non-Core 7.1 7.0 1.2% 1.4%

42 50

Treasury Assets 6.3 6.8 2.0% 2.7% 63 91

Other1

2 2

Underlying Interest Income

391 449

Deferred acquisition costs (13) (13)

Total Interest Income

378 436

1. Other income includes Loans and Advances to Banks, Lease and installment finance and Losses on interest rate hedges on assets

X

X

X

X

X

X

=

=

=

=

=

=

H1 2014 interest income and interest expense are not consistent with published accounts. A €17.5m hedging cost has been reclassified from interest expense to interest income for consistent comparison


Interest Expense

1. Current account cost of funds is 0.04% in H12014 and H12015

Average Balances (€bn) Cost of Funds Interest Expense (€m)

H1 2015 H1 2014 H1 2015 H1 2014 H1 2015 H1 2014

Current Accounts¹ 2.8 2.5 0.0% 0.0% 1 -

Retail Deposits (ex Current Accounts) 11.4 11.3 1.3% 1.9% 76 105

Corporate Deposits 2.9 1.9 2.2% 2.8% 32 27

Institutional Deposits 2.4 4.0 1.0% 1.1% 12 22

IoM Deposits 0.6 0.5 1.8% 1.9% 6 5

Wholesale Funding 7.5 7.3 1.8% 2.6% 67 94

System Funding 4.3 6.2 0.1% 0.3% 1 9

Underlying Interest Expense 195 262

Amortisation of Core Bank deposit intangibles 16 16

Total Reported Interest Expense 211 277

X =

X =

X =

X =

X =

X =

X =

H1 2014 interest income and interest expense are not consistent with published accounts. A €17.5m hedging cost has been reclassified from interest expense to interest income for consistent comparison


Other Income Analysis

(€m) H1 2015 H1 2014 Change

Retail Banking And Credit Card Fees 22 21 1

Brokerage And Insurance 4 8 4

Other Fee Income 1 1 -

Total Fee And Commission Income 27 30 3

Fee and Commission Expense (9) (8) 1

Net Fee And Commission Income 18 22 4

Net Trading (Expense) / Income (4) 11 15

Total Other Income 14 33 19


Loan Book Profile

Dec 2014 ROI HL ROI BTL UK HL UK BTL CRE Consumer Total

Gross Loans (€bn) 16.5 6.3 0.4 6.4 2.0 0.3 31.9

Performing Loans % 74% 64% 88% 98% 23% 70% 74%

NPLs % 26% 36% 12% 2% 77% 30% 26%

Provisions Stock €bn 1.5 1.1 - 0.1 0.9 0.1 3.7

PCR¹ % 38% 59% 20% 50% 60% 94% 48%

June 2015 ROI HL ROI BTL UK HL UK BTL CRE Consumer Total

Gross Loans (€bn) 16.1 5.8 0.3 3.5 0.9 0.3 26.9

Performing Loans % 75% 67% 85% 97% 28% 69% 75%

NPLs % 25% 33% 15% 3% 72% 31% 25%

Provisions Stock €bn 1.5 0.9 - 0.1 0.4 0.1 3.0

PCR¹ % 40% 60% 6% 56% 61% 93% 48%

1. Provision Coverage Ratio calculated as impairment provisions as a % of loans greater than 90 days in arrears and/or impaired


NPL Composition

0.5 0.6 0.6

2.5

1.4 1.2

0.3

0.2

0.2

0.2

1.1 1.2

0.2

0.0

0.8

0.9 0.9

4.5

4.2 4.0

0

1

2

3

4

5

Dec-13 Dec-14 Jun-15

Long Term Treated Short Term

Splits (Treated but Impaired) Technically Held

> 90 Days Arrears / Legal Closures

0.2 0.2 0.3

1.2

0.9 0.6

0.2

0.2

0.1

0.1

0.1

0.1

0.0

0.8

0.8

0.7

2.5

2.2

1.9

0

1

2

3

Dec-13 Dec-14 Jun-15

Long Term Treated Short Term

Splits (Treated but Impaired) Technically Held

> 90 Days Arrears / Legal Closures

ROI Home Loan NPLs (€bn) ROI Buy-To-Let NPLs (€bn)


€4.56bn in Total Forbearance, 69% Non Performing & 72% Home Loan

Loans in Forbearance

Split, 51%

Trials, 16% Term Extension/

Capitalisation,

16%

Part Capital &

Interest, 11%

Short Term, 4%

Interest Only,

1%

Split, 13% Trials, 9%

Term Extension/

Capitalisation,

11%

Part Capital &

Interest, 17%

Short Term, 3% Interest Only,

47%

Split, 0%

Trials, 8%

Term Extension/

Capitalisation,

20%

Part Capital &

Interest, 46%

Short Term, 7% Interest Only,

0% Trials, 1%

Term Extension/

Capitalisation,

26%

Part Capital &

Interest, 65%

Short Term, 8%

ROI Home Loan in Forbearance- Non Performing €2.22bn ROI BTL in Forbearance- Non Performing €0.94bn

ROI Home Loan in Forbearance- Performing €1.05bn ROI BTL in Forbearance- Performing €0.35bn


€2.2bn at June 15 which is down 13% from December 14

Negative Equity Balances

2.2 2.1

1.3 1.1

1.6 1.5

1.1 1.1

Dec-13 Jun-14 Dec-14 Jun-15

Performing Non-Performing

€3.8bn €3.5bn

€2.4bn €2.2bn

-7%

-32%

-13%

ROI Home Loans and Buy-To-Let Mortgages


Treasury Portfolio Overview

Treasury Portfolio Summary

Asset Type Balance (€bn) Gross Yield¹%

Debt Securities 4.2 3.30

Government 3.2 4.30

Corporate 0.0 2.60

NAMA 1.0 1.80

Loans and Advances to Credit Institutions (cash and equivalents)

1.7 0.12

• o/w Restricted in Securitisation Vehicle Balances

0.5

Total 5.9 2.03

1. Gross income/Average balance for H1 2015 2. NAMA Bonds priced off 6 month Euribor. However, EIR accounting adjustments,

including those arising from redemptions, have given rise to a higher yield

41%

32%

10%

17%

Debt Securities

Government

NAMA

Loans and Advances to Credit Institutions

Treasury Portfolio Mix


Regulatory Capital

30-Jun-15 31-Dec-14

Transitional Fully Loaded Transitional Fully Loaded

€bn €bn €bn €bn

RWAs 13.6 13.6 14.8 14.8

Capital Resources:

CET1 Capital 2.1 1.8 2.1 1.8

Additional Tier 1 0.1 0.1 0.0 0.0

Tier 1 Capital 2.2 1.9 2.1 1.8

Tier 2 Capital 0.1 0.1 0.1 0.1

Total Capital 2.3 2.0 2.2 1.9

Capital Ratios:

CET1 Capital 15.4% 13.4% 14.2% 12.4%

Tier 1 Capital 16.3% 14.3% 14.2% 12.4%

Total Capital 17.0% 15.0% 14.9% 13.1%

Leverage Ratio 6.0% 5.3% 5.1% 4.5%

30-Jun-15 31-Dec-14

Transitional Fully Loaded Transitional Fully Loaded

€m €m €m €m

Total Equity 2.3 2.3 2.3 2.3

Less: AT1 Capital (0.1) (0.1) 0.0 0.0

CoCo 0.0 0.0 (0.1) (0.1)

Adjusted Capital 2.2 2.2 2.2 2.2

Prudential Filters:

Intangibles 0.0 0.0 (0.1) (0.1)

Deferred Tax 0.0 (0.4) 0.0 (0.4)

Cashflow Hedge Reserve 0.0 0.0 0.1 0.1

AFS Reserves (0.1) 0.0 (0.1) 0.0

Revaluation Reserve 0.0 0.0 0.0 0.0

Common Equity Tier 1 2.1 1.8 2.1 1.8

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