Permanent TSB Group Holdings PLC · EURONEXT:PTSB
Permanent TSB — Debt Investor Presentation (March 2015)
45 slides from Permanent TSB's debt investor presentation, March 2015
Slide 1: permanent tsb Group Credit Investor Update
permanent tsb Group Credit Investor Update Please refer to the important information in disclaimer on pages 43 to 44 before continuing March 2015
Slide 2: Table of Contents
Table of Contents Section 1 Comprehensive Assessment and Capital Plan Section 2 Overview of PTSB Group Section 3 Financial Performance Section 4 Asset Quality Section 5 Capital Section 6 Funding & Liquidity Section 7 Summary Section 8 Appendix Section 9 Legal Disclaimer 1
Slide 3: Section 1: Comprehensive Assessment and Capital Plan
Section 1 Comprehensive Assessment and Capital Plan
Slide 4: Comprehensive Assessment and Capital Plan: An Overview
Comprehensive Assessment And Capital Plan: An Overview • SSM Outcome ‒ Provisioning levels validated by the Asset Quality Review ‒ Sufficiently capitalised in the Baseline Scenario ‒ Capital shortfall of €855m identified in the Adverse Scenario ‒ The Group’s Capital Plan is ‘Endorsed’ by the ECB/JST
Slide 5: Comprehensive Assessment: Outcome
Comprehensive Assessment: Outcome Asset Quality Review (AQR) Baseline Stress Test Scenario Adverse Stress Test Scenario 15% 15% 15% CET1 Ratio vs Requirements, Year-End Adverse Scenario CET1 Ratio vs Requirements, Year-End Baseline CET1 Ratio vs Requirements, Year-End AQR (0.3)% 10% 10% 10% Min. CET
Slide 6: Capital Plan: Endorsed by ECB/JST
Capital Plan: The Capital Plan Has Been ‘Endorsed’ By ECB/JST Capital Plan • €855m capital shortfall in the Adverse Stress Test 10% excluded the €400m CCN which only qualifies as available capital upon conversion Adverse Stress Test Scenario CET1 Ratio 8% • Capital Plan submitted to address shortfal
Slide 7: Section 2: Overview of PTSB Group
Section 2 Overview of PTSB Group
Slide 8: Group Organisation
Group Organisation Group (Net Loans: €28.2bn) Core Bank Non-Core (Net Loans: €20.1bn) (Net Loans: €8.2bn) ‒ Full service retail bank across Current Accounts, Deposits, Mortgages, Credit Cards and Personal Loans RoI Non-Core UK Non-Core (Net Loans: €1.5bn) (Net Loans: €6.7bn)(b) ‒ Dedicated Asset Man
Slide 9: Group Overview
Group Overview Group Deposits FY2014 Financials PBI (IoM)(a) (€bn Unless Stated) Core Non-Core Group 3% Corporate Deposits 19.8 0.6 20.4 13% Net Loans 20.1 8.2 28.2 Retail Current Retail Provisions 2.5 1.2 3.7 Accounts (ex-Current 13% Accounts) RWA 11.3 3.5 14.8 57% Equity 2.3 Institutional 14% Tota
Slide 10: Non-Core: Focused Deleveraging Means Group Will Equal Core Bank by Mid 2016
Non-Core: Focused Deleveraging Means ‘Group Will Equal Core Bank’ By The Middle of 2016 Overview Exit Strategy • €2.0bn CRE Non Performing portfolios • Sale of €1.5bn of gross (€0.8bn net) assets announced Non-Core RoI • €0.6bn CRE Performing portfolios • Management targeting a sale of remaining loa
Slide 11: Core Bank: Focused Domestic Retail Bank Well Positioned To Grow
Core Bank: Focused Domestic Retail Bank Well Positioned To Grow PTSB Overview RoI Current Account Market Share • Focused Domestic Retail Bank well placed to capture market 36% 30% share: 17% 13% – 1 million plus customers – 77 branches plus phone and web capability AIB BoI PTSB Ulster Note: Data is
Slide 12: Strong Macro-Economics Support Increasing Demand For Credit
Strong Macro-Economics Support Increasing Demand For Credit House Prices Market Mortgage Drawdowns 0% 22.1 (28)% 14.3 15.9 15.0 (20)% (37)% (33)% (46)% (40)% 3.9 2.5 2.6 2.5 (60)% 2013 2014 2015F 2016F 2011 2012 2013 2014 Value (€bn) Volume ('000s) Note: Data shown is the percentage fall of HPI Inde
Slide 13: The Group Has Scale Natural Market Share In Key Products
The Group Has Scale Natural Market Share In Key Products Growing Retail Deposit Base Growing Mortgage Lending Flow 15.0 600 14.5 500 11.1% 14.0 400 12.7% 8.3% 12.1% 11.9% 13.5 300 485 14.3 429 13.0 200 13.6 3.1% 290 13.2 12.5 100 209 81 67 12.0 0 2012 2013 2014 2012 2013 2014 Retail Deposit Volumes
Slide 14: Business Plan Underpinned By Grounded Assumptions
Business Plan Underpinned By Grounded Assumptions Deposits Current Accounts Mortgages Balancing Growth And Attractive Customer Pricing Strong Growth In Current Accounts Driven By Switchers Maintaining Share In A Recovering Market 56.2k Gross 2.0% 1.75% Lending 3.9 >8.0(a) 41.9k Value (€bn) 13% - 17%
Slide 15: Section 3: Financial Performance
Section 3 Financial Performance
Slide 16: Financial Headlines
Financial Headlines Group Result Operating Profit NIM Profit Before Impairments, Non-Recurring and Further Progress: Pre-Tax Loss REDUCED 93% Exceptional Items: Group: 90bps (+8bps) from €668m to €48m Group: €8m Core Bank: 121bps (+24bps) Core Bank: €45m Impairments System Funding Capital €1bn reduc
Slide 17: Group Income Statement
Group Income Statement Group Income Statement Summary (€m) FY 2012 FY 2013 FY 2014 • Steady NIM improvement of 18bps, despite falling ECB rates (95bps fall since start of 2012), driven by lower cost of funds Interest Income 1,200 973 874 Interest Expense (900) (664) (545) • ELG fees continuing to de
Slide 18: Core Bank Income Statement: Profitable in 2014
Core Bank Income Statement: Profitable in 2014 Core Bank Income Statement Summary (€m) FY 2013 FY 2014 • Core Bank NIM improved to 1.21% in 2014 from 0.97% in 2013, demonstrating considerable progress towards the medium term Net Interest Income (excl ELG) 287 334 target of 1.70% ELG Fees (103) (59)
Slide 19: Medium-Term Targets: Trending To Attractive Returns
Medium-Term Targets: Trending To Attractive Returns Core Bank RoE Target of c.10%(a) Medium-Term Targets Representative only: not intended to portray actual contributions from each category Core Bank NIM c.1.70% c.10.0% Core Bank Cost:Income Ratio c.50% Core Bank Cost of Risk <0.4% na 2014E Asset De
Slide 20: NIM Trending Towards 170bps
NIM Trending Towards 170bps Core Bank NIM Target NIM Of 170bps By 2018 1.70% 2.66% 1.21% 2.49% 2.49% 1.19% 2.40% 0.97% 0.93% 1.05% 1.19% 1.23% Representative only: 1.73% not intended to portray actual 1.44% contributions from each category 1.30% 1.17% H1 2013 H2 2013 H1 2014 H2 2014 Core Core Core L
Slide 21: Section 4: Asset Quality
Section 4 Asset Quality
Slide 22: Asset Quality: Significant Progress Has Been Made
Asset Quality: Significant Progress Has Been Made Significant Progress In • Risk management has been strengthened (People & Systems) Addressing Legacy • AMU established in 2012 Poor Quality Portfolios • Specific strategies in place for resolution of defaulted HL and BTL portfolios Provisioning • Cor
Slide 23: NPL Trends: Fewer Defaults, More Cures and Increasing Treatments
NPL Trends: Fewer Defaults, More Cures And An Increasing Number of Treatments Are Reducing NPLs New Defaults (€m) Cures (€m) As % of As % of 39.1% 35.8% 12.3% 13.1% 9.6% 14.3% NPLs(a) NPLs(a) 4,000 324 2,000 294 256 263 245 200 142 139 1,800 3,500 1,600 3,000 Q1-14 Q2-14 Q3-14 Q4-14 1,400 Q1-14 Q2-1
Slide 24: NPL Trends: Increasing Treatments Leading To Reducing NPLs
NPL Trends: Increasing Number Of Treatments Leading To Reducing NPLs Non-Performing Loans – Home Loan (€bn) Non-Performing Loans – Buy-To-Let (€bn) NPLs As % NPLs As % Of Gross 18% 21% 26% 27% 26% Of Gross 31% 30% 38% 38% 36% Loans Loans 6.0 6.0 6.0 5.0 5.0 5.0 4.49 4.55 4.23 4.0 4.0 3.61 1.03 4.0 1
Slide 25: Treatment Mix: Loss Severity Expected To Change Over Time
Treatment Mix: Loss Severity Expected To Change Over Time As Treatment Mix Varies Home Loan NPLs (€bn) Buy-To-Let NPLs (€bn) 2.5 4.49 4.55 4.23 2.47 2.43 2.24 5% 0% 3% 4% 2.0 23% In 16% 25% 27% In Treatment Treatment 31% 35% 43% 34% 39% 35% 41% 4% 48% 7% 1.5 19% 4% 12% 20% 9% 3% 2% 1% 7% 1% 12% 10%
Slide 26: Provision Coverage: Loan Book Adequately Provisioned
Provision Coverage: Loan Book Adequately Provisioned Provisions and Provision Coverage Ratio (€m) • €2.5bn provisions against €22.5bn RoI gross residential and PCR%(a) 44% 43% 44% 44% 45% consumer loans 2,750 2,714 2,659 101 2,658 2,544 • ECB SSM/AQR confirmed adequacy of provisioning stock as at 31
Slide 27: Collateral Coverage: NPL Negative Equity Offset By Provisions
Collateral Coverage: NPL Negative Equity Balance Of €1.1bn Offset By €2.5bn Of Provisions Loan Split by LTV Negative Equity Falling Cumulative Non (€m) Performing Total Cumulative As % Of Performing €3.8bn (7)% Total €3.5bn <70% 840 5,268 6,108 6,108 26.9% (32)% 1.6 1.5 70% – 90% 700 2,956 3,656 9,7
Slide 28: Section 5: Capital
Section 5 Capital
Slide 29: Maintaining A Strong Capital Position: Indicative Pro-Forma
Maintaining A Strong Capital Position: Indicative Pro-Forma CRD IV Fully Loaded 4.5% 4.1% 5.5% Leverage Ratio: 2.8% 14.3% 12.4% 11.5% (0.9)% 2014 CET1 Impact Of Announced 2014 CET1 Fully Loaded Capital Raise 2014 CET1 Fully Loaded Fully Loaded Deleveraging(a) Pro-Forma For Deleveraging Pro-Forma For
Slide 30: Section 6: Funding & Liquidity
Section 6 Funding & Liquidity
Slide 31: Funding: Rightsizing Deposits And System Funding
Funding: Rightsizing Deposits And System Funding Significant Growth In Customer Deposits System Funding Returning To Normalised Levels c.60% 227% c.60% of 14.0 227% (c) Group Fu 20.4 Group Funding 20.4 191% 19.5 191% 19.5 (b) 16.6 10.7 16.6 15.1 151% 15.1 151% 138% 133% <130% <130% 6.9 <15% of Group
Slide 32: Funding: Mix And Maintenance Led
Funding: Mix And Maintenance Led Funding: Composition Total • Retail Deposits: Funding 40.7 33.3 (€bn) – Base is ‘right sized’ 100% 100% 100% 1% <2.5% – Maintenance with 1-1.5% organic growth per annum 1% 10% <2.5% 21% • Corporate Deposits: – Expensive backbook tail running off, the last of which wi
Slide 33: Liquidity: Significantly Improved
Liquidity: Significantly Improved Liquidity Buffer (€bn)(a) • The Group has significantly improved its Liquidity Buffer by a 5.3 combination of: 4.0 – Growing unsecured liabilities 2.2 2.7 – External securitisations 0.2 – Collateral optimisation (driving down asset encumbrance) 2011 2012 2013 2014 –
Slide 34: Liquidity: Deleveraging Supports Cash Generation
Liquidity: Deleveraging Supports ‘Cash Generation’ Non-Core Loan Book Summary • Non-Core RoI includes CRE Non Performing loans RoI UK – Sale of €1.5bn gross (€0.8bn net) loans announced in March 2015 CRE CRE Non Performing Performing CHL IPI(a) Total – Management targeting a sale of remaining assets
Slide 35: Section 7: Summary
Section 7 Summary
Slide 36: Our Strategy
Our Strategy • Increasing demand for credit as Irish economy recovers Capturing Profitable • Full service domestic retail bank well placed to capture market share Growth • Attractive front book margins • Entry into SME market via OME(a) provides potential for further upside • NIM drag expected to be
Slide 37: Clear Points of Departure and Arrival
Clear Points of Departure and Arrival 2018 2016 • Target RoE of c.10% • Clear path to enhanced • Non-Core deleveraging RoE beyond 2018 2014 complete • Sustainable profitability in Core Bank from 2016 • Passed AQR and baseline stress test 2012 • Capital shortfall under 2018 adverse stress test • New
Slide 38: Section 8: Appendix
Section 8 Appendix
Slide 39: Group Balance Sheet
Group Balance Sheet Group Balance Sheet Summary (€bn) FY 2012 FY 2013 FY 2014 • Recovery in new lending leading to significant front book growth Cash and Bank Placements 1.7 1.4 1.9 offset by amortisation and run-off of the back book Net Loans 31.8 29.3 27.2 • Investments include €1.3bn NAMA Bonds (
Slide 40: Asset Quality: Overview of the Book
Asset Quality: Overview of the Book CRE (€bn Unless Stated) Home Loan Buy-To-Let (Residential) Consumer Core Bank • Core Bank gross loans of €22.5bn with c.73% performing or in Accounts (000s) 134.9 22.4 1.7 189.0 344.5 early arrears (<90 days in arrears) • €16.3bn (73%) performing and €0.5bn in arr
Slide 41: Group Capital Position
Group Capital Position Pro-forma For Pro-forma For FY 2014 Deleveraging Capital Raise (€bn) Transitional Fully Loaded Transitional Fully Loaded Transitional Fully Loaded RWAs 14.8 14.8 13.4 13.4 13.4 13.4 Risk Weighting as % Total Loans 53% 53% 55% 55% 55% 55% Share Capital, Share Premium and Reserv
Slide 42: Draft Restructuring Plan Term Sheet Commitments
Draft Restructuring Plan Term Sheet Commitments SUBJECT TO FINAL DECISION BY THE EUROPEAN COMMISSION Commitment Description • Limit the maximum size of the Balance Sheet Balance Sheet • Deliver on Loan Treatment targets for residential NPLs, broadly consistent with CBI targets Deleveraging • Delever
Slide 43: Section 9: Legal Disclaimer
Section 9 Legal Disclaimer
Slide 44: Legal Disclaimer (1/2)
Legal Disclaimer (1/2) THIS PRESENTATION AND ITS CONTENTS ARE CONFIDENTIAL AND ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, JAPAN OR ANY JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAW
Slide 45: Legal Disclaimer (2/2)
Legal Disclaimer (2/2) This presentation includes statements, estimates, opinions and projections with respect to the anticipated future performance of the Group ("forward-looking statements") which reflect various assumptions concerning anticipated results taken from the Group’s current business pl
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