Aib Group Plc · EURONEXT:A5G
Aib — Allied Irish Banks, p.l.c. — H1 2007 Earnings Presentation
47 slides from Aib's earnings presentation, Jun 30, 2007
Slide 1: Half-year ended 30 June 2007 – Allied Irish Banks, p.l.c.
for the half-year ended 30 June 2007 Allied Irish Banks, p.l.c. 1
Slide 2: Forward looking statements
Forward looking statements A number of statements we will be making 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 the United States Private Securities Litigation Reform Act of 1995. Actual resu
Slide 3: Eugene Sheehy, Group Chief Executive
Eugene Sheehy Group Chief Executive
Slide 4: AIB today… wherever we operate
AIB today …………. ….......wherever we operate 4
Slide 5: Performance highlights
Performance highlights Basic earnings per share 114.7 c - basic adjusted * 108.8 c 16% ** Positive income / cost gap 4% Cost / income ratio 1.2% Impaired loans 0.7% Dividend 10% Return on equity 24% Tier 1 capital ratio 7.6 % * Basic earnings per share less profit on disposal/development of pr
Slide 6: Consistent, sustained & broad based growth
Consistent, sustained & broad based growth Operating profit by division AIB Bank RoI €527m 17% Capital Markets €331m 12% AIB Bank UK €223m 19% Poland €155m 37% M&T* €74m 1% AIB Bank RoI 40% Capital Markets 25% AIB Bank UK 17% Poland 12% * after tax contribution M&T 6% 6
Slide 7: Strength in diversity
Strength in diversity Pre-tax profit by geography * 4% 15% ROI USA UK Poland 24% 48% RoW 9% * Management estimate of continuing operations reflecting the geographic markets from which profit was generated. Does not include profit on disposal / development of properties and interest rate hedge volati
Slide 8: Premium positions in high growth markets
Premium positions in high growth markets Republic of Extending our no. 1 position in a resilient Ireland economy UK Significant headroom for growth in selected GB mid market business sectors; strong franchise in an improving N.I. environment Poland Well set for rapid organic growth and expansi
Slide 9: Republic of Ireland – robust & supportive economic environment
Republic of Ireland – robust & supportive economic environment % 2007 (f) 2008 (f) GDP 5.0 3.3 Growth slowing in a changing, more broad based economy House market trends are a rational adjustment Moderate price reductions following long period of buoyancy Buyers responding to lower affordabi
Slide 10: AIB Bank Republic of Ireland
AIB Bank Republic of Ireland 17% operating profit Gaining market share in a competitive environment Income / cost gap + 4% Total Lending 26 21 Business Lending 30 24 Mortgages 19 19 Personal Lending 19 19 AIB YoY Growth Deposits 12 10 Est. Rest of Market Achieving high quality growth through inves
Slide 11: Capital Markets
Capital Markets 12% operating profit Income / cost gap + 4% 13% 18% Pre-provision operating profit 19% Treasury 10 year PBT CAGR 21% Corporate Banking Strong recurring customer based income, Investment Banking 87% of total 69% * Corporate Banking PBT 12% Ireland 19% Operating profit
Slide 12: AIB Bank United Kingdom
AIB Bank United Kingdom 19% operating profit Income / cost gap + 5% Growth driven by intense focus on dual priorities Premium product and service delivery in response to buoyant customer demand + Realignment of franchises to maximise efficiency Great Britain PBT €122m 17% Northern Ireland
Slide 13: Poland
Poland 37% operating profit Income / cost gap + 5% Well balanced growth Total income % mix 8 6 Interest income (+22%) now growing at a faster 12 rate than non interest income (+19%) 16 Business lending 30% Retail cash lending 36% 34 41 Brokerage Mortgages 33% Asset Mgt Deposits 1
Slide 14: Single enterprise agenda – reaping the benefits of continuing investment
Single enterprise agenda – reaping the benefits of continuing investment Service Quality Operational Managed Risk Cost Excellence Intense change programme now moved from planning to implementation and delivery Common UK & Irish branch banking front-end system now in operation across all location
Slide 15: M&T
M&T 1% Significant improvement in Q2 performance following a challenging first quarter Q2 cost / income ratio to 50.2% due to good income growth and tight cost management Bayview investment already making positive contribution Asset quality remains solid Moderate increase in NPLs / charge
Slide 16: Asset quality – key indicators remain strong
Asset quality – key indicators remain strong Dec 2006 Jun 2007 0.9 Impaired loans (ILs) % 0.7 4.9 Criticised loans / total loans % 4.8 0.4 Gross new ILs % 0.4 76 Total provisions / ILs % 80 12 Bad debt charge bps 4 16
Slide 17: Performance features
Performance features Rich mix of earnings by geography & business unit underpins stability Growth Resilience and options for growth Highly Improving productivity while skilled investing to sustain growth experienced people High quality asset portfolios Solid capital and funding positions Div
Slide 18: John O'Donnell, Group Finance Director
John O’Donnell Group Finance Director
Slide 19: Performance snapshot
Performance snapshot Jun Jun ccy change 2006 €m 2007 % 2,076 Total operating income 2,417 17 1,088 Total operating expenses 1,237 13 Group operating profit 988 before provisions 1,180 16 12 Total provisions 30 150 976 Group operating profit 1,150 18 1,214 Group profit before tax 1,318 9 121.2c EPS –
Slide 20: Adjusted basic EPS
Adjusted basic EPS % vs June 2006 Basic earnings per share 114.7c Profit on disposal/development of property (8.3c) Hedge volatility 2.4c Adjusted basic EPS 108.8c 16 20
Slide 21: Deposit growth
Deposit growth Year on Year to June 2007 % 25 24 20 18 15 15 12 10 5 0 0 Group AIB Bank Capital AIB Bank Poland RoI Markets UK 21
Slide 22: Loan and risk weighted asset growth
Loan and risk weighted asset growth Year on Year to June 2007 38 % 34 30 27 26 26 Loan growth 23 22 21 RWA growth 10 Group AIB Bank Capital AIB Bank Poland RoI Markets UK 22
Slide 23: Loan portfolios by sector
Loan portfolios by sector % of Group loan portfolio 34% 33% 25% 24% Dec-06 Jun-07 13% 12% 12% 11% 8% 8% 5% 5% 3% 3% 2% 2% Agriculture Construction & Residential Manufacturing Personal Services Transport & Other Property Mortgages Distribution 23
Slide 24: Property & construction – solid & well diversified
Property & construction – solid & well diversified Low level of impaired loans for this sector Property & construction 0.4%, total book 0.7% Loan book diversified by geography 1% 3% 4% 26% Republic of Ireland USA Northern Ireland Poland Great Britain Other 56% 10% Further diversified by wide r
Slide 25: Irish property & construction – high quality, good demand
Irish property & construction – high quality, good demand AIB Bank RoI Division portfolios Commercial investment: spread by sector, tenant & covenant, retail 26%, office 33%, industrial 8%, mixed 33% Residential investment: wide tenant spread, highly granular / small 3% bite sizes, conservative appr
Slide 26: Home mortgages – Republic of Ireland
Home mortgages – Republic of Ireland Very solid, resilient portfolio Arrears profile remains very low bps 55 53 50 47 45 40 35 34 35 34 30 2003 2004 2005 2006 H1 2007 Primary emphasis remains on repayment capacity Conservative LTVs and loan durations New business LTVs across all ranges vir
Slide 27: Capital Markets – high quality asset portfolios
Capital Markets – high quality asset portfolios Ireland 16 22 UK 6 US Project Finance Leveraged Finance (US 60%, Europe 40%) 17 Structured Securities 24 5 Institutional / Other 10 Average portfolio margin to 164 bps International expansion built on people experience / sector specialism More
Slide 28: Low level exposure to market hotspots
Low level exposure to market “hotspots” c. 0.6% of AIB loan book Characteristics CLOs / CDOs Asset portfolio of €359m, investment grade All performing well, no write downs, all held to maturity US / Europe split 51% / 49%, average deal size €9.6m Own managed CLOs / CDOs Asset manager for 6 f
Slide 29: Net Interest Margin
Net Interest Margin Jun 2007 Jun 2006 change 2.20% 2.29% -9 bps Business factors affecting net interest margin; est. -9 bps Growth in treasury assets; est. 0 bps -9 bps Business factors include Loans growing faster than deposits 5 bps Business mix & competition; unchanged factor 4 bps Pr
Slide 30: N.I.M. business factors attrition – a reducing trend
N.I.M. business factors attrition – a reducing trend -20 -16 -9 bps 2005 2006 H1 2007 2007 business factor guidance: around 10 bps (vs 16 bps in 2006, excludes effect of treasury assets) 30
Slide 31: Costs – continued investment, growth rate now peaked
Costs – continued investment, growth rate now peaked Jun Underlying 2007 yoy change % Staff costs 799 14 Sustained investment in people, operations, Other costs 368 15 governance and risk Depreciation & amortìsation 70 1 framework Operating expenses 1,237 13 % Growth in linked half years Rate of
Slide 32: Positive jaws in all franchises
Positive “jaws” in all franchises 5% 4% 4% 4% 5% 17 20 17 13 % 13 15 13 16 8 12 Group AIB Bank Capital AIB Bank Poland RoI Markets UK Income Costs 32
Slide 33: Cost / income ratio in all divisions
Cost / income ratio in all divisions 56.2 54.4 Jun 06 52.4 Jun 07 51.2 49.4 48.0 47.3 % 45.0 43.5 42.2 Group AIB Bank Capital AIB Bank Poland RoI Markets UK 33
Slide 34: Constant & material income / cost gap
Constant & material income / cost gap % 20 15 10 5 0 2004 2005 2006 H1 2007 Cost growth Income growth 34
Slide 35: Impaired loans by Division
Impaired loans by Division As at 31 December, 2006 As at 30 June, 2007 ILs/ Total ILs/ Total Actual Provisions/ Actual Provisions/ ILs Advances ILs ILs Advances ILs €m % % €m % % 366 0.6 81 AIB Bank ROI 385 0.6 85 130 0.6 74 Capital Markets 77 0.3 97 205 0.9 71 AIB Bank UK 214 0.9 67 232 4.9 73 Pola
Slide 36: Bad debt provisions by division
Bad debt provisions by division Jun Average Jun Average 2006 Loans % €m 2007 Loans % 35.4 0.14 AIB Bank ROI 46.1 0.15 (37.0) (0.39) Capital Markets (22.0) (0.19) 7.5 0.08 AIB Bank UK 6.4 0.06 6.1 0.31 Poland (6.0) (0.24) 12.1 0.03 Total 24.5 0.04 2007 full year guidance c. 13 bps 36
Slide 37: Solid capital position
Solid capital position 8.0% 7.9% * Tier 1 ratio 7.6% 27% 26% Preference share % Tier 1 30% Jun 06 Dec 06 Jun 07 Jun Dec-06 Jun-07 Total capital ratio 10.4% Tier 1 7.6% (target minimum c. 7%) Core tier 1 5.6% (preference shares 26%, target range 20 – 30%) No requirement for recourse to shareh
Slide 38: Funding
Funding % 100 10% 9% 7% 9% Capital 80 4% 4% Senior Debt 8% 8% ACS 60 22% 23% CDs & CPs Deposits by banks Customer a/cs 40 20 49% 47% 0 2006 H1 2007 38
Slide 39: Outlook – full year 2007
Outlook – full year 2007 High quality growth set to continue across all key franchises Strong customer demand and pipelines Loans expected to increase c. 20%, deposits c. 10% Solid asset quality Lower writebacks in H2 will increase bad debt charge Now increasing our target to low teens gro
Slide 40: Slide 40
Slide 41: Appendices
Appendices
Slide 42: AIB Bank RoI profit statement
AIB Bank RoI profit statement H1 H1 Change 2006 €m 2007 % 745 Net interest income 868 17 212 Other income 238 12 957 Total operating income 1,106 16 473 Total operating expenses 531 12 484 Operating profit before provisions 575 19 35 Total Provisions 48 36 449 Operating profit 527 17 - Profit on dis
Slide 43: Capital Markets profit statement
Capital Markets profit statement H1 H1 Change 2006 €m 2007 % 239 Net interest income 285 20 227 Other income 254 13 466 Total operating income 539 17 202 Total operating expenses 227 13 264 Operating profit before provisions 312 19 (34) Total Provisions (19) -44 298 Operating profit 331 12 2 Associa
Slide 44: AIB Bank UK profit statement
AIB Bank UK profit statement H1 H1 Change 2006 €m 2007 % 287 Net interest income 339 16 75 Other income 78 1 362 Total operating income 417 13 171 Total operating expenses 187 8 191 Operating profit before provisions 230 18 7 Total Provisions 7 - 184 Operating profit 223 19 - Profit on disposal of p
Slide 45: Poland profit statement
Poland profit statement H1 H1 Change 2006 €m 2007 % 112 Net interest income 139 22 160 Other income 192 19 272 Total operating income 331 20 156 Total operating expenses 182 15 116 Operating profit before provisions 149 26 4 Total Provisions (6) - 112 Operating profit 155 37 2 Associated undertaking
Slide 46: Group profit statement
Group profit statement H1 H1 2006 €m 2007 46 Net interest income 36 (27) Other income (12) 19 Total operating income 24 86 Total operating expenses 110 - Total Provisions - (67) Operating loss (86) 80 Share of results of associates – M&T 74 90 Profit on disposal of property 41 34 Construction contra
Slide 47: Contacts
Contacts Our Group Investor Relations Department will be happy to facilitate your requests for any further information Alan Kelly [email protected] +353-1-6412162 Rose O‟Donovan rose.m.o’[email protected] +353-1-6414191 Pat Clarke [email protected] +353-1-6412381 Alma Pearson alma.e.pear
Allied Irish Banks, p.l.c. — H1 2007 Earnings Presentation on 6ix