Permanent Tsb Group Holdings PLC · EURONEXT:PTSB
Permanent Tsb — Irish Life & Permanent — FY2002 Earnings Presentation
44 slides from Permanent Tsb's earnings presentation, Mar 5, 2003
Slide 1: Irish Life & Permanent 2002 results, 5 March 2003
www.irishlifepermanent.ie 5 March 2003 1
Slide 2: Forward looking statement
Forward looking statement 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 Private Securities Litigation Reform Act of 1995. Actual results may differ m
Slide 3: 2002 Highlights: Sales
2002 Highlights Sales Ireland Life sales up 25% Bancassurance sales up 50% New Mortgage Lending up 28% Loan Book growth up 13% 33
Slide 4: 2002 Highlights: Financials
2002 Highlights Financials Ireland/UK contribution up 14% Total after tax profit €290m Dividend up 10% Share buy-back €150m completed Continued Capital strength 44
Slide 5: Financial Review
Financial Review
Slide 6: Accounting Changes
Accounting Changes Embedded Value (Achieved Profits) Reporting: Best practice guidance Pre-tax reporting Investment fluctuations “below the line” Recategorisation of income Contribution = Operating Profit No change in total reported profit after tax 66
Slide 7: Total Earnings
Total Earnings 31 Dec 31 Dec 2002 2001 Change €m €m % Total Contribution 355.3 270.4 31 Short Term Investment fluctuations • Life (96.7) (43.3) • Associate (33.0) (14.0) Goodwill (11.7) (14.8) Exceptional items 123.5 (113.0) Economic Variance 20.8 (6.2) Total Profit before tax 358.2 79.1 Taxation &
Slide 8: Total Contribution - Group & Associate
Total Contribution - Group & Associate 31 Dec 31 Dec 2002 2001 Change €m €m % Ireland & UK • Life Assurance 220.0 195.2 13 • Banking & Other 97.4 91.1 7 317.4 286.3 11 • Share of Associate 29.0 6.8 • Other Investment Earnings 3.8 15.2 350.2 308.3 14 US 5.1 (37.9) Total Contribution 355.3 270.4 31 88
Slide 9: Life Assurance - Contribution
Life Assurance - Contribution 31 Dec 31 Dec 2002 2001 Change €m €m % Ireland New Business 58.2 57.9 - Existing Business • Unwind of Discount Rate 83.4 74.6 • Experience Variances 26.5 17.4 • Assumption Changes 24.5 14.1 Expected Investment returns 4.1 0.4 Other Income 8.2 10.0 204.9 174.4 17 UK 15.1
Slide 10: Life Assurance - Ireland
Life Assurance - Ireland Value of New Business/Margins 31 Dec 31 Dec 2002 2001 Change €m €m % VNB Life 50.8 53.7 ILIM 7.4 4.2 58.2 57.9 Sales Life 326.4 288.8 ILIM 87.7 42.4 414.1 331.2 25 Margins % % Life 15.6 18.6 ILIM 8.4 9.9 Total Margin 14.1 17.5 10 10
Slide 11: Life Assurance - Ireland
Life Assurance -Ireland Experience Assumption Variances Changes 2002 2001 2002 2001 €m €m €m €m Persistency 14.5 17.6 - 9.3 Risk 11.1 12.6 14.3 (6.5) Other 0.9 (12.8) 10.2 11.3 26.5 17.4 24.5 14.1 11 11
Slide 12: Life Assurance - Operating Expenses
Life Assurance - Operating Expenses 31 Dec 31 Dec 2002 2001 Change €m €m % Ireland • Acquisition 65.8 64.3 2 • Payroll & overheads 194.8 197.7 (1) US & UK 80.7 165.7 341.3 427.7 12 12
Slide 13: Banking & Other - Contribution
Banking & Other - Contribution 31 Dec 31 Dec 2002 2001 Change €m €m % Net Interest Income 325.2 280.4 Other Income (net) 29.9 27.7 355.1 308.1 15 Expenses (244.4) (205.3) Bad & Doubtful Debts (13.3) (11.7) Contribution 97.4 91.1 7 13 13
Slide 14: Banking & Other - Contribution
Banking & Other - Contribution 31 Dec 31 Dec 2002 2001 Change €m €m % Retail 89.9 78.9 14 Treasury 13.2 17.2 Other (5.7) (5.0) 97.4 91.1 7 14 14
Slide 15: Banking - Margins
Banking - Margins €m % 350 325 3 300 280 2.15 250 1.98 1.90 1.78 2 200 183 183 153 1.58 150 100 1 1998 1999 2000 2001 2002 Net Interest Income Net Interest Margin 15 15
Slide 16: Banking - Margins
Banking - Margins 2002 Movement % 2001 1.90 Retail (0.02) Treasury (0.04) Funding (0.06) 2002 1.78 16 16
Slide 17: Banking & Other - Non Interest Income
Banking & Other - Non Interest Income 31 Dec 31 Dec 2002 2001 Change €m €m % Fees & Commissions receivable 43.5 32.4 34 Fees & Commissions payable (27.4) (20.7) 32 Dealing profits 3.3 4.8 (31) Other income 4.7 6.2 (24) Property Management 5.8 5.0 16 29.9 27.7 8 Note: Bank Embedded Value earnings €39
Slide 18: Banking & Other - Expenses
Banking & Other - Expenses 31 Dec 31 Dec 2002 2001 €m €m Banking 232.8 195.3* Underlying increase of 3% Corporate & Other 11.6 10.0 244.4 205.3 *includes TSB acquisition from 20/4/01 Cost/Income Ratio % % Reported 67 64 Incl. Commission 65 63 Incl. Bank EV Earnings 60 58 18 18
Slide 19: Bad debt provisions
31 Dec 31 Dec 2002 2001 €m €m Opening Balance 77.7 40.9 Charge for Period 13.3 11.7 Arising on acquisition of TSB - 30.3 Amounts Written Off (5.4) (5.2) Closing Balance 85.6 77.7 % % Reserve Ratio 0.65 0.66 Arrears Ratio 0.25 0.25 19 19
Slide 20: Associate - Allianz-Irish Life
Associate - Allianz-Irish Life 31 Dec 31 Dec 2002 2001 €m €m Contribution 29.0 6.8 Short term investment fluctuations (33.0) (14.0) (4.0) (7.2) Note: Contribution includes expected/normalised investment returns 20 20
Slide 21: Exceptional Items
Exceptional Items 31 Dec 31 Dec 2002 2001 €m €m Profit on disposal of Industrial Branch business 103.2 - Profit on disposal of branch properties 30.3 - Banking restructuring costs (10.0) (63.0) Loss on disposal of US businesses - (50.0) 123.5 (113.0) 21 21
Slide 22: Dividend
Dividend cent 50 47.5 45 43.0 39.0 40 35.1 35 z10% increase for 2002 30 zCompound growth 11% p.a. 25 zDividend yield 5% 20 1999 2000 2001 2002 22 22
Slide 23: Capital Adequacy - Banking
Capital Adequacy - Banking €m 2,500 Bank Tier 1 available z Tier 1 Capital/Risk 2,000 €1,695m capital Weighted Assets: Tier 1 10% €934m 1,500 z Share buy-back of Life Co €150m completed in Embedded 2002 1,000 Value deduction z Tier 2 capacity to €1,435m fund balance sheet 500 Tier 2 growth €674m 0 T
Slide 24: Capital Adequacy - Life Assurance
Capital Adequacy - Life Assurance €m 600 Total €558m Fixed Interest €25m Equities €28m 500 z Full matching policy Excess on unit-linked & non- Property & assets Business €290m linked policyholder 400 Assets liabilities €195m z Conservative 300 investment of Net Solvency Assets (equities 5%) Cash mar
Slide 25: Business Review
Business Review
Slide 26: Ireland - Life Assurance
Ireland - Life Assurance €m Sales Growth 250 +15% 2002 Total €414.1m 2001 Total €331.2m 200 150 +107% +11% 100 50 0 ILIM Corporate Retail 26 26
Slide 27: Retail Life - Products
Retail Life - Products €m 120 +44% 2002 Total €226.6m 100 2001 Total €196.5m 80 60 +4% -10% 40 +11% 20 0 Protection/Risk Pensions Investments Savings 27 27
Slide 28: Retail Life - Distribution
Retail Life - Distribution Institutions 6% Brokers/IFAs Direct Sales Force 28% 28% Bancassurance 38% 28 28
Slide 29: Corporate Life - Products
Corporate Life - Products €m 60 +8% 2002 Total €90.8m 50 2001 Total €81.8m 40 30 +18% 20 +10% 10 0 Other Risk DC 29 29
Slide 30: Life Assurance - Change Programme
Life Assurance - Change Programme Radical change agenda New processes & supporting technology New POS and on-line fulfilment technology in operation New back-office systems operational for new business from Q2 2003 To complete end 2004 30 30
Slide 31: Mortgage and lending sales 2002
€m +28% 3,000 2002 Total €4,494m 2,500 2001 Total €3,594m 2,000 1,500 1,000 +17% +25% +15% 500 0 ROI Consumer Commercial UK Mortgages Finance Mortgages 31 31
Slide 32: Banking - Loan Book
Banking - Loan Book 31 Dec 31 Dec 2002 2001 Change €m €m % ROI - Mortgages 10,087 8,692 16 Consumer Finance 1,312 1,289 2 Commercial 1,255 1,169 7 12,654 11,150 13 Stg£m Stg£m UK - Mortgages 1,286 1,094 18 Total Lending 14,631 12,939 13 32 32
Slide 33: Banking - Resources
Banking - Resources 31 Dec 31 Dec 2002 2001 Change €m €m % Retail deposits • Current accounts 1,354 1,130 20 • Other 4,402 4,410 Corporate deposits 4,448 3,931 10,204 9,471 8 33 33
Slide 34: Ireland - Banking
Ireland - Banking Integration of permanent tsb Integration and launch completed Bancassurance success Target cost synergies increased to €29m • €9m savings in 2002 • €20m annualised savings end 2002 On track to deliver by end 2003 34 34
Slide 35: Corporate Developments
Corporate Developments US - Guarantee Reserve Industrial Branch disposal Share Buy-back completed Allianz - Irish Life 35 35
Slide 36: Outlook
Outlook Economy Markets and interest rates Bank lending Life sales 36 36
Slide 37: Additional Information
Additional Information Embedded value movement 2002 Total contribution after tax 2002 Total profit after tax 2002 Total contribution after tax 2001 Total profit after tax 2001 Life Assurance Sales 1998 - 2002 Bank Lending Growth 1998 - 2002 37 37
Slide 38: Embedded Value Movement 2002
Embedded Value Movement 2002 €m Embedded value 31 Dec 2001* • Net assets 99.7 • Value of in-force business 1,280.3 1,380.0 Contribution 225.1 Investment fluctuations (96.7) Economic variance 20.8 Profit on sale of Industrial Branch business 103.2 Taxation (48.9) Currency & other items (3.9) Dividend
Slide 39: Total Contribution After Tax 2002
Total Contribution After Tax 2002 31 Dec 31 Dec 2002 2001 Pre-tax Tax Post-tax Post-tax €m €m €m €m Ireland • Banking & Other 74.3 (12.4) 61.9 59.6 • Life assurance 204.9 (11.5) 193.4 163.7 • Other investment earnings 3.8 - 3.8 13.8 283.0 (23.9) 259.1 237.1 UK • Banking & Other 23.1 (6.4) 16.7 14.6
Slide 40: Total Profit After Tax 2002
Total Profit After Tax 2002 31 Dec 31 Dec 2002 2001 Pre-tax Tax Post-tax Post-tax €m €m €m €m Total Contribution 355.3 (38.3) 317.0 245.8 Investment fluctuations • Life (96.7) (16.4)* (113.1) (41.9) • Associate (33.0) 3.9 (29.1) (13.7) Goodwill (11.7) - (11.7) (14.8) Economic variance 20.8 (12.2)* 8
Slide 41: Total Contribution After Tax 2001
Total Contribution After Tax 2001 31 Dec 2001 Pre-tax Tax Post-tax Ireland €m €m €m • Banking & Other 70.5 (10.9) 59.6 • Life assurance 174.4 (10.7) 163.7 • Other investment earnings 15.2 (1.4) 13.8 260.1 (23.0) 237.1 UK • Banking & Other 20.6 (6.0) 14.6 • Life Assurance 20.8 (2.9) 17.9 41.4 (8.9) 3
Slide 42: Total Profit After Tax 2001
Total Profit After Tax 2001 31 Dec 2001 Pre-tax Tax Post-tax €m €m €m Total Contribution 270.4 (24.6) 245.8 Investment fluctuations • Life (43.3) 1.4 (41.9) • Associate (14.0) 0.3 (13.7) Goodwill (14.8) - (14.8) Economic variance (6.2) 1.0 (5.2) Exceptional items (113.0) (7.8) (120.8) Total Profit 7
Slide 43: Life Assurance Sales - Ireland
Life Assurance Sales - Ireland €m 450 414.1 400 350 331.2 319.9 300 250 231.5 200 166.9 150 100 50 0 1998 1999 2000 2001 2002 Retail Corporate ILIM Progressive Life (pre 1999 only) ILI * annual premium equivalent 43 43
Slide 44: Bank Lending Growth
Bank Lending Growth Loans & Advances €bn 14.6 14 12.9 12 10 9.2 8 7.6 6 5.9 4 2 0 1998* 1999* 2000* 2001* 2002* Total Residential * includes securitised assets 44 44
Irish Life & Permanent — FY2002 Earnings Presentation on 6ix