Aib Group Plc · EURONEXT:A5G
Aib — Allied Irish Banks, p.l.c. — H1 2004 Earnings Presentation
42 slides from Aib's earnings presentation, Jun 30, 2004
Slide 1: Interim Results 2004
Interim Results 2004 Interim Results for the half year ended 30 June 2004 Allied Irish Banks, p.l.c.
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 resul
Slide 3: Michael Buckley, Group Chief Executive
Michael Buckley Group Chief Executive
Slide 4: Highlights
Highlights Adjusted earnings per share 10% vs 60c base H1 2003* 7% Profit before tax 10% Dividend 10% Tangible return on equity 28.6% * excludes H1 2003 M&T / Allfirst integration costs of 1.5c
Slide 5: Strong fundamentals driving performance
Strong fundamentals driving performance Solid income growth, significant increases in loans & deposits Tight cost management Income growing faster than costs, improving productivity Robust asset quality, positive trends
Slide 6: Solid income growth
Solid income growth 28% 10% 9% 8% 7% - 34 bps Loans * Deposits* -26 . Net Interest Other income Total Operating -8 Income Income Net Interest Margin Includes income reduction of €36m re investigation * annualised volume growth
Slide 7: Tight cost management
Tight cost management Moderate increase relative to strong business growth 28% Loans* 24% 20% 16% 12% Deposits* 8% 4% Costs 0% * annualised growth . . • Includes: - investigation costs of €9m - IAS & Basel II incremental costs €6m
Slide 8: Growing income faster than costs
Growing income faster than costs Income 8% Costs 5% Positive gap 3%
Slide 9: Improving productivity
Improving productivity 10 60 58 8 56 54 6 52 57.7% 58.0% 56.0% 4 50 H1 2003 2003 H1 2004 Cost growth Income growth Cost/income ratio
Slide 10: Robust asset quality
Robust asset quality Dec 03 Jun 04 1.4 Non-performing loans (NPLs) % 1.3 6.7 Criticised loans / total loans % 6.3 0.9 Gross new NPLs % 0.7 94 Total provisions / NPLs % 91 31 Bad debt charge bps 20 General provision 2.6 times provision rate to June „04
Slide 11: Asset quality - benign trends
Asset quality - benign trends bps 2.0% 37bps 40 36bps 31bps 35 30 20bps 25 1.0% 20 15 10 5 2.0% 1.8% 1.4% 1.3% 0.0% 0 2001 2002 2003 H1 2004 NPLs Bad debt charge
Slide 12: Dynamic operating performance
Dynamic operating performance AIB Bank Republic of Ireland 1% (16% underlying) AIB GB & NI 20% Capital Markets 25% Poland 163% M&T 13%
Slide 13: AIB Bank Republic of Ireland
AIB Bank Republic of Ireland 1% Underlying* profit 16% Income 10%, costs 6.5% Tangible cost / income ratio 54%, underlying* 50% (51% H1 2003) Loans 14%, deposits 7% Ark Life profit €2m to €24 APE sales offset by tighter margins Strong customer demand, continuing market share gains desp
Slide 14: AIB Bank Great Britain & Northern Ireland
AIB Bank Great Britain & Northern Ireland 20% Income 12%, costs 10% Tangible cost / income ratio 50% (51% H1 2003) Growth underpinned by credit quality Net provision writeback 23% 20% Sustained momentum in GB, 17% distinctive “business & wealth management” focus Loans 11%, deposits 16% €
Slide 15: Capital Markets
Capital Markets 25% Income 6%, costs flat tangible cost / income ratio to 51% (55% H1 2003) Realising benefits from 2003 restructuring programme Corporate banking 58% loans 20%, strong international and domestic demand excellent credit quality, lower provisions Good Treasury performanc
Slide 16: Poland
Poland 163% Combining business momentum with efficiency gains Income 10%, costs 10% Tangible cost / income ratio 66% (81% H1 2003) Loans 4%, deposits flat (investment funds 40%) good H2 pipeline maintaining credit discipline not competing for low margin corporate deposits Positive as
Slide 17: M&T
M&T 13%* Net operating income 24% Diluted net operating EPS 11% Strong commercial loan growth and business pipeline Good cost discipline, cost / income ratio 50.4% (53.6% Dec 2003) Further reduction in NPLs, 0.51% (0.67% 2003) Unchanged full year guidance $5.90 - $6.10 GAAP EPS * relat
Slide 18: Operating / EPS growth
Operating / EPS growth % Currency 15 13 Tax / Minorities / Shares 12 - 4% 9 - 2% 7 6 3 0 Operations . . EPS Not anticipated to be material factors in 2005
Slide 19: Gary Kennedy, Group Director Finance & Enterprise Technology
Gary Kennedy Group Director, Finance & Enterprise Technology
Slide 20: Operating income
Operating income (continuing activities) H1 H1 Underlying 2003 €m 2004 change %* 919 Net interest income 977 7 7 Other finance income 9 16 557 Other income 585 9 1,483 Total operating income 1,571 8 38.0% Other income ratio 37.8% Before investigation related charge of €36m: total operating income
Slide 21: Deposit growth
Deposit growth* (continuing activities) Group 5% AIB Bank ROI 7% AIB Bank GB&NI 12% Capital Markets -6% Poland 3% ** * excludes the impact of currency movements ** includes investment funds
Slide 22: Risk weighted asset & loan growth
Risk weighted asset & loan growth* (continuing activities) 14% Group 13% 14% AIB Bank ROI 12% 11% AIB Bank GB&NI 13% 18% Capital Markets 14% 4% Poland 10% RWA growth Loan growth * excludes the impact of currency movements
Slide 23: Loan growth analysis
Loan growth analysis Loans 14% Other Property & 41% Construction 34% House Mortgages 25%
Slide 24: Loan portfolios by sector - quality focus
Loan portfolios by sector - quality focus % of Group loan portfolio 2003 H1 2004 26% 25% 23% 22% 14% 14% 14% 14% 9% 9% 8% 7% 5% 5% 3% 3% Agriculture Construction & Residential Manufacturing Personal Services Transport & Other Property Mortgages Distribution
Slide 25: Property & construction
Property & construction Excellent credit quality NPLs 0.7% of portfolio Typical emphasis % of portfolios investment strong covenants 58 development pre-sold / pre-let 36 contracting strong track records 6 100 Well diversified portfolio by: type (commercial, retail, office & residential), g
Slide 26: House mortgages - Republic of Ireland
House mortgages - Republic of Ireland Primary focus on debt service ratio (repayment capacity) New Business Consistent LTVs (% no’s of drawdowns) Dec 01 Dec 02 Dec 03 Jun 04 < 75% 72 66 67 68 > 75% < 90% 22 26 25 23 > 90% 6 8 8 9 Total 100 100 100 100 Strong arrears profile (book balance €m) Dec 0
Slide 27: Net interest margin
Net interest margin H1 H1 bps 2004 2003 change Continuing activities 2.46% 2.80% -34 Indicative breakdown of bps change Funding effect of loans growing faster than deposits -15 Mix effects -4 Other -7 Sub total -26 Technical change in reinvestment of capital -8 Total -34
Slide 28: RoI loan growth: volumes & interest income
RoI loan growth: volumes & interest income Broadly stable product margins * annualised 28% 28% 24% 24% 2003 H1 2004 Volumes Interest Income
Slide 29: Operating expenses
Operating expenses (continuing activities) H1 H1 Underlying * 2003 €m 2004 change % 533 Staff costs 546 4 250 Other costs 273 11 88 Depr. & amort. 76 -11 871 Operating expenses 895 5 57.7% Tangible cost / income ratio 56.0% * excludes the impact of currency movements
Slide 30: Non-performing loans by Division
Non-performing loans by Division As at December 31, 2003 As at June 30, 2004 NPLs/ Total NPLs/ Total Actual Provisions/ Actual Provisions/ NPLs Advances NPLs NPLs Advances NPLs €m % % €m % % 209 0.8 109 AIB Bank ROI 215 0.7 108 84 0.8 148 AIB Bank GB & NI 105 0.9 120 82 0.8 149 Capital Markets 81 0.
Slide 31: Bad debt provisions by division
Bad debt provisions by division (continuing activities) H1 Average H1 Average 2003 Loans % €m 2004 Loans % 28 0.25 AIB Bank ROI 28 0.19 6 0.13 AIB Bank GB & NI (3) (0.05) 16 0.33 Capital Markets 10 0.17 16 1.00 Poland 20 1.32 - Group - 66 0.29 Total 55 0.20 GB & NI - very strong recoveries / low l
Slide 32: Capital ratios
Capital ratios H1 2004 Total tier 1 capital €5,032m Total capital €7,041m Total risk weighted assets €72,146m Tier 1 ratio 7.0% Equity % of tier 1 86% Total capital ratio 9.8%
Slide 33: Capital allocation
Capital allocation > 15% risk adjusted return a prerequisite New lending exceeds targeted return rate Strong capacity / various options to increase capital ratios Pragmatic consideration of acquisition opportunities
Slide 34: Summary
Summary Strong business momentum in all operating divisions Improving productivity, clear income / cost gap High loan growth and high quality credit portfolios 2004 adjusted EPS target: 123c - 126c (2003 base 118c) Business dynamics underpin 2005 double digit EPS target
Slide 35: Additional Information
Additional Information
Slide 36: Tangible cost / income ratios
Tangible cost / income ratios* (continuing activities) 81% 66% 57.7% 56.0% 55% 54%** 51% 51% 50% 51% Group ROI GB&NI Cap Mkts Poland H1 2003 H1 2004 * excludes goodwill ** investigation related charge of €45m included
Slide 37: Poland Division relative to BZWBK
Poland Division relative to BZWBK Jun 2004 Underlying PLN €m change % BZWBK consolidated Polish GAAP 303 64 89 BZ goodwill amortisation (12) Other Group adjustments* (14) Poland division 38 163 * includes central costs and other adjustments in line with AIB segmental reporting
Slide 38: Balance sheet
Balance sheet (continuing activities) 31 Dec €m 30 June Underlying * 2003 Assets: 2004 change % 50,999 Loans to customers 59,045 14 40,984 Customer accounts 43,773 5 80,960 Total assets 95,550 16 * excludes the impact of currency movements Dec 2003 Jun 2004 Tier 1 7.1% 7.0% Total 10.4% 9.8%
Slide 39: Risk weighted assets
Risk weighted assets (continuing activities) 31 Dec H1 Underlying 2003 €m 2004 Change %* 24,119 AIB Bank Rep Ire 27,043 12 10,055 AIB Bank GB & NI 11,923 13 24,506 Capital Markets 28,695 14 3,259 Poland 3,689 10 62,615 Total RWA 72,146 13 * excludes the impact of currency movements
Slide 40: Return on risk weighted assets
Return on risk weighted assets €bn 70.0 3.0% 60.0 2.5% 2.0% 50.0 1.8% 1.7% 1.7% 1.7% 2.0% 1.6% 1.6% 1.6% 40.0 1.6% 1.5% 1.1% 30.0 1.0% 20.0 10.0 0.5% 19.3 22.1 29.1 37.4 45.2 60.2 64.6 68.6 61.7 67.5 0.0 0.0% 1995 1996 1997 1998 1999 2000 2001 2002 2003* H1 2004 Average RWA (LHS) Return (RHS) * 2003
Slide 41: Interim Results 2004
Interim Results 2004 Interim Results for the half year ended 30 June 2004 Allied Irish Banks, p.l.c.
Slide 42: 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 David O‟Callaghan david.a.o’[email protected] +353-1-6414191 Pat Clarke [email protected] +353-1-6412381 Mary Gethings mary
Allied Irish Banks, p.l.c. — H1 2004 Earnings Presentation on 6ix