AIB Group plc · EURONEXT:A5G
AIB — Allied Irish Banks, p.l.c. — H1 2005 Earnings Presentation
38 slides from AIB's earnings presentation, Jun 30, 2005
Slide 1: Allied Irish Banks, p.l.c. Interim Results 2005
ALLIED IRISH BANKS, P.L.C. Interim Results 2005 for the half-year ended 30 June, 2005
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: Eugene Sheehy, Group Chief Executive
Eugene Sheehy Group Chief Executive
Slide 4: Highlights – H1 2005
Highlights – H1 2005 Earnings per share 16% excl. volatility / dividend timing 15% Cost / income ratio 1.9% Dividend 10% Return on equity 20%
Slide 5: Well managed growth
Well managed growth All franchises performing well Income growing faster than costs, positive gap 4% Consistent feature in all divisions Strong growth in loans 11%, deposits 6% Absorbing step up in regulation / compliance costs Improving productivity, cost / income ratio in all divisions
Slide 6: Positioned for growth
Positioned for growth GDP % 2005 (f) 2006 (f) Ireland 5.0 5.5 UK 1.7 2.4 Poland 3.8 5.0 USA 3.7 3.6 Eurozone 1.3 1.8
Slide 7: Broad based momentum
Broad based momentum constant currency Profit before tax AIB Bank Republic of Ireland €406m 17% * AIB GB & NI €156m 13% Capital Markets €206m 33% Poland €68m 17% M&T €69m 21% ** * Excludes fx investigation costs in H1 2004 **after tax figure
Slide 8: Diverse geographies, consistent business model
Diverse geographies, consistent business model Strong, recurring earnings power Success founded on customer demand Distinctive relationship management skills No. 1 retail, commercial & corporate franchises in Ireland Fast growing “bank of choice” in selected G.B. mid market business sector
Slide 9: Work in progress
Work in progress Continue to harvest income potential in our high quality franchises Early stage development of enterprise wide operations / systems programme Improving service quality, operational risk and productivity Further develop robust enterprise wide risk management, compliance, fina
Slide 10: Gary Kennedy, Group Director, Finance & Enterprise Technology
Gary Kennedy Group Director, Finance & Enterprise Technology
Slide 11: Performance snapshot
Performance snapshot Proforma Change H1 2004 €m H1 2005 % 1,586 Total operating income 1,803 12 896 Total operating expenses 985 8 Group operating profit 690 before provisions 818 17 63 Total provisions 42 -37 627 Group operating profit 776 23 703 Group profit before tax 851 21 62.4c EPS 72.3c 16 EP
Slide 12: Strong income growth
Strong income growth 22% * 17% 12%* 12% 2% Loans Deposits . Net Interest Other income Total Operating Income Income -18 bps Net Interest Margin * annualised
Slide 13: Deposit growth
Deposit growth * Group 6% AIB Bank ROI 8% AIB Bank GB&NI 11% Capital Markets -3% Poland 3% * excludes the impact of currency movements
Slide 14: Risk weighted asset & loan growth
Risk weighted asset & loan growth * 11% Group 10% 12% AIB Bank ROI 11% 13% AIB Bank GB&NI 15% 13% Capital Markets 8% Poland 0% -4% RWA growth Loan growth * excludes the impact of currency movements
Slide 15: Loan growth analysis
Loan growth analysis Loans 11% YTD Other 33% Property & Construction 42% House Mortgages 25%
Slide 16: Loan portfolios by sector
Loan portfolios by sector % of Group loan portfolio 26% 2004 H1 2005 25% 25% 25% 15% 14% 13% 13% 8% 8% 7% 7% 4% 4% 3% 2% Agriculture Construction & Residential Manufacturing Personal Services Transport & Other Property Mortgages Distribution
Slide 17: Loan portfolios by geography
Loan portfolios by geography Poland USA 5% 5% RoW 3% Rep. Of Ireland UK 57% 30% Loan origination from Core relationship franchises and Leveraging proven skillset
Slide 18: Property & construction - quality focus
Property & construction - quality focus Excellent credit quality Impaired loans 0.5% v total Impaired loans 1.1% Typical emphasis % of portfolios investment strong covenants 54 house building/development pre-sold / pre-let 41 contracting strong track records 5 100 Well diversified portfolio by
Slide 19: 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 02 Dec 03 Dec 04 Jun 05 < 75% 66 67 67 70 > 75% < 90% 26 25 24 18 > 90% 8 8 9 12 Total 100 100 100 100 Strong arrears profile Dec 02 Dec 03 Dec 04 J
Slide 20: Net interest margin
Net interest margin Proforma bps H1 2005 H1 2004 change 2.55% 2.73% -18 Majority of 18 bps attrition due to loans growing faster than deposits Other factors include lower yields on re-investment of customer account funds, business mix and competition 2005 guidance: - 20 bps
Slide 21: Well contained costs
Well contained costs Proforma Underlying * H1 2004 €m H1 2005 change % 555 Staff costs 638 12 277 Other costs 282 3 64 Depr. & amort. 65 -5 896 Operating expenses 985 8 “run rate” increase of + 5% Performance compensation + 1% Regulatory / compliance costs + 2% + 8% 2005 full year forecast +
Slide 22: Cost / income ratio in all divisions
Cost / income ratio in all divisions % 70 60 H1 2004 H1 2005 50 40 Group RoI GB & NI Cap. Mkts Poland
Slide 23: Income / cost gap; a healthy relationship
Income / cost gap; a healthy relationship % 14 12 10 8 6 4 2 2002 2003 2004 H1 2005 Cost growth Income growth
Slide 24: Positive operating trends
Positive operating trends Operating profit increase before bad debt charge * % 20 16 12 8 4 0 2002 2003 2004 H1 2005 * Underlying
Slide 25: Strong asset quality
Strong asset quality 2004 H1 2005 1.3 Impaired loans (ILs) % 1.1 6.6 Criticised loans / total loans % 5.5 0.7 Gross new ILs % 0.5 73 Total provisions / ILs % 75 20 Bad debt charge bps 13
Slide 26: Impaired loans by Division
Impaired loans by Division As at December 31, 2004 As at June 30, 2005 ILs/ Total ILs/ Total Actual Provisions/ Actual Provisions/ ILs Advances ILs ILs Advances ILs €m % % €m % % 295 0.8 83 AIB Bank ROI 308 0.8 84 154 1.2 73 AIB Bank GB & NI 174 1.1 70 100 0.8 79 Capital Markets 106 0.7 78 297 8.4 6
Slide 27: Bad debt provisions by division
Bad debt provisions by division June Average June Average 2004 Loans % €m 2005 Loans % 28 0.19 AIB Bank ROI 26 0.14 (3) (0.05) AIB Bank GB & NI 8 0.11 10 0.17 Capital Markets 7 0.09 20 1.32 Poland 5 0.26 55 0.20 Total 46 0.13
Slide 28: Tier 1 capital
Tier 1 capital 2004 H1 2005 26% 25% Equity Preference Shares Tier 1 Capital Ratio 8.3%* 7.7% * Tier 1 ratio as at 1 Jan „05
Slide 29: Capital
Capital June 2005 Total tier 1 capital € 6,794m Total capital € 9,729m Total risk weighted assets € 88bn Lending must exceed: EVA hurdle rates and Return from alternative use of capital
Slide 30: Source of funds
Source of funds % 100 11% 11% 4% 5% 80 9% 11% Capital Senior Debt 22% 21% 60 CDs & CPs Deposits by banks Customer a/cs 40 54% 52% 20 0 2004 * H1 2005 * IFRS restated
Slide 31: AIB Bank Republic of Ireland
AIB Bank Republic of Ireland H1 2005 vs Proforma H1 2004 €m % Total operating income 859 11 * Total operating costs 430 8* Income / cost growth gap 3 Operating profit before provisions 429 14 Profit before taxation 406 17 Strong momentum in high growth, competitive market Loans 12% : deposits
Slide 32: AIB Bank Great Britain & Northern Ireland
AIB Bank Great Britain & Northern Ireland H1 2005 vs Proforma H1 2004 €m % Total operating income 321 14 Total operating costs 158 7 Income / cost growth gap 7 Operating profit before provisions 163 21 Profit before taxation 156 13 Outperforming in both high quality franchises G.B N.I. Profit
Slide 33: Capital Markets
Capital Markets H1 2005 vs Proforma H1 2004 €m % Total operating income 408 16 Total operating costs 200 9 Income / cost growth gap 7 Operating profit before provisions 208 23 Profit before taxation 206 33 Strong growth in corporate banking operating profit 51% Loans 13% Treasury 11% M
Slide 34: Poland
Poland H1 2005 vs Proforma H1 2004 €m % Total operating income 208 3 Total operating costs 136 - Income / cost growth gap 3 Operating profit before provisions 72 8 Profit before taxation 68 17 Non interest income 10% Driven by strong customer activity Loans flat, deposits 3% Growth curta
Slide 35: M&T
M&T H1 2005 vs H1 2004 $m % Net income 386 12 Average loans 6% Good business pipelines Good productivity, cost / income ratio 52% NPL‟s 0.46%: net charge offs 14 bps in Q2 2005 M&T guidance 10% - 13% growth in GAAP EPS
Slide 36: Summary
Summary Dynamic broad based performance High growth franchises, well contained costs Strong asset quality, exceptionally low bad debt charge in H1 Robust capital and funding Business pipelines support positive outlook Targetting 2005 EPS range 140c – 142c
Slide 37: Slide 37
Slide 38: 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 Maurice Tracey [email protected] +353-1-6414191 Pat Clarke [email protected] +353-1-6412381 Alma Pearson alma.e.pear
Allied Irish Banks, p.l.c. — H1 2005 Earnings Presentation on 6ix