Aib Group Plc · EURONEXT:A5G
Aib — Allied Irish Banks, p.l.c. — H1 2000 Earnings Presentation
43 slides from Aib's earnings presentation, 2000
Slide 1: Allied Irish Banks, p.l.c. Interim Results 2000
Allied Irish Banks, p.l.c. Interim Results 2000
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 Private Securities Litigation Reform Act of 1995. Actual results may differ
Slide 3: Tom Mulcahy, Group Chief Executive
Tom Mulcahy Group Chief Executive
Slide 4: Shareholder Value
Shareholder Value Profit before Tax €609m +12% Profit Attributable €414m +13% Tangible EPS 49.9c +16% Dividend per Share 13.5c +14% Return on Equity 21.7%
Slide 5: Performance Highlights
Performance Highlights Growth in operating profit of 18% Other income up 14% (underlying) Underlying cost growth of 6% Group loan growth of 7% since December 1999 Strong asset quality maintained Range of e-Business initiatives implemented
Slide 6: AIB Bank Ireland
AIB Bank IRELAND Profit from retail banking activities up 24% Loan growth 12% Absorbed margin decline ARK Life profit up 32% Strong growth in single premiums / pensions Cost / income ratio 52% Volume momentum for second half Quality asset formation
Slide 7: AIB Bank Northern Ireland and Britain
AIB Bank Northern Ireland First Trust Bank profit up 15% Loan growth 9% Business confidence improving BRITAIN Profit up 20% Loan growth 7% Deposit growth 9% Continuing benefits of SME focus
Slide 8: USA
USA Underlying $ profit up 5% ALLFIRST Absorbed margin decline of 22 bps Loan growth - commercial +7%, retail -2% Other income up 5% underlying No deterioration in asset quality ALLIED IRISH AMERICA Growing “not for profit” (NFP) business Loan growth of 13% New office in Chicago
Slide 9: Allied Irish America Market Opportunity
Allied Irish America Market Opportunity 700,000 NFP’s $987bn Assets Income $620bn Tuition Religious Management Fund Generation Affinities • 10k schools / colleges • 119m members • Av. Tuition per school • Contributions $175bn $4.8m p.a. • 204k churches • Av. Tuition per college • Represents 2% of US
Slide 10: Allied Irish America
Allied Irish America Risk assets $1.7bn in NFP sector Extensive national opportunity High value Frequently under served Potential to grow at 25 - 30% per annum Planning 6 additional offices
Slide 11: Capital Markets
Capital Markets Profit up 12% Investment banking Goodbody - improved market share Asset management - strong profit growth Custodial services - IFSC based growth Treasury Strong revenue performance Continuing technology investment Corporate banking Strong interest / fee income growth Opera
Slide 12: Poland
Poland Profit up 82% WBK up 31% Loan growth 2% underlying Growth in network - 402 outlets (37 added) - 444 ATMs (67 added) STRATEGIC FOCUS Top five financial services franchise with 10%+ market share Major focus on electronic banking capability Merge banks at appropriate time - merged
Slide 13: Singapore
Singapore Development co-operation in progress Customer information / profitability systems Bancassurance Retail product penetration SME product / service range Decision on option exercise not critical
Slide 14: Online Customer Development
Online Customer Development Dec Jun Target 99 000’s 00 Dec 00 30 Ireland 56 100 3 Northern Ireland 10 15 1 USA 27 35 6 Poland 14 20 750k+ phone banking customers
Slide 15: Online Diary 2000
Online Diary 2000 Home mortgages Q1 GSM banking service Q2 Secure online payment Q2 WAP based mortgages Q2 Consumer finance Q3 - WAP banking Q3 Online currency dealing Q3 Online share dealing Q3 Web cash management Q4 Virtual model Q4
Slide 16: Virtual Model
Virtual Model Q4 launch in Ireland Brand name selected Product development well advanced Committed to differentiated consumer proposition Electronic channel access only Exploring application in other AIB locations
Slide 17: Outlook
Outlook Competing profitably in transition to the network economy Franchise enhancement through the profit and loss account eBusiness developments positioning for the future Building provisions against changing economic conditions Positive outlook across the Group Continued commitment to
Slide 18: Gary Kennedy, Group Financial Director
Gary Kennedy Group Financial Director
Slide 19: Performance by Division
Performance by Division Half Year Half Year Change Jun 99 €m Jun 00 % 270 AIB Bank 323 20 142 USA 164 15 80 Capital Markets 90 12 23 Poland 43 82 27 Group (13) - 542 Group Profit before Disposals 607 12
Slide 20: Total Income
Total Income Jun Jun Change 1999 €m 2000 % 843 Net Interest Income 985 17 490 Other Income 615 26 1,333 Total Income 1,600 20 36.7% Other Income Ratio 38.3% Other Income AIB Bank - ARK Life APE +31%, credit card, finance & leasing USA - electronic banking +16%, trust & advisory fees +10% Capit
Slide 21: Loan Growth
Loan Growth % 15 Corporate Retail 12 9 9 8 11 9 7 8 27 6 3 3 12 7 0 Group Rep. of Northern Britain USA Poland Ireland Ireland Residential mortgages (RoI) up 10%
Slide 22: Deposit Growth
Deposit Growth % 25 24 20 13 15 6 7 10 4 5 1 0 Group Rep. of Northern Britain* USA Poland Ireland Ireland * Retail up 9%
Slide 23: Net Interest Margin
Net Interest Margin % Foreign 5.0 Group 4.5 Domestic 4.0 3.5 3.40 3.10 3.0 2.73 2.5 1993 1994 1995 1996 1997 1998 1999 H1 00 NPLs / Loans 5.1% 1.9%
Slide 24: Operating Expenses
Operating Expenses Jun Jun Change Underlying 1999 €m 2000 % Change % 459 Staff Costs 545 19 6 300 Other Costs 379 26 8 759 Operating Expenses 924 22 6 Costs driven by: Increased business activity Technology / eBusiness expenditure Network expansion in Poland BZ goodwill amortisation €12m
Slide 25: Efficiency
Efficiency Cost / Income Ratio* (%) Jun 99 Jun 00 AIB Bank - Ireland 54 52 - Northern Ireland 55 53 - Britain 60 57 Capital Markets 56 55 USA 59 58 Poland 65 65 * Tangible (excluding goodwill amortisation)
Slide 26: Asset Quality
Asset Quality % Dec 1999 Jun 2000 NPLs / Loans 1.9 1.9 Bad debts charge / average loans 0.2 0.3 Provisions / NPLs 102 98 1999 bad debt charge 0.28 bps (excl LDC release) NPLs / loans 1% (excl BZ) Provisions / NPLs at 140% (excl BZ) BZ fair value assessment by end 2000 Home mortgages (RoI)
Slide 27: Provisions for Bad Debts
Provisions for Bad Debts Jun 1999 Average Jun 2000 Average €m Loans % €m Loans % 21 0.3 AIB Bank 28 0.3 20 0.4 USA 18 0.3 5 0.2 Capital Markets 11 0.3 5 1.0 Poland 13 1.0 51 0.3 Divisional Total 70 0.3 -16 - LDC Provisions - - 35 0.2 P/L Charge 70 0.3
Slide 28: Balance Sheet / Capital Ratios
Balance Sheet / Capital Ratios Dec €m Jun Constant Currency 1999 Assets: 2000 Change % 39,171 Loans to Customers 42,825 7 42,335 Customer Accounts 46,499 6 67,070 Total Assets 74,687 10 % Capital Ratios: % 5.4 Ordinary Equity to Assets 5.4 6.4 Tier 1 6.5 11.3 Total 11.3
Slide 29: Sustaining Performance 1995-1999
Sustaining Performance 1995 - 1999 ROE (average) 23% EPS Growth 18%* Dividend Growth 19%* RORWA (average) 1.74% * 5 year CAGR
Slide 30: Sustaining Performance
Sustaining Performance Product penetration New / existing customers New Revenue Streams Open product distribution Business to business processes Costs re-engineering Branch network re-configuration Routine transactions to lower cost platforms Automation of existing processes Deve
Slide 31: Slide 31
Slide 32: AIB Bank Profit Statement
AIB Bank Profit Statement Half Year Half Year Change Jun 99 €m Jun 00 % 440 Net Interest Income 502 14 199 Other Income 243 22 639 Total Income 745 17 348 Operating Costs 394 13 291 Operating Surplus 351 21 21 Provisions 28 35 270 Profit before Taxation 323 20
Slide 33: USA Division Profit Statement
USA Division Profit Statement Half Year Half Year Change Jun 99 €m Jun 00 % 244 Net Interest Income 261 7 150 Other Income 174 16 394 Total Income 435 10 231 Operating Costs 253 9 163 Operating Surplus 182 12 21 Provisions 18 (13) 142 Profit before Taxation 164 15
Slide 34: Capital Markets Profit Statement
Capital Markets Profit Statement Half Year Half Year Change Jun 99 €m Jun 00 % 71 Net Interest Income 79 12 122 Other Income 146 19 193 Total Income 225 16 109 Operating Costs 124 14 84 Operating Surplus 101 20 4 Provisions 11 179 80 Profit before Taxation 90 12
Slide 35: Poland Profit Statement
Poland Profit Statement Half Year Half Year Change Jun 99 €m Jun 00 % 50 Net Interest Income 122 141 31 Other Income 69 118 81 Total Income 191 132 53 Operating Costs 136 155 28 Operating Surplus 55 89 5 Provisions 12 117 23 Profit before Disposals 43 82
Slide 36: Non-Performing Loans by Division
Non-Performing Loans by Division As at December 31, 1999 As at June 30, 2000 NPLs/ Total NPLs/ Total Actual Provisions/ Actual Provisions/ NPLs Advances NPLs NPLs Advances NPLs €m % % €m % % 234 1.2 112 AIB Bank 238 1.1 116 53 USA - €m 67 53 0.4 319 - US$m 65 0.5 263 30 0.5 248 Capital Markets 35 0.
Slide 37: Return on Equity
Return on Equity % 28 27.3* 26 23.6 23.5 24 21.3 21.7 22 19.4 20 18.8 18 16 94 95 96 97 98 1999 H1 2000 * after elimination of impact of deferred tax adjustment
Slide 38: Return on Assets
Return on Assets % 1.5 1.39* 1.4 1.33 1.3 1.26 1.23 1.2 1.09 1.09 1.1 1.03 1 0.9 94 95 96 97 98 1999 H1 2000 * after elimination of impact of deferred tax adjustment
Slide 39: Cost / Income Ratio
Cost / Income Ratio * % 70 65.9 66 64.6 64.5 62.4 62 58 57.0 57.1 54.9 54 94 95 96 97 98 1999 H1 2000 * Tangible
Slide 40: Return on Risk Weighted Assets
Return on Risk Weighted Assets Return % Average RWA (bn) 3.0 60 50 2.0 40 30 1.0 20 1.63 1.61 1.96 1.78 1.69 10 1.74 0.0 0 1995 1996 1997 1998 1999 H1 2000
Slide 41: Risk Weighted Assets
Risk Weighted Assets Change Dec 99 €m Jun 00 % 17,919 AIB Bank 20,015 12 16,898 USA 19,117 13 11,375 Capital Markets 12,696 12 2,838 Poland 3,063 8 245 Group 277 13 49,275 55,168 12
Slide 42: Irish Economic Outlook
Irish Economic Outlook Forecast Forecast Growth % 1999 2000 2001 Real GDP 9.8 9.5 7.5 Domestic Demand 6.3 9.7 6.8 Unemployment Rate 5.6 4.2 3.5 Inflation (average) 1.6 5.3 3.3 Source: AIB Chief Economist Inflation pressures largely externally generated Wage pressures reduced by productivity gain
Slide 43: Contacts
Contacts Our Investor Relations Department will be happy to facilitate your requests for any further information. Maurice Crowley [email protected] Conor Herlihy [email protected] 353-1-660 0311 Pat Clarke [email protected] 353-1-641 2075 Rachel O’Connor rachel.m.o’[email protected] i
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