2012 Jeremy Masding Group Chief Executive Glen Lucken Group Chief - PowerPoint PPT Presentation

0 Full Year Results: 2012 Jeremy Masding Group Chief Executive Glen Lucken Group Chief Financial Officer www.permanenttsbgroup.ie 2012 Full Year Results Page 0

Forward Looking Statements 1 A number of statements we make 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 US Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected in the forward looking statements. Factors that could cause actual results to differ materially from those in the forward looking statements include, but are not limited to, global, national and regional economic conditions, levels of market interest rates, credit or other risks of lending and investment activities, competitive and regulatory factors and technology change. permanent tsb Group Holdings plc undertakes no obligation to update the forward-looking statements contained in this presentation. Forward- looking statements made in this presentation relate only to events as of to date on which they are made. 2012 Full Year Results Page 1

Agenda 2 1 • Group Chief Executive’s Review 2 • Financial Review 3 • Arrears & Asset Management Unit 4 • Recap & Priorities 5 • Q & A 2012 Full Year Results Page 2

3 Group Chief Executive’s Review Jeremy Masding 2012 Full Year Results Page 3

2012 – A Transformative Year 4 Overhaul:  Group Architecture  Board of Directors  Senior Management Team  Strategy Restructuring:  Top to Toe Restructuring Plan - “The Bank + Two Strategy” Tackling Problems:  Managing arrears  Reducing the Standard Variable Rate (“SVR”)  Tackling high cost base 2012 Full Year Results Page 4

2012 – The Bank + Two Strategy 5 permanent tsb Asset Management Unit CHL (UK) 2012 Full Year Results Page 5

2012 – The Bank + Two Strategy 6 permanent tsb • Tackled the SVR issue • Grew the deposit base • Re-sized the business and cost base • Return to relevance • Mortgage Lending • Current Account 2012 Full Year Results Page 6

2012 – The Bank + Two Strategy 7 Asset Management Unit • Constructed a new arrears unit from scratch • Established a best in class operation • Recruited and trained specialists 2012 Full Year Results Page 7

2012 – The Bank + Two Strategy 8 CHL (UK) • Provides excellent service levels • Optimises arrears position • Maintains optionality 2012 Full Year Results Page 8

9 Financial Review Glen Lucken 2012 Full Year Results Page 9

Financial Highlights 10 Rebuilding Profitability:  Loss Before Exceptional Items: Reduced by 33% to € 0.98bn.  Impairments: Reduced by 38% to € 0.89bn.  Net Interest Margin : Reduced by 0.20% to 0.72%. Strengthening the Balance Sheet:  Deposits: Grew by € 2.2bn  Wholesale Funding: Extended market term repo secured on UK assets.  Sale of Irish Life: Assisted the Group’s funding and capital position  System Funding: Reduced by € 3.3bn; no ELA since April 2012.  Regulatory Capital: Improved Core Tier 1 Ratio to18.0%. 2012 Full Year Results Page 10

Group Income Statement 11  Operating Loss Before Exceptional Items: € m 2012 2011 Variance Reduced in 2012 by 33% Total Operating 197 262 (65) Income  Income: NIM at 0.72% remains a key area of Operating Expenses (286) (290) 4 focus for the restoration of profitability. Impairment Charges (891) (1,440) 549  Operating Expenses: Marginally reduced Operating Loss (980) (1,468) 488 with actions taken to reduce the cost base in Before Exceptional 2013. Items Exceptional Items 58 963 (905)  Impairments: Flow decreased by 38% (Net)  Flow of impairments on ROI Residential Loss Before Taxation (922) (505) (417) Mortgages (HLs and BTLs) decreased by Taxation (77) 81 (158) 57%. Loss After Taxation (999) (424) (575)  Increased flow of impairments on CRE of € 141m. Net Interest Margin 0.72% 0.92% (0.20%)  Exceptional Gains :  Gain on Liability Management Exercise of € 224m offset by loss on sale of PTSB Finance of € 80m and restructuring costs of € 86m. 2012 Full Year Results Page 11

Total Operating Income 12  NIM reduced by 0.20% to 0.72% in € m 2012 2011 2012. Key factors in this reduction Net Interest Income 300 405 were: (Before ELG) ELG Fees (165) (173)  Reduction in the Standard Other Income 62 30 Variable Rate on ROI Mortgages. Total Operating Income 197 262  Increased year-on-year costs of deposits.  ELG fees reduced marginally due to a reduction in the level of covered balances and reduced average fee rate.  Net Other Income increased by € 32m principally due to gains arising from the sales of Government Bond holdings. 2012 Full Year Results Page 12

Impairments ROI Residential Mortgages 13 Flow of impairment of ROI Mortgages € 700m  Flow of impairments on HLs down 51%. € 600m € 500m ROI HLs  Flow of Impairments on BTLs down 62%. € 400m ROI BTLs € 591m € 300m € 580m € 200m  Increased focus on arrears management. € 284m € 224m € 100m € 0m  Set up the Asset Management Unit. 2011 2012 Flow of CRE impairments € 350m CRE € 300m  Impacted by reduced rent rolls and price € 250m € 200m falls with flow of impairments increasing € 320m € 150m by € 141m. € 100m € 179m € 50m  Management of this portfolio has been € 0m outsourced to optimise case-by-case 2011 2012 outcomes. 2012 Full Year Results Page 13

Funding  Loan book reduced by € 1.9bn: 14 Balance Sheet Metrics 2012 2011  € 0.9bn increased impairment. € 40.9bn € 43.2bn Total Assets € 31.8bn € 33.7bn  € 0.7bn of net redemptions/repayments. Loans to Customers  € 0.3bn due to sale of ptsb Finance and FX Wholesale Funding: € 10.7bn € 14.0bn differences. Monetary Authorities € 9.6bn € 11.4bn Market  System funding reduced by 24% ( € 3.3bn): Deposits: € 13.5bn € 12.8bn No recourse to ELA since April 2012. Retail € 3.1bn € 1.6bn Corporate  Increased focus on optimising the Funding Mix: funding mix: Customer Accounts 45% 37%  € 2.2bn growth in deposits across both Long-Term Debt 33% 29% Short-Term Debt 22% 34% Retail and Corporate channels. 100% 100%  Execution of a Term Repo for £2.6bn secured on UK mortgage assets. 2012 Full Year Results Page 14

Capital 15  Actions taken to improve the capital Core Tier 1 Capital Ratio 18.0% ratios during 2012.  Liability Management Exercise generating € 224m 16.7%  Debt buy-backs generating € 27m.  Sale of € 180m of highly risk weighted Dec 11 Dec 12 securities, saving € 123m in capital.  Sale of Irish Life: € 1.3bn.  Core Tier 1 ratio of 18.0% compares to Total Capital Ratio a regulatory minimum of 10.5%. 20.5%  Positioned to absorb future financial losses and any capital required from the 17.9% separation of an SBU. Dec 11 Dec 12 2012 Full Year Results Page 15

Financial Highlights 16 Rebuilding Profitability:  Loss Before Exceptional Items: Reduced by 33% to € 0.98bn.  Impairments: Reduced by 38% to € 0.89bn.  Net Interest Margin : Reduced by 0.20% to 0.72%. Strengthening the Balance Sheet:  Deposits: Grew by of € 2.2bn  Wholesale Funding: Extended market term repo secured on UK assets.  Sale of Irish Life: Assisted the Group’s funding and capital position  System Funding: Reduced by € 3.3bn; no ELA since April 2012.  Regulatory Capital: Improved Core Tier 1 Ratio to18.0%. 2012 Full Year Results Page 16

17 Arrears & Asset Management Unit Jeremy Masding 2012 Full Year Results Page 17

18 Arrears 2012 Full Year Results Page 18

Asset Quality: Portfolio Composition 19 ptsb Portfolio – Composition ROI Mortgages – Arrears Profile 100% Other CRE In Arrears >90 Days 16% 90% In Arrears <90 Days CHL 5% 80% 70% ROI BTL 60% 50% Up to Date 40% 79% 30% ROI HL 20% 10% 0% Arrears Profile of ROI Mortgages (#Cases) Composition of Loan Portfolio (% of € values) 2012 Full Year Results Page 19

Asset Quality: Arrears 20 Arrears Evolution Trend Evolution Data on Total NPLs (Values in € m) Dec. 11 Dec. 12 No. of cases 30000 Total ROI Residential Mortgages 25,419 24,588 (HLs and BTLs) 25000 Fully Performing Loans 18,963 17,570 20000 As % of Total 75% 72% 25% Total NPLs 4,378 5,501 15000 As % of Total 17% 22% 71% 10000 Impairment Flow 1,171 508 7% Impairment Stock 5000 1,629 2,191 As % of NPL 37% 40% 0 Dec. 2009 Dec. 2010 Dec. 2011 Dec. 2012 As % of Total 6% 9% ROI HLs and BTLs arrears Weighted Avg. LTV 116% 119% • Arrears cases continue to increase, • Total NPLs increased by 26% while the albeit at a slower pace since early provision increased by 34% to cover 2012. 40% of the NPLs in Dec 2012. • House prices have started to stabilise • Loans in forbearance increased by 12%. in H2 2012. 2012 Full Year Results Page 20

21 Asset Management Unit (AMU) 2012 Full Year Results Page 21

Asset Management Unit 22 Asset Management Unit Non-Performing Loans Non-Core Loans Low Yielding Loans HL and BTL CRE, HL and BTL Other Portfolios, permanent tsb Finance (until disposal) 2012 Full Year Results Page 22