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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, 1 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 at the date on which they are made. 1
Agenda 2 Jeremy Masding, Group CEO – H1 2014 Highlights Glen Lucken, Group CFO – Financial Performance Shane O’Sullivan, Managing Director of AMU 2 Jeremy Masding, Group CEO – Recap and Priorities Questions & Answers 2
permanent tsb in H1 2014 3 IMPROVED MARKET INDEPENDENCE PERFORMANCE RELEVANCE BETTER Bottom Line GROWING Market Share ACHIEVING Funding Stability BETTER Arrears Management 3 3
Sharply Improving Performance (1) 4 Losses (€m) 1,600 1,468 1,400 1,200 Sharply Improving Bottom Line 980 977 1,000 Underlying performance improved €278m 1,109 H2 800 on H1 13 523 528 H1 600 400 457 449 200 359 171 0 2011 2012 2013 2014 4 Sharply Improving Impairment Profile 1,440 Impairment Charge (€m) 1,200 Impairments fell by €281m 930 1,000 891 1,107 800 Sharply Improving Arrears Profile 500 454 H2 600 Early and late arrears in ROI mortgages H1 decreasing 400 Total number of cases in arrears down 14% 437 430 200 333 in H1 14 149 0 2011 2012 2013 2014 4
Sharply Improving Performance (2) 5 Economic environment continues to support business Arrears have peaked in 2013 and are falling Improved Performance Impairments are reducing significantly Non-Core deleveraging planned in H2 5 Re-establishing market position; a competitive third retail banking force … Meaning Well positioned as economic outlook continues to improve on-plan to and foreign owned banks retrench deliver Growing customer base driven by expanding customer sustainable proposition profitability Focused OME launch planned for H2 5
…Building a Best in Class Retail Bank in Ireland Deposit Volumes (€bn) and Market Share (%) 6 Attracting New Customers and Deposits 14.8 13.2% 13.0% Deposit balances have increased to €14.5bn 13.0% 14.4 (incl. Current Accounts) 12.7% 12.8% 14.5 14.0 Market share of 13% 12.5% 12.6% 14.0 12.3% 12.3% 12.4% Current Account balances have increased by 13.6 13.7 12.2% c.€250m 13.5 13.5 13.2 12.0% 15,524 new payroll accounts in H1 12.8 11.8% H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 Deposit Volumes Market Share Increasing New Lending 6 Mortgage drawdowns have increased to Mortgages Approvals/Drawdowns (€m) and Market Share (%) €180m, an increase of 362% from H1 2013 13% 300 14% Market share of approvals of 13% from a 12% 250 264 low of 3% in Q4 2012 10% 9% 200 221 Term Lending payouts up 14% yoy to €21m 8% 180 150 170 5% 6% 4% 100 3% 4% Broadening Customer Proposition 50 69 2% Insurance Sales up 70% yoy in H1 39 42 39 38 29 0 0% OME launch in H2 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 PTSB Drawdowns (€m) PTSB Approvals (€m) Share of Market Approvals (%) 6
Group: Key Financial Highlights Improving Operating Performance 7 Key Metrics Operating Loss reduced by 61.9% NIM improved by 6bps; ptsb SBU NIM at Income Statement H1 ‘14 H1 ‘13 Change 140bps Operating Loss Before (171) (449) 61.9% Impairment Charges reduced by 65.3% Exceptional Items ptsb SBU records Operating Profit of €3m NIM (Before ELG Fees) 88bps 82bps 6bps Strengthening the Balance Sheet Impairment Charges (149) (430) 65.3% Arrears over 90 days fallen by 14% since 7 Dec 13 Balance Sheet Jun ’14 Dec ’13 Change Customer Deposits increased to 60% of System Funding €5.8bn €6.9bn 15.9% mix ECB Funding reduced further by 15.9%; Loans to Deposit Ratio 141% 151% 10ppts halved from peak levels in 2011 CET 1 Ratio 12.7% 13.4% 0.7ppts Loans to Deposit ratio down 10ppts to 141% Customer Accounts 20,545 19,511 5.3% Capital position remains strong at 12.7% ROI Arrears > 90 Days (#) 22,559 26,357 14.4% 7
Agenda 8 Jeremy Masding, Group CEO – H1 2014 Highlights Glen Lucken, Group CFO – Financial Performance Shane O’Sullivan, Managing Director of AMU 8 Jeremy Masding, Group CEO – Recap and Priorities Questions & Answers 8
Group Income Statement 9 H1 2014 H1 2013 Change Change Net Interest Income increased marginally by €m €m €m % 1.3%, despite a 5.2% reduction in Interest Net Interest Income 158 156 2 1.3% Earning Assets Steady NIM improvement of 6bps in falling Other Income 33 26 7 26.9% rate environment driven by lower cost of ELG Fees (32) (63) 31 49.2% funds Total Operating Income 159 119 40 33.6% Other Income increase of 26.9% mainly driven by one ‐ off gains Operating Expenses (181) (138) (43) (31.2%) ELG Fees reduced by 49.2% as result of Operating Loss reduction in covered liabilities (22) (19) (3) (15.7%) Pre ‐ Impairment 9 Operating Expenses increased by 31.2% as Impairment Charges (149) (430) 281 65.3% a result of increased regulatory costs and one ‐ off legacy legal and compliance costs Loss Before (171) (449) 278 61.9% Impairment Charges reduced by 65.3% Exceptional Items mainly driven by reduced new default Exceptional Items (Net) ‐ 318 (318) (100.0%) flow and provision releases as restructured loans are labelled as ‘cured’ Loss Before Tax (171) (131) (40) (30.5%) Underlying Loss improvement of 61.9% Excluding one ‐ off items in Income and Avg. Int. Earning Assets 36,079 38,049 (1,970) (5.2%) Expenses, the Group recorded a Pre ‐ Net Interest Margin 88bps 82bps 6bps 7.3% Provision Profit 9
Group: Segmental Performance 10 Income Statement (€m) Core Bank Non ‐ Core Group* PTSB AMU H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 Underlying Operating Profit/(Loss) Before 62 (26) (49) (22) (18) 6 4 (33) Impairments and Non ‐ Recurring Items Non ‐ Recurring Items ‐ 14 (25) ‐ (1) ‐ (26) 14 Impairment Charges (59) (27) (42) (307) (48) (96) (149) (430) Profit/(Loss) 3 (39) (116) (329) (67) (90) (171) (449) 10 Balance Sheet (€bn) Jun 14 Dec 13 Jun 14 Dec 13 Jun 14 Dec 13 Jun 14 Dec 13 Total Assets 20.8 21.8 6.5 6.4 9.2 9.3 36.9 37.6 Gross Loans 14.1 14.6 8.8 8.7 10.2 10.1 33.1 33.5 *Group includes unallocated adjustments which have not been attributed to the segments 10
Group: Net Interest Income and NIM Components of NIM NII and NIM 11 Group NIM shows a steady 1.20% improvement of 6bps 1.00% 0.12% ptsb SBU NIM is at 140bps 0.20% 0.80% 0.07% Driven mainly by reduction in overall 0.60% 0.19% 0.88% 0.82% cost of funds 0.40% Continuous ECB rate cuts over the last 0.20% few years driving lower asset yields 0.00% NIM June 2013 Asset Pricing Deposit ECB Funding Wholesale NIM June 2014 Funding Costs Costs Funding 11 Future NIM expansion will primarily reflect: Cost of Funds decreasing at a faster Decreasing Cost of Funds rate than Asset Yields Increasing new lending with higher 76bp 72bp 82bp margins 82bp 88bp Refinancing the back book in improving economic environment Maturity of CoCo (in June 2016) H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 Asset Yields Cost of Funds 11
Group: Operating Expenses Staff Costs 12 Group Operating Expenses €200m Staff Costs reduced by €3m or 4% compared to June 2013 due to changes in pension entitlements and €160m other staff benefits, and savings achieved from VSS €115m €120m Other Costs €69m 12 Other Costs increased due higher cost €80m of regulation and one ‐ off provisions relating to legacy legal and €40m compliance liabilities €69m €66m Bank Levy €0m c€30m due for recognition and H1 2013 H1 2014 payment in H2 2014 Staff Costs Other Costs 12
Impairment Charges Group Impairments 13 Impairment Charges (€m) 600 Impairment Charges decreased by €281m (65.3%) since H1 2013, driven by 500 the fall in both early and late arrears across all portfolios ROI HL charge reduced by 45.8% from 400 H1 2013, mainly due to low levels of 65% new defaults 13 300 ROI BTL recorded a write ‐ back of 498 449 provisions of €14m as restructured 434 429 200 loans are cured Consumer Finance book recorded a 100 write ‐ back of provisions of €3m due to 148 enhanced collections performance 0 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 13
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