Backing our Customers Half-Yearly Financial Results 2019 For the - PowerPoint PPT Presentation

Backing our Customers Half-Yearly Financial Results 2019 For the six months ended 30 June 2019 AIB Group plc

Forward Looking Statement This document contains certain forward looking statements with respect to the financial condition, results of operations and business of AIB Group and certain of the plans and objectives of the Group. These forward looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward looking statements sometimes use words such as ‘aim’, ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’, ‘may’, ‘could’, ‘will’, ‘seek’, ‘continue’, ‘should’, ‘assume’, or other words of similar meaning. Examples of forward looking statements include, among others, statements regarding the Group’s future financial position, capital structure, Government shareholding in the Group, income growth, loan losses, business strategy, projected costs, capital ratios, estimates of capital expenditures, and plans and objectives for future operations. Because such statements are inherently subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward looking information. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward looking statements. These are set out in the Principal risks and uncertainties on pages 62 to 68 in the 2018 Annual Financial Report. In addition to matters relating to the Group’s business, future performance will be impacted by Irish, UK and wider European and global economic and financial market considerations. Any forward looking statements made by or on behalf of the Group speak only as of the date they are made. The Group cautions that the list of important factors on pages 62 to 68 of the 2018 Annual Financial Report is not exhaustive. Investors and others should carefully consider the foregoing factors and other uncertainties and events when making an investment decision based on any forward looking statement . 2

H1 2019 highlights Solid performance and well positioned for remainder of the year Pre-exceptional PBT €567m , loan book growth and ongoing improvement in asset quality Pre-exceptional PBT €567m , loan book growth and ongoing improvement in asset quality NPEs reduced to 7.5% and on track to reach c. 5% by year end NPEs reduced to 7.5% and on track to reach c. 5% by year end Sustainable growth in performing loan book and new lending Sustainable growth in performing loan book and new lending Strong capital base with capacity for excess capital return – subject to Board and regulatory approval Strong capital base with capacity for excess capital return – subject to Board and regulatory approval Continued investment in leading digital franchise Continued investment in leading digital franchise Positive NPS scores reflecting enhanced customer propositions and customer experience Positive NPS scores reflecting enhanced customer propositions and customer experience Well positioned and planning for the future Well positioned and planning for the future 3

Growing Irish economy Continuing positive market dynamic Irish economic growth* improving; Brexit risk remains Total employment levels rising as unemployment falls % 2,400 10 8.2 14 2,200 3.9 3.7 5 9 3.3 3.1 2.7 2,000 1,800 4 0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2018* 2019 2020 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 As at Jul 2017 Jun-19 LHS: Employment ('000s) RHS: Unemployment rate (%) Source: CSO, Department of Finance Source: CSO Irish housing activity Service sector expanding; overall cautious business sentiment # of completions, commencement & registrations (‘000s) PMI index 65 150 Normalised demand 30,000 60 100 20,000 55 50 10,000 50 45 0 0 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 2013 2014 2015 2016 2017 2018 Irish Services Irish Manufacturing Eurozone Composite Completions Commencements Registrations RHS:HPI Source: CSO, Department of Housing, AIB ERU, National House price index Jan 05=100 Source: Markit via Thomson Datastream * GDP forecasts used, however note that GDP can be distorted due to the impact of multi-national sector in Ireland. Modified final domestic demand in 2018 was 4.8% 4

Delivering continued momentum Increased new lending; leading market shares Continuing increase in new lending New lending across all asset classes (1) Personal lending (€bn) Drawdowns (€bn) Mortgages (€bn) 6.0 1.3 1.2 0.5 0.4 5.5 H1 2018 H1 2019 H1 2018 H1 2019 2.4 Property (€bn) Corporate & SME (ex-property) (€bn) 2.5 2.2 2.1 0.8 0.7 1.3 1.0 H1 2018 H1 2019 H1 2018 H1 2019 Leading market shares in key segments 2.3 Stock (%) 2.0 44% 42% 37% 31% 21% 21% H1 2018 H1 2019 Retail UK CIB (2) Main current account Personal loan (excl car) Mortgages Business main current Main leasing Main business loan account Source: Ipsos MRBI Quarterly personal market pulse Q2 2019; Ipsos MRBI Annual SME Market Pulse March 2019 (1) Excludes UK 5 (2) Mortgage new lending flow based on BPFI industry drawdown data to end June 2019

Strong track record of delivery Next phase to be announced at FY19 results MAR 2017 FY 2017 FY 2018 MAR 2020 HY 2019 Continued Sustainable Solid H1 and on delivery; €870m profit and NPE track to c.5% investment progress NPEs by year completed end 2017 – 2019 2020 - 2022 • 4 pillar strategy • Strategy evolution • Medium-term targets • Medium-term targets • 22% NPE ratio (FY 16); • Capital plan c.5% goal by end 2019 • NPE next phase • IPO in June 2017 NPE ratio: 16% NPE ratio: 7.5% NPE ratio: 9.6% Solid operational performance and normalising NPEs; moving our focus to returning excess capital 6

Continued delivery on key strategic pillars Our strategy in action in H1 2019 THE FOUR PILLARS CUSTOMER FIRST SIMPLE & EFFICIENT RISK & CAPITAL TALENT & CULTURE • Mortgage rate changes • Payzone acquisition* to • €1bn NPE disposal in H1; NPEs • Greater accountability: offering customers choice and enhance leading fintech on track to c. 5% milestone addressing legacy issues certainty capability • >98% of new lending • Irish Banking Culture Board • Award winning Customer • Number 1 Irish Banking App; strong/satisfactory grades • Achieved Gallup ‘Great Experience mortgage journey >1 million active customers • €3.3bn MREL now issued; Workplace Award’ • €5bn funding to support • New internet business banking well-positioned to meet transition to low-carbon platform expected requirement economy Building long-term sustainability * On 18 th April, we announced a proposed acquisition with First Data Corporation of Payzone, pending relevant approvals 7

Purpose & four pillar strategy driving performance Digitally-enabled bank driving customer engagement THE FOUR PILLARS CUSTOMER FIRST SIMPLE & EFFICIENT RISK & CAPITAL TALENT & CULTURE Q2 19: NPS +33 11K Personal 1.26m Kiosk / Tablet relationship 148K Mobile Logins Mobile Interaction Interactions 17K 18K s Contact Contact 242K Q2 19: 208K Centre (1) Centre (1) Internet Internet H1 2019 NPS +20 2013 Calls Calls Banking Banking SME Logins Logins relationship 432K ATM 77k Branch 174K ATM Interactions Transactions 81K Branch Interactions Transactions Q2 19: 880K NPS +53 DAILY INTERACTIONS Homes 1.8M transaction DAILY INTERACTIONS (1) Includes calls to direct banking & service 8

Continued investment in key focus areas Predictable levels of investment c.€225m per annum  Improved customer engagement platforms Annual investment spend  Enhanced mortgage customer journeys (€m) Strategic  Informational & analytical capability 300  Automated small business loan approval  Launch of new internet Business Banking platform Resilience  New payments and Treasury platforms  Increasing digital and data capacity while maintaining capability and services level Sustainment  Continued investment in cyber security  Ongoing regulatory agenda including compliance th EU anti money laundering with IFRS9 and 4 Regulatory  Significant progress towards Open Banking and central credit register compliance 0 2016-2018 average Medium term average Additional strategic investment to engage with our customers / Regulatory Sustainment Resilience Strategic expand product and service proposition 9

Near-term outlook Focused on controlling the controllables QUALITY OF NPEs LENDING Protecting our balance sheet In a period of wider uncertainty, particularly Brexit… COSTS Supporting our customers ...we are focused on those Ensuring seamless operations factors within our control… Discipline is paramount Delivering sustainably for customers and shareholders 10