Half-Yearly Financial Results 2018 For the six months ended 30 June - PowerPoint PPT Presentation

Half-Yearly Financial Results 2018 For the six months ended 30 June 2018 AIB Group plc

Important information and forward looking statement This presentation should be considered with AIB’s Annual Financial Report 2017, Q1 Trading Update April 2018 and all other relevant market disclosures, copies of which can be found at the following link: http://aib.ie/investorrelations Important Information and forward-looking statements This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of AIB Group plc 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 58 to 68 in the Annual Financial Report 2017. 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 58 to 68 of the Annual Financial Report 2017 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

AIB Group plc

H1 2018 Highlights Franchise and business model delivering sustainable performance Profit before tax of € 0.8bn, continuing sustainable underlying profitability, loan  book growth and significant improvement in asset quality Strong capital ratio of CET 1 FL 17.6%; continuing capital generation and capacity  for attractive returns Continued progress on NPE normalisation; € 7.5bn (12% overall), down € 2.7bn (-27%)  from FY 2017 Market leading franchise with customer first strategy and investment in digital and  innovation driving commercial success Well positioned and evolving for future challenges and opportunities in a growing  economy 4

Growing economy with attractive market dynamic Well positioned for growth Irish economic growthimproving; Brexit risk remains Total employment levels rising as unemployment falls % 2300 16 7.2 14 2200 5.6 12 2100 4.3 4.0 3.7 10 3.4 3.1 2000 2.7 8 1900 6 1800 4 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2017* 2018 2019 2020 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 As at July 2017 As at July 2018 LHS: Employment ('000s) RHS: Unemployment rate (%) Source: CSO, Dept. of Finance Source: CSO Irish housing activity Business sector in expansionary mode # of Completions, Commencement & Registrations (‘000s) PMI index 66 Normalised demand 30,000 120 25,000 100 61 20,000 80 56 15,000 60 10,000 40 Expansion 51 5,000 20 Contraction 0 0 46 2013 2014 2015 2016 2017 Completions Commencements Registrations HPI (RHS) Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Irish Manufacturing Irish Services Eurozone Composite 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 2017 was 3.2% 5

Delivering continued momentum Increased new lending; Leading market shares Leading market shares in key segments Continuing increase in New Lending Continuing momentum in key sectors Drawdowns ( € bn) Stock Mortgage Lending ( € bn) 43% 41% 36% 32% 5.5 23% 20% 4.8 1.2 1.1 0.5 (1) (3) H1 2017 H1 2018 0.5 Personal Personal Mortgages Business Leasing Main (2) Current loans Current Business Accounts Accounts Loans Personal Lending ( € bn) 2.3 Strong market share position 2.2 (Stock) 0.4 0.4 #1 Business Main #1 Mortgages Current Accounts (4) 0.8 H1 2017 H1 2018 #1 Business Main #1 Personal Main 0.9 SME and Corporate (5) Lending ( € bn) Loans Current Accounts 2.0 2.6 #1 Business Main 1.9 #1 Personal Loans Leasing (4) 1.3 1.9 1.3 #2 Business Credit #1 Personal Credit Cards 0.7 0.7 Cards H1 2017 H1 2018 H1 2017 H1 2018 #1 bank for FDI WIB UK RCB Transactional SME Corporate Source: Ipsos MRBI AIB Personal Financial Tracker Q2 2018; AIB SME Financial Services Monitor 2017, BPFI – Q2 2018 (1) New lending flow to June 2018 (2) Amongst banks; excludes car finance 6 (3) Main leasing business agreement (4) Joint number 1 position (5) Corporate includes leverage finance, real estate > € 10m, advisory and structured finance

AIB Group plc

Financial highlights H1 2018 Business model delivering sustainable performance  Sustainable profitability underpinned by stable net interest income and margin NIM 2.53% with underlying NIM (1) 2.50%  Continued cost discipline, H1 2018 in line with expectations Stable costs and income, CIR 51%; excluding enhanced income effects CIR 53% (2)  Inflection point passed, both net and performing loan books growing New term lending +15% to € 5bn  Significant progress in NPE deleveraging; on track to normalised levels NPEs (3) reduced 27% from € 10.2bn to € 7.5bn  Strong capital generation supporting growth and capital return Sustainable profits driving capital generation +130bps; CET1 (FL) 17.6% (1) NIM underlying 2.50% in half year to June 18 excludes interest on loans when upgraded from Stage 3 without incurring financial loss (i.e. suspense interest) (2) Excludes income on previously restructured loans € 40m and suspense interest € 12m 8 (3) Non performing exposures exclude c. € 0.2bn of off-balance sheet commitments

Income statement PBT € 0.8bn driven by strong business performance Summary income statement (€m) H1 2018 H1 2017  Net interest income in line with H1 2017 Net interest income 1,061 1,077 Other income 322 452  Other income € 322m - stable fees and Total operating income 1,383 1,529 Total operating expenses (1) (711) (693) commissions offset by lower one off items Operating profit before provisions 672 836 Bank levies and regulatory fees (31) (45)  Operating expenses € 711m – controlled and Net credit impairment writeback 130 23 in line with expectations Associated undertakings & other 5 9 Profit before exceptionals 776 823  Net credit impairment writeback € 130m Exceptional items (14) (62) Profit before tax from continuing operations 762 761 Metrics H1 2018 H1 2017  Delivering consistent and sustainable returns Net interest margin 2.53% 2.54% Cost income ratio (CIR) (1) 51% 45%  RoTE 15.2% Return on tangible equity (RoTE) (2) 15.2% 14.4% Return on assets (RoA) 1.4% 1.4%  RoA 1.4% Earnings per share (EPS) 23.3c 23.3c (1) Excludes exceptional items, bank levies and regulatory fees (2) RoTE based on (PAT - AT1 coupon + DTA utilisation) / (CET1 @13% plus DTA) 9

Average balance sheet NIM stable and in line with 2.40%+ medium term target H1 2018 H1 2017 Average Average Volume Interest Yield Volume Interest Yield €m €m % €m €m % Assets  Stable loan yields Loans to customers 60,728 1,050 3.49 60,815 1,078 3.57 ex suspense interest NAMA senior bonds 0 0 0.00 845 2 0.49 Investment securities 15,238 113 1.50 17,624 146 1.67  Favourable mix and Other assets 8,644 9 0.19 6,238 6 0.17 lower yield on Interest earning assets 84,610 1,172 2.79 85,522 1,232 2.90 Non interest earning assets 7,181 7,401 customer accounts Total assets 91,791 1,172 92,923 1,232  Mortgage pricing Liabilities and equity changes and the cost Customer accounts 35,966 81 0.45 37,104 128 0.69 of excess liquidity Deposits by banks 3,987 (4) (0.20) 5,981 (4) (0.15) absorbed Other debt issued / other 4,868 18 0.75 6,625 15 0.46 Subordinated liabilities 794 16 3.99 792 16 3.97  Continued spread Interest earning liabilities 45,615 111 0.49 50,502 155 0.62 widening between Non interest earning liabilities (1) 32,739 29,217 loans and deposits Equity 13,437 13,204 Total liabilities and equity 91,791 111 92,923 155 Net interest margin 1,061 2.53 1,077 2.54 Net interest margin (underlying) 2.50 2.47 (1) Includes non-interest bearing current accounts € 29bn Jun 18, € 26bn Jun 17 10