0 . Forward Looking Statements 1 A number of statements we make in - - PowerPoint PPT Presentation

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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 at the date on which they are made.

Forward Looking Statements

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Road to Recovery

Year Key Milestones Stage 2012

• Overhauled the Group Architecture
• New Senior Management Team
• Restructuring Plan Submission
• Building Capabilities Including Establishing the AMU

Laying the Foundations and Building Momentum 2013

• Completion of Internal Reorganisation
• Return to Lending
• Successful product Launches particularly Current Accounts
• Return to Funding Markets
• Submission of an Updated Restructuring Plan
• Engaged with over 80% of customers in financial difficulties

2014

• Improve Customer Experience
• Continue To Innovate with Simple Products
• Increase Market Share in Key Product Areas
• Approach Breakeven

Grow and Trend to Profitability 2015 2016

• Return to Profitability
• Agree and execute an ‘Exit Strategy’ with the Minister for Finance

Privatise and Return Value to State 2017

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• Summary and Progress To Date

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• Financial Performance

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• Arrears Management

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• Recap & Priorities

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• Q & A

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Agenda

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Jeremy Masding

• Summary and Progress To Date

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• Successful re‐entry into the market; force for competition
• Permanent tsb SBU profitable in 2014
• System Funding reduced by 35%; returned to wholesale market
• Arrears have peaked and are now in decline
• Engaged with over 80% of customers in financial difficulties
• CBI Balance Sheet Assessment addressed; no further capital required and

capital remains in excess of regulatory minimum

Turning the Corner

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• Loss after tax of €261m including two significant one‐off accounting

adjustments for pension schemes and deferred tax assets

• Loss pre‐exceptional items flat versus 2012 at €977m; operating loss pre‐

impairment charge reduced by 44%

• Total operating income increased by 28%; modest improvement in NIM
• Staff related costs decreased by 15%
• Impairments increased by 4% including impact of BSA (c.€0.3bn) and new

Central Bank Provisioning Guidelines

Summary Financial Performance (1)

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• Funding and Liquidity positions improved
• €2.6bn Senior Debt repaid + System funding down by 35%
• Market access signified by €500m of RMBS issuance in 2013
• Customer deposits increased by €2.9bn to 56% of total funding

requirement

• Core Tier 1 ratio of 13.1% including impact of BSA
• Basel III transitional Common Equity Tier 1 ratio of 13.4 %

Summary Financial Performance (2)

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Core Bank

permanent tsb Group

permanent tsb bank Asset Management Unit Non Core (UK) Non Core (ROI)

• An end‐to‐end Irish Retail Bank; serving customers and an asset for the State
• permanent tsb – providing competition in the Irish Market Place
• AMU – Best‐in‐class collections unit

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permanent tsb bank has returned successfully to the market, with major gains in Current Accounts and Lending.

Core Bank – permanent tsb

Deposits

Retail Deposits up by €0.5bn

Current Accounts

Over 40,000 new Current Accounts opened

Lending

Close to €300m new Mortgages approved; over €200m paid out

• 650,000 Deposit Account

Customers

• 13% market share of Retail

Deposits

• Over 500,000 Current Account

Customers

• Increased market share driven by

switchers

• 225,000 Mortgage Customers
• 12% market share
• Personal lending ‐ €36m payouts

+71% on 2012

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Early 2014 signs encouraging…

Success has been driven by a range of simple, innovative, customer‐friendly products, supported by new technology.

Core Bank – permanent tsb

• Strong pipeline
• Greater customer

awareness leading to increased demand

• Continuing

momentum

New Initiatives New Technology

• Mobile Banking App available for iPhone and Android

devices

• Tablet and Mobiles Payments App launching soon
• Redesign of the Online Banking (Open24)

under way

• Active Twitter Support
• Plan for increase in engaging customers through more social

channels

• New Products:

 Fee‐free Switch Current Account  €100m home improvement fund  Market Leading Car Finance Offering  Managed Variable Rate Mortgages  Tracker Mover Products  New BTL suite  Booster Bonus Deposit Account

• Approval in Principle: 15 minutes for Mortgages

and 5 minutes for Personal Loans

• Saturday opening hours (trial)

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Core Bank – AMU

• 1. Deliver a better

bottom line

• 2. Support ptsb front-

end efforts

• Collections through to Recoveries is an integral part of an end to end banking

platform

• Invested heavily to build and develop this capability and skillset in the AMU
• 3. Meet all Central Bank

targets  Best‐in‐class early collections capability  Wide range of restructure arrangements  Optimised property management  Proposed long term solutions to more than 18,000 customers  More than 12,500 accepted by end 2013  Cured AMU loans can return to ptsb  Minimise new arrears cases in ptsb

The AMU has 3 Key Objectives:

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Non‐Core

• Non‐Core being managed in line with expectations;

 Outsourced management of CRE book to enhance value  Increasing buyer appetite for Irish Non‐Core assets; CRE and Springboard being prepared for sale  CHL & IoM – good quality but low‐yielding  Driving efficiencies and managing for value

permanent tsb Group

permanent tsb bank Asset Management Unit Non Core (UK) Non Core (ROI)

• Capital Home Loans
• Isle of Man
• CRE
• Springboard

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Glen Lucken

• Financial Performance

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€m 2013 2012 Change Net Interest Income 309 300 3.0% Other Income (net) 48 62 ‐22.6% ELG Fees (105) (165) 36.4% Total Operating Income 252 197 27.9% Operating Expenses (300) (283) ‐6.0% Pre‐Impairment Loss (48) (86) 44.2% Impairment Charges (929) (891) ‐4.3% Underlying Loss Before Exceptional Items (977) (977) ‐ Exceptional Items (Net) 309 58 ‐ Loss Before Tax (668) (919) 27.3% Tax 407 (77) ‐ Loss After Tax (261) (996) 73.8% Net Interest Margin 0.82% 0.72% 10 Bps Total Operating Income

• Increased by 28% largely due to reduction in ELG
• NIM (excluding ELG) has increased to 0.82%,

primarily due to reduction in cost of funding and

• ne‐off gains from disposals

Operating Expenses

• Operating expenses increased by 6% due to one‐
• ff provisions

Impairment Charge

• Overall increase of 4%, mainly driven by the ROI

Home Loan and BTL portfolios

• Includes the effect of BSA and new CBI

provisioning guidelines of c.€0.3bn Exceptional Items (Net)

• Includes write‐back of pension liabilities of

€329m offset by restructuring costs of €20m. Tax

• Relates to recognition of deferred tax asset on

previously unrecognised carried forward tax losses

Group Income Statement

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2013 2012

ptsb AMU Non‐Core Group Group Underlying Loss Before Exceptional Items (€153m) (€561m) (€283m) (€977m) (€977m) NIM 1.03% 0.11% 0.21% 0.82% 0.72% Loans to Customers €14.2bn €6.4bn €8.7bn €29.3bn €31.8bn Total Assets €21.9bn €6.4bn €9.3bn €37.6bn €40.9bn

• ptsb reported an underlying loss before exceptional items of €153m and a NIM of

1.03% (before ELG costs)

• AMU’s results are impacted by high impairment charges of €496m
• Non‐Core losses mainly attributable to impairment charge on Commercial Real Estate

(CRE) Portfolio which represented 86% of the total Non‐Core impairments

Segmental Performance

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Staff Costs

• Staff costs reduced by €23m or 15%

due to changes on pension entitlements, other staff benefits and savings achieved from VSS

• Average staff numbers increased

mainly due to significant staffing up in the AMU (c.300), offset by staff reductions in other parts of the Group Other Costs

• Increase in other costs relates to one‐
• ff provisions

Operating Expenses

€133m €173m €150m €127m 2012 2013 Other Costs Staff Costs

€283m €300m

2,018 2,041

• Avg. Staff No.

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• Impairments on ROI HLs increased by €147m or 50% and on ROI BTLs by €66m or 30%
• The charges for HL, BTL and CRE include a combined c.€0.3bn of charge arising as a result of the

impact of the BSA and the implementation of the new CBI provisioning guidelines

• CRE impairments decreased by €160m or 50% as 2012 included a one‐off review which resulted in

a large impairment charge

• PCR on all key portfolios has increased except CRE which remains high at 63%

€m Impairment Charges PCR 2013 2012 Change 2013 2012 ROI Mortgages ‐ HLs 439 292 50% 37% 34% ‐ BTLs 290 224 30% 58% 50% UK Mortgages 21 25 ‐16% 31% 28% CRE 160 320 ‐50% 63% 66% Consumer 19 30 ‐37% 97% 101% Total Group 929 891 4% 47% 45%

Impairment Charges

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• System funding reduced by €3.8bn or 35%; reduced to 20% of total funding
• New RMBS issuance of €500m in 2013
• Senior Debt of €2.6bn repaid in 2013
• Continuing focus on optimising the funding mix:
• €2.9bn growth in deposits across both Retail and Corporate channels at an improved rate
• Reliance on short‐term debt reduced to 16%
• Deposits now increased to 56% of total funding
• LDR improved due to a combination of deposit growth and loan book run‐down
• Continuing reduction in Cost of Funds into 2014

Balance Sheet Metrics 2013 2012 Funding Mix: Deposits Long‐Term Debt Short‐Term Debt ECB Funding 56% 28% 16% 100% 20% 45% 33% 22% 100% 29% LDR 150% 191%

Funding

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19 19 13.1% 13.4% 10.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% CT1% CET1% Transitional CET1% Fully Loaded Capital Ratios at 31 December 2013

• These ratios reflect outcomes from the

Balance Sheet Assessment including:

• Increase in RWAs (c.€3.3bn)
• Increase in impairment provisions

(c.€0.3bn)

• Core Tier 1 ratio at 31 December 2013 was

13.1%

• Proforma Common Equity Tier 1 ratio under

Basel III transitional basis was 13.4%

• Common Equity Tier 1 ratio under Basel III

fully loaded basis was 10.9%

Capital

8% 8% 10.5%

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Rebuilding Profitability

• NIM increased to 0.82% from a trough of 0.66% in H2 2012;

1.03% in ptsb SBU

• Staff costs down by 15%, other costs increased due to one‐
• ff provisions; further actions being taken to manage costs

down

• Impairments remain elevated but outlook stabilising

Funding Position

• System funding reduced by a further 35%
• Deposit base increased by 17%, aligned to improvements in

funding mix

• No impact from ELG withdrawal

Capital Position

• Strong Core Tier 1 Capital Base at 13.1%
• Strong CET1 ratio at 13.4%
• Continuous effort to optimise RWAs

Conclusion

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Jeremy Masding

• Arrears Management

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Arrears Management Headlines

• Arrears have peaked and now in decline
• PCR improved across all key portfolios

ROI HLs

 73% of ROI residential mortgages are HLs; of these 58% are ECB trackers  Early Arrears continue to reduce and are ahead of industry; Late Arrears show signs of stabilisation and declined for the first time since 2010 in Q4 2013  PCR has increased by 3ppts to 37%

ROI BTLs

 27% of ROI residential mortgages are BTLs; of these 85% are ECB trackers  Both Early and Late Arrears continuing to reduce with a widening positive gap to the industry  Private rental market demonstrated further recovery in 2013  PCR has increased by 8ppts to 58%

• Provisioning assumptions include 55% peak to trough fall (compared to actual fall of 46%) plus other

adjustments for forced sale discounts, disposal costs

• Residential property prices increased in 2013 by 6.4% at national level; 15% in Dublin

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€3.9bn €17.7bn

54% 19% 6% 20% 1%

Gross Loans

ROI HL ROI BTL CRE CHL Consumer 53% 26% 17% 3% 1%

NPLs

ROI HL ROI BTL CRE CHL Consumer

Asset Quality: Total Portfolio Composition

ROI HL ROI BTL CRE CHL Consumer Total Gross Loans €bn 17.6 6.4 2.1 6.8 0.4 33.3 Performing % 74% 65% 31% 96% 72% 74% NPLs* % 26% 35% 69% 4% 28% 26% Provisions €bn 1.7 1.3 0.9 0.1 0.1 4.1 PCR % 37% 58% 63% 31% 97% 47%

*Non‐Performing Loans are defined as loans which are greater than 90 days in arrears or impaired

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ROI HL: €17.6bn ROI BTL: €6.4bn

Source: CBI

Arrears Levels – ROI HLs and ROI BTLs

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For the 12 months to 31 December 2013 Offered Accepted (so far)

Total Long Term Treatments ‐ HLs (# of Cases) 14,845 10,305 ‐ HLs (€m) €2,151 €1,445 ‐ BTLs (# of Cases) 3,221 2,035 ‐ BTLs (€m) €1,172 €751

• AMU continues to make good progress in replacing Short‐Term with Long‐Term

Solutions that are Sustainable and Affordable

• Sale or Foreclosure options are pursued where a Long‐Term Treatment is not suitable
• Customer contact levels and cash collection has increased
• All CBI Mortgage Arrears Resolution Targets met in 2013 (Q4 subject to CBI

verification)

Long Term Treatments – ROI HLs and ROI BTLs

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• Recap & Priorities

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Recap

• Encouraging progress in 2013; years 1 and 2 of laying the

foundation and building momentum complete

• Successful re‐entry into the market; force for competition
• Arrears have peaked and now in decline
• Good traction on mortgage restructurings
• Improvements in macro‐economic and commercial factors

encouraging

Priorities

• Further improve customer experience
• Further increase market share in key product areas
• Continue to support recovery of the Irish economy, increase

lending and drive competition

• Continue progress on long term solutions for customers in

arrears

• Return to profitability

2013 – Recap & Priorities

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Myths

• Tracker Mortgages
• Restructuring Plan
• Stress Tests

Reality

• Returning to Profitability
• Growing Market Share and Competing Vigorously
• Here to Stay

Debunking myths about permanent tsb

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• Q & A

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