1 2013 Half Year Results 1 Forward Looking Statements 2 A number - - PowerPoint PPT Presentation

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2013 Half Year Results

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2013 Half Year Results

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Forward Looking Statements

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.

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• Group Chief Executive’s Review

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• Financial Review

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• Asset Quality & Arrears

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• Recap & Priorities

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• Q & A

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Agenda

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Group Chief Executive’s Review

Jeremy Masding

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Bank Plus Two strategy now firmly in place  The Bank - PTSB SBU – is proving its relevance and is on a pathway to viability  Return to mortgage market – beginning to gain traction  Launches very competitive assault on current account market  Continues gathering deposit accounts  Pre-impairment losses of €12m, approaching break-even

H1 2013 – Encouraging Progress

Almost 30,000 new current accounts

• pened to date in 2013

Over €120m new mortgage approvals to date in 2013 Growth in Deposits of

• ver €2.5bn in H1 2013

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 The Plus Two are performing in line with expectations –  AMU has proposed long term solutions to 5,000+ customers  2,888 accepted by end June  Non-Core operations (CHL and CRE) being managed in line with expectations  Restructuring Plan  Update recently submitted by Department of Finance to EC  Aiming for approval before year end

H1 2013 – Encouraging Progress

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Financial Performance – firmly in line with Restructuring Plan  Reduction of Group losses from €565m to €141m flattered by technical accounting issues (pension write back)  Modest improvement in Group Operating Loss before Exceptional Items – despite conservative approach to impairment provisions  The “Good Bank” reports underlying losses of €39m (just ~9%

• f total Group losses) – Pre-impairment – close to break-even

 Progress on reducing costs + increasing Net Interest Margin  €2.6bn Senior Debt repaid + System funding down by 27%

H1 2013 – Encouraging Progress

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Financial Review Glen Lucken

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€m H1 2013 H1 2012 Change %

Total Operating Income 119 115 3% Operating Expenses (138) (135) 2% Pre-Impairment Loss (19) (20) 5% Impairment Charges (430) (437) 2% Underlying Loss Before Exceptional Items (449) (457) 2% Exceptional Items (Net) 318 (130)

• Loss Before Taxation

(131) (587) 78% Taxation (10) 22 145% Loss After Taxation (141) (565) 75% Net Interest Margin 0.82% 0.76% 6 bps

 Loss After Taxation: Decreased by 75%  Underlying Loss Before Exceptional Items: Marginally reduced in H1 2013 by 2%  Income: NIM (excluding ELG) has increased from H1 2012 by 6bps to 0.82%, primarily due to reduction in cost of funding  Operating Expenses: Broadly in line with H1 2012 with specific actions undertaken to manage costs down further  Impairments:  Marginally reduced from H1 2012  Overall Provisions Coverage Ratio1 increased to 48% from 45% in December 2012  Early arrears reducing and provision charge falling in most books

Group Income Statement

1Total impairment provision as % of Non-Performing Loans

€m

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Segmental Performance

€m H1 2013 H1 2012

ptsb AMU Non-Core Group Group Underlying Loss Before Exceptional Items (€39m) (€329m) (€90m) (€449m) (€457m) NIM 0.95% 0.19% 0.14% 0.82% 0.76% Loans to Customers €14.5bn €6.7bn €9.0bn €30.2bn €32.9bn Total Assets €22.0bn €6.8bn €9.3bn €38.1bn €43.8bn

 ptsb reported underlying loss before exceptional items of €39m (pre-impairment loss of €12m) approaching break-even  ptsb recorded a NIM of 0.95% (before ELG costs) with overall Group NIM diluted by lower margins in AMU and Non-Core  AMU continues to be impacted by high impairment charges; however, progress to date and future progress on arrears resolution will mitigate this impact  Non-Core losses mainly attributable to impairment charge on Commercial Real Estate (CRE) Portfolio

Good Bank

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Total Operating Income

€m H1 2013 H1 2012 Net Interest Income (Before ELG) 156 166 ELG Fees (63) (81) Other Income 26 30 Total Operating Income 119 115

 NIM increased to 0.82% in H1 2013 from a trough of 0.66% in H2 2012  ELG fees reduction due to withdrawal of the scheme in March 2013  Funding covered by ELG as a percentage of total liabilities has dropped from 38% in December 2012 to 24% in June 2013  ELG fees will reduce as the covered liabilities mature

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Operating Expenses

 Movements in OpEx reflect significant underlying changes in the Group’s cost structure. Since H1 2012, the Group has invested in the AMU which employs circa 250 people.  Notwithstanding this, staff costs reduced by €2m from H1 2012 and by €10m from H2 2012 due to a voluntary severance programme and the sale of the non-core consumer finance portfolio in December 2012.  Non-payroll costs €5m higher from H1 2012 due to AMU strategic investment  Managing down the cost base further

€151m €138m €135m €m

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Impairment Charges

 Impairments on ROI HLs increased by €106m mainly arising from continued conservative approach to provisioning  Impairments on BTLs decreased by €22m due to progress made by AMU  CRE impairments decreased by €66m as 2012 included a one-off review which resulted in a large impairment charge  PCR on ROI HLs and BTLs increased:  ROI HL 34% 36%  ROI BTL 50% 58%

€m Impairment Charges PCR % H1 2013 H1 2012 Change % H1 2013 H2 2012 ROI Mortgages

• HLs

236 130 82% 36% 34%

• BTLs

102 124 18% 58% 50% UK Mortgages 11 12 8% 30% 28% CRE 72 138 48% 64% 66% Consumer 8 30 73% 103% 101% Total Group 429 434 1% 48% 45%

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Capital

 Core Tier 1 Ratio of 15.7% (Basel II basis) with 5.2% buffer to the CBI minimum

• f 10.5%

 Risk Weighted Assets (RWA) reduced by €0.3bn

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Funding

Balance Sheet Metrics €bn H1 2013 H2 2012 Wholesale Funding: Monetary Authorities Market 7.8 7.8 10.7 9.6 Deposits: Retail Corporate 13.7 5.5 13.5 3.1

 System funding reduced by 27% (€2.9bn); no recourse to ELA since April 2012  Senior debt of €2.6bn already repaid in 2013  Continuing focus on optimising the funding mix:  €2.6bn growth in deposits across both Retail and Corporate channels at an improved rate  Reliance on short-term debt reduced to 15%.  Deposits now 55% of total funding  LDR and NSFR improved due to a combination of deposit growth and loan book run down  Deposits increased despite ending of ELG scheme  Continued focus on optimising the cost of funds

Balance Sheet Metrics % H1 2013 H2 2012 Funding Mix: Deposits Long-Term Debt Short-Term Debt 55% 30% 15% 100% 45% 33% 22% 100% LDR

157%

191% NSFR  81% 67%

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Conclusion

Rebuilding Profitability

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

0.95% in ptsb SBU

• Operating costs broadly in line with H1 2012, further

actions taken to manage costs down

• Impairments remain elevated but outlook stabilising
• ptsb SBU approaching breakeven

Capital Position

• Strong Core Tier 1 Capital Base at 15.7%
• Continuous effort to optimise RWAs

Funding Position

• System funding reduced by a further 27%
• Deposit base increased by 16%, aligned to improvements in

funding mix

• No impact from ELG withdrawal

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Asset Quality Jeremy Masding

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AMU Progress

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Asset Quality: Total Portfolio Composition

ROI HL ROI BTL CRE CHL OTHER 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Composition of Loan Portfolio (% of € values)

Total Portfolio Composition

€3.9bn €6.5bn €17.7bn €2.2bn €6.9bn €0.5bn €33.8bn*

* Excludes provisions of €3.6bn

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Group: €33.8bn

 Early arrears reducing  Overall arrears growth slowing  Impairment charge reduced  PCR improved: PCR of NPLs increased by 3% to 48% in June 2013

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ROI BTLs: €6.5bn

 27% of ROI residential mortgages are BTLs  Impairment provisions down by 19% on H1 2012  Arrears levels reduced by 1%  PCR has increased by 8% to 58%  Continued focus on sustainable long term treatments

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%

% of cases in default

Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 PTSB 6.4% 5.3% 5.2% 5.0% 4.6% Industry Excl PTSB 6.6% 6.6% 6.5% 7.0% 6.8%

Early Arrears % - Cases 0-90 days in arrears

PTSB Industry Excl PTSB 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

% of cases in default

Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 PTSB 19.3% 20.3% 21.0% 20.6% 18.8% Industry Excl PTSB 16.1% 17.5% 18.5% 19.5% 20.7%

Default % - Cases over 90 days in arrears

PTSB Industry Excl PTSB

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ROI Home Loans: €17.7bn

 73% of ROI residential mortgages are HLs  Evidence of property price stabilising  Early arrears falling  PCR has increased by 2% to 36%  Continued focus on long term treatments

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%

% of cases in default

Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 PTSB 6.2% 5.3% 5.4% 5.4% 5.0% Industry Excl PTSB 6.2% 6.5% 6.2% 6.1% 6.0%

Early Arrears % - Cases 0-90 days in arrears

PTSB Industry Excl PTSB 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% % of cases in default

Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 PTSB 12.6% 13.2% 13.7% 14.5% 15.1% Industry Excl PTSB 10.1% 11.1% 11.5% 11.9% 12.2%

Default % - Cases over 90 days in arrears

PTSB Industry Excl PTSB

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Forbearance Treatments – ROI HLs and BTLs

For the six months to 30 June 2013 Offered Accepted (so far)

Total Long Term Treatments

• HLs (# of Cases)

3,289 1,823

• HLs (€m)

479 249

• BTLs (# of Cases)

1,746 1,065

• BTLs (€m)

758 427

 AMU continues to make good progress in replacing short-term forbearance measures with long-term sustainable and affordable solutions  Voluntary or legal options are also pursued where a long-term treatment is unsuitable  Early arrears flow has continued to reduce in both HLs and BTLs  Customer contact levels and cash collection has increased  CBI Mortgage Arrears Resolution Targets: Q2 targets met and on track to meet targets for Q3 and Q4 H1 2013 H2 2012

Total Forbearance including Long Term Treatment Cases

• HLs (# of Cases)

15,432 14,308

• HLs (€m)

2,257 2,136

• BTLs (# of Cases)

2,226 1,354

• BTLs (€m)

789 470

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• As at 30 June, 58% of ROI Trackers were allocated to PTSB SBU

ROI Tracker Mortgages

• ptsb SBU will generate pre-provision profit in 2014
• Profitability will improve as core product margins widen and new

lending builds up

• ptsb SBU can grow through organic core product flow (and

transfers of cured mortgages from the AMU)

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Recap & Priorities

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H1 2013 – Recap & Priorities

Recap

• Encouraging Progress on ‘Bank Plus Two’ strategy
• Shape and potential of the “Good Bank” is beginning

to emerge

• Overall Group financial performance in line with

Restructuring Plan

• Good traction developing on mortgage restructurings

Priorities

• NIM
• Continued drive in Mortgage, Deposits and Current

Accounts in ptsb

• Continue progress on long term solutions for

customers in arrears