2012 Jeremy Masding Group Chief Executive Glen Lucken Group Chief - - PowerPoint PPT Presentation

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2012 Jeremy Masding Group Chief Executive Glen Lucken Group Chief - - PowerPoint PPT Presentation

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0 Full Year Results: 2012 Jeremy Masding Group Chief Executive Glen Lucken Group Chief Financial Officer www.permanenttsbgroup.ie 2012 Full Year Results Page 0 Forward Looking Statements 1 A number of statements we make in our presentation

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2012 Full Year Results

Full Year Results:

2012

Jeremy Masding

Group Chief Executive

Glen Lucken

Group Chief Financial Officer

www.permanenttsbgroup.ie

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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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2012 Full Year Results

  • Group Chief Executive’s Review

1

  • Financial Review

2

  • Arrears & Asset Management Unit

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  • Recap & Priorities

4

  • Q & A

5

Agenda

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Group Chief Executive’s Review Jeremy Masding

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2012 – A Transformative Year

Overhaul:  Group Architecture  Board of Directors  Senior Management Team  Strategy Restructuring:  Top to Toe Restructuring Plan - “The Bank + Two Strategy” Tackling Problems:  Managing arrears  Reducing the Standard Variable Rate (“SVR”)  Tackling high cost base

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2012 – The Bank + Two Strategy

permanent tsb Asset Management Unit CHL (UK)

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2012 – The Bank + Two Strategy

permanent tsb

  • Tackled the SVR issue
  • Grew the deposit base
  • Re-sized the business and cost base
  • Return to relevance
  • Mortgage Lending
  • Current Account
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2012 – The Bank + Two Strategy

Asset Management Unit

  • Constructed a new arrears unit from

scratch

  • Established a best in class operation
  • Recruited and trained specialists
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2012 – The Bank + Two Strategy

CHL (UK)

  • Provides excellent service levels
  • Optimises arrears position
  • Maintains optionality
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2012 Full Year Results

Financial Review Glen Lucken

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Financial Highlights

Rebuilding Profitability:

 Loss Before Exceptional Items: Reduced by 33% to €0.98bn.  Impairments: Reduced by 38% to €0.89bn.  Net Interest Margin: Reduced by 0.20% to 0.72%.

Strengthening the Balance Sheet:

 Deposits: Grew by €2.2bn  Wholesale Funding: Extended market term repo secured on UK assets.  Sale of Irish Life: Assisted the Group’s funding and capital position  System Funding: Reduced by €3.3bn; no ELA since April 2012.  Regulatory Capital: Improved Core Tier 1 Ratio to18.0%.

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€m 2012 2011 Variance Total Operating Income 197 262 (65) Operating Expenses (286) (290) 4 Impairment Charges (891) (1,440) 549 Operating Loss Before Exceptional Items (980) (1,468) 488 Exceptional Items (Net) 58 963 (905) Loss Before Taxation (922) (505) (417) Taxation (77) 81 (158) Loss After Taxation (999) (424) (575) Net Interest Margin 0.72% 0.92% (0.20%) Operating Loss Before Exceptional Items: Reduced in 2012 by 33% Income: NIM at 0.72% remains a key area of focus for the restoration of profitability. Operating Expenses: Marginally reduced with actions taken to reduce the cost base in 2013. Impairments: Flow decreased by 38%  Flow of impairments on ROI Residential Mortgages (HLs and BTLs) decreased by 57%.  Increased flow of impairments on CRE of €141m. Exceptional Gains:  Gain on Liability Management Exercise of €224m offset by loss on sale of PTSB Finance of €80m and restructuring costs of €86m.

Group Income Statement

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Total Operating Income

€m 2012 2011 Net Interest Income

(Before ELG)

300 405 ELG Fees (165) (173) Other Income 62 30 Total Operating Income 197 262

 NIM reduced by 0.20% to 0.72% in

  • 2012. Key factors in this reduction

were:  Reduction in the Standard Variable Rate on ROI Mortgages.  Increased year-on-year costs of deposits.  ELG fees reduced marginally due to a reduction in the level of covered balances and reduced average fee rate.  Net Other Income increased by €32m principally due to gains arising from the sales of Government Bond holdings.

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Impairments

ROI Residential Mortgages  Flow of impairments on HLs down 51%.  Flow of Impairments on BTLs down 62%.  Increased focus on arrears management.  Set up the Asset Management Unit. CRE  Impacted by reduced rent rolls and price falls with flow of impairments increasing by €141m.  Management of this portfolio has been

  • utsourced to optimise case-by-case
  • utcomes.
€580m €284m €591m €224m

€0m €100m €200m €300m €400m €500m €600m €700m

2011 2012 Flow of impairment of ROI Mortgages ROI HLs ROI BTLs

€179m €320m

€0m €50m €100m €150m €200m €250m €300m €350m

2011 2012 Flow of CRE impairments

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Funding

Balance Sheet Metrics 2012 2011

Total Assets €40.9bn €43.2bn Loans to Customers €31.8bn €33.7bn Wholesale Funding: Monetary Authorities Market €10.7bn €9.6bn €14.0bn €11.4bn Deposits: Retail Corporate €13.5bn €3.1bn €12.8bn €1.6bn Funding Mix: Customer Accounts Long-Term Debt Short-Term Debt 45% 33% 22% 100% 37% 29% 34% 100%

 Loan book reduced by €1.9bn: €0.9bn increased impairment. €0.7bn of net redemptions/repayments. €0.3bn due to sale of ptsb Finance and FX differences.  System funding reduced by 24% (€3.3bn): No recourse to ELA since April 2012.  Increased focus on optimising the funding mix: €2.2bn growth in deposits across both Retail and Corporate channels. Execution of a Term Repo for £2.6bn secured on UK mortgage assets.

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Capital

16.7% 18.0% Dec 11 Dec 12 Core Tier 1 Capital Ratio

 Actions taken to improve the capital ratios during 2012.  Liability Management Exercise generating €224m  Debt buy-backs generating €27m.  Sale of €180m of highly risk weighted securities, saving €123m in capital.  Sale of Irish Life: €1.3bn.  Core Tier 1 ratio of 18.0% compares to a regulatory minimum of 10.5%.  Positioned to absorb future financial losses and any capital required from the separation of an SBU.

17.9% 20.5% Dec 11 Dec 12 Total Capital Ratio

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Financial Highlights

Rebuilding Profitability:

 Loss Before Exceptional Items: Reduced by 33% to €0.98bn.  Impairments: Reduced by 38% to €0.89bn.  Net Interest Margin: Reduced by 0.20% to 0.72%.

Strengthening the Balance Sheet:

 Deposits: Grew by of €2.2bn  Wholesale Funding: Extended market term repo secured on UK assets.  Sale of Irish Life: Assisted the Group’s funding and capital position  System Funding: Reduced by €3.3bn; no ELA since April 2012.  Regulatory Capital: Improved Core Tier 1 Ratio to18.0%.

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Arrears & Asset Management Unit Jeremy Masding

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2012 Full Year Results

Arrears

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Asset Quality: Portfolio Composition

ptsb Portfolio – Composition

79% 5% 16%

Arrears Profile of ROI Mortgages (#Cases)

ROI HL ROI BTL CHL CRE Other 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Composition of Loan Portfolio (% of € values)

Up to Date In Arrears <90 Days In Arrears >90 Days

ROI Mortgages – Arrears Profile

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Asset Quality: Arrears

  • Arrears cases continue to increase,

albeit at a slower pace since early 2012.

  • House prices have started to stabilise

in H2 2012. Arrears Evolution Trend

(Values in €m)
  • Dec. 11
  • Dec. 12

Total ROI Residential Mortgages (HLs and BTLs) 25,419 24,588 Fully Performing Loans 18,963 17,570 As % of Total 75% 72% Total NPLs 4,378 5,501 As % of Total 17% 22% Impairment Flow 1,171 508 Impairment Stock 1,629 2,191 As % of NPL 37% 40% As % of Total 6% 9% Weighted Avg. LTV 116% 119%

  • Total NPLs increased by 26% while the

provision increased by 34% to cover 40% of the NPLs in Dec 2012.

  • Loans in forbearance increased by 12%.

Evolution Data on Total NPLs

5000 10000 15000 20000 25000 30000

  • Dec. 2009
  • Dec. 2010
  • Dec. 2011
  • Dec. 2012

ROI HLs and BTLs arrears 25% 71% 7%

  • No. of cases
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Asset Management Unit (AMU)

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Asset Management Unit Non-Performing Loans Non-Core Loans Low Yielding Loans

HL and BTL CRE, Other Portfolios, permanent tsb Finance (until disposal) HL and BTL

Asset Management Unit

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AMU: Workplan

2012 2013 Q2 Q3 Q4 Q1 Q…

Build Capability Fix Front Book Focus

  • n Back Book

Maintain Momentum Focus of last 9 months Current focus

1 2 3

Workplan in place, with 2 of the 3 key steps delivered

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Answering More Calls & Contacting More People Than Ever Before… AMU: Building Collections Capability

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Monthly cash collected by AMU has more than doubled… AMU: Fix the Front book

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Arrears (1-30) Arrears (31-60) Arrears (61-90) NPL (>90) Provisions

HL + BTL

… with new disciplines delivering an improvement across all arrears buckets as well as in new NPLs flow AMU: NPL Flow

1,008 577 493 710 446 361 200 400 600 800 1000 1200 0-30 31-60 61-90 Dec 11 Dec 12

Days in arrears Actual €m

1,961 1,123 500 1000 1500 2000 2500

Default Flow

Dec 11 Dec 12

Actual €m ~43%

reduction

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AMU: Fix the Front book

Frontbook ahead of the Restructuring Plan in 2012

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2012 2013 Q2 Q3 Q4 Q1 Q2

Grounded Provisioning Build Capabilities

2

Fix the Front book

Optimise & sustain benefits delivery

BTLs: Develop Detailed Design & Plan

Implement & Deliver

Design Legal & Recoveries TOM

Adjust resourcing levels as required

Fix the Back book

Implement

& Deliver

Implement

& Deliver CRE: Develop Detailed Design & Plan HLs: Develop Detailed Design & Plan Other: Develop Detailed Design & Plan Design Property Management TOM

1 2 3 4

AMU: Focusing on Back book

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Recap & Priorities

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2012 – A Transformative Year ‘Enormous Progress’ made on an ‘Enormous Challenge’:  A year of transformation on multiple fronts.  Significant progress on a sustainable, credible Restructuring Plan.  Significant progress made on stabilising financials  The Bank + Two Strategy – a basis for maximising recovery and optionality

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2013 – Building on the Foundation

permanent tsb ‘Returning to Relevance’

 Back to Basics  NIM  Cost Management

AMU ‘Curing the Patient’

 Cash collected  Long-Term Treatments  Provision Release

CHL ‘Maintaining Optionality’

 Service Excellence  Cash Collected  Choices

Group Centre ‘Standards and Service’

 Professionalism  Funding  Portfolio Management

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Thank You