Annual Results 2015 For the 12 months ended 31 December 2015 Annual - - PowerPoint PPT Presentation

Annual Results 2015

Annual Results 2015

For the 12 months ended 31 December 2015

Annual Results 2015 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 US Securities legislation. The words "expect", "anticipate", "intend", "plan", "estimate", "aim", "forecast", "project", "target", "goal", "believe", "may", "could", "will", "seek", "assume" and similar expressions (or their negative) identify certain of these forward-looking

• statements. These forward-looking statements are statements regarding Permanent TSB Group Holdings plc's (the “Group's") intentions, beliefs or current

expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies and the banking

• industry. The forward-looking statements in this presentation are based on numerous assumptions regarding the Group's present and future business

strategies and the environment in which the Group will operate in the future. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the Group to be materially different from those expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond the Group's ability to control or estimate precisely, such as future global, national and regional economic conditions, levels of market interest rates, credit or other risks of lending and investment activities, competition and the behaviour of other market participants, the actions of regulators and other factors such as changes in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions. Past performance should not be taken as an indication or guarantee of future results, and no representation

• r warranty, express or implied, is made regarding future performance. The Group expressly disclaims any obligation or undertaking to release any updates or

revisions to these forward-looking statements to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based after the date of this presentation or to update or to keep current any other information contained in this

• presentation. Accordingly, undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this presentation.

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. The securities referred to in this presentation have not been, and will not be, registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements under the Securities Act. This presentation should be considered with the Group’s Annual Report for 2015 and all other relevant market disclosures, copies of which can be found at the following link: www.permanenttsbgroup.ie/investor-relations 1

Forward Looking Statements

2015 Annual Results 2 2015 Annual Results

Agenda

Progress & Strategy 3 Financial Performance 9 Summary & Outlook 25

Annual Results 2015 3

Progress & Strategy

Jeremy Masding

Group CEO

Annual Results 2015 4

Delivering Financial Performance

Net Interest Margin

112bps

FY14 90bps

Cost Income Ratio¹

84%

FY14 126%

Impairment (Charge) / Write-Back

FY14 €42m

Profit / (Loss) Before Exceptional Items

FY14 (€39m)

€26m (€35m)

1. Excluding Exceptional Items 2. Excluding €0.3bn CRE Performing Loans transferred to Core Bank from 1 January 2016 3. On a Fully Loaded Basis 4. Calculated using the number of shares in issue at 31 December 2015

Non- Core Loans

(Gross)

RWAs TNAV Per Share

Dec 2014 €9.3bn Dec 2014 €14.8bn Dec 2014 €4.864

€12.3bn

3

€4.92 €3.8bn

2

NPLs CET1 Ratio

(Fully Loaded)

Loan to Deposit Ratio

125% 15.0% €6.1bn

Dec 2014 €8.3bn Dec 2014 138% Dec 2014 12.4%

Annual Results 2015 5

Delivering Competition In The Irish Market

30 Branches Refurbished To Date Extended Opening Hours Good Momentum in Credit Cards & Insurance SME Launch December 2015

2016 New Website Launch Building On Positive Momentum

The Rise of Mobile Mobile traffic now makes up 53% off all traffic to permanenttsb.ie compared to 28% in 2014 30% Increase in Mobile Payments www.permanenttsb.ie Website traffic up 80% YOY 172% increase in Term Loans originating Online/Phone in 2015 Active mobile customers +20% YoY Innovative New Products & Propositions

Mortgage Drawdowns Personal Lending Current Accounts Retail Deposits

€459m €60m

+2% YOY

€3bn

43,000 New Accounts in 2015

€11bn

In line with expectations

+40% YOY

Annual Results 2015

Delivering Arrears Management Solutions

30% 45% 51% 70% 55% 49%

Dec-13 Dec-14 Dec-15

Treated NPLs Untreated NPLs

ROI Residential Mortgage NPLs2,3

1. Includes pre, early and late arrears cases 2. Includes assessments made on BTL cases where no SFS is required 3. 94% are <31 DPD; 89% are 0 DPD

c.39k Assessments1 Completed Since 2013 Restructure solutions have been offered in 90% (or 35k) of cases2 where an assessment has been made 94% of sustainable solutions are meeting the terms3 of the arrangement

6

1. Peak : Q3 2013 2. Based on balances 3. Treated NPLs include Split Mortgages, Other Long Term and Short Term Treated Loans. Untreated NPLs include Technically Held, Loans in Closures and > 90 DPD Cases In Legal.

Overall Arrears

Levels¹

• 46%

Exceeded Mortgage Arrears Resolution Targets (MART) Target 85% Target 55% Target 75% Proposed Concluded Meeting Terms

89% 69% 94%

Since Peak

>90 DPD By Cases >720 DPD By Cases Since Dec 2014 Since Dec 2014

• 21%

ROI Residential Mortgages

• 9%

€5.7bn

• 12%

Since Dec 2014

Annual Results 2015 7

Embedding Our Purpose & Strategy

Please find further detail on Our Business Model & Strategy on page 11 of the 2015 Annual Report

Clear Competitive Positioning Effective Arrears Management Maximising Non-Core Value Building a Safe, Stable and Resilient Group Sustainable Profitability We set out our Strategic Priorities and Medium Term Financial Targets in our Equity

• Prospectus. We have presented our Corporate Strategy in the 2015 Annual Report both to

express our purpose more explicitly, and to provide a construct to guide the execution of those priorities.

We set out our Strategic Priorities page 92 of the 2015 Equity Prospectus

We will maximise shareholder value

• ver time

by developing a personal banking relationship with

• ur customers

while operating within the strict boundaries of

• ur risk appetite

Participation Strategy Competitive Strategy

Relative Total Shareholder Return

Our Purpose

Corporate Strategy

Annual Results 2015 8

Progressing Against Our Medium Term Targets

FY 2014 FY 2015 2018 Target Balance Sheet Group LDR 138% 125% <130% Group CET1 Ratio (Fully Loaded) 12.4% 15.0% >11% Income Statement Core Bank NIM 121bps 142bps c.170bps Core Bank Cost:Income Ratio 115% 78% c.50% Core Bank Underlying Cost of Risk1 38bps (37bps) <40bps Core Bank RoE c.10.0%2

1. Calculated excluding Provisioning Model Calibration adjustments 2. Based on Equity required for a Fully Loaded CET1 ratio of 11%

Annual Results 2015 9

Financial Performance

Patricia Carroll

Interim Group CFO

Annual Results 2015 10

Income Statement – Group

€m FY 2015 FY 2014 Change Net Interest Income 358 329 29 Other Income 34 38 4 ELG Fees (14) (59) 45 Total Operating Income 378 308 70 Total Operating Expenses (287) (362) 75 Bank Levy & BRRD Contribution (30) (27) 3 Pre-Impairment Profit / (Loss) 61 (81) 142 Impairment (Charge) / Write-back (35) 42 77 Profit /(Loss) Before Exceptional Items 26 (39) 65 Exceptional Items (Net) (460) (9) Loss Before Tax (434) (48) Key Metrics FY 2015 FY 2014 Change Net Interest Margin 1.12% 0.90% 22bps Cost Income Ratio 84% 126% 42ppts Cost of Risk1 (39bps) 31bps 70bps

• Net Interest Income and NIM
• Net Interest Income increased by €29m reflecting higher NIM
• NIM growth driven by falling Cost of Funds which fell from 1.57% in

2014 to 1.11%

• Other Income
• Down by €4m due to fair value movements in hedging instruments
• Estimated gain of €23m on sale of Visa Europe to be realised in 2016
• ELG Fees significantly reduced as more Covered Liabilities matured
• Total Operating Expenses including Bank Levy and BRRD Contributions
• Down by €72m mainly due to fall in provisions for Legacy Legal and

Compliance Related Costs and, lower Project Costs and Professional Fees

• Cost Income Ratio declined to 84% from 126%
• Impairment (Charge) / Write-back
• Headline Charge increased by €77m
• Underlying Charge reduced significantly driven by lower new defaults

rates and sustained loan cures

• Underlying Cost of Risk1 improved by 70bps
• Exceptional Items for 2015 include:
• €401m of net loss on Deleveraging on Non-Core portfolios
• €52m in relation to loss on repurchase of the Contingent Convertible

Capital Note

• €7m with respect to certain Restructuring Costs
• Profit Before Exceptional Items of €26m, improving from a loss of €39m in

2014

1Calculated excluding Provisioning Model Calibration adjustments

Annual Results 2015 11

Income Statement – Good Momentum

€m H2 2014 H1 2015 Change H2 2015 Change Net Interest Income 171 167 191 Other Income 5 14 20 ELG Fees (27) (9) (5) Total Operating Income 149 172 206 Total Operating Expenses (181) (147) (140) Bank Levy & BRRD Contribution (27)

• (30)

Pre-Impairment (Loss) / Profit (59) 25 36 Impairment Charge 191 (24) (11) Profit Before Exceptional Items 132 1 25 NIM 90bps 100 bps 128bps Cost Income Ratio 139% 85% 83%

Annual Results 2015 12

Net Interest Margin

Group NIM Drivers FY 2015 FY 2014 Asset Yields Balance €bn

• Avg. Yield %4

Balance €bn

• Avg. Yield %4

Treasury Assets2 5.5 1.92 7.1 2.62 Core Bank Loans3 19.2 2.42 20.1 2.57 Non-Core Loans3 3.9 1.70 8.1 1.87 Total Int. Earning Assets 28.6 2.18 35.3 2.41 Cost Of Funds Deposits 18.6 1.26 20.4 1.68 Wholesale Funding 3.0 1.07 7.6 1.53

• Sub. Liabilities

0.0 0.00 0.4 18.1 System Funding 4.7 0.05 4.9 0.19 Total Int. Bearing Liabilities 26.3 1.11 33.3 1.57

1. CBI Data 2. Treasury Assets include Debt Securities and, Loans and Advances to Banks 3. Balances at year end. Loan balances presented are net of provisions 4. Gross Interest Income/Average Balance

2.63% 2.48% 2.50% 2.32% 2.25% 2.11% 1.96% 1.75% 1.70% 1.44% 1.30% 0.88% H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 Asset Yield Cost of Funds 0.82% 0.82% 0.88% 1.00% 0.90% 1.28%

Group NIM and NIM Drivers

• NIM Improved to 1.12% in FY2015 principally reflecting

lower funding costs

• Asset Yields have reduced by 23bps in FY2015 mainly

due to certain high yielding Treasury Asset maturities and the full year impact of ECB rate reductions applied in 2014

• Changes to SVR pricing impact minimal (c.15k

customers switched by end February 2016)

• Cost of Funds fell from 1.57% in 2014 to 1.11% in 2015
• Retail Deposit Costs continued to fall due to rate reductions in Retail
• Deposits. Blended PTSB ROI Retail Rate of 67bps vs Blended Market Rate
• f 44bps1 at end December 2015
• Further Retail Deposit rate cut implemented in January 2016
• The cost of Corporate and Institutional Deposits continues to fall
• Wholesale Funding cost fell due to repayments and maturities
• Cost of subordinated liabilities fell due to CoCo repurchase
• Q4 NIM was 1.30%; NIM expected improve further in 2016
• Average Interest Earning Assets reduced to €31.9bn (2014: €36.3bn)

mainly due to Deleveraging and Treasury Assets maturities

NIM

Annual Results 2015 13

Total Operating Expenses

€m FY 2015 FY 2014 Change Staff Costs 121 119 2 Staff Pension Costs 11 11

• Total Staff Costs

132 130 2 Depreciation and Amortisation 20 19 1 Other Costs 135 213 78 Total Operating Expenses 287 362 75 Bank Levy 27 27

• BRRD Contribution

3

• 3

Total Operating Expenses Including Regulatory Costs 317 389 72 Average No. of Staff 2,344 2,297 47 Cost Income Ratio 84% 126% 22ppts

• Cost Income Ratio continues to decline driven by positive

momentum in both Total Operating Income and Total Operating Expenses

• Staff Costs increased marginally
• Average number of employees increased by c.2% due to required

investment in Regulatory and Control functions

• Other Costs reduced by €78m due to fall in provisions for Legacy

Legal and Compliance Related Costs , lower Project Costs and Professional Fees

• Contribution to the BRRD Fund of €3m
• Regulatory Costs including contribution to BRRD Fund and DGS

Scheme may increase by €20m - €35m in 2016

Annual Results 2015 14

Asset Quality – Impairment Charge

Breakdown by Portfolio (€m) FY 2015 FY 2014 Change ROI Home Loans (12) 123 135 ROI BTLs 66 (156) 222 Total ROI Residential Mortgages 54 (33) 87 Consumer Finance 2 (6) 8 CRE (27) (13) 14 UK Residential Mortgages 6 10 4 Total Charge / (Write-Backs) 35 (42) 77 Cost of Risk1 (39bps) 31bps 70bps Performance

• Charge of €35m for 2015 compared to a €42m Credit in 2014
• Both periods contain model parameter updates reflecting

experience adjustments

• No HPI related write-backs recognised in 2015 compared to

€280m write-back in 2014

• Excluding the impact of these model parameter updates, the

underlying charge would have been a Credit of €99m in 2015 versus a Charge of €88m in 2014, an improvement of €187m yoy

• Improvement driven by lower new defaults and sustained

loan cures

• Continued cautious approach to provisioning given variability

in HPI and in particular with regard to collateral realisations

• utside Dublin
• Medium Term guidance for write-backs remains unchanged

(See Slide 36)

1Calculated excluding Provisioning Model Calibration adjustments

Annual Results 2015 15

Asset Quality – Arrears Performance

Home Loan - # Cases 0-90 DPD

3.4% 3.6% 0.0% 3.0% 6.0% Jun-12 Dec-13 Dec-14 Dec-15 PTSB Industry

Home Loan - # Cases >90 DPD Buy To Let - # Cases 0-90 DPD Buy To Let - # Cases >90 DPD

3.0% 4.1% 0.0% 2.0% 4.0% 6.0% 8.0% Jun-12 Dec-13 Dec-14 Dec-15 PTSB Industry 10.3% 19.4% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Jun-12 Dec-13 Dec-14 Dec-15 PTSB Industry 8.2% 8.8% 0.0% 4.0% 8.0% 12.0% 16.0% Jun-12 Dec-13 Dec-14 Dec-15 PTSB Industry

Annual Results 2015 16

Asset Quality – NPL Definition

PTSB’s NPL Definition NPLs are defined as:

• Loans that are impaired;
• Loans which are greater than 90 days in arrears;
• Loans which the borrower is considered unlikely to repay the total loan

balance without realisation of the underlying collateral; and

• Loans which are considered unlikely to pay as defined under regulatory

guidelines, including both May 2013 CBI guidelines on impairment provisioning and EBA ITS.

Annual Results 2015 17

Asset Quality – NPL Composition

1. Technically Held loans refer to loans which are NPLs due to the fact that some of the borrower’s other loans are non-performing 2. These loans move out of non-performing to performing after 12 consecutive repayments 3. These exclude Springboard Mortgages

2

0.5 0.6 0.6 2.5 1.4 1.1 0.3 0.2 0.2 0.2 1.1 1.2 0.8 0.9 0.9 0.2 0.1

Dec-13 Dec-14 Dec-15

Closures >90 DPD In Legal Technically Held Splits (Treated But Impaired) Other Long Term Treated Short Term Treatment

0.2 0.2 0.3 1.2 0.9 0.5 0.1 0.2 0.2 0.1 0.1 0.8 0.8 0.7 0.1 0.05

Dec-13 Dec-14 Dec-15

1 2

ROI Buy To Let NPLs ROI Home Loan NPLs (€bn)

Included in the below a total of €0.5bn (2014: €0.5bn) loans that are not impaired and less than 90 DPD

3.93 4.5 4.2 2.5 1.83 2.2

• 7%
• 7%
• 12%
• 18%

In Treatment 56% 45% 27% 31% 41% In Treatment 47%

Annual Results 2015 18

Asset Quality – NPL Metrics

Dec 2015 Dec 2014 Change Total Loan Book Gross Loans (€bn) 25.8 32.0 6.2 Total NPLs (€bn) 6.1 8.3 2.2 Total NPLs as % of Gross Loans 24% 26% 2ppts Provision Stock (€bn) 2.7 3.7 1.0 Provision Coverage Ratio1 44% 45% 1ppt ROI HLs and BTLs Gross Loans (€bn) 21.5 22.9 1.4 ROI HL and BTL NPLs (€bn) 5.7 6.5 0.8 % of Treated ROI HL and BTL NPLs2 51% 45% 6ppts NPLs as % of Gross Loans 26% 28% 2ppts NPLs Excluding Treated Loans as % Gross Loans 13% 16% 3ppts Provision Stock (€bn) 2.5 2.7 0.2 Provision Coverage Ratio1 43% 41% 2ppts Texas Ratio3 123% 140% 17ppts Texas Ratio Excluding Treated NPLs4 76% 107% 31ppts €

€ €

• Total NPLs decreased by 27% mainly due to disposals and also

reduced new defaults and sustained loan cures

• Total NPLs as % of Gross Loans remains elevated; however,

c.50% of the NPLs are in Long Term Treatments

• Overall PCR decreased by 1ppt mainly due to Deleveraging;

however, remains robust at 44%

• c.94% of the Total NPLs are ROI HLs and BTLs , of which 51%

are Treated up from 45% in 2014

• ROI HL and BTLs NPLs amount to 27% of Gross Loans; however

reduces to 13% when Treated Loans are removed

• PCR increased by 2ppts on ROI HL and BTLs NPLs and remains

robust

• Texas Ratio remains elevated at 123%; however, drops

significantly to 76% when Treated Loans are removed

• HPI provision assumption remains conservative including a

significant buffer relative to CSO Peak-To-Trough Index

1. Calculated as Impairment Provision Stock as a % of NPLs 2. Treated NPLs include Split Mortgages, Other Long Term and Short Term Treated Loans. Untreated NPLs include Loans in Closures, > 90 DPD Cases In Legal and Technically Held NPLs 3. Calculated as Total NPLs as % of the total of Tangible Net Asset Value and Provision Stock 4. Calculated as Total NPLs excluding Treated Irish Home Loans and BTLs as % of the total of Tangible Net Asset Value and Provision Stock excluding Provisions associated with Treated Irish Home Loans and BTLs

€ € €

Annual Results 2015 19

Summary Balance Sheet – Group

€bn Dec 2015 Dec 2014 Change Net Loans 23.0 27.2 (4.2) Treasury Assets 5.5 7.1 (1.8) Assets Held For Sale 0.1 1.0 (0.9) Other Assets 0.7 1.0 (0.1) Total Assets 29.3 36.3 (7.0) Customer Deposits 18.6 20.4 (1.8) Wholesale Funding 3.0 7.6 (4.6) ECB Funding 4.7 4.9 (0.2) Other Liabilities 0.6 1.1 (0.5) Total Liabilities 26.9 34.0 (7.1) Total Equity (incl. AT1) 2.4 2.3 0.1 Total Equity and Liabilities 29.3 36.3 (7.0) Movements in Assets

• Net Loans decreased mainly due to deleveraging of CHL and CRE

portfolios

• Treasury Assets reduced due to maturities and NAMA bond

redemptions

• Assets Held For Sale include €0.1bn of Irish CRE loans which are

expected to be repaid in the coming weeks Movements in Liabilities

• Customer Deposits reduced mainly due to reduction in

Institutional Deposits and Repos with NTMA

• Wholesale Funding reduced due to repurchase of CoCo, maturities

and repayment of secured funding on CHL loans that were deleveraged

• ECB Funding remained broadly unchanged from 2014

Annual Results 2015 20

Funding

61% 70% 15% 18% 23% 12% 1% Dec-14 Dec-15

Customer Deposits ECB Funding Wholesale Subordinated Liabilities

Key Funding Metrics Dec 2015 Dec 2014 Change LDR 125% 138% 13ppts NSFR 94% 91% 3ppts LCR 153% 160% 7ppts Retail Deposits

• Irish Retail Deposits represent 42% of Total Funding
• Reduction due to rate actions manageable
• IOM represents 2% of Total Funding

Current Accounts

• Represent 11% of Total Funding

Corporate & Institutional Deposits

• Represent 15% of Total Funding
• Fall mainly due to reduction in NTMA Repos
• Expect to further fall in 2016 due to scheduled maturities

Wholesale

• Represents 12% of Total Funding; reduction due to maturities and

repayment of secured funding on CHL loans that were deleveraged

• €300m of Senior Unsecured issued in 2015
• Further Senior Unsecured and Secured issuances planned in 2016

ECB Funding

• Represents 18% of Total Funding

Key Funding Metrics

• LDR improved to 125% primarily due to deleveraging
• The Group is on a glide path towards compliance with the 2018

Basel 3 NSFR requirements

• Continue to maintain adequate liquidity coverage

€33.3bn €26.3bn Total Funding

Annual Results 2015 21

Deleveraging

Dec-13 Dec-14 Dec-15

Non-Core Loan Book at Constant Exchange Rate1

(€bn) RoI UK Total CRE Perf. CRE NPL CHL IPI2 Gross Loans 0.3 0.2 3.3 0.3 4.1 Provisions 0.0 0.1 0.1 0.0 0.2 Net Loans 0.3 0.1 3.2 0.3 3.9 NPLs

• 0.2

0.2 0.0 0.4 NPL% of Gross Loans

• 100%

5% 1% 9% PCR %

• 65%

32% 48% 51% RWAs (€bn) 0.3 0.1 1.3 0.1 1.8 Non-Core Loan Book Summary

• 58% of the Non-Core Loans at December 2014 deleveraged
• Performing CRE transferred to Core Bank from 1 January 2016
• €0.2bn CRE NPLs (Geared Property Loans) held for sale – expected to be

repaid in the coming weeks

• Residual CHL Loans remains Non-Core to the Group; continuing to explore
• ptions to deleverage, though market dynamics have changed

(€bn)

1. Using exchange rate at 31 December 2015 2. Refers to Irish Permanent Isle of Man (IoM) Limited

11.0 9.7 4.1

Annual Results 2015 22

RWAs

• RWAs reduced mainly due to deleveraging of Non-Core

portfolios

• RWA Intensity:
• Remains at 42%
• Will increase once residual UK mortgages are

deleveraged (which carry lower risk weights)

• Majority of the Lending Exposures are risk weighted

using IRB approach; Standardised approach represents <3% of EAD

• 34% of the RWAs on Total Lending Exposures are on NPLs
• EU-wide harmonisation of internal models and risk weights

represents a risk

Dec-15 EAD4 (€bn) RWAs1 (€bn)

• Avg. Risk

Weight % ROI HLs and BTLs 21.9 8.9 41% Consumer/SME 0.9 0.3 32% Non-Core UK 3.6 1.4 39% Non-Core Ireland 0.4 0.3 68% Total Lending Exposures 26.8 10.9 41% Treasury Assets 14.35 0.5 3% Other Exposures 0.7 0.5 69% Total Credit Risk 41.8 11.9 28% Operational Risk 0.4 Total Risk3 12.3

12.3 14.8 Dec-15 Dec-14

RWAs (€bn)

1

RWA Intensity2

41% 42%

1. On a Fully Loaded basis 2. Calculated as RWAs as % of Total Assets 3. Data sourced from Group’s Pillar III disclosures. RWAs include both IRB and Standardised approaches. Some exposure classes per Pillar III have been reclassified to align with the categories outlined in the table 4. Exposure At Default (EAD) is a regulatory estimate of Credit Risk consisting of both On and Off balance sheet commitments 5. Treasury Assets include gross exposures to the Irish Government and Central Banks arising from the Group’s repurchase transactions

Annual Results 2015 23

Capital

14.2% 17.1% 12.4% 15.0% Dec-14 Dec-15 Transitional Fully Loaded 374 66 (460) 45 TNAV at Dec 2014 Equity Raise Underlying Profit Exceptional Items Reserve Movements TNAV at Dec 2015

• Robust CET1 ratios
• 2.6% increase in Fully Loaded CET1 ratio
• 2.9% increase in Transitional Loaded CET1 ratio
• Increase mainly due to capital raise and deleveraging
• SSM CET1 SREP requirement for 20161 of 11.45%, on a Transitional Basis
• Total Capital Ratio of 18.9% on a Transitional Basis; 16.6% on a Fully

Loaded basis

• Leverage Ratio2 of 6.8% on a Fully Loaded basis (31 Dec 2014: 4.5%)
• TNAV broadly unchanged as impact from losses on Deleveraging was
• ffset by Equity Raise and Underlying Profit in the year

2,212 2,237

(€m)

1. SREP requirement is subject to annual review by the SSM 2. Calculated as Tier 1 Capital as % of gross balance sheet exposures (Total Assets and OBSA). 3. Underlying Profit is calculated as Profit for the Year minus Exceptional Items and movements in Intangible Assets 4. Reserve movement includes movements in AFS, Cash Flow Hedge and Revaluation Reserves

14.2% 17.0%

3.0% (3.5%) 3.1% 0.3%

Dec-14 RWA Loss After Tax Capital Raise Prudential Filters and other movements Dec-15

14.2% 17.1%

RWA Loss After Tax Capital Raise Prudential Filters And Other Dec-14 Dec-15

CET1 Transitional CET1

4 3

TNAV

Annual Results 2015 24

Summary

Return to Pre-Exceptional Profits Net Interest Margin improved to 1.12% Total Operating Expenses down by 19% Non-Performing Loans declined by €2.2 billion or 27% CET1 Ratio increased to 15.0% (Fully Loaded) and 17.1% (Transitional)

Annual Results 2015 25

Summary & Outlook

Jeremy Masding

Group CEO

Annual Results 2015 26

Risks & Opportunities

Opportunities

Growing Domestic Economy Reducing Cost of Funds Continuing Improvement in Collateral Prices Maintaining Positive Trends in Arrears Strengthening Risk, Governance and Control Foundations Increasing Regulatory Costs Constrained Lending From Limited Housing Supply Harmonisation of EU-Wide RWAs ‘Lower for Longer’ Interest Rates

Risks

Continuing Volatility In The UK Asset Market

Annual Results 2015 27

Recap / Priorities for 2016 and Beyond

Returning To Sustainable Profitability Maximising Non-Core Value Building a Safe, Stable and Resilient Group

• Rebuilding trust and

confidence with our customers

• Continuing to focus on new

products and propositions; investing in further strengthening distribution networks and sales management capabilities

• Continuing to support the CBI’s

Tracker Mortgage Review

• Continuing to build

capital and optimise its use while maintaining robust buffers above regulatory minimum thresholds

• Continuing

effectively manage the evolving regulatory environment

• Continuing to

explore

• pportunities to

complete the deleveraging programme

• Improving NIM

further while reducing the underlying cost base to achieve Group profitability

• Continuing to

ensure restructuring treatments are appropriate and relevant at all times

Developing Clear Competitive Positioning Maintaining Effective Arrears Management Robust Capital Levels Stable Funding Base Asset Quality Improving

Priorities Recap

Return to Underlying Profitability Further Progress on Deleveraging

Annual Results 2015

Annual Results 2015

For the 12 months ended 31 December 2015

Annual Results 2015

For the 12 months ended 31 December 2015

Annual Results 2015 29

Appendices

Trading Conditions 30 Segmental Income Statement 31 Interest Income 32 Interest Expenses 33 Tracker Mortgage Book and Margin 34 Other Income Analysis 35 Impairments – Write-Back Potential 36 Loan Book Profile 37 Asset Quality – NPL Composition 38 Loans In Forbearance 39 Negative Equity Balances 40 Treasury Portfolio Overview 41 Liquidity 42 Regulatory Capital 43

Annual Results 2015

Source: CSO, Department of Environment, Davy

Trading Conditions

• 25
• 20
• 15
• 10
• 5

5 10 15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Retail Sales Consumer Spending (yoy %) % YoY 12,666 20 40 60 80 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Thousands

• 10
• 5

5 10 15 2000 2002 2004 2006 2008 2010 2012 2014

Net Trade Change in Stocks Investment Government Spending Consumer Spending GDP

% change, year on 14.00% 12.00% 10.20% 8.80% 2012 2013 2014 2015

Unemployment Rate GDP to expand to close to 7% House Building Completions Recovery in Consumer Spending

30

Annual Results 2015 Group Core Non-Core €m FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 Interest Income 694 874 567 675 127 199 Interest Expense (336) (545) (207) (341) (129) (204) Net Interest Income (excl. ELG) 358 329 360 334 (2) (5) ELG Fees (14) (59) (14) (59)

• Other Income

34 38 33 35 1 3 Total Operating Income 378 308 379 310 (1) (2) Total Operating Expenses (287) (362) (267) (329) (20) (33) Bank Levy and BRRD Contribution (30) (27) (30) (27)

• Pre-Provision Profit/(Loss)

61 (81) 82 (46) (21) (35) Impairments (Charge) / Write-back (35) 42 (63) 51 28 (9) Profit/(Loss) Before Exceptional Items 26 (39) 19 5 7 (44) Exceptional Items (Net) (460) (9) Loss Before Taxation (434) (48) Taxation 9 (54) Loss For The Year (425) (102)

Segmental Income Statement

31

Annual Results 2015 Gross Average Balances (€bn) Gross Yields2 Interest Income (€m) FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 Core Bank Tracker 14.1 15.0

1.2%

1.3% 169 191 Core Bank Fixed and Variable 7.7 8.0

4.0%

4.0% 310 321 Consumer Finance 0.4 0.3

8.9%

9.8% 32 34 ROI Non-Core 1.5 2.4

2.1%

3.0% 32 71 UK Non-Core 5.1 6.9

1.0%

1.4% 51 94 Treasury Assets 6.3 7.2

1.9%

2.6% 122 185 Other1

• 7

Underlying Interest Income 716 901 Deferred Acquisition Costs (22) (27) Total Interest Income 694 874

1. Other income includes Loans and Advances to Banks, Lease and installment finance and Losses on interest rate hedges on assets 2. Gross yield shown are net of hedging costs

X X X X X X

= = = = = =

Interest Income

32

Annual Results 2015

Interest Expenses

Average Balances (€bn) Cost of Funds Interest Expense (€m) FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 Current Accounts 2.8 2.5 0.0% 0.0% 1 1 Retail Deposits (ex Current Accounts) 11.3 11.4 1.1% 1.8% 126 203 Corporate Deposits 2.7 2.2 2.1% 2.6% 58 59 Institutional Deposits 1.9 3.6 1.0% 1.1% 18 39 IoM Deposits 0.6 0.5 1.7% 1.9% 10 10 Wholesale Funding (including Subordinated Liabilities) 6.2 7.6 1.4% 2.5% 88 191 System Funding 5.9 5.9 0.1% 0.2% 3 11 Underlying Interest Expense 305 514 Amortisation of Core Deposit Intangibles 31 31 Total Interest Expense 336 545

X

=

X

=

X

=

X

=

X

=

X

=

X

=

33

Annual Results 2015

Tracker Margin Impact at FY2015

1. Average ECB bank rate for the year

Dec 13 Dec 14 Dec 15 Gross Irish Tracker Book (€bn) 34

(bps) Group Core Bank Average Customer Rate 120 120

• ECB Repo Rate1

5 5

• Average Fixed Spread

115 115 Cost of Funds

• 111
• 82

Net Interest Margin Impact 9 38

Tracker Book And Margin

15.3 14.8 14.2

Annual Results 2015

(€m) FY2015 FY2014 Retail Banking And Credit Card Fees 45 44 Brokerage And Insurance 9 10 Other Fee Income 2 2 Total Fee And Commission Income 56 56 Fee and Commission Expense (17) (19) Net Fee And Commission Income 39 37 Net Trading (Expense) / Income (4) 5 Net Other Operating Expenses (1) (4) Total Other Income 34 38

Other Income Analysis

35

Annual Results 2015 36

Impairments – Write-Back Potential

PTSB HPI Assumptions More Conservative Than External Forecasts

• 35.8%
• 36.2%
• 60%
• 55%
• 50%
• 45%
• 40%
• 35%
• 30%

Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Feb-00 Feb-00 CSO (Dublin) CSO (non Dublin)

Key Messages

• No significant changes to any house prices assumptions in the

Group’s impairment models in 2015

• House prices increased by 6.6% in 2015; Dublin 2.6%, Rest of

Ireland 10.2%

• Dublin prices dropped in January by 1.2%
• Continued cautious approach to provisioning given variability in HPI
• Provision Model Forecast HPI retains significant buffer to CSO index
• Previous Medium Term Guidance reiterated

Note: Sensitivity assumes all other factors remain the same 1. Upside assumed in the Medium Term Plan while maintaining a buffer 2. ESRI and Goodbody Projections modelled on basis of curve (buffer removed) and incremental to the Current Assumption 3. The Current Model buffer to HPI Index is 16.6% at the end of December 2015

HPI Curves Upside Current Assumption – 20161 €85m ESRI-HPI2 €263m Goodbody-HPI2 €424m

CSO House Price Index

• 33.0%
• 25.9%
• 36.9%
• 31.1%
• 46.4%
• 42.5%
• 50.0%
• 45.0%
• 40.0%
• 35.0%
• 30.0%
• 25.0%
• 20.0%

2015 2016 2017 2018 Goodbody ESRI Current Model Jan 13 Dec 15

Annual Results 2015

Dec 2014 (€bn) ROI HL ROI BTL UK HL UK BTL CRE Consumer Total Gross Loans 16.5 6.3 0.4 6.4 2.0 0.3 31.9 Performing Loans 12.3 4.1 0.3 6.2 0.5 0.2 23.6 NPLs 4.2 2.2 0.1 0.2 1.5 0.1 8.3 Provisions Stock 1.6 1.1 0.0 0.0 0.9 0.1 3.7 PCR¹ % 37% 49% 9% 36% 58% 94% 45% Dec 2015 (€bn) ROI HL ROI BTL UK HL UK BTL CRE Consumer Total Gross Loans 16.0 5.6 0.2 3.3 0.4 0.3 25.8 Performing Loans 12.1 3.8 0.2 3.1 0.3 0.2 19.7 NPLs 3.9 1.8 0.0 0.2 0.1 0.1 6.1 Provisions Stock 1.5 1.0 0.0 0.0 0.1 0.1 2.7 PCR¹ % 38% 55% 25% 38% 66% 93% 44%

1. Calculated as Provision Stock as a % of NPLs

Loan Book Profile

37

Annual Results 2015

Asset Quality – NPL Composition

ROI Home Loan NPLs (€bn) ROI Buy-To-Let NPLs (€bn)

NPL Cover 70% 57% 25% 50% 36% 37%

4.2 2.2 1.8

Included in the below a total of €0.5bn (2014: €0.5bn) loans that are not impaired and less than 90 days in arrears

• 13%

3.9

• 27%

2.53 4.53

100% 89% %>90 DPD 31% 60% 2% 0% 51% 38% 25% 32% 34% 21% NPL Cover 100% 90% 16% 67% 1% 0% %>90 DPD

1

1. Technically Held loans refer to loans which are NPLs due to the fact that some of the borrower’s other loans are non-performing 2. These loans move out of Non - Performing to Performing after 12 consecutive repayments 3. These exclude Springboard Mortgage

2 2

0.5 0.6 0.6 2.5 1.4 1.1 0.3 0.2 0.2 0.2 1.1 1.2 0.2 0.1 0.8 0.9 0.9 Dec-13 Dec-14 Dec-15 Closures > 90 Days Arrears In Legal Technically Held Splits (Treated But Impaired) Short Term Treatment Other Long Term Treated 0.2 0.2 0.3 1.2 0.9 0.5 0.2 0.2 0.1 0.1 0.1 0.10 0.8 0.8 0.7 Dec-13 Dec-14 Dec-15 38

Annual Results 2015 39

Loans in Forbearance

10% 53% 18% 13% 4% 2%

ROI Home Loan in Forbearance - NPLs €2.2bn Trials Split Mortgage Term Extension/ Capitalisation Part Capital & Interest Short Term Interest Only

4% 14% 11% 18% 4% 49%

ROI BTL in Forbearance - NPLs €0.9bn Trials Split Mortgage Term Extension/ Capitalisation Part Capital & Interest Short Term Interest Only

1% 35% 57% 7%

ROI Home Loan in Forbearance - Performing €1.0bn Trials Term Extension/ Capitalisation Part Capital & Interest Short Term

17% 81% 2%

ROI BTL in Forbearance - Performing €0.4bn Term Extension/ Capitalisation Part Capital & Interest Short Term

€4.5bn in Active Forbearance, 69% NPLs & 71% Home Loan

Annual Results 2015 2.2 1.3 0.8 1.6 1.1 0.9 Dec-13 Dec-14 Dec-15 Performing Non-Performing

ROI Home Loans and Buy-To-Let Mortgages

Negative Equity Balances

€1.7bn at December 15, down 29% from December 14 €3.8bn €2.4bn €1.7bn

40

Annual Results 2015 Asset Type Balance (€bn) Gross Yield%1 Debt Securities 3.8 2.6 Government 3.1 3.0 Corporate

• NAMA

0.7 1.42 Loans and Advances to Credit Institutions (Cash and Equivalents) 1.6 0.1

• o/w Restricted in Securitisation Vehicle

Balances 0.3 Total 5.4 1.9

1. Gross income/Average balance for 2015 2. NAMA Bonds priced off 6 month Euribor. However, EIR accounting adjustments, including those arising from redemptions, have given rise to a higher yield

57% 13% 30%

Government NAMA Loans and Advances to Credit Institutions Treasury Portfolio Mix

Treasury Portfolio Overview

41

Annual Results 2015 Government Bonds 42% NAMA Bonds 20% Irish RMBS 33% Credit Line 5%

2015 2014

1. HQLAs: High Quality Liquid Assets 2. Ratio of the stock of high quality liquid assets to expected net cash outflows over the next 30 days under a stress scenario.

• Reduction in the Liquidity Buffer is due to redemption of NAMA bonds and an increase in the amount of encumbered assets
• Total Liquidity Buffer of €3.8bn made up of cash, cash equivalents and unencumbered collateral; HQLA1 of €2.3bn
• Liquidity Coverage Ratio2 of 153% at 31 December 2015

Liquidity Buffer (€bn) Liquidity Portfolio Composition

Liquidity

42

3.8 5.3

Annual Results 2015

31-Dec-15 31-Dec-14 Transitional Fully Loaded Transitional Fully Loaded €bn €bn €bn €bn RWAs 12.2 12.3 14.8 14.8 Capital Resources: CET1 Capital 2.1 1.8 2.1 1.8 Additional Tier 1 0.1 0.1 0.0 0.0 Tier 1 Capital 2.2 2.0 2.1 1.8 Tier 2 Capital 0.1 0.1 0.1 0.1 Total Capital 2.3 2.0 2.2 1.9 Capital Ratios: CET1 Capital 17.1% 15.0% 14.2% 12.4% Tier 1 Capital 18.1% 16.0% 14.2% 12.4% Total Capital 18.9% 16.6% 14.9% 13.1% Leverage Ratio1 6.8% 6.0% 5.1% 4.5% 31-Dec-15 31-Dec-14 Transitional Fully Loaded Transitional Fully Loaded €m €m €m €m Total Equity 2.4 2.4 2.3 2.3 Less: AT1 Capital (0.1) (0.1) 0.0 0.0 CoCo

• (0.1)

(0.1) Adjusted Capital 2.3 2.3 2.2 2.2 Prudential Filters: Intangibles (0.1) (0.1) (0.1) (0.1) Deferred Tax (0.0) (0.4) 0.0 (0.4) Cashflow Hedge Reserve 0.0 0.0 0.1 0.1 AFS Reserve (0.1) (0.0) (0.1) 0.0 Revaluation Reserve (0.0) (0.0) 0.0 0.0 Equity Reserve (0.0) (0.0) Common Equity Tier 1 2.1 1.8 2.1 1.8

1. Calculated as Tier 1 Capital as % of gross balance sheet exposures (total assets and off-balance sheet exposure).

Regulatory Capital

43