All numbers and - Investis Digital/media/Files/I/... · 2014. 8. 19. · H2 H1 Sharply Improving Performance (1) Sharply Improving Bottom Line ... ECB Funding reduced further by 15.9%;

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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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Agenda

Jeremy Masding, Group CEO – H1 2014 Highlights

Glen Lucken, Group CFO – Financial Performance

Shane O’Sullivan, Managing Director of AMU

Jeremy Masding, Group CEO – Recap and Priorities

Questions & Answers

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permanent tsb in H1 2014

IMPROVED PERFORMANCE

MARKET RELEVANCE INDEPENDENCE

BETTER Bottom LineBETTER Arrears Management ACHIEVING Funding StabilityGROWING Market Share

4

4

4

333 437 430

149

1,107

454 500

0

200

400

600

800

1,000

1,200

2011 2012 2013 2014

Impairment Charge (€m)

H2

H1

Sharply Improving Performance (1)

Sharply Improving Bottom Line Underlying performance improved €278m

on H1 13

Sharply Improving Impairment Profile Impairments fell by €281m

Sharply Improving Arrears Profile Early and late arrears in ROI mortgages

decreasing Total number of cases in arrears down 14%

in H1 14

359 457 449 171

1,109

523 528

0

200

400

600

800

1,000

1,200

1,400

1,600

2011 2012 2013 2014

Losses (€m)

H2

H1

977980

930891

1,468

1,440

5

5

5

Re-establishing market position; a competitive third retail banking force

Well positioned as economic outlook continues to improve and foreign owned banks retrench

Growing customer base driven by expanding customer proposition

Focused OME launch planned for H2

Sharply Improving Performance (2)

ImprovedPerformance

… Meaning on-plan to

deliver sustainable profitability

Economic environment continues to support business

Arrears have peaked in 2013 and are falling

Impairments are reducing significantly

Non-Core deleveraging planned in H2

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…Building a Best in Class Retail Bank in IrelandAttracting New Customers and Deposits

Deposit balances have increased to €14.5bn (incl. Current Accounts)

Market share of 13% Current Account balances have increased by

c.€250m 15,524 new payroll accounts in H1

Increasing New Lending

Mortgage drawdowns have increased to €180m, an increase of 362% from H1 2013

Market share of approvals of 13% from a low of 3% in Q4 2012

Term Lending payouts up 14% yoy to €21m

Broadening Customer Proposition Insurance Sales up 70% yoy in H1 OME launch in H2

13.5 13.513.7

14.0

14.5

12.3% 12.3%12.5%

12.7%

13.0%

11.8%

12.0%

12.2%

12.4%

12.6%

12.8%

13.0%

13.2%

12.8

13.2

13.6

14.0

14.4

14.8

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

Deposit Volumes (€bn) and Market Share (%)

Deposit Volumes Market Share

39 42 39

170 180

38 29

69

221

264

3%4%

5%

9%

13%

0%

2%

4%

6%

8%

10%

12%

14%

0

50

100

150

200

250

300

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

Mortgages Approvals/Drawdowns (€m) and Market Share (%)

PTSB Drawdowns (€m) PTSB Approvals (€m) Share of Market Approvals (%)

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Group: Key Financial HighlightsImproving Operating Performance

Operating Loss reduced by 61.9% NIM improved by 6bps; ptsb SBU NIM at

140bps Impairment Charges reduced by 65.3% ptsb SBU records Operating Profit of €3m

Strengthening the Balance Sheet

Arrears over 90 days fallen by 14% since Dec 13

Customer Deposits increased to 60% of mix

ECB Funding reduced further by 15.9%; halved from peak levels in 2011

Loans to Deposit ratio down 10ppts to 141%

Capital position remains strong at 12.7%

Key Metrics

Income Statement H1 ‘14 H1 ‘13 Change

Operating Loss Before Exceptional Items (171) (449) 61.9%

NIM (Before ELG Fees) 88bps 82bps 6bps

Impairment Charges (149) (430) 65.3%

Balance Sheet Jun ’14 Dec ’13 Change

System Funding €5.8bn €6.9bn 15.9%

Loans to Deposit Ratio 141% 151% 10ppts

CET 1 Ratio 12.7% 13.4% 0.7ppts

Customer Accounts 20,545 19,511 5.3%

ROI Arrears > 90 Days (#) 22,559 26,357 14.4%

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Agenda





Questions & Answers

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H1 2014€m

H1 2013 €m

Change€m

Change%

Net Interest Income 158 156 2 1.3%

Other Income 33 26 7 26.9%

ELG Fees (32) (63) 31 49.2%

Total Operating Income 159 119 40 33.6%

Operating Expenses (181) (138) (43) (31.2%)

Operating LossPre‐Impairment (22) (19) (3) (15.7%)

Impairment Charges (149) (430) 281 65.3%

Loss Before Exceptional Items (171) (449) 278 61.9%

Exceptional Items (Net) ‐ 318 (318) (100.0%)

Loss Before Tax (171) (131) (40) (30.5%)

Avg. Int. Earning Assets 36,079 38,049 (1,970) (5.2%)

Net Interest Margin 88bps 82bps 6bps 7.3%

Group Income Statement

Net Interest Income increased marginally by 1.3%, despite a 5.2% reduction in Interest Earning Assets

Steady NIM improvement of 6bps in falling rate environment driven by lower cost of funds

Other Income increase of 26.9% mainly driven by one‐off gains

ELG Fees reduced by 49.2% as result of reduction in covered liabilities

Operating Expenses increased by 31.2% as a result of increased regulatory costs and one‐off legacy legal and compliance costs

Impairment Charges reduced by 65.3% mainly driven by reduced new default flow and provision releases as restructured loans are labelled as ‘cured’

Underlying Loss improvement of 61.9% Excluding one‐off items in Income and

Expenses, the Group recorded a Pre‐Provision Profit

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Income Statement (€m) Core BankNon‐Core Group*

PTSB AMU

H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013

Underlying Operating Profit/(Loss) Before Impairments and Non‐Recurring Items

62 (26) (49) (22) (18) 6 4 (33)

Non‐Recurring Items ‐ 14 (25) ‐ (1) ‐ (26) 14

Impairment Charges (59) (27) (42) (307) (48) (96) (149) (430)

Profit/(Loss) 3 (39) (116) (329) (67) (90) (171) (449)

Balance Sheet (€bn) Jun 14 Dec 13 Jun 14 Dec 13 Jun 14 Dec 13 Jun 14 Dec 13

Total Assets 20.8 21.8 6.5 6.4 9.2 9.3 36.9 37.6

Gross Loans 14.1 14.6 8.8 8.7 10.2 10.1 33.1 33.5

*Group includes unallocated adjustments which have not been attributed to the segments

Group: Segmental Performance

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Group: Net Interest Income and NIM

0.88%0.82%

0.19%

0.20%

0.12%

0.07%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

NIM June 2013 Asset Pricing DepositFunding Costs

ECB FundingCosts

WholesaleFunding

NIM June 2014

Components of NIM

Cost of Funds decreasing at a faster rate than Asset Yields

NII and NIM Group NIM shows a steady

improvement of 6bps ptsb SBU NIM is at 140bps Driven mainly by reduction in overall

cost of funds Continuous ECB rate cuts over the last

few years driving lower asset yieldsFuture NIM expansion will primarily reflect: Decreasing Cost of Funds Increasing new lending with higher

margins Refinancing the back book in

improving economic environment Maturity of CoCo (in June 2016)

76bp

88bp

72bp82bp 82bp

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

Cost of FundsAsset Yields

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Staff Costs

Staff Costs reduced by €3m or 4% compared to June 2013 due to changes in pension entitlements and other staff benefits, and savings achieved from VSS

Other Costs

Other Costs increased due higher cost of regulation and one‐off provisions relating to legacy legal and compliance liabilities

Bank Levy

c€30m due for recognition and payment in H2 2014

Group: Operating Expenses

€69m €66m

€69m

€115m

€0m

€40m

€80m

€120m

€160m

€200m

H1 2013 H1 2014

Group Operating Expenses

Staff Costs Other Costs

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13

13

Impairment Charges

434 449 429

498

148

0

100

200

300

400

500

600

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

Impairment Charges (€m) Group Impairments

Impairment Charges decreased by €281m (65.3%) since H1 2013, driven by the fall in both early and late arrears across all portfolios

ROI HL charge reduced by 45.8% from H1 2013, mainly due to low levels of new defaults

ROI BTL recorded a write‐back of provisions of €14m as restructured loans are cured

Consumer Finance book recorded a write‐back of provisions of €3m due to enhanced collections performance

65%

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14

14

Deleveraging

36,402

35,042

33,995 33,769

33,089

680

30,000

31,000

32,000

33,000

34,000

35,000

36,000

37,000

H2 2011 H2 2012 H2 2013 H1 2014 Post HFS Sale

Deleveraging* (€m)

Assets reduced by €2.6bn since 2011

Deleveraging

Continued natural net reduction of loan assets

Gross Loans have reduced by over €2.6bn since 2011

Small tranche of CRE sold in H1

€680m of loans are formally ‘Held for Sale’ (Springboard and a small tranche of CHL loans), with further asset sales planned over time (CRE)

Held for Sale

Note: * Gross Loans at constant exchange rate

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Funding

227% 157% 151% 141%

LDR%

Continuing focus on optimising the funding mix: System Funding reduced by €1.1bn or

16%; reduced to 17% of mix and more than two thirds down from peak

€1bn growth in deposits across Retail and Corporate channels at an improved rate (60% of mix)

Reliance on Short‐Term Debt remains static at 6%

Fastnet 9 launched in December 2013 with a yield of Euribor + 165bps%, which has since fallen to Euribor + 110bps%

€0.8bn repaid under the LTRO programme in 2014

LDR improved due to a combination of deposit growth and loan book run‐down

Continuing reduction in Cost of Funds into 2014

14.419.2 19.5 20.5

14.07.8 6.9 5.8

8.77.8 7.9 7.5

1.89%1.76%

1.65%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2.00%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

H2 2011 H1 2013 H2 2013 H1 2014

Group Funding Mix

Customer Deposits System FundingWholesale Funding Cost of Funds

€bn

16

16

16

13.4% 12.7%

0.0%

4.0%

8.0%

12.0%

16.0%

Dec‐13 Jun‐14

CET1 Ratio %

Common Equity Tier 1 ratio under Basel III transitional basis is 12.7%; well above the regulatory minimum of 8%

RWA – down €0.9bn due both to reduction in loans and advances, and improvement in default probabilities as the economy recovers

Capital

16,953

16,070

15,600

16,000

16,400

16,800

17,200

Dec‐13 Jun‐14

RWA Level€m

17

17

17

€3.9bn€17.7bn

53%

19%

6%

21%

1%

Gross Loans

ROI HL

ROI BTL

CRE

CHL

Consumer

55%25%

16%

3% 1%

NPLs

ROI HL

ROI BTL

CRE

CHL

Consumer

Group: Asset Quality

ROI HL ROI BTL CRE CHL Consumer Total

Gross Loans €bn 17.1 6.4 2.1 7.0 0.3 32.9

Performing % 69% 65% 29% 95% 67% 71%

NPLs* % 27% 33% 69% 3% 24% 26%

Provisions €bn 1.7 1.3 0.9 0.1 0.1 4.1

PCR % 38% 60% 65% 36% 97% 48%

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

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Group: Asset Quality ‐ ROI Home Loans

ROI HL: €17.1bn* H1 2014 H2 2013 Change

Early Arrears (<90 days) 6,041 7,063 14.4%

Late Arrears (90+ days) 19,009 22,452 15.3%

Late Arrears % of Total Cases 13.7% 15.8% 2.1 ppts

NPLs (€m) 4,681 4,526 3.4%

Provision Stock (€m) 1,758 1,661 5.8%

Coverage Ratio 38% 37% 1 ppt

130 154

236 201

128

0

50

100

150

200

250

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

Impairment Charges (€m)

ROI HL

Portfolio

73% of ROI residential mortgages are HLs

57% are Trackers

Economic Environment

CSO property price index shows a nationwide increase in residential property prices of 12.5% in the year to 30 June 2014. Overall the national index is 43% lower than the peak in 2007. Provisioning assumptions continue to be conservative at 55% PTT

Unemployment levels continue to decline

Performance

Early and Late arrears continue to reduce significantly

PCR has increased to 37.6% and remains robust

NPLs increased due to treatments trial periods; if assume all trials convert, NPLs/>90 Days Cases reduced by 15.3%

Impairment Charges reduced by 36.3% since H2 2013

*Gross Loans before Impairments

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Group: Asset Quality ‐ ROI Buy‐To‐LetsROI BTL: €6.4bn* H1 2014 H2

2013Change

Early Arrears (<90 days) 981 1,013 3.2%

Late Arrears (90+ days) 3,550 3,905 9.1%

Late Arrears % of Total Cases 15.5% 16.9% 1.4ppts

NPLs (€m) 2,094 2,229 6.1%

Provision Stock (€m) 1,255 1,289 2.6%

Coverage Ratio 60% 58% 2 ppts

124 100 102

188

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‐50

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50

100

150

200

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014


ROI BTL

Portfolio

27% of ROI residential mortgages are BTLs

85% are Trackers

Economic Environment

CSO property price index shows a nationwide increase in residential property prices of 12.5% in the year to 30 June 2014. Overall the national index is 43% lower than the peak in 2007. Provisioning assumptions continue to be conservative at 55% PTT

Unemployment levels continue to decline

Private rental market continued to grow in 2014

Performance

Early and Late arrears continue to reduce significantly

PCR has increased to 59.9% and remains robust

Post‐Trials NPLs/>90 Days Cases reduced by 9.1%

Write Back of €14m in H1 2014

*Gross Loans before Impairments

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Agenda





Questions & Answers

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The Asset Management Unit

Reduce the flow of new arrears cases

focus on early engagement and cash collection

Engage with customers in late arrears

agree a treatment (repayment plan) that is sustainable and affordable

Manage the legal, property management and recoveries process

use if no affordable and sustainable solution can be found

AMU Role

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The Asset Management Unit

Key Achievements

1. Engagement delivering real benefits

> 80% of customers engaging

88% of Home Loan customers who engage are offered sustainable and affordable treatments to retain ownership

2. Dramatic increase in restructuring deals offered

24,000 restructure offers made by the end of June (cumulative across HL and BTL)

3. Exceeded all Central Bank MART targets

Offering sustainable solutions to customers in late arrears

4. Significant progress in reducing arrears levels

Number of arrears cases down 14% during H1 2014; 17% down from the peak

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Engagement Delivers Real Benefits

Stage 1

Engagement Through SFS

Stage 2

Objective SFS Assessment

Stage 3

Realistic Mortgage Restructure Options

Stage 4

Post-Restructure Payment

•26,000 SFSs completed

•On average we agree a sustainable solution with customers within 10 working days

•For 88% of Home Loan accounts the Bank identifies a payment arrangement that can see the customer retaining ownership

•The equivalent figure for BTL accounts is 79%

•Where customers work with the Bank, the vast majority receive affordable and sustainable solutions; 80% of customers accept their restructure offer

•92% of stage 3 customers successfully meeting their new mortgage payment

The Group’s focus on sustainable and affordable treatments has resulted in industry leading Arrears Management Metrics

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Sustainable Solutions

Short TermTreatments

Other Options

• Term Extension

• Arrears Repayment Plan

• Part Capital and Interest with Bullet

• Split Mortgage with Bullet

• Voluntary Sale (with upfront agreement on shortfall)

• Voluntary Surrender

• Mortgage To Rent

• Insolvency

• Interest Only

• > Interest Only

Long Term Treatments

Repossessions are considered only after alternative treatments have been considered/offered or where the Borrower refuses to engage with the Bank. The

Bank will continue to explore treatments that may result in a customer being removed from the Legal process.

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Source: PTSB Internal Data, CBI DataNote: *rounded to the nearest hundred

Delivering Arrears Management Performance (1)PTSB Buy To Let: Trend significantly outperforming industry

Early Arrears down to 4.2% from 6.4% in June 2012, Late Arrears down to 15.1% from 21% at peak

Jun‐12 Dec‐12 Jun‐13 Dec‐13 Jun‐14Industry 6.6% 6.5% 6.8% 6.2%

PTSB 6.4% 5.2% 4.6% 4.3% 4.2%

2%

3%

4%

5%

6%

7%

8%

% of A

ccou

nts in 1‐90

Days in Arrears

Early Arrears – BTL


PTSB 19.3% 21.0% 18.8% 16.5% 15.1%

0%

5%

10%

15%

20%

25%

% of A

ccou

nts in >90 da

ys in

Arrears

Late Arrears – BTL

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PTSB Home Loan: Trend outperforming industryEarly Arrears down to 4.1% from 6.2% in June 2012, Late Arrears down to 12.5% from 15.1% at peak

Delivering Arrears Management Performance (2)


PTSB 6.2% 5.4% 5.0% 4.8% 4.1%

2%

3%

4%

5%

6%

7%

% of A

ccou

nts in 1‐90

Days in Arrears

Early Arrears – Home Loan


PTSB 12.4% 13.7% 15.1% 14.9% 12.5%

4%

6%

8%

10%

12%

14%

16%

% of A

ccou

nts in >90 da

ys in

Arrears

Late Arrears – Home Loan

Source: PTSB Internal Data, CBI DataNote: *rounded to the nearest hundred

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• More than 60% of “Non-Performing” HL customers pay more than 50% of their mortgage each month

• More than 50% of “Non-Performing” BTL customers pay more than 50% of their mortgage each month

Customers are continuing to pay what they can …

… and balances in negative equity have fallen by 8% since December 2013

Improving Economics

2.5 2.3

1.51.4

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1

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3

4

5

Dec 13 Jun 14

Balances in Negative Equity

BTL

HL

€4.0bn€3.7bn

€bn

8%

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Agenda





Questions & Answers

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On the Road to Profitability…

437 454 430499

149

0

100

200

300

400

500

600

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014


6.5 7.0 7.5 8.6 8.5

14.1%

15.6%16.1% 15.9%

13.9%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

‐

2.0

4.0

6.0

8.0

10.0

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

Total NPLs (€bn) and ROI Residential Mortgages in Arrears > 90 days (% of total cases)

Total NPLs ROI residential mortgages in arrears > 90days

‐457‐520

‐449‐528

‐171

‐600

‐500

‐400

‐300

‐200

‐100

0

Underlying losses before exceptional items (€m)

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

0.76%0.72%

0.82% 0.82%

0.88%

0.50%

0.55%

0.60%

0.65%

0.70%

0.75%

0.80%

0.85%

0.90%

H1 12 H2 12 H1 13 H2 13 H1 14

Net Interest Margin Trajectory %

NIM

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

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30

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…Whilst Recognising and Managing the Constraints

Performance and outlook have improved dramatically;

however, we are balanced about the challenges ahead…

Returning to Sustainable Economic Profitability

ManagingLegacy Issues

Demonstrating ‘Focus’ is a form of Sustainable Advantage

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Re-establish market position as competitive third retail banking force

Increase market share in lending and deposits

Expand customer proposition and launch into SME

Return to sustainable economic profitability

Continue to deliver

Summary

Recap

Priorities

Losses abating for the first time since 2008

Impairment charges reducing; arrears have peaked and are now falling

Strong funding position; deposit base expanding and cost of funds falling

Higher new lending volumes

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Agenda





Questions & Answers

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Appendix

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1 70

617 523

225 270

203 141

1,177 1,084

‐

500

1,000

1,500

2,000

2,500

Dec 13 Jun 14

Buy‐to‐Let NPLs

>90 Days Arrears/Legal ClosuresTechnically Held Long Term TreatedSplits (Treated But Impaired)

153

1,005979

809219

224501

437

2,344

1,880

‐

1,000

2,000

3,000

4,000

5,000

Dec 13 Jun 14

Home Loans NPLs

>90 Days Arrears/Legal ClosuresTechnically Held Long Term TreatedSplits (Treated But Impaired)

NPL Analysis

• >90 Day arrears are falling….• …but Treated Assets are making up an increasing proportion of total NPL stock which will

cause NPL stock to remain elevated.

€4,231m €4,355m €2,234m€2,088m

€m €m

€2,880m

€1,351m

€2,317m

€2,038m

€1,391m

€843m

€1,224m

€863m

Note: • “Technically Held” relate to assets which have not breached the standard delinquency triggers, but are classified as default, typically, through association with other defaulted assets. • Numbers do not include Springboard Portfolio

All numbers and - Investis Digital/media/Files/I/... · 2014. 8. 19. · H2 H1 Sharply Improving Performance (1) Sharply Improving Bottom Line ... ECB Funding reduced further by 15.9%;

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