Bank of Ireland Investor Day A focus on Capital Markets & Retail Financial Services Ireland

Transcription

1 Bank of Ireland Investor Day A focus on Capital Markets & Retail Financial Services Ireland Friday 23 rd March 2007

2 Agenda Introduction & welcome Capital Markets Overview Brian Goggin Group Chief Executive Denis Donovan Chief Executive, Capital Markets Corporate Banking Global Markets Asset Management Retail Financial Services Ireland Overview (RFSI) Personal Lending Business Banking Wealth Management Conclusion Q & A Coffee / Tea Q & A Lunch Tom Hayes Chief Executive, Corporate Banking Austin Jennings Chief Executive, Global Markets Mick Sweeney Chief Executive, Bank of Ireland Asset Management Richie Boucher Chief Executive, RFSI Joe Larkin Director, Personal Lending Business Cathal Muckian Director, Business Banking Brian Forrester Director, Wealth Management Brian Goggin Group Chief Executive 2

3 Denis Donovan Chief Executive, Capital Markets

4 Building on experience and investing for growth 1 Delivering sustainable, high quality earnings 2 Building well diversified, niche businesses 3 Talent based - skill not scale 4 Expanding global footprint 4

5 1. Introducing Capital Markets 2. Strategy 3. Delivering results

6 Divisional profile Contributes 32%* of Group profitability c. 50% of Divisional profits generated outside Ireland Comprises Corporate Banking, Global Markets, Asset Management & IBI Corporate Finance (Davy disposal October 2006) Delivering strong financial performance Positive trading statement for 12 months to March * Note: Includes Davy

7 Divisional profile business focus Corporate Banking Tom Hayes Global Markets Austin Jennings 60% Divisional Profit 27% Divisional Profit Asset Management & Corporate Finance Mick Sweeney Bank of Ireland Asset Management and Bank of Ireland Securities Services Michael Grealy Alternative Investments Roisin Brennan Corporate Finance 13% Divisional Profit 7

8 Divisional profile growing geographic footprint Montreal / Toronto Asset Management Chicago Asset Management San Francisco Asset Management Los Angeles Asset Management Corporate Banking Dublin Corporate Banking Global Markets Asset Management Corporate Finance New York / Connecticut Corporate Banking Global Markets Asset Management Belfast Global Markets Corporate Finance London Corporate Banking Global Markets Asset Management Frankfurt Corporate Banking Global Markets Paris Corporate Banking Circa 1800 employees Capital Markets Tokyo Asset Management 8 Melbourne Asset Management

9 1. Introducing Capital Markets 2. Strategy 3. Delivering results

10 Capital Markets Division in a Group context Bank of Ireland Group vision: To be the number one bank in Ireland with dynamic businesses growing internationally Our strategy: Maximise returns from our leading position in Ireland Substantially grow our businesses in the UK Grow our portfolio of niche, skill-based businesses internationally 10

11 Capital Markets strategic differentiators Leveraging our strengths People We nurture and develop diverse talent Technical Product Capability We have built/continue to build expertise in premium valued niche sectors Risk Management We understand and manage risk Execution Reputation for delivery 11

12 1. Introducing Capital Markets 2. Strategy 3. Delivering results

13 Growth platform in place Key messages In the past: High dependence on FX trading, leasing and structured transactions Today: Completed strategic shift to quality sustainable customer revenue Investing in new businesses, capability and geographies Looking forward: International expansion driving income growth Exceptionally benign credit environment not sustainable Division well positioned for further profit growth 30 September 2006 Loan book Loan losses (annualised) Funds under management Funds under administration PBT growth H1 06/07 vs. H1 05/06 Jaws* Cost / income ratio Key metrics 22bn 4bps 53bn 113bn + 31% 3% 40% 13 * Differential between growth in revenue and costs for 6 mths to 30 Sept 2006 over 6 mths to 30 Sept 2005

14 Business unit profit progression Corporate Banking 60% Divisional profit Global Markets 27% Divisional profit Asset Management 13% Divisional profit PBT m PBT m PBT m March 04 March 05 March 06 H1 06/07 0 March 04 March 05 March 06 H1 06/07 0 March 04 March 05 March 06 H1 06/07 Key messages Corporate Banking investment delivering significant returns a key driver of Divisional profit Global Markets shift in focus to customer-driven business with higher quality earnings Stabilising Asset Management 14

15 Tom Hayes Chief Executive, Corporate Banking

16 Building on experience and investing for growth 1 Delivering sustainable, high quality earnings 2 Building well diversified, niche businesses 3 Talent based - skill not scale 4 Expanding global footprint 16

17 Corporate Banking - profile Providing full banking services to larger corporates and multinationals in Ireland and financing in niche areas globally International franchise - Ireland, UK, mainland Europe and US 6 main business segments Circa 465 employees 50% increase in last 3 years Significant driver of profit: Delivered 158m PBT 6 months to 30 September % of Divisional PBT 18% of Group PBT 22bn loan portfolio 65% outside Ireland 17

18 Corporate Banking - business & geographic profile Dublin Corporate Banking Property Finance Specialised Finance Acquisition Finance Institutional Banking London Project Finance Specialised Finance Acquisition Finance Property Finance Circa 465 employees Corporate Banking Los Angeles Specialised Finance Stamford Specialised Finance Project Finance Acquisition Finance Institutional Banking Paris Acquisition Finance Frankfurt Acquisition Finance 18

19 Our strategy Strategic objective: Retain our leading position in Ireland and build leading niche skill-based businesses internationally Key relationship management strengths: Ability to source deal flow Structuring, arranging and execution skills Cross-selling capability Credit assessment skills Underwriting and syndication skills Responsiveness 19

20 Drivers of growth Broadened geographic focus New offices in Paris (2005), Frankfurt (2006) and added to frontline teams in UK and US Invested in new sectors, skills and capability Burdale (comprehensive asset based lender) in January 2005 Maritime team (August 2003), Media team (February 2005) UK and European property team (January 2006) Moved up the tombstone Increasing number of manager lead arranger roles Greater cross-selling opportunities 20

21 A well diversified loan book Loan book by segment September 2006 Total revenue by segment September 2006 Corporate Ireland 16% Property Finance 19% 14% 16% 15% Specialised Finance Acquisition Finance 10% 18% 8% 14% Project Finance 9% 33% Institutional Banking Total 28% 22bn Corporate Ireland Property Finance Specialised Finance Acquisition Finance Project Finance Institutional Banking 21

22 Portfolio profile Corporate Ireland Strategy Full service offering to public and larger private companies in Ireland Capability and performance Circa 45 professionals across 7 teams in Dublin Leading banker to Irish corporates Main banker to circa 50% of multi-nationals operating in Ireland Property Finance Strategy Larger property lending focus residential and commercial transactions Geographic focus Ireland, UK and Europe Capability and performance Circa 40 professionals in Dublin and London 53% Development, 47% Investment Diversification across sectors; average hold circa 45m 950m Refinancing and acquisition of Otis Spunkmeyer Joint Mandated Lead Arranger Bank of Ireland Green Property 775m Recapitalisation and refinancing of existing facilities Joint Mandated Lead Arranger Bank of Ireland 22

23 Portfolio profile 23 Specialised Finance Strategy Focus on media, maritime, healthcare and comprehensive asset based lending (CABL) UK, Europe and US Capability and performance Circa 70 professionals in Dublin, London and US UK market leader in CABL Average hold circa 25m Acquisition Finance Strategy Lead arranger and underwriter of European and US sponsor-backed leveraged finance transactions Debt finance comprising senior, second lien and mezzanine debt Capability and performance Circa 80 professionals in Dublin, London, Paris, Frankfurt and US Average hold size circa 18m MFI Furniture Group Plc UK s largest syndicated ABL facility Lead Arranger Agent and Security Trustee Burdale Financial Orkla Media 645m Acquisition financing for Joint Mandated Lead Arranger Bank of Ireland

24 Portfolio profile Institutional Banking Strategy Leading provider of international banking solutions encompassing international corporate lending, securitisations, structured lending and agency services Diverse sector, geographic and product spread Capability and performance Circa 60 professionals in Dublin and US Average hold circa 25m Project Finance Strategy Focus on infrastructure (transport and accommodation) and energy (waste treatment, oil and gas, power and environmental) Ireland, UK, mainland Europe, North America and Middle East Capability and performance Circa 30 professionals in London, Dublin and US High quality debt arranging and underwriting capability Awarded Infrastructure Deal of the Year (Americas) 2005 Average hold circa 20m Schroder Private Equity Fund of Funds Programme Revolving Credit Facilities Lead Arranger Bank of Ireland 155m Sole Lead Arranger Bank of Ireland 24

25 Controlled growth Loan book (PIT) vs. Loan loss charge: Profit: Bps* m bn Loan book 25 Bps * March 02 March 03 March 04 March 05 March 06 H1 06/ March 02 March 03 March 04 March 05 March 06 H1 06/07 Business environment Favourable economic fundamentals in key geographies Exceptionally benign credit environment Wall of liquidity driving more aggressive debt structures 25 Note: March 2005 and onwards IFRS basis of preparation * Annualised loan loss charge (bps)

26 Controlled growth Strong and diversified loan growth Centralised credit decision making Proactive credit management Controlled bite size High rejection rate 26

27 Looking forward Retain leading position in Ireland Expand in existing niches Identify new niches and new geographies Continue to move up the tombstone Continue to invest in new talent Maintain our leading position in Ireland Accelerate growth from international platforms Maintain asset quality 27

28 Austin Jennings Chief Executive, Global Markets

29 Building on experience and investing for growth 1 Delivering sustainable, high quality earnings 2 Building well diversified, niche businesses 3 Talent based - skill not scale 4 Expanding global footprint 29

30 Global Markets business profile Leading provider of full-service treasury products and solutions in Ireland Niche player internationally - mainly in UK and US Treasurer to Bank of Ireland Group Contributing 27% of Divisional profitability Quality revenues - less than 10% from proprietary trading 30

31 Global Markets: International growth on a leading domestic platform Dublin Customer Dealing Funding and Trading Centralised Middle / Back Office Circa 630 employees Global Markets UK Customer Dealing Funding and Trading Trade Finance Customer dealing room opened in London in September 2005 Stamford Customer Dealing and Funding Acquired banking license and opened dealing room in October

32 Delivering growth in a controlled risk environment Average daily VaR usage 4.2m Highly controlled risk environment Integrated risk framework Culture of proactive risk management Centralised controls in Dublin supporting international operations 32

33 Global Markets strategy Strategic objective: Achieve this by: 33 Retain our leading position in Ireland and build leading niche skill-based businesses internationally Investing in new skill sets, particularly in key product development areas Diversifying income into higher margin non-vanilla products Driving cross-selling opportunities across the Bank of Ireland Group Expanding into new geographies, in particular UK and US

34 Strategic strengths driving success Key strategic strengths Quality of our people Reputation in product and solution innovation Strong and established relationships with Irish and multi-national Corporates Expertise of Economic Research Team st Irish bank to launch Liability Driven Investment for pension markets Ranked 1 st for Liquidity Funds Globally in 2003, 2005 & 2006** Winner of Best in Ireland for Structured Products & Distribution by Structured Products Magazine*** 1 st Irish bank to develop an Energy and Emissions trading capability 1 st Irish bank to co-ordinate and manage a US Private Placement Related Swap Auction 2004 Winner of IFR Eurobond of the Year Award for 1 st BoI ACS Bond Issue* 34 *International Financing Review, 2004 **imoneynet.com Official Rankings 2003, 2005, 2006 ***Structured Products magazine, 2005

35 Global Markets: Delivering strong growth m Global markets profits Completed strategic shift from trading to quality sustainable customer revenue since March 2002 March 2003 March 2004 March 2005 March 2006 Exceptional trading gains PBT H1 06/07 Customer revenue growth Exited from declining businesses no longer seen as strategic drivers Driving growth in customer business Investing in new skills m CAGR 18% March 2002 March 2003 Customer revenue from continuing businesses CAGR 22% March 2004 March 2005 March 2006 H1 06/07 Global Markets generated Group revenues from continuing businesses Investing in international expansion Driving cross-sales across Group Delivering significant growth in customer-driven revenue

36 Wholesale funding: Efficiently funding Group balance sheet growth September 2006 Funding strategy 44% 14.5% 12.1% Senior Debt/ ACS CP/CDs Maximise core customer deposits Develop and diversify wholesale funding channels Extend duration of funding profile 17.4% 42.7% 5.4% 7.9% Total assets 165bn* Deposits by Banks Customer Accounts Other Capital / Sub Debt Funding programmes / facilities: 25 bn EMTN Programme 10 bn ACS Programme US$10 bn MTN Programme Extendible Notes 10 bn ECP Programme London CD Facility US$ Yankee CD Facility US$15 bn US CP Programme C$2.5 bn Canadian CP Programme 5 bn French CD Programme 2.9 bn RMBS (Kildare transacted Feb 07) 5.5 bn RMBS (Brunel transacted Mar 07) 36 *Excludes Life funds held on behalf of policyholders

37 Looking forward Continue to grow quality customer income Drive cross-sales across the Group Diversify income into higher margin products Deliver on international investment Continue focus on innovation Continue to diversify wholesale funding Maintain tight risk control get there safely Maintain our leading position in Ireland Accelerate growth from UK and US platforms 37

38 Mick Sweeney Chief Executive, Bank of Ireland Asset Management

39 Building on experience and investing for growth 1 Delivering sustainable, high quality earnings 2 Building well diversified, niche businesses 3 Talent based - skill not scale 4 Expanding global footprint 39

40 Organisation Asset Management Businesses Distribution Bank of Ireland Securities Services (BoISS) Bank of Ireland Asset Management (BIAM) Iridian Asset Management Guggenheim Advisors Paul Capital Investments Contributes 13% of Divisional PBT & 4% Group PBT 40

41 Business profile Bank of Ireland Securities Services Administration and custodial services - 113bn under administration / custody Key driver of quality earnings Provides services to sophisticated global customer base Circa 330 people employed in Dublin s International Financial Services Centre (IFSC) Talent based - skill not scale 41

42 Business profile Bank of Ireland Asset Management 43bn AUM Full investment service provider in Ireland Specialist equity / bond investment manager internationally Circa 230 people Alternative Investments and International Distribution 3 specialist investment businesses - 10bn AUM Iridian Asset Management (92%) US equity manager Guggenheim Advisors (71%) Fund of hedge funds manager Paul Capital Investments (50%) Private equity fund of funds advisor / manager Global distribution capability 9 locations Circa 120 people Talent based - significant global footprint 42

43 Asset Management businesses worldwide 680 employees Asset Management Toronto / Montreal BIAM Chicago BIAM Dublin BoISS / BIAM London BIAM / Guggenheim San Francisco Paul Capital Los Angeles BIAM New York / Connecticut BIAM / Iridian / Guggenheim Tokyo BIAM Melbourne BIAM 43

44 Asset Management financials Assets 160 bn March 02 March 03 March 04 March 05 March 06 Sept 2006 Assets Under Administration Assets Under Management m PBT BOISS Key profit driver: shift towards higher margins BIAM Slowdown in outflows; change in asset mix Specialist businesses Investment in integration 2006/2007 Key Messages Period of stabilisation 0 March 02 March 03 March 04 March 05 March 06 H1 06/07 PBT 44

45 Growth strategy Bank of Ireland Securities Services Build higher margin business: Securities lending Cash management / FX Hedge fund admin Liquidity provider Bank of Ireland Asset Management Grow higher margin AUM Broaden product range: Liability driven investing Fund of hedge funds Enhanced indexation Specialist equity Absolute return Alternative Investments & International Distribution Grow AUM in niche segments Broaden product range: Hedge funds Fund of hedge funds Private equity fund of funds Concentrated equity Absolute return Structured products 45

46 Looking forward Complete stabilisation Grow higher margin business Focus on innovation Diversify product range Leverage Capital Markets expertise Maximise global footprint Maintain our leading position in Ireland Build dynamic specialist businesses internationally Delivered by successful investment businesses run by talented entrepreneurial teams 46

47 Capital Markets Outlook

48 Outlook Delivering sustainable, high quality earnings Building well diversified, niche businesses Talent based - skill not scale Ambition 2012 Retain leading position in Ireland Increase proportion of profit derived from international activities Top quartile player in our chosen markets 4 Expanding global footprint 48

49 Capital Markets Questions and Answers

50 Richie Boucher Chief Executive, Retail Financial Services Ireland

51 Leveraging our strength Positive Irish fundamentals Bank of Ireland best strategic positioning Most extensive distribution Broadest product range Highly developed sales and service expertise Very engaged staff Strongly positioned for further growth No. 1 or 2 market share 51

52 1. Introducing Retail Financial Services Ireland 2. Strategy 3. Delivering results

53 Retail Financial Services Ireland (RFSI) Retail Financial Services Ireland Mortgages & Consumer Lending Joe Larkin Business Banking Cathal Muckian Wealth Management Brian Forrester Bank of Ireland Life Leading retail bank in Ireland Distribution through 273 branches, broker channels, intermediaries and on-line / telephone services >9,000 employees Strong financial performance Positive trading statement for 12 months to March 2007 Consistent market outperformance 53

54 Integrated service offering Market leading advice-based propositions Business Banking Direct Wealth Management Branch Network Broker Channel Mortgages & Consumer Lending 54

55 Number 1 or 2 in all major products Product / business Mortgages Consumer Loans Credit Card Turnover SME Business Lending SME Current Accounts Life & Pensions (Dec 2006) Savings Private Banking Market position No. 1 No. 2 No. 1 No. 2 No. 2 No. 2 No. 1 (Joint) No. 1 Share & trend 19% 20% 33% 27% 33% 26% 24% 55

56 1. Introducing Retail Financial Services Ireland 2. Strategy 3. Delivering results

57 Our strategy Strategic objective: To be the clear No. 1 in Consumer, Wealth Management and Business Banking in Ireland Leverage our integrated approach: Leading distribution capability Broadest product offering Delivering sales and service excellence Highly engaged staff 57

58 Achieving No. 1: Broadest distribution capability Branch network Established brands 273 Bank of Ireland branches and 8 mortgage stores Intermediaries Key broker brands Direct Direct product sales, comprehensive online and telephone banking 58

59 Achieving No. 1: Broadest product offering Mortgages & Consumer Banking Business Banking Wealth Management Bank of Ireland AIB Bank Irish Life & Permanent Ulster Bank (RBS) Halifax / Bank of Scotland National Irish Bank (Danske Bank) 59

60 Achieving No. 1: Delivering service excellence Comprehensive Customer Programme launched November 2005: Improved ratings Satisfaction measures Branch service satisfaction 3 minute queues Treated as valued Would you buy another product? Q % 76% 63% 50% Q % 84% 73% 62% 60

61 Highly effective branch-based sales management The Bank of Ireland way Sales strategy and customer management Market focused customer segmentation Relationship portfolio approach Sales talent management Performance differentiation Engaged staff Sales planning and processes Scientific and rigorous Sales culture and climate Incentivised and responsible 61

62 1. Introducing Retail Financial Services Ireland 2. Strategy 3. Delivering results

63 Delivering results: Significant loan, resource and life growth bn Loan book 5 Year CAGR 20% m Life APE sales 5 Year CAGR 12% March 2001 March 2002 March 2003 Mortgages March 2004 March 2005 March 2006 Other Lending Sept 06 0 March 2001 March 2002 March 2003 March 2004 March 2005 Life APE Sales March 2006 H1 06/ bn Resources 5 Year CAGR 12% Strong sales driving volume and income growth: Improved customer segmentation / experience Enhanced relationship management approach to customer portfolios 0 March 2001 March 2002 March 2003 March 2004 Resources March 2005 March 2006 Sept 2006 Strengthened sales capability 63

64 Delivering results: Income mix and margin management Margin attrition year on year bps bps 33 bps 43 bps 21 bps bn Revenue growth 5 Year CAGR 9% 0 March 2004 March 2005 March 2006 Margin attrition Sep-06 Strong revenue growth Balanced growth in interest and non-interest income Slowing margin attrition 0.0 March 2001 March 2002 March 2003 Net interest income March 2004 March 2005 March 2006 H1 06/07 Non-interest income 64 Note: Figures from March 2005 are prepared under IFRS

65 Delivering results: Improved operational efficiency Cost / income ratio reduced Revenue to 53% Growth 65% 60% RFSI Cost / Income Ratio 60.5% 57.4% Strategic Transformation Programme delivering efficiency and scalability: Processing efficiencies Consolidation 55% 53.0% Cost / income ratio significantly improved 50% March 2005 March 2006 H1 06/07 Further reductions targeted 65

66 Delivering results: Building a quality lending book Loan growth without compromise Revenue to asset Growth quality bn Loan growth vs. asset quality March 2001 March 2002 March 2003 March 2004 March 2005 March bps Loans (PIT) Loan loss charge (bps) 66

67 Delivering results: Excellent long-term profit growth RFSI 5-year compound annual growth rates Growth GDP growth (e) 5.4% CAGR 15% RFSI PBT growth 13.6% CAGR 10% 5% RFSI Revenue growth 9% CAGR RFSI Cost growth 6% CAGR Note: 5 year CAGR to 31 st March 2006

68 Joe Larkin Director, Personal Lending Business

69 Personal Lending - a diverse and successful business Mortgages 22bn book Distribution: Branches 62% Mortgage Stores 7% Brokers 31% Consumer Lending 3.3bn book Distribution: Branches 70% Direct 30% Excellent cross-sales No 1 in competitive market Motor Loans Personal Loans 19.3% share of national book Mortgages General Insurance Agency basis Home insurance Payment protection 69

70 Bank of Ireland mortgage strategy Prime lender First time buyers Trading up buyers Equity release Investors Switchers Multi-channel, multi brand Broadest distribution reach Branches 273 Brokers 500 Mortgage stores 8 Best advice based proposition Dedicated, qualified mortgage advisor in all branches / stores Cross-sale opportunities Service excellence Full service provider Market leading broker IT platform Margin management Asset quality Driving profitable growth Underpinned by favourable economic and demographic environment 70

71 Dynamics of the mortgage business are changing Customer segment First Time Buyer Trading Up Buyer Equity Release (ER) Switcher RIL (Buy-to-Let) Average LTVs Owner occupier (excl. ER) Investor Fixed vs. variable Fixed % 25% 15% 7% 24% % 62% % % 26% 14% 7% 24% % 62% % % 24% 14% 7% 30% % 62% % Positive backdrop to Irish housing market Increasing interest rates and property prices impacting purchasing capability, particularly for first-time buyers Significant equity provided by purchasers 100% mortgage product expected to account for only 10% of new business Buy-to-let proposition aimed at professional investors 3 or more properties Variable Tracker Variable - SVR 36% 20% 65% 9% 67% 7% Majority of customers opt for a tracker product 71 All figures relate to new business for 12 months to September of each year

72 Effective mortgage margin management bps Mortgage book margin Proportion of book on SVR % 51% 46% 40% 33% 95 29% Mar-04 Sept-04 Mar-05 Sept-05 Mar-06 Sept Mortgage book margin has decreased Declining proportion of variable rate mortgages on book Limited impact on back book pricing Strategic decision to reduce SVR

73 Excellent asset quality Bank of Ireland - arrears vs. total mortgages Number of repossessions Arrears No. mortgages , , , , , , , , , , No. greater than 3 months arrears No. of mortgages Source: Bank of Ireland All figures at Sept Bank of Ireland Industry Source: Irish Mortgage Council Excellent arrears performance (0.80% of total mortgages), notwithstanding substantial growth in mortgage accounts Recent successful securitisation bn 73

74 Number one prime consumer lender in chosen markets Product Market share Market position Source Personal loans 19.8% No. 2 MORI personal loans share (Sept 06) Overdrafts 47.3% No. 1 MORI (Sept 06) Credit Cards - turnover 33.4% No. 1 Central Bank of Ireland (Sept 06) Credit Cards - in force 34.3% No. 1 Central Bank of Ireland (Sept 06) Credit Cards - debt 26.4% No. 2 Central Bank of Ireland (Sept 06) 74

75 Unsecured Lending a growth opportunity Industry lending breakdown Bank of Ireland consumer unsecured lending 100% 80% 60% Housing Other Credit Card 13bn 45bn 125bn 100% 80% 60% 2.37bn Credit Card Debt 2.73bn Loan debt 3.3bn 40% 40% 20% 20% 0% % % of total consumer debt in Ireland is mortgage backed Excellent customer and asset quality: 55% of credit card customers pay monthly bill in full 75

76 Outlook Retain leading position and grow in line with the market Continuing strong Irish economy Distribution and service unrivalled competitive strengths Strategic focus to continue to grow our business profitably Growth Mortgages & Consumer Lending BoI Market Perform in-line 76 Note: Appendices on Irish housing market start on page 101

77 Cathal Muckian Director, Business Banking

78 Business Customers - Bank of Ireland s focus in Ireland Capital Markets Retail Financial Services Ireland Corporate Banking PLCs / Multi-nationals Large limited companies Large property deals All loans > 30m International growth focus Business Banking Small & Medium Enterprises and Start-Ups Up to 250 employees Less than 50m turnover Loans up to 30m SME A growing proposition 300,000 Irish SMEs Account for 60% of Irish workforce Main sectors - retail, services, construction and hospitality Positive economic and demographic trends Major Government focus and support for entrepreneurship 78

79 Bank of Ireland Business Banking - Profile Key dimensions Profit mix Volume Market* position Customers 100, nd Resources 13bn Joint 1 st Loans 13.1bn** 2 nd Asset & Debtor Finance 2.6bn 1 st Business lending Cross-sales *** MT / Resources Effective relationship management driving diversified revenues 79 * Mori Research October 2006, Central Bank (Resources), Industry Analysis (Asset Finance) ** Excludes business loans in Private Banking *** Cross sales include Treasury and Wealth Management products

80 Relationship banking for SMEs Market segment Medium Upper-Medium Lower-Medium Small Business Relationship approach 90 senior business managers and teams 50 customers per portfolio 150 business managers 150 customers per portfolio 300 business advisers Product specialist support Sector lending specialists Wealth management Intermediary specialists Leasing and invoice finance Capital markets Electronic cash management Start-up support unit Lending support unit Advanced credit card scoring model Distribution power, product scope and cross-sales capability 80

81 Achieving sustainable competitive advantage 3 distinct strengths 1. Best practice relationship management Effective meetings Product specialists integrated in sales process Capability through coaching Recognised by Sales Executive Council (USA) Feb 07 as Best Practice 2. Local market planning and taskforce management 66 local task forces Business bankers and branches: one prospecting team Galvanising distribution power 3. Best small business delivery Advisers in every branch Advanced credit scoring Best product development Business Start-Up package recognised as Best in Class by Business Banking Board USA (Sept 06) 81

82 Delivering results Excellent growth in loans, arrangement fees and cross-sales Loan book Fees growth bn m March 04 March 05 March 06 Sept March 04 March 05 March 06 H1 06/07 82 Product Business start-up accounts Wealth management Asset finance/leasing Debtor finance Treasury Cross-sales Growth for the year to September % + 34% + 17% + 103% + 17%

83 Market Share: BoI is now No. 1 or No. 2 in all key markets Product Market share Market position Comments Current A/c s 33% 1 No. 2 Opened 12k Start-up accounts in 2006 c.50% total market Growing share Resources (personal & business) 24% 2 No. 1 Best practice relationship management - key driver to achieve No. 1 in Wealth Management Lending 27% 1 No. 2 Strong No. 2 with a diversified loan portfolio and expertise in all sectors Relationship management in Dublin increased by 25% in 2006 Asset & debtor finance 27% 3 No. 1 Very strong in intermediary / forecourt market and growing share. Key relationships with Toyota, Ford, Mazda and Land Rover 83 Source: 1 Mori, Sept 2006; 2 - Central Bank, Sept 2006; 3 - Industry Sources, Sept 2006

84 Going forward: A clear and focused strategy Drive growth, outperform the market & achieve No. 1 Outlook for SME s is positive Leveraging our core strengths Distribution Product range Credit competence Cross selling Challenging for No. 1 Growth Business Banking BoI Market Outperform 84

85 Brian Forrester Director, Wealth Management

86 Bank of Ireland Wealth Management - Profile Bank of Ireland Wealth Management No. 1 in Wealth Management Wealth Management capability developed over 20 years Bank of Ireland Life* 14bn AUM 600,000 policy holders 3bn premium income Private Banking 5bn AUM 2.4bn loan book 1987 launched Lifetime (bancassurance) 1989 established private bank 1991 introduced sales effectiveness model 1997 acquired New Ireland (broker channel) Leading strategic capability Distribution Brand name and reputation Sales and service capability Efficiency 86 Note: *All figures for Bank of Ireland Life throughout this presentation are to 31 December 2006; All others are to 30 September 2006

87 Significant growth in Irish wealth driving opportunities for Bank of Ireland Pensions 45% of employed have no private occupational pension Major government priority Protection 52% of population without life cover 76% without critical illness cover Continuing mortgage growth Savings Strong market growth Savings culture embedded 10.5% savings ratio Strong continuing to save trend in maturing SSIAs BoI Life 50%, deposit 60% Investments Emergence of inherited wealth Predicted move to more balanced asset allocation 87

88 Bank of Ireland Life A leading market position A very successful Bancassurance model Unit linked office Strong focus on systems & operational efficiency Very strong track record of profitability & solvency Embedded value of 1.3 billion 88

89 Multi-channel & multi-brand strategy Channel Branch Network and Private Banking Intermediaries Direct (Non Branch) Brands Market approach 55% of sales >180 sales advisors >75 Private Bankers 35% of sales through independent brokers Strong broker relationships Supported by excellent technology platform 10% of sales through direct sales force Access to non-boi customer base 89

90 A leading market position Bank of Ireland Life has 26% share of the overall Life & Pensions market* Strong market position Market share across our product lines % 26% 28% % % % Bank of Ireland Life Irish Life & Permanent Aviva (Hibernian & Ark Life) Allied Zurich (Eagle Star) 0 Regular Premium Savings Protection Individual Pensions Group Pensions Single Premium No. 1 No. 2 No. 1 No. 2 No *Note: Overall market share figures available to 31 December 2006; Product share available to December 2005

91 Delivering results Embedded Value High performing and highly efficient business Embedded Value Income Statement H1 05/06 H1 06/07 Growth New Business % Existing Business - Expected Return % - Experience Variance Operating Assumption Changes 5 Intra-Group Costs -13 Operating Profit 68 Cost / Income ratio 46% Strong longer term track record of profit growth Operating profit EV basis m % +19% Growth 6 months to 30 September months to 31 March months to 31 March % +22% +17% 91

92 Private Banking a leading market position Ireland s leading Private Bank Trusted brand >75 Relationship managers 5bn assets advised and managed 2.4bn loan portfolio Diversified income stream Broadest Wealth Management proposition in Irish market Profits doubled in last 3 years Investing for growth Pensions Banking Investment 92

93 Competitive strengths driving results Distribution BoI branches 50% Direct relationships 50% Product innovation Multi-manager investment proposition International property syndicates Reputation Established in 1989 People Investment in relationship management capability - Private Banking Academy Investment in specialist technical skills Volume Growth Lending Investment Pensions Figures to 30 September 2006 Cartier HQ, Paris Purchased for 282m Growth +124% +186% +71% 93

94 In conclusion Wealth Management strengthening our No. 1 position Fast growing market with significant opportunity Strong economy Embedded savings culture Increasing inherited wealth Growth Wealth Management BoI Market Bank of Ireland is strongly positioned Leading Bancassurer and Private Bank Strategic focus to invest and drive significant further growth Outperform 94

95 Retail Financial Services Ireland Outlook

96 The opportunity for profit growth Mortgages & Consumer Lending Wealth Management Business Banking Perform in-line Outperform Outperform Retail Ireland - confident of continued success 96

97 The opportunity for profit growth RFSI PBT growth Economic growth Retail Ireland - confident of continued success 97

98 Retail Financial Services Ireland Questions and Answers

99 Conclusion