Davy Irish Equity Conference www.irishlifepermanent.ie Presentation by: Denis Casey, Group Chief Executive Paris, 13 May 2008 1 Davy Irish Equity Conference Paris, 13 May 2008
Ireland A Growth Market Population growth - 4.2m to 5.0m in 2015 Expanding middle cohort of population Rising incomes and employment, low taxation The economy can grow at an annual average rate of 4% or more over the medium-term, in line with its long-run average growth rate since 1970 Source : ESRI Arp 08 2 Davy Irish Equity Conference Paris, 13 May 2008
Ireland Demographics Population growth & demographics Projected Population A combination of natural demographics and migration will see the population continue to grow rapidly over the next 10 years Population forecast to reach 5 million in 2015 and exceed 5.3 million in 2020 6,500,000 6,000,000 5,500,000 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Labour force projected to grow at an annual average rate of 2.2% out to 2015 320 300 m Ireland Growing Active Population EU 25 (LHS) m 4.0 3.6 Labour force growth combined with rising productivity point to potential GDP growth of circa 4-5% per annum out to 2015 280 260 240 220 Ireland (rhs) 3.2 2.8 2.4 200 2005 2010 2015 2020 2025 2030 2.0 Source : NCB 3 Davy Irish Equity Conference Paris, 13 May 2008
Ireland Housing Demand & Supply 000 s Over 25's Completions (RHS) 000 s 100 90 80 70 60 50 40 30 20 10 0 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 100 90 80 70 60 50 40 30 20 10 0 At end 2007 Irish households are expected to owe roughly 200bn but they also hold over 330bn of financial assets and have houses worth an est. 630bn. 4 Davy Irish Equity Conference Paris, 13 May 2008 Source : Irish Households Survey2007, ESRI Oct 07
Long Term Savings Market High savings ratio Strong public policy support for pensions Significant wealth management opportunity Top 3 players have 70%+ of market Hugely attractive market with strong growth drivers 5 Davy Irish Equity Conference Paris, 13 May 2008
Irish Life the Dominant Franchise Leading asset gatherer in Irish market 33% share of life & pensions market 28% share of assets under management Irish Life Unit-linked business, low risk Position built on distribution reach, investment reputation and service quality & efficiency 6 Davy Irish Equity Conference Paris, 13 May 2008
Irish Life the Dominant Franchise Market Share Sales Growth* 35 % 33% 1000 m 1,014 30 28% 30% 800 706 25 21% 22% 23% 25% 26% 600 400 332 414 316 456 520 20 200 15 2001 2002 2003 2004 2005 2006 2007 Q1 08 0 2001 2002 2003 2004 2005 2006 2007 Growing life market share clear market leader in growth market * APE Sales 7 Davy Irish Equity Conference Paris, 13 May 2008
Unrivalled Distribution Reach & Depth Direct Sales Brokers Bancassurance Onesource Institutions 250 advisors, increased productivity 1,000 brokers, agents & authorised advisors Most efficient & productive bancassurer 175 franchises using direct sales selling process Exporting successful bancassurance model 8 Davy Irish Equity Conference Paris, 13 May 2008
Investment Reputation & Credentials Active 1 Year % 3 Year % 5 Year % 10 Year % ILIM Pension Managed Fund Manager Average -12.6-13.4 7.1 6.3 9.8 8.6 4.0 3.5 Passive ILIM Pension Consensus Fund Manager Average -13.0-13.4 7.0 6.3 9.4 8.6 4.1 3.5 Out-performance 0.4 0.7 0.8 0.6 9 Davy Irish Equity Conference Paris, 13 May 2008
Growth Opportunity - Pensions Under-penetration of pensions in workforce and selfemployed Under-funding of existing DC pension schemes Strong public policy and fiscal support Vehicle for wealth management and post retirement planning DC Pensions Growth % Membership 10 Demographic impact 3 Salary growth 4 Income elasticity 3 20 10 Davy Irish Equity Conference Paris, 13 May 2008
Growth Opportunity - Wealth Management Wealth creation and accumulation an emerging theme in Irish market Household wealth to double by 2015 Enormous opportunity for Irish Life & Permanent Priority to expand structures, capability and products to exploit this opportunity: Creation of new business unit in Retail Life Build capability in direct sales and bancassurance Develop supporting technology and processes Broaden product offering 11 Davy Irish Equity Conference Paris, 13 May 2008
Life Low Risk Profile Irish Life 93% unit-linked; assets and liabilities matched De-risked portfolio e.g. longevity risk reinsured Conservative investment and prudent EV assumptions Low risk appetite and strong market position reduce volatility through cycle 12 Davy Irish Equity Conference Paris, 13 May 2008
Retail Banking Market Highly competitive market Robust prudential and consumer regulation Conservative consumer behaviour Growth opportunity High quality banking sector servicing expanding & wealthier customer base 13 Davy Irish Equity Conference Paris, 13 May 2008
Banking Rapidly Growing Franchise Brand strength modern, youthful, dynamic Unrivalled customer service reputation Customer acquisition strategy via current account Extending sales management process to all products 14 Davy Irish Equity Conference Paris, 13 May 2008
Banking Rapidly Growing Franchise Current Account Growth Loan Book Growth 000s 500 bn 40 39.2 35 33.8 400 300 30 25 20 15 12.9 14.6 17.1 21.1 26.3 200 10 5 100 2003 2004 2005 2006 2007 0 2001 2002 2003 2004 2005 2006 2007 15 Davy Irish Equity Conference Paris, 13 May 2008
permanent tsb Brand Strength Summary of Fair Share Personality Dimensions 4. Hugely successful merger created powerful bank platform We have built a modern, innovative brand that stands out from the crowd Permanent TSB Over Index Modern Youtful Dynamic Factors players over/under perform within Bank AIBX Bank BOI Y Over Index Unhelpful Impersonal Traditional Bureaucratic Over Index Safe Reliable Dependable Traditional Untainted by traditional bank baggage Most trusted bank brand Under Index Impersonal Traditional Bureaucratic Under Index Dynamic Youthful Modern Under Index Modern Youthful 16 Davy Irish Equity Conference Paris, 13 May 2008
Unrivalled Customer Service 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Customer Central programme across the bank to engage our staff and drive for a top quartile score Customer service survey / listening exercise completed by the Leadership Factor annually Highest opening score ever recorded of 82% in 2006 Current: 85.1% Permanent tsb overall 2008: 84.2% Deposit: 84.2% Assurance: 84.0% Mortgage: 83.3% Permanent tsb overall 2007: 81.3% The Satisfaction Index TM for permanent tsb is: 84.2% CSI score of 84% in 2008, up 3% 17 Davy Irish Equity Conference Paris, 13 May 2008
Customer Acquisition Capability Ambition to become the largest Retail Bank in Ireland requires a relentless focus on new customer acquisition 250,000 new customers added over 4 years Currently recruiting over 200 new customers to permanent tsb every day Superior service experience and state of the art sales processes will create real value from these new customer relationships 18 Davy Irish Equity Conference Paris, 13 May 2008
Banking Low Risk Profile 98% of lending secured, 88% residential mortgages Excellent credit quality reduced number of ROI mortgage arrears High quality Treasury liquidity portfolio, no toxic assets Diversified funding sources plus collateralised loan pool of 20bn Low risk assets mitigate credit crunch risks 19 Davy Irish Equity Conference Paris, 13 May 2008
Low Risk Credit Quality & Funding Residential Mortgages (Ireland) Arrears 000s 000s 12 200 No. of Mortgages (RHS) 190 10 180 US & Euro CP ECB Repo Deposits by Banks - secured Deposits by Banks - unsecured X-Notes Funding Profile 2007 2006 12% 12% 6% 3% 3% 20% 1% 5% 6% 4% 8 170 160 Customer Accounts 34% 34% 6 No. in Arrears * LHS 150 64% 4 2002 2003 2004 2005 2006 2007 140 Securitisation 7% 9% Long-term Debt 23% 21% * > 1 month 20 Davy Irish Equity Conference Paris, 13 May 2008 44bn 43bn
Summary Rumours of Ireland s demise greatly exaggerated Huge growth opportunities in personal financial services over next decade Irish Life and permanent tsb are market leading franchises and brands in the market Low risk / high quality business model allows us to successfully weather the current market turmoil IL&P successful company in a growth market 21 Davy Irish Equity Conference Paris, 13 May 2008
Contact Information Please contact our Investor Relations Department for any further information or visit our group website at www.irishlifepermanent.ie Contact details: Barry Walsh barry.walsh@irishlife.ie +353 1 704 2678 Orla Brannigan orla.brannigan@irishlife.ie +353 1 704 1345 Marie Gilsenan marie.gilsenan@irishlife.ie +353 1 856 3286 22 Davy Irish Equity Conference Paris, 13 May 2008