Bank of Ireland A strengthened platform for sustainable growth

Transcription

1 Bank of Ireland A strengthened platform for sustainable growth May 2010 SUPPORT STABILITY STRENGTH

2 Important notice Information contained herein has not been independently verified and no representation or warranty is made as to the fairness, accuracy or correctness of such information or the opinions expressed herein. This document does not constitute or form part of an offer to sell or issue, or the solicitation to purchase or subscribe for, securities of Bank of Ireland ( Securities ) in the United States ( U.S. ) or any other jurisdiction or an inducement to enter into investment activity. No part of this document should form the basis of any commitment or investment decision whatsoever. The presentation contains certain forward-looking statements regarding the belief or current expectations of Bank of Ireland, its directors and other members of its senior management about, among other things, the Bank s financial condition, results, operations and business. Such forward-looking statements are not guarantees of future performance. No Securities have been, nor will be, registered under the U.S. Securities Act of 1933 ("Securities Act"). Securities may not be offered or sold in the U.S. absent registration or an applicable exemption from the registration requirements of the Securities Act. There will be no public offer of the Securities in the U.S. 2

3 Contents 1. Bank of Ireland overview 2. Strengthened platform for sustainable growth i. Core loan portfolio defined ii. Sustainable funding strategy iii. Robust capital position 3. Conclusion 4. Appendices i. Group financial highlights Dec 2009 ii. Group loan book and asset quality iii. Group funding position

4 Bank of Ireland Group overview A diversified financial services group established in 1783 Strategic bias towards Ireland and our international businesses where we have clear competitive strengths and capabilities Bank of Ireland a systemically important bank playing a critical role in the operation of the Irish economy Leading position in Ireland no. 1 or no. 2 in all our principal product and market segments* Bank of Ireland is the first of our financial institutions to emerge from the banking crisis Brian Lenihan, Irish Minister for Finance, 26 April 2010 *Note: latest data available

5 Delivering Group stability Key issues clarified NAMA Expected loss on disposal of total assets to NAMA within existing guidance Tranche 1 transferred Non-NAMA loan impairment Re-affirmed September 2009 guidance of 4.7bn for non-nama loans for the 3 years to 31 March 2011 Financial Regulator Pension Scheme Completion of Financial Regulator s Prudential Capital Assessment Review (PCAR) of Bank of Ireland s capital requirement Completed pension scheme review solution in progress to eliminate IAS 19 pension deficit EU Visibility on EU Restructuring Plan Economy Signs of economic stabilisation Strategy Business, funding and liquidity strategies in place 5

6 Capital raise announcement A market-based solution to Bank of Ireland s capital needs Capital Raise* Warrant buy-back** Capital raising costs Total: 2.8bn 0.49bn c. 0.13bn 3.4bn Proposals to raise 3.4bn equity capital Firm Placing to Private Investors of 0.5bn Firm Placing to State of 1bn Rights Issue of up to 1.9bn fully underwritten Potentially reduced through equity generation and profit impact of Debt for Equity swap Government ownership of up to 36%, facilitated by warrant buy-back Proposals Generate pro-forma equity tier 1 ratio 8% at 31 Dec 2009 Ensure expected minimum 7% equity tier 1 ratio at cyclical low post asset transfers to NAMA Meets severe Financial Regulator stress test Create a better quality capital structure Provide a strong capital foundation to support the Group s future growth Progress prudent disengagement from State Guarantees *Note: Includes 2.7bn required by Financial Regulator ; **Note: Based on a pre announcement closing share price of 1.80 on 23 April

7 Trading update Some signs of stabilisation albeit trading conditions remain challenging As anticipated some downward pressure on net interest margin Ongoing strong cost discipline continues to deliver cost savings Loan impairment as expected re-affirm previous guidance on non NAMA loans Loan impairment charges expected to remain within guidance of 4.7bn in 3 years to 31 Mar 2011 Loan impairment charges expected to have peaked in 2009; expect to progressively reduce in each of 2010, 2011 and 2012 Customer loans broadly unchanged; Customer deposits marginally lower Mar 2010 over Dec 2009 Raised 4.5bn of wholesale funding in 3 months to 31 Mar 2010 continue to extend maturity in support of strategy to disengage prudently from Government Guarantees At 31 Mar 2010, 37% of wholesale funding with maturity of one year or greater (32% Dec 2009) SUPPORT STABILITY STRENGTH

9 Financial targets 2013 Measure 31 Dec Target Net interest margin 1.59% annualised In excess of 1.75% Cost / income ratio 56% < 50% Impairment charge* 4,055m Normalised**** Equity Tier 1 capital 5.8%** > 7% Group loan / deposit ratio 152% <125% Return on equity*** Negative Low teens to mid teens % *Note: Impairment charge on loans and advances to customers **Note: Pro forma at 31 Dec 2009 reflecting debt for debt exchange in Feb 2010 ***Note: ROE excluding 2009 Preference Stock ****Note: Expected that impairment charges on non-nama loans peaked in 2009 and to reduce progressively in 2010, 2011 and

10 Define and focus on core portfolio Core loan portfolio defined Group loan portfolio Core loan portfolio 82bn at 31 Dec % / 24bn Residential mortgages 45% / 61bn Residential mortgages Expected to grow at c. 6%* p.a. to end 2013 Substantially funded by customer deposits 5% / 4bn Consumer 37% / 30bn Non property corporate and SME 29% / 24bn Property and construction 25% / 34bn Non property corporate and SME Run-off / for sale portfolio** 48bn to 53bn at 31 Dec 2009 Run-off 34bn loans 27% / 36bn Property and construction Run-off for value to continue into medium term 30bn UK broker distributed Residential mortgages For sale 14bn 19bn loans 3% / 4bn Consumer Largely funded by wholesale funding 4bn Intl. Corporate Banking Assets 2bn 7bn Irish broker mortgage loans (ICS) 12bn NAMA Loans Group loans 135bn 31 Dec 2009 *Note: Compound annual growth rate; **Note: Reflects measures announced with regard to the implementation of the EU Restructuring Plan 10

11 Define and focus on core portfolio Visibility on EU Restructuring Plan EU Restructuring Plan not expected to be materially detrimental to long term interests of the Bank Formal approval expected in mid 2010 Based on status of negotiations expect key elements to comprise the following which are to be implemented between now and Dec 2014: Principal business disposals New Ireland Assurance Manufacturer of pension, life assurance & related products c. 12bn life assets (primarily unit linked) (Dec 09) Distributes through brokers, direct & BoI network - c. 19% share of new business through these distribution channels in RoI ICS Building Society Irish intermediary sourced mortgage business At 31 Dec 09: Mortgage loans of 7bn (incl. securitisation of 1.9bn) and deposits of 4bn. Commitment to sell min. 2bn mortgages Bank of Ireland Asset Management Dublin-based investment manager Institutional balanced / specialist fund manager 25bn FUM 31 Dec 09 Loan portfolios in wind-down As previously announced in Jan UK intermediary sourced mortgage portfolio ( 30bn) and certain discontinued international corporate lending portfolios ( 4bn) Wholesale funding term-out commitments if wind-down of UK mortgage portfolio not below target level by Jun consistent with Group targets Dividend / coupon payments Not to pay dividends on Ordinary Stock until the earlier of 30 Sep 2012 or the date by which the 2009 Preference Stock is redeemed or no longer owned by the State No discretionary coupon payments / exercise of voluntary call options on hybrid capital until 31 Jan 2011 (one year following dividend stopper) Behavioural commitments 11

12 Define and focus on core portfolio Business strategy Focus capital and resources to core businesses where we have competitive strengths and capabilities strong positions in markets with attractive growth opportunities Funding of core portfolios largely by customer deposits Future growth largely supported by ability to attract customer deposits Retail Ireland UK Financial Services (Retail UK) Capital Markets (Ireland, UK and International) #1 retail bank Leading market positions #1 or 2 across principal product segments Extensive distribution capability Committed to continued improvement of customer service Maximise opportunity in retail and commercial banking activities through branch network in Northern Ireland Continue to develop consumer banking franchise partnership with UK Post Office Further develop our Business Banking activities across 8 sales hubs in Great Britain Corporate banking and customer driven treasury management activities in Ireland, the UK and in selected niche segments internationally Securities Services (fund administration) and Corporate Finance 12

13 Improve margin Margin expansion key management priority Target Group net interest margin in excess of 1.75% in 2013 Re-align asset and liability pricing Re-pricing new business reflecting changing environment Improved market liquidity to enable deposit re-pricing Back-book re-pricing of consumer, mortgage, business and corporate banking loans Interest rate increases will impact positively Short term negative due to term-out of wholesale funding in preparation for prudent disengagement from Government Guarantees Maximise asset re-pricing in run-off portfolio Drivers of net interest margin movement Higher new lending and deposit margins Higher new business volumes Back-book re-pricing Higher official interest rates Higher funding costs Short term 13

14 Manage credit risk effectively Extensive internal review of impairment charge estimates undertaken in Jan / Feb 2010 Outcome validated by Oliver Wyman through independent review and challenge Re-affirmed guidance - impairment charges of 4.7bn for the 3 year period to 31 Mar 2011 for the non-nama element of the loan book of which 2.7bn taken to 31 Dec 2009 Impairment charge on non-nama loans expected to have peaked in 2009 progressive reductions expected in 2010, 2011 and 2012 SUPPORT STABILITY STRENGTH

15 Delivering Group Stability Continuing progress on key priorities National Asset Management Agency Eligible Bank Assets classified as loans held for sale to NAMA of c. 12.2bn (gross) Phased transfer in 2010 Performing and non-performing loans 70% land and development, 30% associated loans 2.8bn impairment provisions at 31 Dec bn first tranche transferred in early Apr bn land and development and 1.0bn associated loans Consideration 1.2bn Loss on disposal on first tranche may not be representative of impact of total disposals to NAMA Though applying similar level of discount would result in gross loss of 4.4bn - within previous guidance Loss on sale of assets to NAMA function of quantum, mix and discount applied - actual loss only known after transfer of final loans Retained Property and construction loans by the Group (post NAMA): 2.8bn land and development loans 20.8bn investment loans Profile of loans held for sale to NAMA 31 Dec 2009 RoI bn UK bn RoW bn Total bn Land Development Associated (mainly investment property) Total

16 Pursue sustainable funding strategy Funding strategy Revert to traditional banking model Fund core portfolios substantially through deposits Asset growth largely supported by ability to attract deposits Run-off portfolios largely funded through wholesale funding Disengage from Government Guarantee in prudent and safe manner Drive deposit growth Extend maturity profile of wholesale funding Maintain significant pool of contingent liquidity collateral Target: Group loan to deposit ratio of <125% in 2013 Conservative funding profile 31 Dec 2009 Core Portfolio Run-off Portfolio Core portfolio 82bn Substantially funded by customer deposits Run-off portfolio of 53bn Largely funded by wholesale funding 16

17 Pursue sustainable funding strategy Funding position Growing deposits Funding metrics Mar 2009 Dec 2009 Reducing wholesale funding Issued 14bn term funding Jan 2009 to Mar 2010 Robust, efficient and flexible buffer of contingent liquid assets Customer deposits 83bn 85bn Group Loans (incl. NAMA Assets) / deposits ratio Group Loans (excl. NAMA Assets) / deposits ratio Core portfolio loans / deposits ratio * 161% 152% - 141% - 101% 42bn of liquidity potential at Dec 2009 Wholesale funding 74bn 61bn Net Monetary Authority drawings 8bn Dec 2009 ( 17bn Mar 2009) Term funding (wholesale funding with a maturity of 1 year or greater) 20bn 20bn Term funding as a % of overall wholesale funding 27% 32% * Core loan portfolio excludes loan portfolios placed in run-off of 34bn and loans for sale of up to 19bn 17

18 Robust capital position Capital ratios following capital raise Financial Regulator completed Prudential Capital Assessment Review (PCAR) Mar 2010 Bank of Ireland to raise 2.66bn (net) capital by Dec 2010 Target core tier 1 ratio of 8% in base case Capital principally in the form of equity to meet targeted equity tier 1 ratio of 7% Target Core tier 1 ratio of 4% in stress scenario Proposals fully address PCAR Equity tier 1 capital Core tier 1 capital Capital ratios (Basel II) Dec 2009 Reported Pro forma capital at 31 Dec 2009 reflects benefit of: Lower tier 2 debt-for-debt exchange Feb 2010 generated 405m equity tier 1 capital Transfer of 12.2bn loans to NAMA Pro forma 5.3bn 5.3% 7.0bn 8.0% 8.8bn 8.9% 8.9bn 10.1% Tier 1 capital 9.7bn 9.8% 9.2bn 10.5% Total capital 13.2bn 13.4% 11.8bn 13.5% RWA 98bn 87bn Capital raise proposals which are expected to generate 2.8bn (net) equity tier 1 capital after purchase of Government warrants and fees 18

20 Conclusion Irish economy path to recovery identified Bank of Ireland a systemically important bank with a strengthened platform for sustainable growth Progress and clarity on key issues Core portfolios / businesses identified Progressive reduction in non-nama impairment charges Sustainable funding strategy Cornerstone of funding strategy to disengage from Government Guarantees in a prudent manner Robust capital position to support future growth

22 Financial highlights Dec 2009 Group Profitability 9 Months to Dec 2008 Dec 2009 Profit / (loss) before tax 372m ( 1,813m) Underlying*PBT/(LBT) 595m ( 2,972m) EPS 32.7c (168.6c) Underlying EPS 20.0c (268.7c) Capital Mar 09 Sep 09 Dec 09** Income Statement* highlights 9 Months to Dec 2008 Dec 2009 Total income 2,998m 2,437m Operating expenses ( 1,545m) ( 1,381m) Net interest margin annualised 1.73% 1.59% Operating Profit before impairment on financial assets Impairment charge on financial assets Funding 1,453m 1,050m 823m 4,057m Mar 09 Sep 09 Dec 09 RWAs ( bn) Equity tier ratio 1 6.2% 6.6% 5.3% Core tier ratio 1 9.5% 10.1% 8.9% Tier 1 ratio 12.0% 11.0% 9.8% Total capital ratio 15.2% 14.5% 13.4% Loans (incl NAMA assets) / deposits Loans (excl NAMA assets) / deposits Term Funding (funding with a maturity of 1 year or greater) as a % of total wholesale funding 161% 152% 152% % 27% 33% 32% * Note: Underlying excluding non-core items; ** Note: Slide 18 shows pro forma capital ratios reflecting the impact of Feb 2010 debt for debt exchange, transfer of 12.2bn loans to NAMA and capital raise proposals 22

23 Profile of total loans* - 135bn at Dec 2009 % of Group Loan Book Group loan book* Residential mortgages 45% / 61bn Property and construction 18% / 24bn Loans held for sale to NAMA c.9% / c. 12bn Non property corporate and SME 25% / 34bn Consumer 3% / 4bn RoI - 21% UK - 24% RoI - 7% UK - 10% RoW - 1% RoI - 6% UK / RoW - 3% RoI - 11% UK - 7% RoW - 7% RoI - 2% UK - 1% Group loan book 135bn at 31 Dec 2009 Significant Residential mortgage book - 29bn in RoI and 32bn in the UK 24bn or 18% of Group loan book in retained Property and construction loans - 9bn in RoI, 13bn in the UK with 2bn RoW c. 12.2bn loans held for sale to NAMA Loans to Non-property corporate and SME sectors is 25% of the loan portfolio bn in RoI, 9.8bn in the UK with 9.2bn in RoW 3% of loan book is Consumer loans which includes credit cards, personal loans and motors loans - 2.9bn is in RoI and 1.4bn in the UK * Note: Before balance sheet impairment provisions of 5.8bn at 31 Dec

24 Impairment charge by portfolio Total Loans Impairment charge on loans and advances to customers by portfolio At Dec 09 9 mths to Dec mths to Mar 09 9 mths to Dec 09 Residential mortgages bn m 61bn 60m bps (annualised) 13bps m 127m bps (annualised) 20bps m 237m bps (annualised) 52bps - Republic of Ireland -UK Non property corporate and SME Property and construction 29bn 32bn 24m 36m 12bps 14bps 60m 67m 23bps 20bps 165m 72m 34bn 108m 41bps 344m 94bps 659m 250bps 36bn 449m 165bps 766m 211bps 2,993m 79bps 30bps 1,125bps - Investment -Land and development 25bn 11bn 70m 379m 40bps 394bps 143m 623m 61bps 493bps 437m 2,556m 249bps 2,831bps Consumer 4bn 130m 244bps 198m 308bps 166m 421bps Total 135bn* 747m** 72bps 1,435m** 102bps 4,055m** 396bps Of the 4,055 million impairment charge in the 9 months to Dec billion relates to loans held for sale to NAMA 1.8 billion relates to Bank of Ireland retained portfolio *Note: Before balance sheet impairment provisions of 5.8bn at Dec 09 **Note: Excludes impairment charge on other financial assets of 2m in 9 months to Dec 09 ( 76m in 9 months to Dec 08; 78m in 12 months to Mar 2009) 24

25 UK Residential mortgages - 29bn / 32bn Dec 2009 Book - segment split Asset quality - arrears Arrears greater than 3 mths in arrears* Dec 08 Mar 09 Sept 09 Dec 09 Book - BoI 118bps 148bps 161bps 171bps CML 188bps 241bps 240bps 238bps Buy to let - BoI 140bps 173bps 177bps 185bps CML 231bps 306bps 219bps 200bps Self Cert - BoI 263bps 366bps 410bps 454bps Standard- BoI 66bps 80bps 93bps 97bps *Note: Cases > 3 months excluding possessions 47% Standard 37% BTL 16% Self-cert UK mortgages 53% of total Group mortgages (24% of Group loans and advances to customers) Bank of Ireland has c.262,000 residential mortgages in the UK Modest decline in book: end Sept 09 to Dec 09: (0.9)% end Jun 09 to Sept 09: (0.4)% end Mar 09 to Jun 09: 0.0% end Dec 08 to Mar 09: 0.0% end Mar 08 to Dec 08: 7.3% Strategic decision to de-leverage Group balance sheet - withdrawal from UK intermediary sourced mortgage business (Jan 09) House prices up 5.9% in 12 mths to Dec 2009; down 12.9% from peak in Oct 2007 to Dec 2009 (Nationwide) Asset quality: Impairment charge Annualised 9 mth impairment charge to 31 Dec 09 30bps Annualised 9 mth impairment charge to 31Dec 08 14bps Negative equity 30k (11.6%) mortgages in negative equity (Mar 09: 56k or 21%, Sept 09: 37k or 14%) quantum of net negative equity 260m (Mar 09: 685m, Sept 09: 344m) Possessions 305 properties in possession or 0.12% of mortgages at 31 Dec properties or 0.13% of mortgages in possession at 30 Sep or 0.15% of mortgages in possession at 31 Mar new possessions in 9 mths to 31 Dec in 3 mths to 31 Dec in 3 mths to 30 Sept in 3 mths to 30 Jun 09 25

26 Irish Residential mortgages - 29bn Dec 2009 Book - segment split Irish mortgages 47% of total Group mortgages (21% of total Group loans and advances to customers) Bank of Ireland has c.199,000 residential mortgage accounts in Ireland Book growth: 28% 28% 23% 21% FTB BTL Trading up/down Equity release and switchers end Sept 09 to Dec 09:0.4% end Jun 09 to Sept 09: 0.7% end Mar 09 to Jun 09: 0.3% end Dec 08 to Mar 09: 0.3% New business product split: 9 mths to 31 Dec 09: FTB 36%; BTL 8%; Trade up/down 26%; Equity release/switch 30% 9 mths to 31 Dec 08: FTB 24%; BTL 25%; Trade up/down 24%; Equity release/switch 27% House prices fell 18.5% in 12 mths to Dec 2009; down 31.5% from peak in February 2007 to Dec 2009 (PTSB) - official statistics trailing actual market Asset quality Arrears 3 months or more past due* Book 346bps Dec 2009 (297bps Sept 09; 192bps Mar 09) Impairment charge Annualised 9 mth impairment charge to 31 Dec 09-79bps Annualised 9 mth impairment charge to 31 Dec 08 12bps Negative equity 43k (21.5%) of mortgages in negative equity (Mar 09: 12k or 6%,Sept 09: 21k or 10%) quantum of net negative equity 1.4bn (Sept m; Mar m) Possessions: 28 properties in possession at 31 Dec 09 (14 at 30 Sep 2009; 6 at 31 Mar 09) 27 new possessions in 9 mths to 31 Dec 09 (16 in 3 mths to 31 Dec 09; 9 in 3 mths to 30 Sept 09; 2 in 3 mths to 30 Jun 09) * Based on value of mortgages in arrears 26

27 Property and construction loans bn Dec 2009* Geographic and sector profile - bn Total Loans held for sale to NAMA Retained Book Post NAMA Investment Land and development Total Investment Land and development Total Investment Land and development Total Ireland Land Development Investment Total Ireland UK (GB/NI) Land Development Investment Total UK (GB/NI) Total Other Total * Note: Before balance sheet impairment provisions of 3.9bn of which 2.7bn relates to loans held for sale to NAMA; Loans and advances expected to transfer to NAMA total 12.2bn and include 0.3bn relating to Non property and construction loans 27

28 Retained Property and construction loans bn Dec 2009 Investment Loans 20.8bn Land and Development Loans 2.8bn Investment loans 20.8bn 88% of retained Property & construction loans Book weighted to UK - Geographic profile - 56% in the UK, 37% in Ireland and 7% US/Europe Key risk is tenant default mitigated by: Portfolio well diversified lack of tenant concentrations Sector profile; c.51% Retail, 24% Office, 9% Industry, 16% mixed use Impairment provision in the retained investment portfolio of 0.4bn at 31 Dec 09, against impaired loans of 1.4bn Land and development loans 2.8bn 12% of retained Property & construction loans - Land 1.3bn (RoI 0.6bn and UK 0.7bn) - Development 1.5bn (RoI 0.5bn / UK 0.8bn / RoW 0.2bn) Profile of land and development portfolio - 39% in Ireland, 54% in the UK and 7% US/Europe - 46% in land and 54% in development Impairment provision in retained land and development portfolio of 0.8bn at 31 Dec 09, against impaired loans of 1.9bn 28

29 Loans held for sale to NAMA c 12.2bn Profile of loans transferring to NAMA at 31 Dec 2009 Total loans and advances to customers Impaired loans Impaired loans as % of advances Impairment provisions Impairment provisions as % of impaired loans m m % m % Property and construction 11,956 6, , Other Total 12,235 6, , Portfolio of circa 12.2bn expected to transfer to NAMA 70% land and development and 30% associated loans 54% or 6.6bn of loans held for sale to NAMA classified as impaired at 31 Dec 09 Stock of Balance Sheet Provisions of 2.8bn on 12.2bn portfolio at 31 Dec 09 of which: 2.5bn relates to land and development 0.3bn relates to associated loans 1.9bn first tranche to transfer in early April bn land and development loans (47%) and 1.0bn associated loans (53%) Consideration of 1.2bn 29

30 Asset quality Dec 2009 Non-property corporate and SME loans & Consumer loans Non-property corporate and SME loans - 34bn Consumer loans - 4bn Corporate and SME loan portfolio of 34bn - portfolio diversified across a range of sectors and geographies c.45% Ireland, 28% UK and 27% RoW 9 months impairment charge of 659m or 250bps (annualised) (9 months to Dec m or 41bps) Increased impairment charge reflecting Impact of the slowdown in economic activity Poor consumer sentiment Higher level of business insolvencies Consumer loan portfolio of 4bn at 31 Dec 09 ( 6bn Mar 09) 67% Ireland and 33% UK Includes personal loans, overdrafts, motor loans and credit cards Enhanced management of arrears 9 months impairment charge of 166m or 421bps (annualised) (9 months to Dec m or 244bps) Impairment charge remains elevated due to Higher unemployment Higher level of personal indebtedness Lower disposable income 30

31 Visibility on non-nama impairments Economic assumptions underpinning expected impairment charge Ireland House price falls peak to trough 45% Unemployment % % GDP growth not expected before 2011 United Kingdom House price falls peak to trough 20% Unemployment % % GDP low growth expected in 2010 Extensive Group loan loss forecast re-fresh exercise undertaken in Jan/Feb 2010 Assessment grounded in consensus base-case macro economic forecasts Combination of modelled and granular bottom-up analysis Previous market guidance re-affirmed for impairment charges of 4.7bn for the 3 year period to 31 Mar 2011 for the non-nama element of the loan book Outcome validated by Oliver Wyman through an independent review and challenge of the Group s loan loss forecast Impairment charge expected to have peaked in 2009 Impairment charge on non-nama loans and advances to customers expected to have peaked in 2009 with progressive reductions expected in each of 2010, 2011 and

32 Balance Sheet funding strategy Mar 2009 Total liabilities 184bn* Sept 2009 Total liabilities 173bn* Dec 2009 Total liabilities 169bn* Balance Sheet funding strategy Customer Deposits Drive growth through strength of franchise and scale of distribution Wholesale Funding Continue to extend maturities in term markets Customer deposits 45% / 83bn Customer deposits 50% / 87bn Customer deposits 50% / 85bn As funding markets continue to normalise extend maturity profile of short term programmes Contingent Liquidity Maintain a robust, efficient and flexible buffer of contingent liquid assets - 42bn of liquidity potential at 31 Dec 09 Ensuring access to BOE, ECB & Federal Reserve Wholesale funding 40% / 74bn Wholesale funding 35% / 61bn Wholesale funding 36% / 61bn Government Guarantee Disengage from the Government Guarantee in a prudent and safe manner Total capital 8% / 15bn Other 7% / 12bn Total capital 8% / 14bn Other 7% / 11bn Total capital 8% / 12bn Other 6% / 11bn * Note: Excludes Life funds held on behalf of policyholders: Mar bn, Sept bn, Dec bn 32

33 Group deposits Divisional profile of deposits Mar 09 Sept 09 Dec 09 % growth Dec 09 Vs Mar 09 Group Total 83bn 87bn 85bn 2% Retail Ireland 33bn 34bn 35bn 4% - Deposits 23bn 24bn 24bn 4% - Current accounts credit balances UK Financial Services (UKFS) 10bn 10bn 11bn 6% 21bn 19bn 21bn 18bn 21bn 19bn (2%) - BBUK 11bn 10bn 10bn (9%) -POFS 8bn 8bn 9bn 9% Capital Markets 29bn 32bn 29bn (1%) Competitive market Deposits increased by 2% Dec 09 vs Mar 09 despite intense competition and pressure on international deposits Distribution, strength of brand and stable franchise driving deposit growth Joint number one share of total resources in Ireland - extensive distribution capability with leading and trusted franchise Retail Ireland customer deposits up 4% (Dec 09 vs Mar 09) Deposits increased 4% Current account credit balances up 6% UKFS customer deposits down 2% (Dec 09 vs Mar 09) POFS source of quality deposits Capital Markets customer deposits down 1% (Dec 09 vs Mar 09) 33

34 Wholesale funding profile Wholesale Funding Mar bn 9% Sept bn Dec bn Quantum of wholesale funding at Dec 2009 reduced to 61bn from 74bn at Mar 2009 Increase in customer deposits Reduction in liquid assets of 7bn as wholesale funding is termed out Securitisation ACS/Senior debt 34% 18% 10% 41% 10% 44% 9bn of term funding issued during 9 months to Dec 2009 ( 8.4bn in the 12 months to Mar 09) Average maturity of 2.4yrs with an average spread of 3 month Euribor +180bps CP/CDs Deposits by Banks 39% 15% 34% 16% 30% Maturity profile of wholesale funding lengthened with term funding (funding with a maturity of 1 year and longer) increased from 27% of wholesale funding at Mar 2009 to 32% at Dec 2009 Improvement in funding conditions Improved investor sentiment towards Ireland reflected in narrowing of CDS spreads * Sovereign CDS c.128bps at 26 Mar 2010, down from peak of c.400bps in Feb 2009 Bank of Ireland CDS c.204bps at 26 Mar 2010, down from peak of c.670bps in Mar 2009 Net Monetary Authority drawings have decreased to 8bn at Dec 2009 from 17bn at Mar 2009 Jan 2010 BoI accepted as a participating institution in Eligible Liabilities Guarantee Scheme (ELG) * Note: CDS credit default swaps 34