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AIB Group

AIB Group. Preliminary announcement of 2001 results. Forward looking statement.

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AIB Group

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  1. AIB Group Preliminary announcement of 2001 results

  2. Forward looking statement A number of statements we will be making 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 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. visit www.aibgroup.com/investorrelations/home/

  3. Michael Buckley Group Chief Executive

  4. Allfirst suspected fraud update 6 Feb 07.00  Stock exchange announcement, $750m loss indicated 7 Feb 20.00  Independent investigation endorsed by AIB board AIB treasury management activities to be centralised 10 Feb 13.00  Announcement of Eugene A.Ludwig to lead investigation

  5. Impact Pre-tax €789m After-tax €513m Allfirst suspected fraud update 20 Feb  Once-off charge of $691m in 2001 annual results Suspected fraud perpetrated over 5 years 9 Mar  Target date for investigation report Mid Mar  Target date for announcement of findings and actions

  6. Profit before Taxation Pre Suspected Fraud€1,401m Adjusted Return on Equity 21% Profit before Taxation€612m Profit Attributable €484m-38% Adjusted Earnings per Share119.4c+12% Dividend per Share 43.8c+13% Underlying Earnings per Share* +8% 2001 reported results * excludes Allfirst suspected fraud, KCH profit, Poland restructuring costs, additional unallocated provision, FRS 17, goodwill amortisation

  7. Revenue growth +8%* +10% +11% +17% +1bp Banking fees and commissions Net interest margin Loans Deposits * excludes the Allfirst suspected fraud and the impact of currency movements

  8. Once-off +4% Other +8% Costs +12% Cost / income ratio 58.5% • Once-off costs include integration in Poland, euro conversion and development costs in USA • Other costs include: • special salary adjustments in Rep. Ire & USA • Investment in USA and Poland Significant reduction in cost growth rate this year

  9. Robust asset quality / strong provisioning • Non-performing loans 2% (1.9% in 2000) • Prudent provision cover across the group • Additional unallocated credit provision, €50m, in a turbulent economic environment • General provision (€454m) 3 times current provision charge

  10. Our strategic goal ….. to become the standard for 21st century community banking

  11. AIB wherever we operate ... Retail & Commercial Banking Rep. Ire., GB + NI, USA, Poland • Different markets, one approach • Transferable core competencies • Common IT architecture and streamlined support infrastructure • World class CRM tools Other Relationship Business the standard for 21st century community banking

  12. AIB - 21st century community bank AIB Bank Republic of Ireland - profit +9% • Most productive bank in Ireland - cost / income reduced again to 51% • Promoting home ownership home mortgages +20%, gaining market share • Ark life - 15% of profit, no 3rd party fees • Post office agreement enhances customer choice (60% increase in available service transaction time) • 1,000 extra customer portfolio managers within 1 year

  13. Favourable Irish economic outlook Growth % 2002 (f) 2003 (f) GDP 3.7 6.4 GNP 2.9 6.3 Unemployment rate 5.3 5.3 Source:OECD

  14. Demographics underpin demand 2006

  15. Population by age group

  16. AIB - 21st century community bank AIB Bank Great Britain + Northern Ireland - profit +8% G.B. • Bank of choice for chosen business segments • New relationship managers being recruited • 2 new business development centres opened,additional 5 this year N.I. • Realigning the network to customer needs • 7 new business development centres opened • £10m investment programme in branch network • Centralising administration - 30% more business development staff this year

  17. AIB - 21st century community bank USA - loss €434m (underlying profit +8%) Allfirst • Alignment to community banking model • Generating momentum in Direct Retail & SME markets • 4% growth in targeted loan portfolios • Strong new business growth in Wealth Management • Favourable demographics • Family incomes 9% above US average • Market shares 10-19% • No. 1, 2, or 3 in all key counties Cont…/

  18. AIB - 21st century community bank USA /...cont. • Building not for profit business • Risk assets up 27%, fee income up 41% • New locations - Atlanta, San Francisco • Complementary businesses acquired - CCS, Ketchum

  19. Allfirst focus Next 6/9 months • Repair damage in Allfirst • Rebuild retail and commercial momentum Thereafter • Revalidation of strategic focus

  20. AIB - 21st century community bank Poland - profit (16%*) • Transferring core competencies to build top tier position • New branch banking model ($100m spend) - implemented for 75% of our business in 6 months • Cost agenda on target (€50m p.a. saving by 2003) • Branch network ideally positioned * excludes integration costs

  21. AIB - 21st century community bank Capital Markets - profit +22% • Customer services driving revenue • World class corporate relationship banking model- record profit • Fostering innovation (debt management activities, joint venture with Bank of New York) • Strong treasury performance

  22. Enterprise Networks & eBusiness • Leveraging IT capabilities and initiatives across the Group through: • Consolidating and optimising technology infrastructure • Prioritising technology and eBusiness investments to deliver Group-wide benefits

  23. Conclusion • 2001 - solid year in volatile circumstances • Allfirst suspected fraud a very serious, regrettable event • Board / management / staff focused on • quickly dealing with all issues arising • minimising disruption of business momentum • revalidation that all elements of control framework meet highest standards • Powerful, resilient franchises • A strong balance sheet

  24. Gary Kennedy Group Director, Finance, Risk, Enterprise Networks & eBusiness

  25. 2001 underlying results Adjusted EPS (c) PBT (€m) Reported year 2001 612 Allfirst suspected fraud (789) Adjusted 119.4 1,401 KCH profit 10.8 93 Poland restructuring -2.3 (38) Additional unallocated credit provision -5.1 (50) Net impact adjusted EPS / PBT 3.4 5 Base for 2002 comparison with 2001 116 1,396

  26. Profit and loss account Reported Pre fraud Change * 2001 €m 2001 on 2000 % 2,997 Total operating income 3,786 11 2,284 Total operating expenses 2,284 14 Group operating profit 713 before provisions 1,502 7 204 Total provisions 204 52 509 Group operating profit 1,298 3 612 Group profit before tax 1,401 10 * excludes exceptional item in 2000

  27. Implementation of FRS 17 Year Year Year €m 2001 2000 1999 Profit before Tax* 1,362 1,251 1,132 FRS 17 Implementation 39 23 31 Profit before Tax* 1,401 1,274 1,163 • FRS 17 benefit expected to be €40m approx. in 2002 * before Allfirst suspected fraud in 2001 and exceptional item in 2000

  28. Performance by division 2000 €m 2001 Change% 516 AIB Bank Rep Ire 562 9 205 AIB Bank GB & NI 223 8 330 USA 355 8 159 Capital Markets 194 22 88 Poland 36 (16) (24) Group 31 - 1,274 Group profit before tax 1,401 10 * ** * * excludes Allfirst suspected fraud ** excludes integration costs

  29. Operating income * Underlying 2000 €m 2001 Change % ** 2,022 Net interest income 2,293 11 71 Other finance income 67 (6) 1,304 Other income 1,426 5 3,397 Total operating income 3,786 8 40.5% Other income ratio 39.4% * excludes Allfirst suspected fraud ** excludes the impact of currency movements

  30. Risk weighted asset / loan growth* * excludes the impact of currency movements

  31. Risk weighted assets Underlying 2000 €m 2001 Change %* 14,302 AIB Bank Rep Ire 15,987 12 6,789 AIB Bank GB & NI 7,542 8 20,318 USA 22,403 4 14,879 Capital Markets 18,821 27 3,655 Poland 4,105 4 279 Group - 60,22268,858 11 * excludes the impact of currency movements

  32. Deposit growth

  33. Net interest margin H1 2001 H2 2001 % 2001 2000 2.93 3.12 Group 3.03 3.02 2.67 2.72 Domestic 2.69 2.75 3.16 3.50 Foreign 3.34 3.23

  34. Operating expenses Underlying * 2000 €m 2001 Change % 1,192 Staff costs 1,348 11 634 Other costs 703 9 171 Depreciation & amortisation 195 11 1,997 2,246 10 - Integration costs - Poland 38 1,997 Operating expenses 2,284 12 58.0% Tangible cost / income ratio 58.5% * excludes the impact of currency movements

  35. Provisions for bad debts 2000 Average 2001 Average €m Loans % €m Loans % 36 0.25 AIB Bank Rep Ire 43 0.25 20 0.29 AIB Bank GB & NI 19 0.25 34 0.27 USA 37 0.28 17 0.23 Capital Markets 14 0.17 26 0.90 Poland 16 0.47 133 0.30 129 0.26 - Additional unallocated 50 133 0.30 Total179 0.36

  36. Asset quality % 2001 2000 NPLs / loans 2.0 1.9 Bad debts charge / average loans 0.26 0.30 Provisions / NPLs 97 100 * • NPLs / loans ratio at 0.80% (excl. Poland) • Provisions / NPLs at 168% (excl. Poland) * 0.36% including unallocated provision

  37. Balance sheet €m Underlying * 2000 Assets: 2001 change % 45,880 Loans to customers 51,216 10 48,437 Customer accounts 54,557 11 80,250 Total assets 88,837 8 * excludes the impact of currency movements

  38. Capital ratios 2001 2000 Tier 1 6.5% 6.3% Total 10.1% 10.8% • Good capital position to comfortably support all growth objectives • Surplus capital generated in each year of our medium term plan

  39. Return on risk weighted assets

  40. AIB in 2002 • Strong start to the year…….. • 57% increase in Rep. Ireland mortgage activity in January • Number 1 market share of Special Savings Investment Accounts - significant increase in January • Strong business pipeline in GB & NI • Good customer revenues in Capital Markets • Operating trends continue to improve in Poland

  41. Euro conversion costs • Development costs in USA AIB in 2002 Active cost management % Note: The above year on year cost growth percentages exclude acquisitions and currency factors • Reduction in cost / income ratios in all divisions • Zero cost growth at Allfirst in 2002 • Efficiency gains in Poland. Cost reduction of €50m, >2% of group costs by 2003

  42. AIB in 2002 • Robust asset quality- provision charge approx. 35bps of average loans- prudent provision cover maintained

  43. AIB in 2002 • Revenue growth from consistent, dependable and predictable customer sources • Active control of costs • Robust asset quality • Strong balance sheet EPS target mid single digit growth

  44. Additional information 2000 figures have been restated due to FRS 17 and new divisional structure

  45. AIB Bank profit statement - Rep Ire 2000 €m 2001 Change % 738 Net interest income 843 14 46 Other finance income 43 (6) 357 Other income 359 1 1,141 Total income 1,245 9 593 Operating costs 641 8 548 Operating surplus 604 10 36 Provisions 44 24 512 Operating profit 560 9 4 Profit on disposal 2 (33) 516 Profit before tax 562 9

  46. AIB Bank profit statement - GB & NI 2000 €m 2001 Change % 318 Net interest income 336 6 4 Other finance income 3 (21) 151 Other income 161 7 473 Total income 500 6 248 Operating costs 259 5 225 Operating surplus 241 7 20 Provisions 19 (7) 205 Operating profit 222 8 - Profit on disposal 1 - 205 Profit before tax 223 8

  47. USA Division profit statement* 2000 €m 2001 Change % 537 Net interest income 584 9 4 Other finance income 2 (46) 381 Other income 446 17 922 Total income 1,032 12 554 Operating costs 638 15 368 Operating surplus 394 7 38 Provisions 39 1 330 Profit before tax 355 8 * excludes Allfirst suspected fraud

  48. Capital Markets profit statement 2000 €m 2001 Change % 127 Net interest income 210 67 8 Other finance income 8 - 304 Other income 305 1 439 Total income 523 19 265 Operating costs 296 12 174 Operating surplus 227 31 18 Provisions 38 111 156 Operating profit 189 22 3 Income from associates 5 47 159 Profit before tax 194 22

  49. Poland Division profit statement 2000 €m 2001 Change % 252 Net interest income 275 9 1 Other finance income - - 153 Other income 163 6 406 Total income 438 8 296 Operating costs 358 21 - Integration costs 38 - 110 Operating surplus 42 (27) 23 Provisions 9 (60) 87 Operating profit 33 (19) 1 Property disposal 3 - 88 Profit before tax 36 (16) * * * * excludes integration costs

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