AIB Group Preliminary announcement of 2001 results.
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Transcript of AIB Group Preliminary announcement of 2001 results.
AIB Group
Preliminary announcement of 2001 results
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/
Forward looking statement
Michael Buckley
Group Chief Executive
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
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
Pre-tax €789m
After-tax €513m
Impact
Profit Attributable
€484m-38%
Dividend per Share
43.8c+13%
Underlying Earnings per
Share* +8%
Adjusted Earnings per
Share119.4c+12%
Profit before Taxation€612m
2001 reported results
* excludes Allfirst suspected fraud, KCH profit, Poland restructuring costs, additional unallocated provision, FRS 17, goodwill amortisation
Profit before Taxation Pre Suspected Fraud
€1,401m
Adjusted Return on
Equity
21%
Revenue growth +8%*
Loans Deposits Banking fees and commissions
+10% +17%+11% +1bp
Net interest margin
* excludes the Allfirst suspected fraud and the impact of currency movements
Costs +12%
Other +8%
Once-off +4%
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
Cost / income ratio 58.5%
Significant reduction in cost growth rate this year
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
to become the standard for 21st century community banking
Our strategic goal …..
• Different markets, one approach
• Transferable core competencies
• Common IT architecture and streamlined support infrastructure
• World class CRM tools
Other Relationship
Business
Retail & Commercial
Banking
Rep. Ire., GB + NI, USA, Poland
AIB wherever we operate ...
the standard for 21st century community banking
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
AIB - 21st century community bank
Source:OECD
GDP 3.7 6.4
GNP 2.9 6.3
Unemployment rate 5.3 5.3
Growth % 2002 (f) 2003 (f)
Favourable Irish economic outlook
4000045000
500005500060000
6500070000
7500080000
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
No
of
Bir
ths
10001100120013001400150016001700180019002000
'00
0's
Births Labour Force
Demographics underpin demand
2006
0
200
400
600
800
1000
1200
1400
0-14 15-19 20-24 25-44 45-54 55-59 60-64 65+
Tho
usan
ds
1996 (Based on Census) 2006 (Based on CSO Projections)
Population by age group
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
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
AIB - 21st century community bank
Cont…/
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
AIB - 21st century community bank
Allfirst focus
Repair damage in Allfirst
Rebuild retail and commercial momentum
Next 6/9 months
Thereafter
Revalidation of strategic focus
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
AIB - 21st century community bank
* excludes integration costs
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
AIB - 21st century community bank
Leveraging IT capabilities and initiatives across the Group through:
Consolidating and optimising technology infrastructure
Prioritising technology and eBusiness investments to deliver Group-wide benefits
Enterprise Networks & eBusiness
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
Gary Kennedy
Group Director, Finance, Risk, Enterprise Networks & eBusiness
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
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
Reported Pre fraud Change *2001 €m 2001 on 2000 %
Profit and loss account
* excludes exceptional item in 2000
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
Implementation of FRS 17
• FRS 17 benefit expected to be €40m approx. in 2002
* before Allfirst suspected fraud in 2001 and exceptional item in 2000
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
2000 €m 2001 Change %
* excludes Allfirst suspected fraud** excludes integration costs
Performance by division
*
*
**
Underlying2000 €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%
Operating income *
* excludes Allfirst suspected fraud** excludes the impact of currency movements
**
411
4-1
1818
88
1614
1110
-5 0 5 10 15 20
Poland
USA
Britain
Northern Ireland
Rep of Ireland
Group
RWA Loan
Risk weighted asset / loan growth*
* excludes the impact of currency movements
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 -
60,222 68,858 11
Risk weighted assets
* excludes the impact of currency movements
9
10
18
3
14
11
0 5 10 15 20
Poland
USA
Britain
Northern Ireland
Rep of Ireland
Group
Deposit growth
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
Net interest margin
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%
Underlying *2000 €m 2001 Change %
* excludes the impact of currency movements
Operating expenses
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 Total 179 0.36
2000 Average 2001 Average €m Loans % €m Loans %
Provisions for bad debts
% 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)
Asset quality
* 0.36% including unallocated provision
*
€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
Balance sheet
* excludes the impact of currency movements
Capital ratios
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
2001 2000
1.661.651.781.961.741.611.630.0
1.0
2.0
3.0
1995 1996 1997 1998 1999 2000 2001
0
10
20
30
40
50
60
70
Return
Average RWA (bn)
Return on risk weighted assets
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
AIB in 2002
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
4
6
8
10
12
1997 1998 1999 2000 2001 2002(F)
• Euro conversion costs
• Development costs in USA
%
Note: The above year on year cost growth percentages exclude acquisitions and currency factors
Active cost management
AIB in 2002
Robust asset quality- provision charge approx. 35bps of average loans- prudent provision cover maintained
AIB in 2002
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
Additional information
2000 figures have been restated due to FRS 17 and new divisional structure
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
AIB Bank profit statement - Rep Ire
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
AIB Bank profit statement - GB & NI
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
USA Division profit statement*
* excludes Allfirst suspected fraud
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
Capital Markets 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)
Poland Division profit statement
*
*
*
* excludes integration costs
BZWBK (legal entity Polish GAAP) 267 73
Use of provisions created on acquisition 47
BZ Goodwill amortisation -26
Merger costs -38
Other adjustments * -20
Poland division 36
2001PLN €m
* includes capital adjustment, consolidation of subsidiaries and alignment with Group
accounting policies
Poland Division relative to BZWBK
139 0.9 126 AIB Bank Rep Ire 162 0.9 123
93 1.3 122 AIB Bank GB & NI 107 1.3 119
87 0.7 205 USA - €m 87 0.6 22281 - US$m 77
29 0.4 262 Capital Markets 34 0.4 251
523 18.0 62 Poland - €m 643 18.4 552,014 - Pln m 2,249
871 1.9 100 Total 1,033 2.0 97
As at December 31, 2000 As at December 31, 2001NPLs/ Total NPLs/ TotalActual Provisions/ Actual Provisions/
NPLs Advances NPLs NPLs Advances NPLs €m % % €m % %
Non-performing loans by division
Alan Kelly [email protected] +353-1-6412162
Conor Herlihy [email protected] +353-1-6414191
Pat Clarke [email protected] +353-1-6412381
Mary Gethings [email protected] +353-1-6413469
353-1-660 0311
353-1-641 2075
Our Investor Relations Department will be happy to facilitate
your requests for any further information
Visit our website www.aibgroup.com/investorrelations/home/
Contacts