1 Management Briefing - May 2007www.irishlifepermanent.ie
Management BriefingLondon, May 2007
Group Strategy & OverviewPresentation by
Denis Casey, Group CEO
2 Management Briefing - May 2007
Powerfully positioned in Irish Retail Financial Services Market
Life & PensionsMarket leader [28% of new business in 2006]Broadest distribution reach and product offering
Retail BankingMarket leader in residential mortgage lending [22% of new lending in 2006]Fastest growing customer base - 180,000+ customers added since 2004
Investment ManagementNo. 2 asset manager in Ireland [25% of funds under management in 2006]No. 1 for inflows 2005 to 2007
Where we are today
3 Management Briefing - May 2007
Projected Population
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
6,000,000
6,500,000
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Population growth & demographics
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
Labour force projected to grow at an annual average rate of 2.2% out to 2015
Labour force growth combined with rising productivity point to potential GDP growth of circa 5% per annum out to 2015
The Economically Active Age Groups
2,000,000
2,250,000
2,500,000
2,750,000
3,000,000
3,250,000
3,500,000
3,750,000
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Source : NCB
Ireland - land of opportunity
4 Management Briefing - May 2007
Growing population implies a growing domestic customer base
Growth in incomes will add momentum to the rate of growth in domestic demand
Given the age profile of the population, growth in demand for financial products should be particularly strong
Underlying demand for housing estimated at circa 65,000 per annum until 2015
As personal wealth increases the propensity to save and to spend on retirement savings rises sharply
Spending by Income Decile(% of State Average)
0
50
100
150
200
250
300
350
400
450
1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th
Pension Fund
Domestic Services
Hotels & Expenditure Abroad
Private Health Insurance
Meals Away from Home
Clothing & Footwear
Entertainment
Mortgage Repayments & Home Insurance
Personal Services
Food
Rent & Other Charges
Fuel & Light
Tobacco
Source : NCB
Pension Fund
Ireland - land of opportunity
5 Management Briefing - May 2007
Middle Ireland (our traditional heartland) beginning to accumulate real wealth creating a significant opportunity to develop new wealth management products and services
An ageing population combined with the extraordinary property price inflation of the last decade will accelerate the incidence of inherited wealth
Employment growth and rising incomes will drive rapid growth in the retirement savings market
1334681Net Assets202115Household Debt
1536796Gross Assets
3620Commercial Property
3619Direct Equity
5328Investment Funds8143Business Equity
11464Pension Funds15780Deposits
1059542Residential Property
2015 2005€ Billions
Irish Household Assets and Net Worth Forecast
Ireland - land of opportunity
Source : BoI Private Banking
6 Management Briefing - May 2007
Retail financial services market in Ireland continues to offer significant growth
opportunities for Irish Life & Permanent
Building our position in the retail / personal financial services market will remain our
strategic priority
Ireland - an opportunity rich environment
7 Management Briefing - May 2007
Banking
8 Management Briefing - May 2007
We have the opportunity and the capability to build the largest Retail bank in Ireland
We define largest simply as the bank with the most personal customers
This is our burning ambition, our singular focus and driver of growth
Ireland’s largest Retail Bank
9 Management Briefing - May 2007
4 Building blocks make this possible
Brand strength
Exploit growth opportunities
Sales management capability
Customer acquisition capability
Ireland’s largest Retail Bank
10 Management Briefing - May 2007
4.
Summary of Fair Share Personality Dimensions
Over Index– Safe– Reliable– Dependable– Traditional
Over Index– Unhelpful– Impersonal– Traditional– Bureaucratic
Over Index
– Modern
– Youtful
– Dynamic
BOIAIBPermanent TSB
Under Index– Modern– Youthful
Under Index– Dynamic– Youthful– Modern
Under Index
– Impersonal
– Traditional
– Bureaucratic
Factors players over/under perform withinHugely successful merger created powerful bank platform
We have built a modern, innovative brand that stands out from the crowd
Untainted by traditional bank“baggage”
Most trusted bank brand
Brand Strength
Bank X Bank Y
11 Management Briefing - May 2007
Customer Service: There is a measurable difference in the quality of the service we provide to our customers
1© 2005 Ipsos-MORI All rights reserved. Contains Ipsos’ Confidential, Trade Secret and Proprietary Information.
Overall Satisfaction with Main Financial InstitutionJuly 2005 - June 2006% very satisfied
33%
39%
45%
36%
40%
AIB
Ulster Bank
permanent tsb
Bank of Ireland
Overall
Jan-Dec 2003
42
37
42
47
36
Jan-Dec 2004
39
34
40
44
31
Jan-Dec 2005
38
33
43
37
31
Brand Strength
Overall
permanent tsb
Bank X
Bank Y
Bank Z
12 Management Briefing - May 2007
I feel that when I walk into a branch I am walking into a friends house for a chatptsb staff are great - they are personal the counter staff are brilliantthey have a very personal touch with their customers they are very welcoming very understanding and helpful, down to earth people the personality of the frontline staffptsb never forget that we are the customers they have great customer carethey offer simple products with a simple service they treat customers wellfriendliness, I feel at home with them, they call me by my first name ptsb has a customer service that no other bank can touch they put customers firstthe staff are lovely, they always make time for you they are nice and friendly very professional, made us feel at ease you are treated like an individualstaff are very easy to talk to they do employ nice staffthe lady who dealt with me was wonderfully helpful more user friendly bank they are 100% better, better communication, better staff, better service they remember methey don’t complicate things, they talk to me in my language the personal attentionthe customer service is brilliant in my particular bank I feel they are very honestptsb are more understanding and more approachableI have no idea what they do really well - their staff are very helpful though
Customers genuinely feel, enjoy and acknowledge the difference in the experience and the quality of service provided by our front line staff
Powerful differentiator
We will vigorously protect and leverage this unique strength
This is the foundation on which we will build our success
Source : extracts from customer research
What our customers say …
Brand Strength
13 Management Briefing - May 2007
To become the largest Retail Bank in Ireland requires a relentless focus on new customer acquisition
We must attract an additional 500,000 customers
We have already created the products, marketing campaigns and sales processes to achieve this
We are currently recruiting over 250 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
Customer Acquisition Capability
14 Management Briefing - May 2007
Creating a state of the art sales infrastructure in the bank
Making selling a repeatable, high quality process with predictable outcomes
Sales Management Capability
15 Management Briefing - May 2007
Irish Life 1990’sSales process adviser drivenNot customer friendlyRandom outcomesPoorly managedLow productivity
Irish Life todayTechnology led sales processEngaging customer experienceConsistent high quality adviceDisciplined rigorous managementFivefold increase in productivity
permanent tsbUnleash the power of processA core competence of IL&P Successful execution for bancassuranceNew enabling branch remuneration structures in placeNext phase - extension to mainstream bank products - mortgages, current a/c etc
Power of Process
16 Management Briefing - May 2007
Current Account Fuel for future growth
Residential Mortgages Vigorously protect our market leadership position
Commercial Lending Pursuing an opportunity to build a significant business
permanent tsb Finance Leading provider of new car financeBluecube Loans - exploit competencies and capacity
Springboard Targeting emerging specialist mortgage market
Bancassurance Investing to expand bancassurance capacityNew products and technology to better serve mass affluent and HNW segments
General Insurance Under exploited opportunity
Capital Home Loans Mandate to pursue aggressive growth strategy
Exploit Growth Opportunities
17 Management Briefing - May 2007
Life & Pensions
18 Management Briefing - May 2007
Market Leader
Undisputed No. 1 in Life and Pensions Market
Market Share 28%
Perfectly positioned to exploit the opportunities presented by growth markets
Three business divisions firing on all cylinders
10
15
20
25
30
1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: Irish Insurance Federation
0
100
200
300
400
500
600
700
800
1998 1999 2000 2001 2002 2003 2004 2005 2006
Retail
Corp Business
ILIM
APE Sales CAGR 1998 - 2006: 20%
New Business 1998 - 200628%
26%25%
21%23%
22%21%
19%19%
19 Management Briefing - May 2007
Irish Life Retail
Irish Life Corporate
Irish Life Investment Managers
Powerful distribution
Highly effectivesales processes
Diversified productofferings
Excellent investmentperformance
Divisions Capabilities
Middle / Masspackaged investment,savings & pensionsproducts
Markets
Market Leader
20 Management Briefing - May 2007
2 big drivers of growth:
Pensions
Wealth management
Growth Drivers
21 Management Briefing - May 2007
Pensions Opportunity
Under-penetration of pensions in workforce and self-employed
Under-funding of existing DC pension schemes
Strong public policy and fiscal support
Vehicle for wealth management and post retirement planning
22 Management Briefing - May 2007
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
Wealth Management Opportunity
23 Management Briefing - May 2007
No company has succeeded in positioning itself in Irish consumers minds as the “Investment Solutions Company”
Given the rapid rate of wealth creation and accumulation and the new phenomenon of inherited wealth there is an enormous prize for the company that succeeds in doing this
This is the space Irish Life intends to grab
We aim to become the “Investment Solutions Company of Ireland”
NCB
Life Ambition
24 Management Briefing - May 2007
Irish Life Brand Research
Irish Life brand awareness outside top tier group - but gap is very bridgeable
Some very positive brand personality characteristics:
CaringProblem SolversSuccessfulNot bureaucratic
Strong foundations from which to build
9.
Total Spontaneous Brand Awareness
BOI/BOI Life, 83
Permanent TSB, 69
AIB/Ark Life, 77
Eagle Star, 24
Irish Life, 53
An Post, 44
Credit Union, 53
EBS, 35
Friends First, 14
Canada Life, 25
Anglo Irish Bank, 14
New Ireland, 22
First Active, 45
Hibernian, 25
Ulster Bank, 32
Bank of Scotland, 15National Irish Bank, 13Scottish Provident, 9
Standard Life, 15
%
Primary
Secondary
Tertiary
(+12% pts)
(+11% pts)
(+12% pts)(+11% pts)
Shifts(+/- 7%)
(+9% pts)
Irish Life Target 45%
Brand :No single company has succeeded in establishing itself in consumers minds as the outstanding investment expert in the Irish market
Irish Life Vision & Strategy
25 Management Briefing - May 2007
4.
Summary of Fair Share Personality Dimensions
Over Index– Amicable– Impersonal– Modern– Youthful– Bureaucratic
Over Index– Safe– Reliable– Dependable– Traditional
Over Index– Unhelpful– Impersonal– Traditional– Bureaucratic
Over Index
– Modern
– Youtful
– Dynamic
Over Index
– Caring
– Traditional
– Problem Solvers
– Successful
Eagle StarBOIAIBPermanent TSBIrish Life
Under Index– Safe– Reliable– Traditional
Under Index– Modern– Youthful
Under Index– Dynamic– Youthful– Modern
Under Index
– Impersonal
– Traditional
– Bureaucratic
Under Index
– Modern
– Youthful
– Bureaucratic
Factors players over/under perform within
Irish Life Vision & Strategy
Brand :No single company has succeeded in establishing itself in consumers minds as the outstanding investment expert in the Irish market
Irish Life Brand Research
Irish Life brand awareness outside top tier group - but gap is very bridgeable
Some very positive brand personality characteristics:
CaringProblem SolversSuccessfulNot bureaucratic
Strong foundations from which to build
Bank X Bank Y Bank Z
26 Management Briefing - May 2007
Opportunity to develop and promote Irish Life as theinvestment solutions company for an increasingly wealthy Ireland
Significant project already underway to map out future brand strategy
Major investment planned in Irish Life brand
Brand - work to be done
27 Management Briefing - May 2007
Irish Life Retail
Irish Life Corporate
Irish Life Investment Managers
Powerful distribution
Highly effectivesales processes
Diversified productofferings
Excellent investmentperformance
Divisions Capabilities
Middle / Masspackaged investment,savings & pensionsproducts
Mass affluent / HNWflexible / tailoredwealth managementand pension products& services
Markets
Creating the Investment Solutions Company
Revitalised Brand
Strong Platform for Growth
28 Management Briefing - May 2007
Clear and focused strategy
Strong market positions
Ambitious but achievable targets
Create high performance culture
Protect strong risk management and cost disciplines
Driving Growth
TARGETS
Sales 15 - 20%Earnings 12 - 14%Dividend 10% +ROC (blended) 16%
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