Growing in a Riskier Worldipm.production.investis.com/~/media/Files/I/Irish... · Key Issues Davy...

Davy Irish Financials Site Visit

Presentations by:Peter Fitzpatrick, Group Finance Director

David McCarthy, Group CFOGerry Hassett, GM – Business Development

David Guinane, Head of Sales – permanent tsb

Growing in a Riskier World

Dublin, Sept 2007

www.irishlifepermanent.ie

http://www.irishlifepermanent.ie/

http://www.irishlifepermanent.ie/ipm/

Interims 2007

Banking Liquidity & Funding

Life Opportunity

Building the No.1 Retail Bank

Agenda

2 Davy – Irish Financials Site Visit - Sept 2007

3

Continued strong growth

Market share robust

Excellent financial results

Low risk business

Economy performing strongly

Long-term savings exceptional

growth

Slowdown in housing market

Interims 2007 - Key Messages

•

Market Backdrop

•

•• •

••

Irish Life & Permanent

Davy – Irish Financials Site Visit - Sept 2007

Banking

4

permanent tsb loan book growth 23%

35,000 new current accounts

opened

Operating profit 23%

Life Sales 41%

ILIM inflows 124%

Operating profit 45%

Interims 2007 - Highlights

•

Life Assurance

••• •

•Operating EPS 26%


Banking Liquidity & Funding

Regulatory liquidity requirements

Refinancing existing debt

Additional 2007 debt requirements

Exposures within investment book

Current Market Conditions

6

Outlook for cost of funding

Key Issues


Investment Book

7

…No shocks on the

asset sideShareholder vs Policy Holder exposure

€220m RMBS, average AAA rated

No CDO’s / CLA’s / US Sub Prime


Liquidity

8

New protocolintroduced on a

very timelybasis

Time based measurement

More robust and prudent

Background

Substantial reduction in funding

Protocol Actual*1 week 100% 237%1 month 90% 135%

2007 protocol


*As at 04th Sept07

Funding Strategy

9

Securitisation8%

Long TermDebt29%

ECP10.5%

IB/Repo8.5%

CommercialDeposits

18%

Retail Deposits18%

Fr CD3%

USCP5%

• Diversification of funding sources

• Balanced mix of long / short term

• Mortgage pro-note facility with ECB

of €6.9bn

• Rating agency opinion …’better than

most’


Funding profile Aug 2007: €43.4bn

50% coverage achieved to date

No structured funding required

No debt capital required

€2bn required for second half

2007 Funding Requirements and Strategy

10

Strategy:• Shorter term funding• Watch market trends

2008 • Determine closer to year end

2007


Last 2 to 3 years have been exceptional

Liquidity still in the system

Expect spreads to tighten in

2007 figures largely unaffected

Cost of Funding

11

Retail spreads could widen


Life Opportunity

Population By Growth

External Retail Results

13

Age By 2010 By 2015

0-14 +10% +20%15-24 -10% -10%

24-44 +10% +16%45-64 +13% +24%65+ +12% +34%

+8% +16%

Source: CSO


Household Savings

Source: ESRI

Average GDP Growth 7.4% p.a.

14

“Irish Households will add€6-7 billion per annumin cash savings over

next few years”0

2

4

6

8

10

12

14

16

2000 2005 2010

€13.5b

€10.0b

€4.0b


Forecast Flows - Next 5 Years

35% Increase in Employment

15

Deposits €32bn

Pension Funds €29bn

Investment Funds €29bn

Direct Equity €11bn

Commercial Property €7bn


DC Pensions Growth –20% a mid-range estimate

Growing Membership - + 10 % p.a.

Age Related Impact - + 3 % p.a.

Salary Growth - + 4 % p.a.

Increasing Discretionary Incomes - + 3 % p.a.

+20% p.a.=

DC Pensions savings will become the biggest single component of Irish Financial Services over the next 10 / 12 years.

16 Davy – Irish Financials Site Visit - Sept 2007

17

The Life & Pensions Market in Ireland is Booming

Life Market Sales*

“Heading for over €2.5bn in 2009”

€m

*APE basis

0

500

1000

1500

2000

2500

3000

2002 2003 2004 2005 2006 2007(f) 2008(f) 2009(f)


18

Source: Irish Insurance Federation

New Business 1998-2007

Growing and Winning Market Share

10

15

20

25

30

1999 2000 2001 2002 2003 2004 2005 2006 H1 07

19%

22%23%

25%26%

28%

30%

21% 21%

2007 (H1)

Life sales up 41%

Investment sales up 124%

Market share gains•••


19

Mass affluent / HNW market

Distribution Management

Investment Reputation

Key competencies are platform for continued growth in share

Maintaining Momentum


20

Mass Affluent

Wealth Distribution

2005

1995

Low High

Extend Mass Affluent Capability


21

Phase 1 Phase 2 Phase 3

Build Products for Broker Market

Build Sales Process for Tied

Sales Force

Extend to institutions /

Brokers

Mass Affluent - Steps to Success


Corporate Life

22

Group model highly efficient

Public sector franchise

Open admin. platform

Salesforce, branches, brokers

Most efficient bancassurer

Adding to CRM capability

Broad & Efficient Distribution

•

Retail Life

••• •

•


Axa RosenbergBIAMCapital InternationalEagle StarFidelity InternationalIrish Life Investment ManagersJP MorganMFS Investment ManagementNewton Investment ManagementRCMRobecoRussell Investment GroupUBS Global Asset ManagementWellington Management

Average

FTSE World

Versus 27 Global managers competing for Irish pension clients

Manager15.48.8

11.018.815.217.818.014.316.215.716.313.412.212.1

14.9

14.5

5yrs % p.a Rank1325242

1443

169

127

182122

8.53.86.9

10.98.5

10.78.49.18.77.88.37.36.58.1

8.1

8.4

71916182946

1210151711

Sou

rce:

Poo

led

Fund

s G

loba

l Equ

ity S

urve

y

23

3yrs % p.a Rank

ILIM - Active Credentials


j

j

At 31 July 2007

Irish Life Consensus

Manager Average

Out performance

1 Year

%

13.5

13.1

0.4

3 Years

% p.a

14.8

13.9

0.9

5 Years

% p.a

11.1

10.2

0.9

10 Years

% p.a

8.0

7.3

0.7

Indexed products doing what they say on the tin

ILIM shop window Consensus Fund is the largest investment fund in market at €6.4bn with top quartile performance

••

24

ILIM - Passive Credentials


25

The Life & Pensions Market in Ireland is Booming

Irish Life Sales 2001 - 2009

“Heading for €750m+ in 2009”

€m

*APE basis

0

100

200

300

400

500

600

700

800

2002 2003 2004 2005 2006 2007(f) 2008(f) 2009(f)


Building the No. 1 Retail Bank

Ireland• Economic success attracting new

competitors

• Traditionally dominated by the big 2AIB / BoI – up to 80% of the market

• Halifax BOS

• Danske NIB

• Rabobank

• Fortis Bank

Personal Banking


28

Brand Strength

Customer Acquisitions

Sales Management

Growth Opportunities

No. 1 Retail Bank

Growth Drivers


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 within

Bank X Bank Y

Brand Strength


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

Bank Y

Bank Z

Overall

permanent tsb

Bank X

Brand Strength


Direct Advertising


32

200,000 new current accounts by end 2007

‘000

10

20

30

40

50

60

70

2004 2005 2006 H1 07

23.6

49

68

35

Customer Acquisition


33

Switch balances since launch

€m

100

200

300

400

500

600

700

800

2005 2006 H1 07

300

646

799

Switch Current Account


Age % ofAccounts

18-25

26-34

36-45

46-55

55+

23%

36%

20%

12%

9%

New Customer Profile


High quality people

Technology investment

Vibrant ‘life co’ culture

But, delivering a service

• New manager appointments

• And young, ambitious branch personnel

• Highly electronic – diary, point of sale, execution

• Investments, savings, mortgages

• Very pro-active, high energy

• Highly incentivised

• Strong relationship skills

• Investment in skills and knowledge


Sales Management

*The % of New Current Account Customers that buy another product within two years of opening their account

Credit Card 30%

Mortgage 12%

Term Loan 8%

Bancassurance 14%

Current Account Cross-Sell


* This measures the value add per sale for every €1,000 cover issued with a mortgage

permanent tsb €4.39

IL Direct Sales €4.25

Lender A €3.16

Lender B €3.16

Irish Life Brokers €2.91

Lender C €2.49

Lender D €2.39

Mortgage Cross-Sell


*This measures the number of Bancassurance products sold for every 100 SSIA Deposit Maturities

permanent tsb 21

Bank Y 10

Bank X 13

SSIA Maturities %

SSIA Cross-Sell


Current Account

Residential Mortgages

Commercial Lending

Bancassurance

CHL

• Adding at least 250 customers every day

• Maintaining share in competitive markets• 10 – 15% growth in book

• Opportunity to build a significant business

• Opportunity from expanding the customer base

• Mandate to expand geographic coverage and grow aggressively

Growth Opportunities


40

500,000 new customers required in the next 9 years

Confident of continued success

Largest retail bank in Ireland by 2016

Largest Retail Bank in Ireland by 2016

••


Contact Details

Please contact our Investor Relations Department for any further information or visit our group website at

www.irishlifepermanent.ie

Contact details:

Barry Walsh [email protected] +353 1 704 2678

Orla Brannigan [email protected] +353 1 704 1345

Marie Gilsenan [email protected] +353 1 856 3286

http://www.irishlifepermanent.ie/

mailto:[email protected]



http://www.irishlifepermanent.ie/ipm/

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