Merrill Lynch Irish Investor Trip · 3 Merrill Lynch - June 2007 Projected Population 3,000,000...

1 Merrill Lynch - June 2007www.irishlifepermanent.ie

Presentation by

Denis Casey, Group CEO

Merrill Lynch Irish Investor Trip

Dublin, June 2007

http://www.irishlifepermanent.ie/

2 Merrill Lynch - June 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


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


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



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


Source : BoI Private Banking


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


Banking


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


4 Building blocks make this possible

Brand strength

Exploit growth opportunities

Sales management capability

Customer acquisition capability

Ireland’s largest Retail Bank


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


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


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


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


Creating a state of the art sales infrastructure in the bank

Making selling a repeatable, high quality process with predictable outcomes

Sales Management Capability


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


Current Account Fuel for future growthResidential 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


Life & Pensions


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%


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


2 big drivers of growth:

Pensions

Wealth management

Growth Drivers


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


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


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

http://www.friendsfirst.ie/index.shtmlhttp://www.davydirect.ie/public/homepagehttp://www.bloxham.ie/index.htmlhttp://www.ulsterbank.com/ri_personal.asp


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


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


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


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


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%

Merrill Lynch Irish Investor Trip · 3 Merrill Lynch - June 2007 Projected Population 3,000,000...

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Transcript of Merrill Lynch Irish Investor Trip · 3 Merrill Lynch - June 2007 Projected Population 3,000,000...