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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
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%
Davy – Irish Financials Site Visit - Sept 2007
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
Davy – Irish Financials Site Visit - Sept 2007
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
Davy – Irish Financials Site Visit - Sept 2007
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
Davy – Irish Financials Site Visit - Sept 2007
*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’
Davy – Irish Financials Site Visit - Sept 2007
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
Davy – Irish Financials Site Visit - Sept 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
Davy – Irish Financials Site Visit - Sept 2007
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
Davy – Irish Financials Site Visit - Sept 2007
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
Davy – Irish Financials Site Visit - Sept 2007
Forecast Flows - Next 5 Years
35% Increase in Employment
15
Deposits €32bn
Pension Funds €29bn
Investment Funds €29bn
Direct Equity €11bn
Commercial Property €7bn
Davy – Irish Financials Site Visit - Sept 2007
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)
Davy – Irish Financials Site Visit - Sept 2007
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•••
Davy – Irish Financials Site Visit - Sept 2007
19
Mass affluent / HNW market
Distribution Management
Investment Reputation
Key competencies are platform for continued growth in share
Maintaining Momentum
Davy – Irish Financials Site Visit - Sept 2007
20
Mass Affluent
Wealth Distribution
2005
1995
Low High
Extend Mass Affluent Capability
Davy – Irish Financials Site Visit - Sept 2007
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
Davy – Irish Financials Site Visit - Sept 2007
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
••• •
•
Davy – Irish Financials Site Visit - Sept 2007
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
Davy – Irish Financials Site Visit - Sept 2007
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
Davy – Irish Financials Site Visit - Sept 2007
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)
Davy – Irish Financials Site Visit - Sept 2007
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
Davy – Irish Financials Site Visit - Sept 200727
28
Brand Strength
Customer Acquisitions
Sales Management
Growth Opportunities
No. 1 Retail Bank
Growth Drivers
Davy – Irish Financials Site Visit - Sept 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 within
Bank X Bank Y
Brand Strength
Davy – Irish Financials Site Visit - Sept 200729
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
Davy – Irish Financials Site Visit - Sept 200730
Direct Advertising
Davy – Irish Financials Site Visit - Sept 200731
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
Davy – Irish Financials Site Visit - Sept 2007
33
Switch balances since launch
€m
100
200
300
400
500
600
700
800
2005 2006 H1 07
300
646
799
Switch Current Account
Davy – Irish Financials Site Visit - Sept 2007
Age % ofAccounts
18-25
26-34
36-45
46-55
55+
23%
36%
20%
12%
9%
New Customer Profile
Davy – Irish Financials Site Visit - Sept 200734
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
Davy – Irish Financials Site Visit - Sept 200735
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
Davy – Irish Financials Site Visit - Sept 200736
* 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
Davy – Irish Financials Site Visit - Sept 200737
*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
Davy – Irish Financials Site Visit - Sept 200738
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
Davy – Irish Financials Site Visit - Sept 200739
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
••
Davy – Irish Financials Site Visit - Sept 2007
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 barry.walsh@irishlife.ie +353 1 704 2678
Orla Brannigan orla.brannigan@irishlife.ie +353 1 704 1345
Marie Gilsenan marie.gilsenan@irishlife.ie +353 1 856 3286
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