Bank of Ireland Group plc
(the "Group")
2023 Annual
Results
26
February 2024
Comment: Myles
O'Grady, Bank of Ireland Group CEO:
"In 2023, the group performed well with strong
financial results, tangible strategic progress and improved
customer and employee outcomes. This represents an excellent start
to our three year strategic cycle, underpinned by our
differentiated business model, the attractive markets in which we
operate, especially Ireland, where the loan book grew by 23% and
Wealth assets by 18%, and guided by our purpose to help customers,
colleagues, shareholders and society to thrive.
We look to the future with continued
confidence. While we are mindful of the risks presented by the
external environment, the overall outlook for our core markets, and
Ireland in particular, remains positive.
The combination of this positive outlook, the
attractions of the markets in which we operate, our differentiated
business model and our strategic clarity and focus supports this
confidence in our prospects. We remain on track to deliver the
financial and non-financial targets set over our FY23-25 strategic
cycle."
Key
highlights:
· €1.9 billion profit before tax; total income +42% year on year
reflecting higher interest rates, strategic actions and
acquisitions, and positive business momentum from commercial
delivery
· Total distribution of €1.15 billion, up from €350 million in
2022; €634 million proposed ordinary dividend (40% payout,
equivalent to dividend per share of 60 cents) and €520 million
additional distribution via approved share buyback; total
distribution equivalent to 72% of earnings and 13% of market
capitalisation
·
2024 distributions to comprise
a mix of ordinary dividends and share buybacks, with interim
distributions to commence
·
Strong capital position; fully
loaded CET1 ratio 14.3%, in-line with >14% guidance
·
Significantly higher capital
generation; 340 basis points net organic capital generation in 2023
vs 135 basis points in 2022
·
Adjusted RoTE of
17.3%
·
Cost to income ratio of
42%
· Net
interest income +48% and business income (including share of
associates and JVs) +10%
·
Operating expenses in line with
c.€1.85 billion guidance
· Strong strategic delivery: AUM +18% to €46 billion; +23% in
Irish customer loans; completion and successful migration of the
KBCI portfolios in February 2023
· New
mortgage lending of €4.9 billion in Ireland, +25% vs 2022, while
maintaining our commercial focus and underwriting
standards
· Net credit
impairment charge of €403 million, reflecting slightly higher loan
loss experience and additional pro-active management adjustments of
€138 million
· Improved
asset quality; NPE ratio reduced 50 basis points year on year to
3.1%
Income
Net interest income growth in 2023 reflects
higher interest rates, growing deposit franchise, acquisitions, and
higher wholesale and deposit funding costs. Business
income (including share of associates and JVs) has increased 10%,
primarily reflecting growth in Wealth and Insurance and the full
year benefit of the Davy acquisition.
Costs
The Group continues to maintain tight
control over its cost base. Reported costs were 11% higher in 2023,
primarily reflecting impacts of both acquisitions, lifting of
variable pay restrictions and additional investment to drive future
efficiencies. Non-core costs of €85 million (2022; €142
million).
Balance Sheet
The Group's loan book increased by €7.7 billion
during 2023, including a 23% increase in the Irish loan book. This
increase includes the €8 billion of loans acquired from KBCI in
February 2023. On a constant currency basis, excluding the KBCI
acquisition, a €2 billion increase in net lending in Irish
non-property loan books has been offset by a €0.1 billion reduction
in NPEs, a €0.8 billion reduction in Retail UK, in-line with our
strategy, and against an uncertain geopolitical backdrop, a €1.6
billion reduction in net lending in property and international
corporate reflecting prudent capital allocation.
Liquid assets of €43.6 billion decreased by
€5.1 billion since December 2022, primarily reflecting the KBCI
transaction.
Our liquidity profile remains strong, supported
by our retail franchise in Ireland. Customer deposits were €100.2
billion, €1 billion higher in 2023, primarily due to growth in
Irish deposits of €2.5 billion partially offset by a reduction in
corporate deposits. The Group's liquidity ratios reflect this
strength. At December 2023, the Group's liquidity coverage ratio
was 196% (2022: 221%), the loan to deposit ratio was 80% (2022:
73%), and the net stable funding ratio was 157% (2022: 163%). As
expected, the changes in all three ratios in 2023 primarily reflect
the impact of the KBCI transaction.
Asset Quality
An underlying net credit impairment
charge of €403 million (49bps of gross customer loans) arose in
2023
compared to a charge of €187 million
in 2022. This charge reflected loan book experience in the period;
and additional management adjustments to address potential risks,
primarily in Commercial Real Estate.
NPEs decreased by €0.1 billion to
€2.5 billion in 2023. NPE ratio reduced by 50 basis points to 3.1%
of gross customer loans.
Capital
Position
Our fully loaded CET1 capital ratio
was 14.3% at December 2023. The Group's capital performance in 2023
benefitted from strong net organic capital generation of 340 basis
points partially offset by the completion of the KBCI acquisition,
investment in RWA and IFRS17 implementation. Capital ratios also
reflect the full impact of the Group's announced capital
distributions, including the accrual of our foreseeable cash
dividend for 2023 of €634 million, achieving our ordinary dividend
payout ratio target of 40% one year early, and the approved share
buyback of €520 million.
2024
outlook
2024 net interest income is expected
to be 5-6% lower than the Q4 2023 annualised run rate of €3.65
billion primarily reflecting the anticipated lower interest rate
environment. Business income in 2024 is expected to be mid-single
digit percent higher than 2023 supported by continued growth in
Wealth and Insurance and Retail Ireland.
2024 operating expenses are expected
to be mid-single digit percent higher than 2023 reflecting
inflation, business growth and additional investment to future
proof our business, partially offset by efficiencies. We expect
levies and regulatory charges to be €160 - €165 million in
2024.
In 2024, subject to no material
change in economic conditions or outlook, we expect an impairment
charge in the low 30s basis points.
We expect 2024 RoTE to be >
15%.
We expect strong capital generation
to continue in 2024, with 260 to 280 basis points of net organic
capital generation. The Group expects 2024 distributions to
comprise a combination of ordinary dividends and share buybacks,
with interim distributions to commence.
Ends
https://investorrelations.bankofireland.com/results-centre/
For further information please
contact:
Bank of Ireland
Mark Spain, Group Chief Financial Officer
+353 1 2508900 ext
43291
Eamonn Hughes, Chief Sustainability &
Investor Relations Officer
+353
(0)87 2026325
Darach O'Leary, Head of Group Investor
Relations
+353 (0)87
9480650
Damien Garvey, Head of Group External
Communications & Public Affairs
+353 (0)86
8314435
Forward Looking Statement
This announcement contains
forward-looking statements with respect to certain of the Bank of
Ireland Group plc (the 'Company' or 'BOIG plc') and its
subsidiaries' (collectively the 'Group' or 'BOIG plc Group') plans
and its current goals and expectations relating to its future
financial condition and performance, the markets in which it
operates and its future capital requirements. These forward-looking
statements often can be identified by the fact that they do not
relate only to historical or current facts. Generally, but not
always, words such as 'may,' 'could,' 'should,' 'will,' 'expect,'
'intend,' 'estimate,' 'anticipate,' 'assume,' 'believe,' 'plan,'
'seek,' 'continue,' 'target,' 'goal,' 'would,' or their negative
variations or similar expressions identify forward-looking
statements, but their absence does not mean that a statement is not
forward-looking.
Examples of forward-looking
statements include, among others: statements regarding the Group's
near term and longer term future capital requirements and ratios,
LDRs, expected impairment charges, the level of the Group's assets,
the Group's financial position, future income, business strategy,
projected costs, margins, future payment of dividends, future
share buybacks, the implementation of changes in respect of certain
of the Group's pension schemes, estimates of capital expenditures,
discussions with Irish, UK, European and other regulators, plans
and objectives for future operations, and the impact of Russia's
invasion of Ukraine and the Israeli-Palestinian conflict
particularly on certain of the above issues and generally on the
global and domestic economies. Such forward-looking statements are
inherently subject to risks and uncertainties, and hence actual
results may differ materially from those expressed or implied by
such forward-looking statements.
Such risks and uncertainties include,
but are not limited to, those as set out in the Risk Management
Report in the Group's Annual Report for the year ended 31 December
2023. Investors should also read 'Principal Risks and
Uncertainties' in the Group's Annual Report for the year ended 31
December 2023 beginning on p 135.
Nothing in this announcement should
be considered to be a forecast of future profitability, dividend
forecast or financial position of the Group and none of the
information in this announcement is or is intended to be a profit
forecast, dividend forecast, or profit estimate. Any
forward-looking statement speaks only as at the date it is made.
The Group does not undertake to release publicly any revision to
these forward-looking statements to reflect events, circumstances
or unanticipated events occurring after the date hereof.