#1Bank of Ireland O 2019 Interim Results Announcement 30 June 2019#2Empty#3Bank of Ireland 2019 Interim Results H1 2019 Highlights Francesca McDonagh, Group CEO Bank of Ireland 2#4Empty#5H1 2019 Highlights Profitability €376m Underlying profit before tax NIM of 2.16% Bank of Ireland 2019 Interim Results · Cost reduction continues, 3% lower (€30m) vs. H1 2018 • NPE ratio improved by 100bps to 5.3% Growth €1.2bn Net lending growth Transformation Capital 3% Reduction in costs 13.6% CET1 increased by 40bps . • • New lending of €7.7bn; largest lender to the Irish economy Irish mortgage market share of 23%; increased SME market share Corporate Banking net lending growth of €1.0bn Continue to create a leaner and more agile organisation Foundations of the new core banking platform have been built; now prioritising channel experience and customer migration UK Business being enhanced - exit from UK cards, ATMs and current accounts; attractive loan growth in Consumer; costs reduced Organic capital generation of 90bps Securitisation of Irish Mortgage NPES, unlocked 30bps of CET1 capital • Dividend accrual of €100m Bank of Ireland 4#6Economic and Interest Rate Outlook • • Solid growth in Ireland; UK expanding more moderately 8.1% 8.2% 4.8% LLi 1.8% 1.4% 3.8% Unemployment rate in Ireland and UK at low levels 6.7% 5.7% 4.6% 4.2% 4.4% 1.2% 1.4% 4.1% 3.8% 3.8% Bank of Ireland 2019 Interim Results Lower for longer interest rates now expected 0.96% 0.68% 0.40% 100bps decline (0.20%) (0.32%) (0.04%) 2017 2018 ROI GDP 2019f 2020f 2017 2018 2019f 2020f Dec 2019 Dec 2020 Dec 2021 UK GDP ROI unemployment rate UK unemployment rate (annual average) -- Jan 19 Jul 19 (Euro 5yr swap rate) (annual real growth) The Irish economy is continuing to expand at a solid pace and faster than the Euro area average Growth has moderated in the UK Brexit-related uncertainty is weighing on consumer and business sentiment, with some firms in Ireland putting their plans on hold and a clear weakening in business investment in the UK With the unemployment rate in Ireland and the UK at a low level, both economies are effectively at full employment • Material change in interest rate outlook with interest rates expected to be lower for longer Geopolitical risks impacting global growth Sources: Bank of Ireland Economic Research Unit, CSO, Office for National Statistics, GFK, Markit, EU Commission. GDP and unemployment forecasts assume current UK-EU trading arrangements apply over the forecast horizon consistent with a further extension of Article 50 or a transition period Bank of Ireland 5#7Transform the Bank Culture H1 2019 Progress Bank of Ireland 2019 Interim Results Systems Business model Target Outcomes • Colleague engagement continuing to improve, up +7% since 2017 • Continue to create a leaner, simplified and agile organisation with 70% of end state spans and layers structure completed to date ATM and debit cards successfully migrated to new platform . Mobile app technical version produced ahead of customer launch later in 2019 • Automated over 100 business processes through robotics, reducing operational risk and processing times, improving efficiency and customer experience • Strengthened culture Cost base to reduce to c.€1.7bn in 2021 Absolute cost level declining year-on-year to 2021 • Income growth • Exit from Credit Cards, unprofitable ATMs and Current Accounts in the UK Bank of Ireland 6#8Serve Customers Brilliantly Bank of Ireland 2019 Interim Results Embedding voice of customer Investing in digital and physical channels New brand strategy in our businesses H1 2019 Progress • Leading supporter of home building and buying in Ireland; Approved €750m in development financing €1bn Green Fund launched; and Expanding mortgage distribution platform through mortgage broker network Launched Ireland's first Financial Wellbeing programme designed to help customers to better understand, plan and improve their finances Established a Vulnerable Customer Relationship Unit • Continued investment in our branch network, contact centre and digital channels is improving our customer experience • Digital application tracker launched, initially for personal loans, facilitating real-time order tracking by customers New brand strategy launched supported by multi-year customer strategies Target Outcomes • Significant improvement in customer satisfaction and advocacy • Straight through processing; digital journeys • API foundation for Open Banking #1 for customer experience and brand in Ireland Bank of Ireland 7#9Grow Sustainable Profits Improved profitability Efficient business امر H1 2019 Progress Bank of Ireland 2019 Interim Results 2021 Target Headline ROTE of 6.8% Adjusted ROTE of 6.5%¹ ROTE in excess of 10% Cost reduction of €30m (3%) vs. H1 2018 Cost base of c.€1.7bn Costs reduce every year: 2018-2021 Cost income ratio of c.50% Robust capital position if Fully loaded CET1 ratio of 13.6% CET1 ratio in excess of 13% Sustainable dividends 1 See Slide 52 for calculation 8 Dividend accrual of €100m - equivalent to an annualised dividend per share of 18.5c Increase prudently and progressively; over time will build towards a payout ratio of around 50% of sustainable earnings Bank of Ireland#10Empty#11Group CFO Andrew Keating Bank of Ireland 2019 Interim Results Bank of Ireland 10#12Key areas of focus Income growth Bank of Ireland 2019 Interim Results Transformation of cost base Capital generation, investment and return Target is to increase ROTE to in excess of 10% by 2021 Bank of Ireland 11#13Underlying profit before tax of €376m Total income Bank of Ireland 2019 Interim Results Operating profit pre-impairment - increase of 9% reflecting positive jaws Total income of €1,411m increased 1% vs. H1 2018 - Net interest income of €1,069m in line with H1 2018, reflects lower NIM of 2.16% offset by higher loan volumes Other income of €342m includes sustainable and diversified business income of €311m (H1 2018: €323m)² and additional gains, valuation and other items of €31m (H1 2018: net charge of €1m) Operating expenses (before levies and regulatory charges) of €903m; reduction of 3% / €30m vs. H1 2018 H1 2018 H1 2019 (€m) (€m) 1,398 1,411 - Net interest income 1,076 1,069 - Other income (net)* 322 342 Operating expenses (before levies and (933) (903) regulatory charges) - Operating expenses (882) (840) - Transformation Investment charge (51) (63) • Levies and Regulatory charges (67) (73) Operating profit pre-impairment 398 435 Net Impairment (charges) / gains 81 (79) • Net impairment charge of €79m in H1 2019 Share of associates / JVS 21 20 • Underlying profit before tax 500 376 Non-core items (46) (61) • Profit before tax 454 315 *Of which additional gains, valuation . (1) 31 and other items Net interest margin (NIM) 2.23% 2.16% Cost income ratio¹ 66% 65% Impairment charge of €79m / 21bps Write backs in H1 2018 not repeated in H1 2019 Non-core Items of €61m Restructuring costs of €21m mainly relating to redundancy and property; and Charges associated with customer redress on Tracker Mortgage Examination €55m; partially offset by Gross up for policyholder tax in Wealth and Insurance business of €22m (H1 2018: (€2m)) 1 See Slide 51 for calculation 2 Business income in H1 2018 includes €21m relating to UK Cards and ATMs classified as non-core during H1 2019 Bank of Ireland 12#14Net lending growth of €1.2bn Group loan book movement €7.7bn (€6.5bn) €0.2bn (€0.3bn) (€0.1bn) Total €1.2bn €77.0bn¹ €78.0bn¹ Dec 18 Loan Book New Lending Redemptions Loan Book Acquisitions Irish Mortgage NPE FX / Other Jun 19 Loan Book Securitisation Net lending of €1.2bn €0.7bn €0.6bn H1 2018 H2 2018 Bank of Ireland 2019 Interim Results Net lending growth of €1.2bn in H1 2019 . Expect further net lending growth in H2 2019, while maintaining our risk and commercial discipline Ireland: €0.2bn net lending growth • Mortgages net lending €0.2bn lower with market share of 23% SME net lending €0.1bn lower: growth in market share Consumer net lending growth of €0.1bn Corporate Banking net lending growth of €0.4bn UK/International: €1.0bn net lending growth • Mortgages net lending €0.1bn lower; new lending down 15% on H1 2018 reflecting market dynamics Consumer net lending growth of €0.2bn; strong performance through AA brand Northridge net lending growth of €0.4bn; distribution expanding, risk appetite unchanged SME/Other net lending €0.2bn lower due to continued wind down of legacy portfolio Corporate UK net lending growth of €0.3bn; maintaining disciplined approach to growth with Brexit focus Acquisition Finance: net lending growth of €0.4bn; remain risk focussed with 4 out of 5 loans declined €1.2bn . HT 2019 1 Includes UK Credit Card portfolio €0.6bn classified as held for sale as at June 2019. Sale completed in mid July 2019 Bank of Ireland 13#15NIM - Strong commercial discipline on pricing Bank of Ireland 2019 Interim Results Net interest margin drivers NIM of 2.16% in H1 2019 . H1 2019 NIM of 2.16% Maintaining strong commercial pricing discipline - loan asset spreads stable at 284bps in H1 2019 The impact on NIM from competitive pressures in the UK mortgage market have stabilised in H1 2019 2.23% 2.17% 2.16% 282bps 283bps 284bps • (11bps) (12bps) (17bps) H1 2018 H2 2018 Loan Asset Spread¹ H1 2019 Liquid Asset Spread¹ Net Interest Margin 0.40% (0.32%) Dec 2019 Lower for longer interest rates 0.68% (0.20%) Outlook • During 2019, the expected EUR 5 year swap rate in 2021 declined by 100bps 2019 is expected to be slightly lower than H1 NIM of 2.16% 2020/2021: trending mid to high single digit bps lower than 2.16% • 0.96% 100bps decline (0.04%) Dec 2020 Dec 2021 Jan 19 Jul 19 (Euro 5yr swap rate) 1 Spread = Loan asset yield or Liquid asset (excl. NAMA bonds) yield less Group's average cost of funds Bank of Ireland 14#16Sustainable business income Bank of Ireland 2019 Interim Results (€m) 129 Adjusting for the impact of the sale and repositioning of UK Cards and ATMs (€21m income in 2018), Business Income was €9m / 3% higher in H1 2019 due to market share growth and higher APE sales in Wealth and Insurance and higher income in Corporate & Treasury Valuation and other items were a net gain of €28m (H1 2018 net charge of €11m): Lower for longer interest rates have increased the value of the investment bond portfolio; Increase in the value of equity markets in H1 2019 has increased the value of unit-linked assets under management and the associated value of the Group's future fee income Hồ 2018 H1 2019 (€m) Retail Ireland Wealth and Insurance Retail UK 131 115 119 6 (11) - UK continuing operations (15) (11) - UK Cards / ATMs 21 Corporate and Treasury 72 77 Group Centre and other (1) (3) Business Income 323 311 Additional gains 10 3 Valuation and other items (11) 28 Wealth and Insurance: - Interest rate movements (4) - Unit-linked investment variance (7) CVA, DVA, FVA, other (19) IFRS income classifications' Other Income 19 ༞རྨ@ ༤ 15 21 (18) 322 342 1 IFRS income classifications include €7 million of interest income in H1 2019 on 'Life loan mortgage products' which on transition to IFRS 9 were mandatorily classified as FVTPL, with all income on such loans reported in 'net other income'. IFRS income classifications are fully offset in net interest income Bank of Ireland 15#17Costs continue to reduce - - net reduction €30m (3%) €1.9bn Operating expenses continue to reduce €1,796m €1,739m €840m €104m 2017 €113m 2018 €63m 2019 2020 Operating expenses Transformation Investment charge Operating Expenses (including transformation investment charge) c.€1.7bn 2021 Bank of Ireland 2019 Interim Results Transformation of cost base continues • Expect operating expenses (including transformation investment charge) in 2019 to be lower than 2018 and to reduce every year to c.€1.7bn in 2021 Operating expenses (before levies and regulatory charges) of €903m reduced by €30m net (3%) vs. H1 2018 Operating expenses of €840m - down €42m (4.8%) • Staff costs decreased by €19m (5%) vs. H1 2018 reflecting; 4% lower average staff numbers - Changing staff mix with fewer management layers, partially offset by Wage inflation of c.2.6% under the Group Career and Reward framework Other costs and depreciation reduced by €14m from process efficiencies and strategic sourcing, partially offset by higher depreciation from investment in technology Includes cost reduction of €26m relating to exiting UK Cards and ATMs Transformation Investment charge of €63m • Total transformation investment in H1 2019 of €138m, in line with expectations €63m (46%) charged to the income statement Levies and Regulatory charges of €73m Expect levies and regulatory charges to total €115m - €120m for FY 2019 H1 2018 (€m) H1 2019 (€m) • Total staff costs 442 414 - Staff costs 369 350 - Pension costs 73 64 Other costs¹ 339 277 Depreciation¹ 101 149 Operating Expenses 882 840 Transformation Investment charge 51 63 Operating Expenses (before levies and 933 903 regulatory charges) Levies and Regulatory charges 67 73 Total Operating Expenses Average staff numbers 1,000 10,752 Cost-income ratio² 66% 976 10,368 65% 1 The adoption of IFRS 16 resulted in a decrease in other costs of €42m and an increase in depreciation of €38m 2 See Slide 51 for calculation Bank of Ireland 16#18NPE ratio now at 5.3%; a reduction of 100bps in six months Non-performing exposures (NPEs) €5.9bn 7.5% Jun 2018 €5.0bn 220bps reduction in 12 months 6.3% Dec 2018 €4.2bn • 5.3% Jun 2019 • NPES as a % of gross customer loans Non-performing exposures 18bps €72m H1 2018 Net impairment gains / (charges) (9bps) (21bps) (€36m) (€81m) H2 2018 H1 2019 Net impairment gains /(charges) Net impairment gains /(charges) bps Bank of Ireland 2019 Interim Results Asset quality continues to improve • NPE ratio improved by 100bps to 5.3% in H1 2019 NPES of €4.2bn, a reduction of €0.8bn (16%) during H1 2019; NPE reductions achieved broadly within impairment loss allowance NPE resolution strategies • • Irish Buy to Let mortgage securitisation (c.€0.4bn) was executed in April 2019, unlocked 30bps of CET1 capital. Further c.€0.2bn of loans prioritised for transaction during H2 2019 NPE reduction strategies will be kept under review to respond to the associated and evolving regulatory framework Expect further reductions in H2 2019 and beyond. Pace will be influenced by a range of factors including new 'Definition of Default' regulatory rules expected to be implemented by the Group during 2020 Net impairment charge of €81m / 21bps in H1 2019 • Net impairment charge on loans and advances to customers of €81m for H1 2019 (21bps) Absent a change in the economic environment or outlook, expect net impairment charge to be in the range of 20bps - 30bps p.a. during 2019-2021 Bank of Ireland 17#19Capital and liquidity available to support growth Bank of Ireland 2019 Interim Results Strong liquidity ratios Dec 2018 Jun 2019 • (€bn) (€bn) Liquidity Coverage Ratio: 134% • Customer loans Liquid assets Wealth and Insurance assets Other assets 7575 Net Stable Funding Ratio: 128% 78 25 23 17 18 7 • • Loan to Deposit Ratio: 97% Customer deposits: €80.2bn Customer deposits predominantly sourced through retail distribution channels Total assets 124 126 Customer deposits 79 80 Wholesale funding 11 10 Wealth and Insurance liabilities 17 18 Other liabilities 7 8 Shareholders' equity 9 9 Additional Tier 1 security & other 1 1 Total liabilities 124 126 TNAV per share €7.87 €7.88 Dividend per share 16.0c 18.5c Closing EUR/GBP FX rates 0.89 0.90 Wholesale funding: €10.2bn Monetary Authority borrowings of €1.9bn² have reduced by €0.8bn since Dec 2018 primarily due to repayment of funding drawn under the ECB's TLTRO • MREL target of €13.3bn (representing 26.4% of RWA at Dec 2016) to be met by 1 Jan 2021: - MREL ratio of 21.1% based on RWA at Jun 2019 (22.3% pro forma including €600m senior debt issued in July 2019) Modest MREL eligible issuance of c.€1bn - €2bn p.a. anticipated Leverage Ratio • Fully Loaded Leverage Ratio: 6.6% Regulatory Leverage Ratio: 7.2% 1 Dividend accrual of €100m (c.20bps of CET1 capital) in H1 2019, equivalent to an annualised dividend per share of 18.5c 2 Monetary Authority borrowings of €1.9bn at Jun 19 included €0.3bn of ECB TLTRO funding and €1.6bn of BOE funding through TFS (c.€1.4bn) and ILTR (c.€0.2bn) Bank of Ireland 18#20Strong capital generation and robust capital position 0.2% 13.2% Fully loaded CET1 ratio Increased by 40bps Bank of Ireland 2019 Interim Results 90bps (30bps) (25bps) (20bps) 30bps (5bps) 13.6% 1 Jan 19 CET1 (post IFRS 16 impact 20bps) Organic capital generation! Loan Growth/ RWA² Transformation investment Dividend Accrual NPE Disposal Other Jun 19 CET1 CET1 ratio CET1 movements Capital position . Strong capital position with fully loaded CET1 ratio of 13.6%, net increase of 40bps during H1 2019 Continued organic capital generation with 90bps of capital generated in H1 2019 • Securitisation of Irish BTL mortgage NPES (c.€0.4bn) completed in April 2019 unlocked 30bps of CET1 capital No change to capital guidance; The Group expects to maintain a CET1 ratio in excess of 13% on a regulatory basis and on a fully loaded basis by the end of the O-SII phase-in period³ This includes meeting applicable regulatory capital requirements plus an appropriate management buffer 1 Organic capital generation primarily consists of attributable profit and movements in regulatory deductions 2 Loan Growth/RWA primarily consists of RWA movements from net loan growth and changes in asset quality and book mix 3 The Other Systemically Important Institution (O-SII) buffer was introduced at 0.5% in July 2019, increasing to 1.0% in July 2020 and 1.5% in July 2021 4 The Central Bank of Ireland has requested the power to introduce a Systemic Risk Buffer (SyRB) in Ireland, which could increase capital demand. The size, timing and application of any potential SyRB are currently unknown Bank of Ireland 19#21Strategic investment and rigorous allocation of capital Organic capital generation (90bps) Bank of Ireland 2019 Interim Results 1 Growth in loan book 200-250bps 2 Transformation 50-60bps p.a. 3 • • • Regulatory capital demand • Investment / allocation of capital CET1 of c.200-250bps to accommodate loan book growth of c.20% over 4 years (2018-2021) Net lending growth of €1.2bn (c.30bps) in H1 2019 Transformation Programme: investment of 50-60bps p.a. (2018-2021) Transformation investment of €138m (c.25bps) in H1 2019 On track to reduce costs in 2019 and every year to c.€1.7bn in 2021 IFRS 16 impact of c.20bps on 1 Jan 2019 Evolving regulatory framework including EBA and ECB guidelines (Definition of Default, IRB models, NPE requirements, etc.) could consume c.80bps of CET1 by end 2021 The Central Bank of Ireland has requested the power to introduce a Systemic Risk Buffer (SyRB) in Ireland, which could increase capital demand. The size, timing and application of any potential SyRB are currently unknown • Will pursue opportunities to unlock capital in balance sheet as appropriate 4 Dividend / distributions • Dividend accrual of €100m (equivalent to an annualised dividend per share of 18.5c) • No change to dividend policy or guidance Bank of Ireland 20 20#22H2 2019 Outlook . Growth Efficiency Bank of Ireland 2019 Interim Results Returns Net lending growth while maintaining commercial discipline on risk and pricing NIM in 2019 expected to be slightly lower than H1 NIM of 2.16% Continued growth in Wealth and Insurance business • Costs in 2019 to be lower than 2018 • . Expect further reduction in NPES Expect net impairment charge to be in the range of 20bps 30bps p.a. during H2 20191 - • Continue to generate strong organic capital Dividend to increase prudently and progressively; over time will build towards a payout ratio of around 50% of sustainable earnings ROTE target: in excess of 10% by 2021 1 Absent a change in the economic environment or outlook Bank of Ireland 21 21#23Bank of Ireland 2019 Interim Results 22 22 Strategic Outlook Francesca McDonagh, Group CEO Bank of Ireland#24Bank of Ireland 2019 Interim Results Irish credit growth emerging Annual % Change 5 Leading Irish retail and commercial bank; unlocking growth in our home market New lending of €3.8bn in H1 2019 Corporate €0.5bn Consumer €0.3bn Property €0.6bn 0 Mortgages €1.0bn 23 23 Business Banking €1.5bn Unique franchise... • Over 2 million consumer, business and wealth and insurance customers • Largest lender to the Irish economy for 6 years running • Leading market shares in mortgage, SME, consumer and wealth products • Ireland's only bancassurer Leading Business Bank in Ireland #1 lender to Corporate Ireland Largest branch physical footprint, with 265 branches • Digitally enabled with 80% of customers digitally active Ireland is the fastest growing economy in Europe Demographics support further growth with youngest population in Europe 2017 2018 Stock of lending to households Stock of lending to businesses (non-financial corporations)1 ...with growth and efficiency upside • • 2019 Leading supporter of home building and buying €750 million in development finance approved Mortgage market expected to grow significantly €1bn green fund launched supporting mortgage, consumer and SME customers Supporting and partnering our business customers helping them navigate Brexit; €2bn Brexit fund launched • Continued growth in penetration of wealth product holdings for bank customers; launch of digital pensions platform in H2 2019 ⚫ Serving customers brilliantly with efficiencies through customer journey automation and simplification 1 Source: Central Bank of Ireland, Banks balance sheet basis, excludes loan sales and securitisations Bank of Ireland#2524 224 Execution of strategy improving UK returns Invest Reposition Improve . H1 2019 Progress Increased market share and new lending in higher margin personal loans and Northridge businesses (supported by broadened distribution network), accounting for 42% of H1 2019 new lending (33% in H1 2018) • Successful launch of higher margin bespoke mortgages with £100m in offers in first 100 days • Disciplined commercial and risk focus maintained in context of ongoing macro uncertainty • Costs reduced by 19% vs. H1 2018 with cost-income ratio of 60% (H1 2018: 66%) Inaugural wholesale funding transaction completed in June 2019 • Sale of UK credit cards portfolio adding c.0.7% to UK ROTE • Exit from Post Office current accounts and unprofitable Post Office ATMs • Bank of Ireland 2019 Interim Results Future focus Continue to progress higher margin lending initiatives while maintaining disciplined risk focus • Further significant reduction in costs (targeting c.50% cost-income ratio) • Ongoing margin optimisation across lending and deposit books . Ongoing wind-down of legacy portfolios Increase ROTE to high single digit by 2021 Bank of Ireland#26Continued delivery on transformation H1 2019 milestones achieved Bank of Ireland 2019 Interim Results Future milestones planned • First Data migration completed, the largest in the Bank's history, to enable further capability enhancements • Modernised payments infrastructure established, providing greater capacity, improved stability and higher speed processing • New digital Life Assurance underwriting system delivering faster decisions • Strengthened security and cyber defences Bank's mobile app to launch in Q4 2019; customer migration to begin in Q4 2019 and continue into 2020 • Launch of Group Pensions digital platform and expansion of Wealth Advice digital platform in H2 2019 • Operationalisation of single view of the customer in 2020 Improve customer Support growth Drive efficiency experience 25 25 Bank of Ireland#27Delivery of 2021 targets to be our constant focus Bank of Ireland 2019 Interim Results Relentless focus on cost opportunities Selective growth in key areas Levers to mitigate changing environment Prudent price management Business model simplification Continued delivery on transformation and IT change Efficient capital allocation Efficient business Robust capital position if Sustainable dividends Target is to increase ROTE to in excess of 10% by 2021 26 26 Bank of Ireland#28Appendix Bank of Ireland 2019 Interim Results Bank of Ireland 27#29Appendix • BOI Overview - Business profile Historic financial results Profile of customer loans Debt Securities at fair value through other comprehensive income (FVOCI) Gross new lending volumes in H1 2019 ROI mortgage loan book. UK mortgage loan book Income Statement - - Divisional performance Interest Rate Sensitivity Net interest income analysis Non-core Items Transformation Investment Asset Quality Non-performing exposures by portfolio ROI Mortgages UK Customer Loans Ordinary shareholders' equity and TNAV Capital CET1 ratios Capital Guidance and Distribution Policy Regulatory Capital Requirements Risk Weighted Assets Cost income ratio: Jun 2019 Return on tangible equity (ROTE) Defined Benefit Pension Schemes Forward-Looking statement Contact Details Bank of Ireland 2019 Interim Results Slide No. 28 34 35 36 37 38 39 40 42 45 46 47 48 49 50 51 52 53 54 23 312 3144 TF6ENCE 29 31 33 55 Bank of Ireland#30BOI Overview: Ireland Ireland's leading retail and commercial bank Consumer Retail Ireland Business Wealth Bank of Ireland 2019 Interim Results Corporate Ireland Corporate Banking Ireland Property Finance 29 29 Unique customer franchise ÅÅÅÅ Supporting local communities & enterprises Extensive engagement via digital channels 1.7m active consumer customers • 200k SME customers • 500k Wealth and Insurance customers ⚫ 265 branches, >2,800 front line staff • Reinventing branches with workbenches and event spaces driving local community, enterprise and business development activity • 440 community and enterprise events including National Enterprise Week and National Enterprise Town Awards, supporting local businesses and community groups • 80% digitally active current account base • 75% of sessions/visits are via mobile device. • Average of >23m interactions in our digital channels every month ⚫ #1 Corporate Bank in Ireland ⚫ #1 Bank for FDI into Ireland • Country-wide coverage via regional hubs • Banking relationship with 60% of Ireland's top companies • >500 corporate customers: 5 average products held per customer • Disciplined approach to risk • management 60 Specialist staff; >175 customers • Leading lender of investment property and construction Markets & Treasury • Leading treasury service provider • Track record of innovation Bank of Ireland#31Acquisition Finance 30 30 BOI Overview: UK / International Bank of Ireland 2019 Interim Results Attractive UK and International businesses provide diversification and further opportunities for growth Retail UK Partnerships Northern Ireland Niche Businesses Corporate UK / International Corporate Banking UK • Over 40 years in Great Britain • 11.5k branches through Post Office partnership ⚫ #1 travel money business in the UK (FRES) • Access to 3.2m AA members • Full service retail and commercial bank A distribution network of 28 branches, including six business centres Over 190 years since first branch opened Motor asset finance and motor lease finance business Proven track record of strong growth and disciplined risk appetite £2.1bn loan book with c.200k customers • Sector focused business in UK with 5 specialist industry sectors, industrials & manufacturing, technology, consumer & hospitality, media and business services • >80 Customers • Scalable platform with highly disciplined approach and attractive growth opportunity • • Mid market US / European Acquisition Finance business; strong 20 year+ record Well recognised lead arranger 6 international offices - Opened Madrid office in H1 2019, supporting our existing customers in that region • >200 customers, c.75% business from repeat sponsors Bank of Ireland#32BOI Overview Income Statement Bank of Ireland 2019 Interim Results FY 2015 FY 2016² FY 20173 FY 2018 H1 2019 (€m) (€m) (€m) (€m) (€m) Total income 3,272 3,126 3,049 2,805 1,411 - Net interest income 2,454 2,298 2,248 2,146 1,069 - Other income (net) before additional gains and valuation items 626 615 662 672 311 - Additional gains, valuation and other items 192 213 139 (13) 31 Operating expenses (1,746) (1,741) (1,796) (1,739) (840) Transformation Investment charge (41) (104) (113) (63) Levies and Regulatory charges Operating profit pre-impairment (75) (109) (99) (101) (73) 1,451 1,235 1,050 852 435 Net impairment (charges) / gains (296) (178) (15) 42 (79) Share of associates / JVS 46 41 43 41 20 Underlying profit before tax 1,201 1,098 1,078 935 376 Non core items 31 (63) (226) (100) (61) Profit before tax 1,232 1,035 852 835 315 Net interest margin 2.19% 2.20% 2.29% 2.20% 2.16% Cost / income ratio¹ 53% 57% 62% 66% 64% 1 Cost/income ratio is calculated as operating expenses (excluding levies and regulatory charges) divided by total income 2 Comparative figures for 2016 have been restated to reflect the impact of the reclassification of the charges relating to the Central Bank of Ireland's Tracker Mortgage Examination Review as non-core and the impact of the voluntary change in the Group's accounting policy for Life assurance operations 3 Comparative figures have been restated to reflect the impact of the reclassification of €7 million of costs from the Transformation Investment charge (formerly the Core Banking Platform Investment charge) to Operating expenses (before Transformation Investment and levies and regulatory charges) for 2017 Bank of Ireland 31#33BOI Overview Summary Balance Sheet Bank of Ireland 2019 Interim Results Dec 15 (€bn) Dec 16 (€bn) Dec 17 (€bn) Dec 18 (€bn) Jun 19 (€bn) Customer loans¹ 85 78 76 77 Liquid assets 24 21 24 25 23 Wealth and Insurance assets 16 17 17 17 18 Other assets 6 7 6 Total assets 131 123 Customer deposits 80 Wholesale funding 14 14 Wealth and Insurance liabilities 16 Other liabilities 10 25176 123 76 79 13 17 5 Subordinated liabilities and AT1 3 2 3 52753 124 11 17 Shareholders' equity 8 9 9 9 8272820720 126 10 18 9 Total liabilities & Shareholders' equity 131 123 123 124 126 Fully loaded CET1 ratio 11.3% 12.3% 13.8% 13.4% 13.6% Net stable funding ratio 120% 122% 127% 130% 128% Loan to deposit ratio TNAV per share (excl. DPS) Dividend per share (DPS) 106% 104% 100% 97% 97% €7.24 €7.40 €7.52 €7.87 €7.88 11.56 16.0c 18.5c2 1 Loans and advances to customers is stated after impairment loss allowance 2 Dividend accrual of €100m (c.20bps of CET1 capital) equivalent to an annualised dividend per share of 18.5c Bank of Ireland 32 32#34BOI Overview Profile of customer loans¹ at Jun 19 (Gross) Bank of Ireland 2019 Interim Results 33 33 ROI UK RoW Total Total Composition (Jun 19) (€bn) (€bn) (€bn) (€bn) (%) Mortgages 23.2 21.6 0.0 44.8 57% Non-property SME and corporate 11.0 4.82 4.5 20.3 25% SME 7.5 1.6 0.0 9.1 11% Corporate 3.5 3.2 4.5 11.2 14% Property and construction 5.8 2.0 0.7 8.5 11% Investment property 5.2 1.8 0.7 7.7 10% Land and development 0.6 0.2 0.0 0.8 1% Consumer 2.2 3.53 0.0 5.7 7% Customer loans (gross) 42.2 31.9 5.2 79.3 100% Geographic (%) 53% 40% 7% 100% 1 Based on geographic location of customer 2 Includes GB business and corporate loan books, which BOI is required to run down under its EU approved Restructuring Plan (Jun 2019: £0.4bn; Dec 2018: £0.4bn) 3 Includes UK Credit Card portfolio €0.6bn classified as held for sale as at June 2019. Sale completed in mid July 2019 Bank of Ireland#35Debt Securities at fair value through other comprehensive income (FVOCI) Bank of Ireland 2019 Interim Results ROI UK France (€bn) (€bn) (€bn) Other (€bn) Jun 19 (€bn) Dec 18 (€bn) Sovereign bonds 2.5 0.8 2.5 5.8 6.0 Senior debt 0.3 1.9 2.2 2.2 Covered bonds 0.2 0.2 0.9 2.3 3.6 3.7 Subordinated debt 0.1 0.1 0.1 Total 2.7 0.3 2.0 6.7 11.7 12.0 FVOCI Reserve 0.2 0.2 0.2 • • The Group held €11.7bn of FVOCI debt securities at Jun 2019. Weighted average instrument level credit rating of the portfolio is A+ Other exposures include supranational entities (€1.6bn), Spain (€1.0bn), Sweden (€0.9bn), Belgium (€0.8bn) and Other (€2.4bn - all exposures less than €0.5bn) Portfolio • The Group holds NAMA subordinated bonds - €70m nominal value, valued at 103% at Jun 2019 (Dec 18 - 104%) NAMA 34 === Bank of Ireland#36Gross new lending volumes in H1 2019 €2.7bn Retail Ireland Retail UK €2.7bn £2.6bn £2.5bn €1.0bn €1.0bn Bank of Ireland 2019 Interim Results Corporate Banking €2.1bn €2.1bn £1.3bn €0.6bn €0.6bn £1.6bn €0.2bn €0.3bn £0.4bn £0.3bn €1.4bn €1.5bn €0.5bn €0.5bn €0.5bn €0.7bn £0.7bn £0.5bn €0.5bn H1 2018 H1 2019 £0.1bn H1 2018 £0.1bn H1 2019 H1 2018 ■Mortgages Consumer Business Banking Northridge Property Corporate Ireland Acquisition Finance Corporate UK €0.4bn H1 2019 Bank of Ireland 35#37ROI Mortgages: €23.2bn New Lending volumes and Market Share Bank of Ireland 2019 Interim Results ROI Mortgages (gross) 28% 28% €24.1bn €23.7bn €23.2bn 26% 26% €7.3bn 23% €9.5bn €10.4bn €5.8bn €4.4bn €3.5bn €1.3bn €1.2bn €1.0bn €1.0bn €10.9bn €0.8bn €9.8bn €9.3bn H1 2017 H2 2017 H1 2018 New Lending Volumes¹ H2 2018 Market Share H1 2019 Dec 17 Dec 18 Jun 19 Tracker Variable Rates Fixed Rates Pricing strategy • Fixed rate led mortgage pricing strategy which provides value, certainty and stability to our customers and to the Group • Fixed rate products accounted for c.92% of our new lending in H1 2019, up from c.30% in 2014 Distribution strategy - expansion into broker channel • Accelerating on-boarding of new brokers following successful re-entry into broker market in Q4 2018 (Brokers accounted for c.25% of the market in H1 2019) Wider proposition 7 in 10 ROI customers who take out a new mortgage take out a life assurance policy through BOI Group 3 in 10 ROI customers who take out a new mortgage take out a general insurance policy through BOI Group with insurance partners LTV profile . Average LTV of 61% on existing mortgage stock at Jun 2019 (Dec 18: 61%) Average LTV of 74% on new mortgages in H1 2019 (Dec 18: 71%) Tracker mortgages • €8.8bn or 95% of trackers at June 2019 are on a capital and interest repayment basis • 80% of trackers are Owner Occupier mortgages; 20% of trackers are Buy to Let mortgages • Loan asset spread on ECB tracker mortgages was c.64bps² in H1 2019 1 Excluding portfolio acquisitions (H1 2017 - Nil; H2 2017 - €0.1bn; H1 2018 - Nil; H2 2018 - Nil; H1 2019 - Nil) 2 Average customer pay rate of 110bps less Group average cost of funds of 46bps Bank of Ireland 36#38UK Mortgages: £19.4bn / €21.6bn £20.0bn UK Mortgages (gross) £19.4bn £20.0bn £19.4bn £2.0bn Bank of Ireland 2019 Interim Results UK Mortgages (gross) £19.4bn £1.7bn £19.4bn £1.6bn £9.6bn £10.4bn £11.0bn £7.5bn £7.5bn £7.4bn £3.3bn £2.7bn £2.4bn £10.6bn £10.2bn £10.4bn £7.1bn £6.3bn £6.0bn Dec 17 Dec 18 Tracker Variable Rates Fixed Rates Jun 19 LTV profile . Average LTV of 62% on existing stock at Jun 2019 (Dec 18: 62%) • Average LTV of 74% on new UK mortgages in H1 2019 (2018: 72%) Dec 17 Dec 18 Standard Buy to let Self certified Jun 19 Bank of Ireland 37 37#39Income Statement Divisional performance - all trading divisions have increased their operating profit pre-impairment Bank of Ireland 2019 Interim Results Operating Profit 6 months ended Jun 19 pre-impairment (€m) (Єm) Underlying profit/(loss) before tax and additional gains, valuation and other items/(losses) Additional gains, Underlying profit/(loss) before tax (€m) valuation and other items¹ (Єm) Retail Ireland 260 263 263 Wealth and Insurance 84 48 36 84 Retail UK - € 112 88 4 92 Retail UK - £ 97 77 3 80 Corporate and Treasury 250 230 (23) 207 Group Centre & other (208) (211) 4 (207) Transformation Investment charge (63) (63) (63) Group 435 355 21 376 Operating Profit 6 months ended Jun 18 pre-impairment Retail Ireland (€m) 240 Underlying profit/(loss) before tax and additional gains, valuation and other items/(losses) Additional gains, valuation and other items Underlying profit/(loss) before tax (€m) (€m) (€m) 352 345 Wealth and Insurance 34 45 (11) 34 Retail UK - € 105 116 113 Retail UK - £ 92 102 99 Corporate & Treasury 244 228 5 233 Group Centre & Other (174) (170) Transformation Investment charge (51) (51) Group 398 520 (20) (174) (51) 500 1 Excludes IFRS income classifications which is fully offset in net interest income Bank of Ireland 38#40Interest Rate Sensitivity Bank of Ireland 2019 Interim Results The table below shows the estimated sensitivity of the Group's income (before tax) to an instantaneous and sustained 1% parallel movement in interest rates Estimated sensitivity on Group income (1 year horizon) 100bps higher 100bps lower Dec 18 (€m) Jun 19 (€m) c.180 c.200 (c.210) (c.230) The estimates incorporate certain management assumptions primarily related to: . the re-pricing of customer transactions; . the relationship between key official interest rates set by Monetary Authorities and market determined interest rates; and . the assumption of a static balance sheet by size and composition 39 39 In addition, changes in market interest rates could impact a range of other items including the valuation of the Group's IAS19 defined benefit pension schemes Bank of Ireland#41Income Statement Net interest income analysis Bank of Ireland 2019 Interim Results H2 2017 H1 2018 H2 2018 H1 2019 Average Gross Gross Volumes Interest Rate (€bn) (€m) (%) Average Gross Volumes Interest (€bn) (Єm) Gross Rate (%) Average Gross Volumes Interest (€bn) (Єm) Gross Average Gross Rate Volumes Interest (%) (€bn) (Єm) Gross Rate (%) Ireland Loans¹ 35.3 545 3.07% 34.6 531 3.09% 34.4 531 3.06% 34.2 517 3.05% UK Loans 28.0 430 3.05% 28.1 440 3.16% 27.6 447 3.21% 27.5 439 3.22%5 C&T Loans 12.8 253 3.92% 13.6 259 3.85% 14.6 287 3.89% 15.8 312 3.98% Total Loans & Advances to Customers 76.1 1,228 3.20% 76.3 1,230 3.25% 76.6 1,265 3.28% 77.5 1,268 3.30% Liquid Assets 20.8 43 0.41% 22.1 35 0.32% 22.7 38 0.33% 22.9 33 0.29% NAMA Sub Debt 0.3 17 11.97% 0.2 4 3.50% 0.1 Total Interest Earning Assets 97.2 1,288 2.63% 98.6 1,269 Ireland Deposits 20.4 (9) (0.08%) 20.5 (8) Credit Balances² UK Deposits C&T Deposits 29.3 4 0.03% 30.5 2 2.60% (0.08%) 20.7 0.01% 99.4 2 1,305 5.24% 0.1 2 5.40% (8) 32.8 3 2.60% (0.08%) 20.7 0.02% 100.5 1,303 2.61% (7) (0.07%) 34.5 3 0.02% 18.2 (74) (0.80%) 18.9 (81) (0.86%) 18.6 (88) (0.94%) 18.3 (91) (1.00%) 5.2 (9) (0.35%) 4.7 (9) (0.39%) 4.9 (9) Total Deposits 73.1 (88) (0.24%) 74.6 (96) Wholesale Funding³ 12.3 (36) (0.58%) 12.3 (45) (0.26%) 77.0 (0.73%) 11.0 (102) (0.37%) (0.26%) 78.6 5.1 (9) (0.35%) (104) (0.27%) (52) (0.94%) 10.3 (54) (1.06%) Subordinated Liabilities 1.8 (42) (4.80%) 2.1 (49) (4.77%) Total Interest Bearing Liabilities 87.2 (166) (0.38%) 89.0 (190) (0.43%) 2.1 90.1 (51) (4.86%) 2.0 (205) (0.45%) (49) (4.85%) 90.9 (207) (0.46%) IFRS Income Classification 5 7 7 2 Other4 (25) 9 (22) (19) Net Interest Margin 97.2 1,102 Average ECB Base rate Average 3 month Euribor Average BOE Base rate Average 3 month LIBOR 2.25% 0.00% 98.6 1,095 2.23% 0.00% 99.4 1,085 2.17% 100.5 1,079 2.16% 0.00% 0.00% (0.33%) (0.33%) (0.32%) (0.31%) 0.32% 0.50% 0.38% 0.62% 0.70% 0.82% 0.75% 0.84% 1 Includes average interest earning assets of c.€0.3bn in H1 2019 carried at FVTPL with associated H1 2019 interest income of c.€7m 2 Credit balances in H1 2019: ROI €26.5bn, UK €3.5bn, C&T €4.5bn 3 Includes impact of credit risk transfer transactions executed in Dec 2016 and Nov 2017 4 Includes IFRS 16 lease expense and adjustments that are of a non-recurring nature such as customer termination fees and EIR adjustments 5 Excludes income (c.5bps) relating to the repositioning of the UK cards portfolio as non-core in H1 2019 due to classification as held for sale Bank of Ireland 40#42Non-core items Bank of Ireland 2019 Interim Results H1 2018 (€m) H1 2019 (€m) Customer redress programme - Tracker Mortgage Examination (62) (55) - Other programme (7) Cost of restructuring programme¹ (Loss) gain on disposal / liquidation of business activities Gain on disposal of Property Investment return on treasury stock held for policyholders (51) (21) (3) 7 1 2 UK business divestments, net of disposal costs² Gross-up for policyholder tax in the Wealth and Insurance business Total non-core items (2) 22 (46) (61) 1 Restructuring costs of €21 million in H1 2019 primarily relate to a reduction in employee numbers (€17 million), programme management costs (€2 million) and costs related to the implementation of the Group's property strategy (€2 million) 2 Relates to UK Credit Cards, Post Office ATMs and Post Office Current Accounts Bank of Ireland 41#43Transformation Investment of €1.4bn supporting growth / driving efficiencies Costs will decrease every year in absolute terms Bank of Ireland 2019 Interim Results Investment: €1.4bn (2016-2021) c.65% c.€1.9bn c.65% €1,796m €1,739m €104m 2017 €113m 2018 Operating expenses 2019 2020 Transformation Investment charge. Cost income ratio c.50% c.€1.7bn €306m Average of €275m p.a. 2021 2016 2017 2018 2019 2020 2021 42 42 Transformation investments are supporting growth and driving efficiencies - Investor day targets 2018 Expected¹ Treatment (€m) H1 2019 Total (€m) (€m) % Cost target of c.€1.7bn in 2021 40% Transformation Investment charge 113 63 176 40% . Costs reduce every year: 2018 - 2021 40% Cost income ratio expected to improve from 65% to c.50% in 2021 20% 100% Capitalised as Intangible Assets Non-core restructuring costs Total 100 54 154 35% 93 21 114 25% 306 138 444 100% 50-60bps p.a. CET1 (bps) 60bps 25bps 1 As outlined at Investor Day in June 2018 in respect of the average investment of €275m p.a. for 2018-2021 Bank of Ireland#44Non-performing exposures by portfolio Bank of Ireland 2019 Interim Results Advances Non-performing Non-performing Impairment Composition (Jun 19) (€bn) exposures (€bn) exposures as % of advances loss allowance (€bn) Impairment loss allowance as % of non-performing exposures Residential Mortgages 44.8 2.3 5.0% 0.5 23% - Republic of Ireland 23.2 1.8 7.6% 0.4 25% - UK 21.6 0.5 2.2% 0.1 16% Non-property SME and Corporate 20.3 1.1 5.5% 0.6 52% - Republic of Ireland SME 7.5 0.7 9.3% 0.4 51% - UK SME 1.6 0.1 6.8% 0.0 41% - Corporate Property and construction 11.2 0.3 2.7% 0.2 58% 8.5 0.7 8.4% 0.3 46% - Investment property 7.7 0.6 8.6% 0.3 45% - Land and development 0.8 0.1 6.6% 0.0 57% Consumer¹ 5.7 0.1 2.1% 0.2 139% Total loans and advances to customers 79.3 4.2 5.3% 1.6 38% Non-performing Advances Composition (Dec 18) exposures (€bn) (€bn) Non-performing exposures as % of advances Impairment loss allowance Impairment loss allowance as % of (€bn) non-performing exposures Residential Mortgages 45.4 - Republic of Ireland 23.7 - UK 21.7 Non-property SME and Corporate 19.5 - Republic of Ireland SME 7.6 - UK SME 1.6 Consumer - Corporate Property and construction - Investment property - Land and development Total loans and advances to customers 10.3 NNO FOOO 2.8 2.3 0.5 1.2 0.8 0.1 835280 6.0% 0.5 20% 9.5% 0.4 21% 2.3% 0.1 15% 6.2% 0.6 52% 11.2% 0.4 49% 6.1% 0.1 53% 0.3 2.6% 0.1 60% 8.3 0.9 11.0% 0.4 45% 7.7 0.8 10.7% 0.4 44% 0.6 0.1 14.0% 0.0 54% 5.2 0.1 2.1% 0.2 140% 78.4 5.0 6.3% 1.7 35% 1 Includes UK Credit Card portfolio €0.6bn classified as held for sale as at June 2019. Sale completed in mid July 2019 Bank of Ireland 43#4544 44 ROI Mortgages Continued proactive arrears management >90 days arrears¹ Industry Average Industry Average 17.3% 7.1% Bank of Ireland 2.1% Owner Occupier Owner Occupier Bank of Ireland 4.9% Buy to let Buy to let >720 days arrears¹ Industry Average Industry Average 13.4% Bank of Bank of Ireland 4.6% Ireland 2.4% 1.1% Owner Occupier Owner Occupier Buy to let Buy to let >90 days arrears . Bank of Ireland 2019 Interim Results Bank of Ireland is significantly below the industry average for both Owner Occupier (30% of industry average) and Buy to Let (28% of industry average) >720 days arrears • Bank of Ireland is significantly below the industry average for both Owner Occupier (24% of industry average) and Buy to Let (18% of industry average) NPE Resolution strategies • Continued progress on reduction in Irish mortgage NPES, c.€0.5bn reduction in H1 2019 • Securitisation of Irish BTL mortgage NPES (c.€0.4bn) was executed in April 2019 • Further c.€0.2bn of loans prioritised for transaction during H2 2019 • NPE reduction strategies will be kept under review to respond to the associated and evolving regulatory framework 1 As at March 2019, based on number of accounts, industry average excluding BOI Bank of Ireland#46UK Customer Loans £28.6bn (€31.9bn) UK Mortgages - £19.4bn UK Mortgages Analysis - £19.4bn Bank of Ireland 2019 Interim Results . Total UK mortgages of £19.4bn; (NPES: 2%) Scotland, £1.1bn Northern Ireland,, £1.0bn Rest of England,, £9.0bn Wales, £0.7bn Greater London, £3.5bn Outer Metropolitan, £2.2bn South East, £1.9bn Other UK Customer Loans - £9.2bn £0.1bn £0.1bn £0.1bn £0.1bn £2.7bn £1.3bn £1.5bn SME Corporate Investment Property £0.2bn Land & Development Performing loans Non-performing exposures £3.1bn Consumer Average LTV of 62% on total book (2018: 62%) Average LTV of 74% on new mortgages (2018: 72%) • 70% of the current mortgage portfolio originated since January 2010 are standard owner occupier mortgages BTL book is well seasoned with 69% of these mortgages originated prior to January 2010 Average balance of Greater London mortgages is c.£190k, with 92% of Greater London mortgages having an indexed LTV <70% Other UK Customer Loans Analysis - £9.2bn • Non-performing exposures of £0.4bn with strong coverage ratios Performing loans of £8.8bn; SME: broad sectoral diversification with low concentration risk Corporate: specialist lending teams in Acquisition Finance, Project Finance, and Corporate lending through a focused sector strategy Investment Property: primarily Retail, Office and Residential sectors Consumer (£3.2bn): Northridge (£1.7bn): Asset backed motor finance business; net loan book increase of £0.3bn in H1 2019; mid-market targeting prime business only; below industry arrears and loan losses Personal loan volumes (£0.9bn): net loan book increase of £0.2bn in H1 2019; improved credit risk process has driven increase in customer applications and drawdowns Credit cards (£0.5bn): classified as held for sale as at Jun 2019 Bank of Ireland 45#47Ordinary shareholders' equity and TNAV Bank of Ireland 2019 Interim Results Movement in ordinary shareholders' equity Ordinary shareholders' equity at beginning of period Movements: Profit attributable to shareholders Impact of adopting IFRS 9 Dividend paid to ordinary shareholders Remeasurement of the net defined benefit pension liability Debt instruments at FVOCI reserve movements Available for sale (AFS) reserve movements Cash flow hedge reserve movement Foreign exchange movements Other movements Ordinary shareholders' equity at end of period Tangible net asset value Ordinary shareholders' equity at the end of period Adjustments: Intangible assets and goodwill Own stock held for benefit of life assurance policyholders Tangible net asset value (TNAV) Number of ordinary shares in issue at the end of the period TNAV per share (€) Dividend per share (€) paid during period 1 Dec 2018 numbers have been restated to exclude treasury shares held for the benefit of life assurance policyholders 2018 (€m) 8,859 H1 2019 (€m) 9,243 620 195 (31) (124) (173) 129 (61) 133 48 (341) (51) 8 19 10 (2) 39 (1) 9,243 9,257 Dec 181 (€m) Jun 19 (€m) 9,243 9,257 (802) (811) 25 27 8,466 8,473 1,076 1,075 €7.87 €7.88 €0.115 €0.16 Bank of Ireland 46#48Capital - fully loaded CET1 ratio improved by 40bps CET1 ratios - Jun 2019 Bank of Ireland 2019 Interim Results Total equity Less Additional Tier 1 Deferred tax Intangible assets and goodwill Foreseeable dividend' Expected loss deduction Other items² Common Equity Tier 1 Capital Credit RWA Operational RWA Market, Counterparty Credit Risk and Securitisations Total RWA Common Equity Tier 1 ratio Total Capital Ratio Leverage Ratio Phasing impacts on Regulatory ratio Regulatory ratio (€bn) Fully loaded ratio (€bn) 10.1 10.1. (0.8) (0.8) (0.5) (1.1) (0.7) (0.7) (0.1) (0.1) (0.4) (0.4) (0.3) (0.4) 7.3 6.6 42.7 42.5 4.5 4.5 1.7 1.7 48.9 48.7 14.9% 13.6% 18.0% 16.7% 7.2% 6.6% • Deferred tax assets - certain DTAs³ are deducted at a rate of 50% for 2019, increasing annually at a rate of 10% thereafter until 2024 • IFRS 9 - the Group has elected to apply the transitional arrangement which on a Regulatory CET1 basis resulted in minimal impact from initial adoption and will partially mitigate future impacts in the period to 2022. The transitional arrangement allows a 85% add-back in 20194, decreasing to 70%, 50%, and 25% in subsequent years 1 Dividend accrual of €100m (c.20bps of CET1 capital) in H1 2019, equivalent to an annualised dividend per share of 18.5c 2 Other items - the principal items being the cash flow hedge reserve, securitisation deduction and 10% / 15% threshold deduction 3 Deferred tax assets due to temporary differences are included in other RWA with a 250% risk weighting applied 4 The IFRS9 addback to the Regulatory CET1 was c.16bps at 30 Jun 2019, reduced from c.18bps at 31 Dec 2018. Bank of Ireland 47#49Capital Guidance and Distribution Policy Capital Guidance Distribution Policy Dividend Accrual Bank of Ireland 2019 Interim Results • The Group expects to maintain a CET1 ratio in excess of 13% on a regulatory basis and on a fully loaded basis by the end of the O-SII phase-in period¹ • This includes meeting applicable regulatory capital requirements plus an appropriate management buffer² • The Group expects that dividends will increase on a prudent and progressive basis and, over time, will build towards a payout ratio of around 50% of sustainable earnings • Dividend level and rate of progression will reflect, amongst other things: Strength of the Group's capital and capital generation; - Board's assessment of growth and investment opportunities available; Any capital the Group retains to cover uncertainties; and Any impact from the evolving regulatory and accounting environments • Other means of capital distribution will be considered to the extent the Group has excess capital • Regulatory rules require that an accrual is made at the half year in respect of potential dividends; in that regard the Group has made an accrual of €100m (c.20bps) in arriving at its CET1 ratio of 13.6% which would be equivalent to an annualised dividend per share of 18.5c 1 The Other Systemically Important Institution (O-SII) buffer was introduced at 0.5% in July 2019, increasing to 1.0% in July 2020 and 1.5% in July 2021 2 The Central Bank of Ireland has requested the power to introduce a Systemic Risk Buffer (SyRB) in Ireland, which could increase capital demand. The size, timing and application of any potential SyRB are currently unknown Bank of Ireland 48#50Regulatory Capital Requirements Bank of Ireland 2019 Interim Results 19 49 Range 4.50% 2017 4.50% 1% -2.25%² 2.25% 2.50% 1.25% 2018 2019 2020 2021 4.50% 4.50% 4.50% 4.50% 2.25% 2.25% 2.25% 2.25% 1.88% 2.50% 2.50% 2.50% 0.30% 0.90% 0.90% 0.90% CBI 0% - 2.50% FPC (UK) 0% - 2.50% Fed/Various 0% - 2.50% CBI Minister for Finance 0% - 2.00% 0% - 3.00% 8.00% 0.60% 0.60% 0.60% 0.30% 0.30% 0.30% 0.30% 0.50% 1.00% 1.50% TBC 8.93% 10.65% 11.15% Not disclosed in line with regulatory preference TBC 11.65% Pro forma CET1 Regulatory Capital Requirements Set by Pillar 1 - CET1 Pillar 2 Requirement (P2R) Capital Conservation Buffer (CCB) Countercyclical buffer (CCyB)1 Ireland (c.60% of RWA) (from 5 July 2019) UK (c.30% of RWA) (from November 2018) US and other (c. 10% of RWA) CRR SSM CRD O-SII buffer (from 1 July 2019) Systemic Risk Buffer - Ireland Pro forma Minimum CET1 Regulatory Requirements Pillar 2 Guidance (P2G) Regulatory Capital Requirements • A minimum CET1 ratio of 9.55% on a regulatory basis from 1 Jan 2019, increasing to 10.65% from July 2019 • The Central Bank of Ireland has requested the power to introduce a Systemic Risk Buffer in Ireland under Article 133 of CRD IV which could increase the minimum regulatory capital demand. The size, timing and application of any potential SyRB are currently unknown • Pillar 2 Guidance (P2G) is not disclosed in accordance with regulatory preference. The increase in Capital Conservation Buffer (CCB) in 2019 was offset by a like for like reduction in the P2G. In addition the P2G reduced for 2019 following the outcome of the 2018 EBA Stress Test 1 CCуB could be set in excess of 2.50% in exceptional circumstances. A change in the CCYB could also be implemented in less than 12 months in exceptional circumstances 2 This is the expected range for P2R, which is subject to annual review Bank of Ireland#51Risk Weighted Assets (RWAs) / Leverage Ratio Customer lending average credit risk weights - June 20191/2 (Based on regulatory exposure class) Bank of Ireland 2019 Interim Results EBA Transparency Exercise 2018 Country by Country Average IRB risk weights Residential Mortgages - June 2018 Sweden 4.2% Belgium EAD³ RWA (€bn) (€bn) Avg. Risk Weight 9.7% ROI Mortgages 23.8 7.5 32% UK 10.3% UK Mortgages SME 21.7 4.1 19% Finland 10.7% France 11.3% 15.8 12.1 76% Netherlands 11.6% Corporate 11.6 10.6 91% Austria 11.9% Spain 12.8% Other Retail 6.4 4.4 69% Denmark 14.1% Customer lending credit risk 79.3 38.7 49% Germany 14.3% Norway 17.9% Portugal 19.5% Italy 19.9% Ireland • IRB approach accounts for: 70% of credit EAD (Dec 2018: 70%) 71% of credit RWA (Dec 2018: 74%) • RWA has increased from €47.8bn at Dec 2018 to €48.9bn at Jun 2019 primarily driven by the introduction of IFRS16, net loan growth and changes in asset quality and book mix Leverage Ratio • Fully Loaded Leverage Ratio: 6.6% Regulatory Leverage Ratio: 7.2% 38.0% EBA Risk Dashboard Q1 2019 Country by Country Average Leverage ratio Regulatory Leverage Ratio - March 2019 Sweden 4.4% Netherlands 4.7% Denmark 4.7% Germany 4.7% France 5.1% UK 5.3% Finland 5.5% Spain 5.6% Italy 5.6% Belgium 5.7% Austria 6.6% Norway 7.0% Portugal Ireland 7.4% 10.0% 1 EAD and RWA include both IRB and Standardised approaches and comprise both non-defaulted and defaulted loans 2 Securitised exposures are excluded from the table (i.e. excludes exposures included in CRT executed in Nov 2017 and Dec 2016) 3 Exposure at default (EAD) is a regulatory estimate of credit risk exposure consisting of both on balance exposures and off balance sheet commitments Bank of Ireland 50 50#52Cost income ratio: Jun 2019 Headline vs. Adjusted Net interest income Other income - Business income Bank of Ireland 2019 Interim Results H1 2019 Headline (Єm) 1,069 Pro forma adjustments (Єm) H1 2019 Pro forma (Єm) 1,069 311 311 - Additional gains 3 (3) - Other valuation items¹ 28 (18) 10 Total Income 1,411 (21) 1,390 Costs - Operating expenses - Transformation Investment Costs Cost income ratio 840 63 903 64% 840 63 903 65% • Cost income ratio excludes; - - Levies and Regulatory charges Non-core items . H1 2019 adjusted cost income ratio is adjusted for; Additional Gains and valuation items¹ (€21m) - 1 Excludes IFRS income classifications which is fully offset in net interest income Bank of Ireland 51#53Return on tangible equity (ROTE) H1 2019: Headline vs. Adjusted Bank of Ireland 2019 Interim Results H1 2019 Headline (€m) 226 Additional gains, & valuations items¹ net of tax Adjustments 'Normalised' impairment adjustment, net of tax Adjusted for CET1 Ratio at 13% Profit for the period Non-Core items, net of tax 77 Coupon on Additional Tier 1 securities. (28) Preference share dividends (3) Adjusted profit after tax 272 (18) Annualised profit after tax 579 (36) At June 2019 Shareholders' equity 9,257 Intangible assets (811) Shareholders' tangible equity 8,446 Average shareholders' tangible equity 8,576 Return on tangible equity (ROTE) 6.8% H1 2019 Adjusted (€m) 254 543 (283) 8,974 (811) (283) 8,163 (196) 8,380 6.5% • H1 2019 Adjusted Return on Tangible Equity is adjusted for; Additional gains and valuations items¹, net of tax - €36m - - No adjustment to impairment charge - 'Normalised' impairment charge (21bps) in H1 2019 reflected in headline and adjusted numbers Average Shareholders' tangible equity calculated on a CET1 Ratio at 13% - adjustment of €196m 1 Excludes IFRS income classifications which is fully offset in net interest income Bank of Ireland 52 529#54Defined Benefit Pension Schemes Group IAS19 Defined Benefit Pension Deficit 1.60% €1.19bn 2.20% 2.10% 2.00% 1.30% Bank of Ireland 2019 Interim Results Mix of BSPF* Defined Benefit Pension Scheme Assets (%)¹ €4.0bn €5.6bn €6.1bn 45% 72% 72% 11% €0.45bn €0.48bn €0.23bn €0.29bn 44% 23% 5% Dec 18 23% 5% Jun 19 Jun 16 Dec 16 Dec 17 IAS19 DB Pension Deficit Dec 18 EUR Discount Rate Jun 19 €313m IAS19 Pension Deficit Sensitivities (Jun 2016 / Dec 2018 Jun 2019) €173m €174m €153m €122m €102m €122m €71m €28m €37m Inflation³ Interest Rates¹ Credit Spreads² 1 Sensitivity of Group deficit to a 0.25% decrease in interest rates €90m €97m Global Equity 2 Sensitivity of IAS19 liabilities to a 0.10% decrease in credit spread over risk free rates 3 Sensitivity of Group deficit to a 0.10% increase in long term inflation 4 Sensitivity of deficit to a 5% decrease in global equity markets with allowance for other correlated diversified asset classes Dec 12 Listed equities Diversified assets2 Credit / LDI / Hedging * BSPF = Bank of Ireland Staff Pensions Fund Graphs shows BSPF asset allocation. BSPF represents approx. 77% of DB Pension assets 2 Diversified assets includes infrastructure, private equity, hedge funds and property • IAS19 Pension deficit of €0.29bn at Jun 2019: schemes in deficit €0.34bn, schemes in surplus €0.05bn • The primary drivers of the movement in the deficit were the net negative impact of changes in long term assumptions partly offset by the increase in assets and positive experience gains • • The Group has continued to support Trustees in diversifying asset portfolios away from listed equity into other return-seeking but potentially less volatile asset classes. In H1 2019, the BOI Group UK scheme (2nd largest Group scheme) de-risked by reducing the allocation to growth assets, emerging markets and absolute return and increased liability hedging with a transition of c.£117m into an LDI portfolio The Trustees of the New Ireland pension scheme (4th largest Group scheme) have also agreed a significant investment de-risking proposal which is currently being implemented BSPF asset returns of +10.9% and +4.8% p.a. were achieved over 1 year and 3 years respectively to end June 2019 Bank of Ireland 53 53#55Forward-Looking statement Bank of Ireland 2019 Interim Results This document 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, level of ownership by the Irish Government, loan to deposit ratios, 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, the implementation of changes in respect of certain of the Group's pension schemes, estimates of capital expenditures, discussions with Irish, United Kingdom, European and other regulators and plans and objectives for future operations. 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. Investors should read 'Principal Risks and Uncertainties' in the Group's Interim Report for half-year ended 30 June 2019 beginning on page 27 and also the discussion of risk in the Group's Annual Report for the year ended 31 December 2018. Nothing in this document should be considered to be a forecast of future profitability or financial position of the Group and none of the information in this document is or is intended to be a profit 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. Bank of Ireland 54#56Contact Details For further information please contact: • Group Chief Financial Officer Andrew Keating tel: +353 76 623 5141 . Investor Relations Darach O'Leary tel: +353 76 624 4711 Eoin Veale Catriona Hickey tel: +353 76 624 1873 tel: +353 76 624 9051 • Capital Management Lorraine Smyth [email protected] [email protected] [email protected] [email protected] Alan Elliott Alan McNamara tel: +353 76 624 8409 tel: +353 76 624 4371 tel: +353 76 624 8725 Group Communications Damien Garvey tel: +353 76 624 6716 . Investor Relations website www.bankofireland.com/investor [email protected] [email protected] [email protected] [email protected] Bank of Ireland 2019 Interim Results 55 55 Bank of Ireland#57Empty#58Empty#59Empty#60Empty