#1Bank of Ireland Credit Presentation August 2016 Bank of Ireland Group#2Empty#3Bank of Ireland Overview#4Bank of Ireland Franchises Benefitting from Irish growth with International diversification Customer Loans¹ ROI 54% €45.7bn €1.7bn €7.6bn 41% €34.9bn €1.9bn €11.8bn €4.1bn €4.1bn €24.6bn €24.8bn ROI UK 5% €4.5bn International Businesses Residential Mortgages Non-property SME & Corporate Property and Construction Consumer % Geographical Split 1Gross loans and advances to customers at 30 Jun 2016 of €85.1bn Bank of Ireland Group UK Continue to be the largest lender to the Irish economy #1 or #2 market positions across all principal product lines Strong commercial discipline on lending and deposit margins Continuing to benefit from and support economic growth in Ireland ►BOI (UK) plc is a separately regulated, capitalised and self- funded business Universal Banking offering in Northern Ireland Focussed predominantly on consumer sector Attractive partnerships including the Post Office and AA Commission based business model provides flexibility to adapt quickly to market developments International Business - Acquisition finance business Mid market US/European business Strong 20+ year track record Good geographic and sectoral diversification Generates attractive margins and fee income within disciplined risk appetite 2#5Bank of Ireland Overview H1 2016 Strong Operating Performance Total Income H1 2015 €1,759m H2 2015 €1,513m H1 2016 €1,587m Net Interest Margin (NIM) 2.21% 2.17% 2.11% Operating expenses (€848m) (€898m) (€890m) Levies and regulatory charges (€27m) (€48m) (€62m) Impairment charges (€168m) (€128m) (€95m) Underlying profit €743m €458m €560m before tax Robust balance sheet metrics Dec 15 Customer loans (net) €84.7bn Jun 16 €80.2bn Non-performing loans €12.0bn €9.9bn CET1 ratios: Transitional 13.3% 12.8% Fully Loaded 11.3% 10.7% Transitional Total 18.0% Capital Ratio 17.2% Liquidity metrics: NSFR 120% 119% LCR 108% 116% LDR 106% 103% Bank of Ireland Group Underlying profit of €560m in H1 2016 NIM of 2.11%, impacted by the low interest rate environment, lower liquid asset yields and FX translation effects Commercial discipline maintained on lending and deposit margins All trading divisions contributing to the Group's profitability Increased new lending by 14% on H1 2015 Continue to be largest lender to the Irish economy Growth in core loan books of €1.1bn Reduced non-performing loans by €2.1bn in H1 2016 to €9.9bn; defaulted loans now c.10% of customer loans and >50% below reported peak in June 2013 Net impairment charge of 21 bps for H1 2016 vs 28bps in H2 2015 Continued organic capital generation offset by IAS19 accounting standard pension deficit; Fully loaded CET1 ratio of 10.7% Transitional CET1 ratio of 12.8% Transitional Total Capital ratio of 17.2% 3#6Financial Performance#7Group Income Statement Underlying profit before tax of €560m H1 2015 H2 2015 (€m) (€m) H1 2016 (€m) Total income 1,759 1,513 1,587 Net interest income 1,219 1,235 1,135 Other income (net) 545 283 470 ELG fees (5) (18) Operating expenses (848) (898) (890) Levies and regulatory charges (27) (48) (62) Operating profit 884 567 635 pre-impairment Impairment charges (168) (128) (95) Share of associates / JVs 27 19 20 Underlying profit 743 458 560 before tax Of which additional gains 228 9 157 Statutory profit 725 507 557 before tax Underlying EPS 1.8c 0.5c 1.2c Bank of Ireland Group Net interest income of €1,135m, lower than H2 2015 due primarily to the impact of the low interest rate environment, lower liquid asset income and FX impact of c. €30m Business income of €317m in line with H2 2015. Other income includes additional gains of €157m Focussed on tight control over our cost base, while making appropriate investments in our businesses, infrastructure and people Net impairment charge reduced to €95m Underlying PBT includes additional gains of €157m Gain on VISA Europe transaction (€95m) Liquid asset portfolio rebalancing (€54m) Sale of investment properties / other assets (€8m) 5#8Net interest income Impacted by lower liquid asset yields Net interest margin drivers 2.15% 2.21% 2.17% 2.11% 269 bps 269 bps 264 bps 253 bps Bank of Ireland Group Net interest income Net interest income of €1,135m; impacted in H1 2016 by the low interest rate environment, lower liquid asset yields and FX translation effects Average interest earning assets Decreased by €2.9bn to €105.1bn primarily due to FX translation effects 53 bps 34 bps 22 bps 9 bps H2 2014 H1 2015 H2 2015 H1 2016 NIM NIM Loan Asset Spread Liquid Asset Spread €108.8bn €24.3bn Average interest earning assets €108.0bn €22.4bn €105.1bn €22.5bn €84.6bn €85.6bn €82.6bn H1 2015 H2 2015 H1 2016 Average Loans & Advances Average Liquid Assets H1 2016 NIM of 2.11% reflects; Commercial discipline maintained on lending and deposit margins Stable loan asset spread¹ of 264 bps Lower liquid asset spread¹ of 9 bps Maturity of expensive CoCo (€1bn; 10% fixed coupon) in July 2016 will positively impact NIM in H2 2016 'Spread Loan asset yield / Liquid asset yield less Group's average cost of funds 6#9Loans and advances to customers Continued growth in core loan books New lending volumes +16% +12% €3.5bn €3.0bn €2.8bn €2.5bn Irish business¹ UK business +5% €0.57bn €0.60bn Acquisition Finance E H1 2015 I H1 2016 H1 2016 vs H1 2015 Net lending growth ROI trackers €0.5bn Defaulted loans GB non-core business €0.5bn €0.3bn €0.5bn Irish business €0.5bn €0.1bn Acquisition Finance UK business Bank of Ireland Group Core loan books grew by €1.1bn in H1 2016 New lending of €6.9bn during H1 2016; an increase of 14% on H1 2015 Redemptions of €7.1bn, of which €1.3bn related to; Cash payments on defaulted loans of €0.5bn Low yielding ROI mortgage trackers redemptions of €0.5bn GB non-core business banking redemptions of €0.3bn Customer loans decreased by c.€4.5bn to €80.2bn (Primarily due to FX translation impact of €4.3bn) Good pipeline at end H1 2016; we will maintain appropriate caution and focus on pricing Excludes portfolio acquisitions (H1 2015 - €0.5bn; H1 2016 - €0.1bn) 7#10Asset Quality#11Non-performing loans and impairment charges Significant reduction in non-performing loans and impairment charges €14.7bn €1.4bn Non-performing loan volumes €12.0bn €1.4bn €9.9bn €1.2bn €13.3bn €10.6bn €8.7bn Jun 15 Dec 15 Defaulted Loans Probationary Mortgages Jun 16 Net impairment charges on customer loans 48% 49% 49% Bank of Ireland Group Non-performing loan volumes¹ - €9.9bn €2.1bn reduction during H1 2016 Reductions in all asset classes Defaulted loans component of €8.7bn; down >50% from reported peak in June 2013 Expect further reductions in H2 2016 and beyond; pace influenced by a range of factors Impairment charges on customer loans Net charge of 21 bps for H1 2016 vs 28 bps in H2 2015 Gross H2 2016 impairment charge to remain at broadly similar levels Coverage ratio of 49% (49% at Dec 15) Expect normalised impairment charge of 30-35bps 36 bps 28 bps 21 bps H1 2015 H2 2015 H1 2016 Coverage ratio, being impairment provisions divided by non-performing loans Annual impairment charges on customer loans as a % of average gross loans for the period 1 Non-performing loans comprise defaulted loans plus probationary mortgages 9#12Non-performing loans by portfolio Reducing across all asset classes ROI Mortgages Bank of Ireland Group UK Mortgages €3.5bn €3.0bn €0.7bn €2.6bn €0.7bn €0.6bn €1.2bn €1.2bn €2.8bn €0.9bn €2.3bn €2.0bn €0.7bn €0.7bn €0.6bn €0.5bn €0.5bn €0.3bn Jun 15 Dec 15 Jun 16 Jun 15 Dec 15 Jun 16 Defaulted Loans Probationary Mortgages Non property SME and Corporate €3.1bn €2.7bn €2.4bn Jun 15 Dec 15 Jun 16 Non-performing Loans. Defaulted Loans Probationary Mortgages Property and Construction €6.8bn €4.9bn €3.9bn Jun 15 Dec 15 Non-performing Loans Jun 16 Note: Non-performing loans equals defaulted loans plus probationary mortgages 10#13UK Customer Loans £28.8bn (€35.0bn) Bank of Ireland Group UK Mortgages - £20.5bn Scotland, £0.9bn Northern Ireland, £0.9bn Rest of England, £8.6bn 50% Wales, £0.8bn Greater London, £4.4bn Outer Metropolitan, £2.7bn South East, £2.1bn Other UK Customer Loans - £8.3bn 76% 44% £3.0bn £0.7bn £1.7bn £0.2bn £1.7bn -£0.03bn 67% 162% £1.6bn -£0.02bn £2.3bn £1.5bn £1.7bn £0.3bn £0.1bn £1.6bn £0.2bn SME Corporate Investment Property Land & Development Consumer Coverage Ratio UK Mortgages Analysis Total UK mortgages of £20.5bn; (NPLs - 4%; Defaulted loans -2%) Average LTV of 62% on total book Average LTV of 69% on new mortgages UK mortgage book continues to perform better than industry averages² 89% of mortgages originated since 2010 are standard owner occupier mortgages ►BTL book is well seasoned with 88% of these mortgages originated pre 2009 Average balance of Greater London mortgages is c.£195k. 87% of these mortgages have an LTV <70% Other UK Customer Loans Analysis Other UK loans exposure of £8.3bn; Defaulted loans of £1.1bn with strong coverage ratios. Investment property defaulted loans have decreased by 65% in the last 2 years Performing loans of £7.2bn; SME: broad sectoral diversification with low concentration risk Corporate: specialist lending teams in Acquisition Finance, Project Finance, and Corporate lending Investment Property: Retail (47%), Office (21%), Residential (13%) Other (19%) Consumer: largest segment is asset backed motor financing of £0.9bn. Book also includes Post Office / AA branded credit cards and personal loans Performing Loans Defaulted Loans 'Non-performing loans comprise defaulted loans plus probationary mortgages (i.e. primarily mortgages that were previously defaulted but which are no longer defaulted at the reporting date; the mortgages are awaiting the successful completion of a 12 month probation period) 2Data published by the Council Mortgage Lenders (CML) for March 2016 indicates that the proportion (0.98%) of the UK mortgage book in default remains below the UK industry average of 1.04% 11#14Funding & Capital#15Funding Update Customer Deposits Retail Ireland Retail UK Corporate 12 Wholesale Funding 14 Private Markets 13 Monetary Authority 1 Dec 15 (Єm) Jun 16 (Єm) 39 29 8222 80 40 82327 26 12 13 12 1 Liquidity Metrics NSFR 120% 119% LCR 108% 116% LDR 106% 103% Credit Ratings of BOI Debt Securities Bank of Ireland Group Customer deposits - €78bn Customer deposits funding >95% of customer loans ROI €40bn, UK €26bn (£21bn) and Corporate €12bn Predominantly sourced through retail distribution channels Current account volumes growing with increased activity by customers and ongoing shift from term deposits due to the low interest rate environment Wholesale funding - €13bn Strong liquidity position facilitated buyback of €0.6bn of outstanding senior debt in H1 2016 Significant TLTRO II capacity available at attractive pricing Investment grade senior unsecured ratings; positive outlook Strong covered bond credit ratings Senior Rating Agencies Moody's unsecured Covered Bond Credit Ratings Baa2 Outlook Positive Aa1 BBB- Standard & Poor's N/A Outlook Positive DBRS N/A AA (low) As at Aug 2016 13#16Capital¹ Continued organic capital generation offset by IAS19 pension deficit Transitional CET1 ratio 0.7% (0.15%) 0.4% (0.20%) 12.9% (0.45%) 13.25% 12.8% Dec 15 CET1 Organic capital generation² FX Other³ Jun 16 CET1 IAS19 (pre IAS19 pension pension deficit deficit movement) movement Impact of CRD IV phasing in 2016 Fully loaded CET1 ratio 0.6% (0.15%) (0.25%) (0.8%) Jun 16 CET1 Bank of Ireland Group Continued organic capital generation offset by IAS19 accounting standard pension deficit; Fully loaded CET1 ratio of 10.7% Transitional CET1 ratio of 12.8% Transitional Total Capital ratio of 17.2% Transitional leverage ratio of 6.6%; Fully loaded leverage ratio of 5.6% IAS19 accounting standard defined benefit pension deficit of €1.2bn (Dec 15: €0.74bn) Aim is to have a sustainable dividend External factors, including UK's EU referendum result, may impact timing of our ambition to recommence dividends 11.3% 11.5% 10.7% Dec 15 CET1 Organic capital generation² FX Other³ Jun 16 CET1 (pre IAS19 IAS19 pension Jun 16 CET1 pension deficit deficit movement) movement 1Capital ratios have been presented including the benefit of the retained profit during the period 2Organic capital generation consists of attributable profit, AFS reserve movements and the reduction in the DTA deduction (DTAs that rely on future profitability). Transitional organic capital generation is 10bps higher due to the phasing impacts on AFS reserves and DTA deduction Other items relate primarily to 10%/15% threshold deduction and change in RWA on a constant currency basis 14#17Irish Economy Overview#18Favourable macroeconomic environment Bank of Ireland Group Growing economy Employment increasing, just under 50,000 new jobs Y-o-Y Q1 '16 Unemployment falling, down to 7 year low of 7.8% Retail sales rising, up 5.3% year-on-year in June Leading FDI hub with young educated workforce GDP 2016f: 4.3% 2017f: 3.0% Positive momentum Domestic economy to benefit from further investment, sustained consumer spending and an improving labour market GDP forecast to grow by 4.3% in 2016 and 3.0% in 2017 Despite headwinds Related to the UK vote to leave EU Weaker sterling Increased uncertainty & impact on UK growth May dampen exports and weigh on confidence Sources: BOI Economic Research Unit, Central Statistics Office % 3.0 2.5 2.0 1.5 1.0 Healthy underlying growth Solid Employment Growth 0.5 2014 2015 2016(f) 2017(f) Ireland Euro Area Graph shows year-on-year employment growth Source: CSO, Eurostat: Forecasts: Ireland: BOI ERU, Euro area: EU Commission 16#19Consumer spending % 5 4 3. 2- 1. Spending rose 5.0% Y-o-Y in Q1 '16 Positive momentum into 2016 Core retail sales up 4.9% Y-o-Y in June Nearly 100,000 cars sold in H1 2016 Employment and income gains feeding through Deleveraging continuing, some uncertainty from Brexit impact Consumer Spending 2016f: 3.8% 2017f: 3.2% Employment rising Consumer Spending Growing % 12 10 8 Economy creating jobs, almost 50,000 new jobs Y-o-Y in Q1 '16 Bank of Ireland Group Gains broadening out across sectors and regions Unemployment rate well below euro area average, down to 7.8% from a peak of c.15% Projected to be below 7% by end of 2017 Employment 2016f: 2.4% 2017f: 1.9% Unemployment Falling 0+ 2014 2015 2016(f) 6 2017(f) 2014 Ireland Euro Area 2015 2016(f) Ireland Euro Area 2017(f) Graph shows year-on-year real consumer spending growth Source: CSO, Eurostat: Forecasts: Ireland: BOI ERU, Euro area: EU Commission Graph shows average annual unemployment rate Source: CSO, Eurostat: Forecasts: Ireland: BOI ERU, Euro area: EU Commission 17#20Investment growth ► Business sentiment has improved over past few years ►2/3 of firms plan to grow business in next 1-3 years ▶ FDI inflows - investments up 4.5% in H1 '16 ► Construction supported by continued residential and commercial demand ► Brexit uncertainty may weigh on confidence 15,000 12,000- 9,000- 6,000- 3,000 0+ 2012 Investment 2016f: 8.0% 2017f: 7.0% Export outlook Export growth continuing Bank of Ireland Group Positive momentum: ▶ Demand from key trading partners - US & EA - remains positive ► Past competitiveness gains providing support Some headwinds: Unfavourable exchange rate movements since start of 2016 ▶ Impact of Brexit on UK growth Competitiveness Gains Exports 2016f: 4.8% 2017f: 3.8% Housing Completions Up % 20 15. 10- Improving 5 0 -5- -10- -15- -20- 2013 2014 2015 Ireland Graphs show number of completed housing units per year Source: Department of Housing, Planning, Community and Local Government Spain EA Deteriorating Belgium UK Germany Graph shows change in unit labour costs 2009-2017.Source: EU Commission 18#21Bank of Ireland Group Property market recovery ongoing Housing market adjusting to Central Bank's macroprudential rules Transactions and approvals data soft in opening months of 2016 but recent signs of improvement Residential price gains continue, up 6.6% Y-o-Y in June Completions up 15% in 2015 to 12,666, up 18% in first half of 2016, but still well below estimated demand Commercial activity, prices (14% Y-o-Y in Q2 '16), and rents rising (10.9%) Public finances improving Tax receipts healthy, 3.4% above budget targets in the first half of the year Spending in check, in line with budget profile General Government Deficit continues to improve in nominal and GDP terms Ireland is fully engaged in debt markets, sovereign yields at record low levels, rating upgraded Property Prices and Rents % 30- 20 10- 0 €Bn 0 -1 -2 -3. -10- -4 -20 -30- 2012 -5 -6 2013 2014 2015 2016 -7. - National National Ex Dublin Graph shows year-on-year change in residential property prices and private rents Dublin Rents -8 2014 Commercial Source: CSO Rental Growth Capital Growth 14.0% 10.90% Graph shows year-on-year change Q2 2016 Source: IPD General Government Deficit 2015 2016(f) Ireland Graph shows General Government Deficit in billions of euro Source: CSO; Forecasts: Department of Finance 2017(f) 19#22Covered Bond Overview#23Overview of Irish Mortgage Market Bank of Ireland Group Ongoing deleveraging in Irish Mortgage Market €bn 160- 140- 120- 100- 80- 60- 40- 20 0 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16 4 Volume Outstanding Source: CBI Modest pick up in mortgage drawdowns from low base €bn 451 Industry estimated normalised level - €8-10bn 5 40- 35- 30- 25- 20- 15- 10- 5- 0 2006 2012 2013 2014 3 +2 2015 BTL Mover Purchase FTB Purchase 2006 (LHS) 2012-2015 (RHS) Top-up Re-mortgage Source: BPFI Structure of Irish Mortgage Market Size of Irish mortgage market reduced c.25% from 2009 peak (c.€109bn Jun 2016) Predominantly principal and interest structured market New lending ► Total new mortgage lending of c.€4.9bn in 2015, 26% increase vs 2014 Lending by value increased by 17.9% year-on-year in Q2 2016 with market continuing to adjust to Central Bank's macro-prudential rules Average loan value increasing, both FTB and mover purchasers average loan at highest levels since 2011 Macro prudential rules Jan 2015, CBI introduced LTV and LTI limits for Principal Dwelling House (PDH) and Buy to Let (BTL) Mortgages LTV limits¹ PDH for non-first time buyer: 80% limit PDH for first time buyers: 90% up to €220k, 80% on any excess value over €220k BTL: 70% limit LTI at 3.5 times loan to gross income for PDH mortgages² Central Bank has announced a consultation process and review of these rules to be completed by November 2016 1 The total value of new lending for PDH purposes above these limits should be no more than 15 per cent of the euro value of all housing for PDH purposes (10% non-PDH) entered into by a lender in an annual period. 2 This limit should be exceeded by no more than 20% of the total aggregate monetary amount of loans for PDH purposes. BTL mortgages are exempt from the LTI limit 21#24Bank of Ireland ROI Mortgages: €24.6bn €25.6bn €2.3bn ROI Mortgages (gross) €25.0bn €3.9bn Bank of Ireland Group Market share €24.6bn H1-15 H2-15 H1-16 €4.6bn €8.9bn €8.1bn €7.7bn New Lending Volumes¹ €0.5bn €0.9bn €0.6bn Market share 26% 31% 27% €14.4bn €12.9bn €12.3bn Dec 14 Dec 15 Tracker Variable Rates Fixed Rates Jun 16 Tracker volumes lower by €0.6bn since Dec 15; €2.1bn since Dec 14 €11.3bn or 92% of trackers at Jun 16 are on a capital and interest repayment basis 75% of trackers are owner occupier mortgages; 25% of trackers are Buy to Let mortgages Loan asset spread on ECB tracker mortgages was c.37bps2 in H1 2016, compared to Group net interest margin (including ECB trackers) of 211bps in H1 2016 Average LTV of 74% on existing stock of mortgages at June 2016 (Dec 15: 76%) Average LTV of 71% on new mortgages in H1 2016 (Dec 15: 66%)³ We have a fixed rate led mortgage pricing strategy which we believe provides value, certainty and stability to our customers and to the Group Fixed rate products accounted for c.75% of our new lending in H1 2016, up from c.30% in 2014 BOI does not sell through broker channel c.70% of customers that take out a new mortgage take out a life assurance policy through BOI Group c.50% of customers that take out a new mortgage take out a general insurance policy through BOI Group with insurance partners ¹Excludes €0.2bn in respect of IBRC mortgages portfolio acquisitions completed during H1 2015 and €0.1bn in respect of mortgage portfolio acquisitions completed during H1 2016 2Average customer pay rate of 110bps less Group average cost of funds in H1 2016 of 73bps ³Note that the LTV on new business includes the impact of the acquired portfolios 22#25Mortgage Underwriting Process Centralised Underwriting in-place, no delegated discretions Bank of Ireland Group 1 Customer Application 2 Customer Credit Analysis 3 Credit Decision 4 Loan Administration Step 1 Step 2 Step 3 Step 4 Customer makes application through Branch or direct channels (Internet / Phone / Mobile Mortgage Manager) Anti Money Laundering checks completed Interview completed if branch application Standard application contains information on financing of loan and information on applicants assets and liabilities System generated query sent to Irish Credit Bureau and internal risk model Underwriting receives online application with Bureau and risk model output Assessment of credit and regulatory requirements Credit decision is made Max. 90% LTV for Owner Occupier, Buy-to-Let 75%¹ Appeals process in place for declined applications Mortgage Approval - stipulate T&Cs and send document requirements to applicant Send formal letter of offer *Macro-prudential regulation limits the proportion of new lending that can be written at the LTV maxima. 23#26Bank of Ireland Mortgage Bank ACS Table 1 Cover Pool Summary Sep-15 Dec-15 Mar-16 Jun-16 Total property valuation (bn) €22.0 €22.3 €22.1 €21.7 Aggregate balances of the mortgages (bn) €11.5 €11.2 €10.9 €10.7 Weighted average indexed LTV 76.4% 73.7% 72.7% 71.9% % of accounts in arrears (≥ 3 months) 0.00% 0.01% 0.02% 0.02% Table 2 Bond Summary Sep-15 Dec-15 Mar-16 Jun-16 Value of bonds (bn) €8.7 €7.4 €6.7 Nominal overcollateralisation 47% 68% 78% €7.7 54% Prudent market value of mortgages (bn) €10.1 €10.1 €9.9 €9.7 Qualified substitution assets (bn) €1.3 €1.1 €1.0 €1.2 Prudent market value of cover pool (bn) Legislative overcollateralisation €11.5 €11.2 €10.9 €10.8 32% 52% 62% 41% Bank of Ireland Group Key Features of Bank of Ireland Mortgage Bank ACS 100% Irish residential mortgages Cover pool marked to market at intervals not exceeding 3 months using Central Statistics Office (CSO) Residential Property Price Index Strong overcollateralisation (OC) - min contractual OC of 5% and min legislative OC of 3% (both on a prudent market value basis) ►BOIMB policy to remove non-performing assets (payment due ≥ 3 months) from the pool on a quarterly basis Compliance with cover pool obligations monitored by independently regulated Cover Assets Monitor Pre-defined process in event of insolvency 24#27Strengths of Irish ACS Legislation Key Legislative Features of Irish ACS Robust collateral restrictions Mark to market cover pool Strong overcollateralisation (OC) Robust external monitoring Strict ALM requirements Clarity in event of bankruptcy Preferential claims Bank of Ireland Group Qualified deposits and EEA mortgages (BOIMB uses only Irish residential mortgages) LTV limits of 75% for liquidity purposes National CSO Residential Property Price Index updated monthly Requirement to incorporate changes quarterly, monitored externally Minimum contractual OC of 5% and minimum legislative OC of 3% Both legislative and contractual commitments on a prudent market value basis Cover-Assets Monitor (CAM) responsible for monitoring the cover pool and the ACS issuer's compliance with specific provisions of the ACS Acts Appointment of CAM approved by CBI Duration, interest and currency matching Interest rate risk control NTMA pre-defined manager of cover pool as a last resort ACS holders are preferred creditors in relation to the cover assets (ranking after the CAM and the NTMA and equally with the ACS hedge counterparties) 25#28Additional Information#29Additional Information BOI Overview Income Statement Summary Balance Sheet Income Statement Net interest income analysis Other income analysis (net) Non-core Items Asset Quality Profile of customer loans at Jun 16 (gross) Non-performing loans by portfolio ROI Mortgages UK Residential Mortgages Available for Sale Financial Assets Capital CET1 ratios Regulatory Capital Requirements Risk weighted assets BOI Credit Ratings Ordinary stockholders' equity and TNAV Defined Benefit Pension Schemes Reimbursing and rewarding taxpayers support Contact details Bank of Ireland Group Slide No. 28 229 31 33 30 32 A w w w w c 38 39 40 41 42 43 45 46 37 33 34 35 36 27 27#30BOI Overview Income Statement¹ Bank of Ireland Group y/e Dec 12 (€m) y/e Dec 13 (€m) y/e Dec 14 (€m) y/e Dec 15 (€m) Jun 16 (€m) Total income Net interest income 1,862 2,646 2,974 3,272 1,587 1,755 2,133 2,358 2,454 1,135 Other income 495 642 653 828 470 ELG fees (388) (129) (37) (10) (18) Operating expenses (1,589) (1,545) (1,601) (1,746) (890) Levies and regulatory charges (49) (31) (72) (75) (62) Operating profit pre-impairment 224 1,070 1,301 1,451 635 Impairment charges (1,769) (1,665) (472) (296) (95) Customer loans (1,724) (1,665) (542) (296) (93) AFS (45) 70 (2) Share of associates / JVs 46 31 92 46 20 Underlying (loss) / profit before tax (1,499) (564) 921 1,201 560 Non core items (679) 44 (1) 31 (3) Statutory (loss) / profit before tax (2,178) (520) 920 1,232 557 NIM 1.25% 1.84% 2.11% 2.19% 2.11% Cost income ratio 85% 58% 54% 53% 56% ¹Figures as reported, with the exception of y/e Dec 13 which includes a €5m reduction in operating expenses relating to IFRIC 21 adjustments 28#31BOI Overview Summary Balance Sheet¹ Bank of Ireland Group Dec 12 (€bn) Dec 13 (€bn) Dec 14 (€bn) Dec 15 (€bn) Jun 16 (€bn) Net customer loans² 93 85 82 85 80 Liquid assets Other assets Total Assets 33 27 25 24 22 9 6 7 6 8 135 118 114 115 110 Customer deposits 75 74 75 80 78 Wholesale funding 39 27 Private sources 24 19 Monetary Authority/ TLTRO 15 228 20 14 16 13 4 37 321 Subordinated liabilities 2 2 2 2 2 Additional Tier 1 instruments 1 1 Other liabilities 10 7 8 10 Stockholders' equity 9 8 9 8 8 Total Liabilities & Stockholders' Equity 135 118 114 115 110 CET1/Core Tier 1 ratio³ 11.1% 10.0% 12.3% 13.3% 12.8% Total Capital ratio³ 12.1% 11.3% 15.8% 18.0% 17.2% Loan to deposit ratio 123% 114% 110% 106% 103% 'Balance sheet excludes BOI Life assets and liabilities Loans and advances to customers is stated after impairment provisions 3CET1 / Core Tier 1 and Total Capital ratios are stated under Basel II rules as amended for PCAR requirements for 2012 and under Basel III transitional rules for 2013-2016, all excluding 2009 Prefs 29#32Income Statement Net interest income analysis Bank of Ireland Group H2 2014 H1 2015 H2 2015 H1 2016 Average Gross Gross Volumes Interest Rate (€bn) (€m) (%) Average Gross Gross Volumes Interest Rate (€bn) (Єm) (%) (€bn) Average Gross Volumes Interest (€m) Gross Rate (%) Average Gross Gross Volumes Interest Rate (€bn) (€m) (%) Ireland Loans 38.2 617 3.21% 37.1 593 3.22% 36.8 589 3.17% 36.5 552 3.04% UK Loans 34.0 638 3.72% 35.6 656 3.71% 36.4 661 3.60% 33.5 580 3.48% C&T Loans 11.3 246 4.30% 11.9 253 4.31% 12.4 252 4.04% 12.6 253 4.05% Total Loans & Advances to 83.5 1,501 3.56% 84.6 1,503 3.58% 85.6 1,502 3.49% 82.6 1,385 3.37% Customers Liquid Assets 24.4 1921 1.56% 24.3 1481 1.23% 22.4 1151 1.02% 22.5 921 0.82% Total Interest Earning Assets 107.9 1,693 3.11% 108.8 1,651 3.06% 108.0 1,617 2.97% 105.1 1,477 2.83% Ireland Deposits 22.9 (89) (0.77%) 21.9 (48) (0.44%) 22.0 (33) (0.30%) 22.1 (26) (0.24%) Credit Balances² 18.0 (1) (0.01%) 20.8 (1) (0.01%) 22.4 (1) (0.01%) 23.8 (1) (0.01%) UK Deposits C&T Deposits 23.3 (158) (1.34%) 25.9 (158) (1.23%) 9.3 (45) (0.97%) 8.8 (33) (0.76%) 25.6 (161) 8.3 (1.25%) 24.6 (154) (1.26%) Total Deposits 73.4 (293) (0.79%) 77.5 (240) (0.62%) 78.4 (27) (223) (0.65%) 7.7 (21) (0.55%) (0.56%) 78.2 (202) (0.52%) Wholesale Funding 20.4 (113) (1.10%) 18.1 (101) (1.13%) 14.3 (72) Subordinated Liabilities. 2.5 (90) (7.14%) 2.5 (91) (7.34%) 2.4 (88) (1.00%) (7.32%) 13.6 (49) (0.71%) 2.4 (91) (7.72%) Total Interest Bearing Liabilities 96.3 (496) (1.03%) 98.1 (432) (0.89%) 95.1 (383) (0.80%) 94.2 (342) (0.73%) IFRS Income Classification Net Interest Margin 107.9 (26) 1,171 (29) (54) (33) 2.15% 108.8 1,190 2.21% 108.0 1,180 2.17% 105.1 1,102 2.11% Average 3 month Euribor in the period Average ECB base rate in the period Average BOE base rate in the period *Excludes any additional gains from portfolio re-configuration during the period 2Credit balances in H1 2016: ROI €19.5bn, UK €3.1bn and Corporate €1.2bn 0.12% 0.02% (0.06%) (0.22%) 0.09% 0.05% 0.05% 0.02% 0.50% 0.50% 0.50% 0.50% 30#33Income Statement Other income analysis (net) Retail Ireland Bank of Ireland Life Retail UK Corporate and Treasury Group Centre and Other Business Income Other gains VISA Europe share disposal Liquid asset portfolio rebalancing Sale of investment properties / other assets Bank of Ireland Group H1 2015 (€m) H2 2015 (Єm) H1 2016 (Єm) 167 164 156 81 73 76 5 4 5 71 82 86 (5) (16) (6) 319 307 317 གྲབ 57 171 12 7 95 54 8 Other Valuation items Financial instrument valuation adjustments (CVA, DVA, FVA) and other 25 25 11 Economic assumptions - Bank of Ireland Life 0 4 25 Investment variance - Bank of Ireland Life 10 1 Fair value movement on Convertible Contingent Capital Note (CCCN) embedded derivative IFRS income classification (8) (9) (1) (29) (54) (33) Other Income 545 283 470 31#34Income Statement Non-core items Bank of Ireland Group H1 2015 (€m) H2 2015 (€m) H1 2016 (€m) Gain (Charge) arising on the movement in Group's credit spreads Gross-up for policyholder tax in the Life business Investment return on treasury stock for policyholders (8) 19 19 10 1 5 1 Loss on liability management exercises Cost of restructuring programme (19) (18) (25) (10) ~ 은은 Gain on disposal of business activities 51 Impact of changes to pension benefits in the Group sponsored defined benefit schemes 3 L Payments in respect of Career and Reward framework (3) 1 Total non-core items (18) 49 (3) 32#35Asset Quality Profile of customer loans' at Jun 16 (gross) Bank of Ireland Group Composition (Jun 16) Mortgages ROI UK ROW Total Total (€bn) (€bn) (€bn) (€bn) (%) 24.6 24.8 49.4 58% Non-property SME and corporate 11.8 4.12 4.4 20.3 24% SME 9.2 2.0 0.0 11.2 13% Corporate 2.6 2.1 4.4 9.1 11% Property and construction Investment property Land and development 7.6 4.1 0.1 11.8 14% 6.5 3.7 0.1 10.3 12% 1.1 0.4 0.0 1.5 2% Consumer 1.7 1.9 3.6 4% Customer loans (gross) 45.7 34.9 4.5 85.1 100% Geographic (%) 54% 41% 5% 100% *Based on geographic location of customer Includes £1.0bn relating to GB business and corporate loan books, which BOI is required to run down under its EU approved Restructuring Plan 33#36Non-performing loans by portfolio Non-performing loans reducing across all portfolios Composition (Jun 16) Bank of Ireland Group Advances Non-performing Non-performing Defaulted (€bn) loans (€bn) loans as % of advances loans (€bn) Defaulted loans as % of advances Impairment provisions (€bn) Impairment provisions as % of non-performing Impairment provisions as % of defaulted loans loans Residential Mortgages 49.4 3.5 7.2% 2.3 4.7% 1.2 32% 48% Republic of Ireland 24.6 2.6 10.7% 2.0 8.1% 1.1 40% 53% - UK 24.8 0.9 3.7% 0.3 1.5% 0.1 8% 21% Non-property SME and Corporate 20.3 2.4 11.8% 2.4 11.8% 1.3 55% 55% - Republic of Ireland SME 9.1 1.8 20.0% 1.8 20.0% 1.0 53% 53% - UK SME 2.1 0.2 8.8% 0.2 8.8% 0.1 50% 50% Corporate 9.1 0.4 4.2% 0.4 4.2% 0.2 62% 62% Property and construction 11.8 3.9 32.9% 3.9 32.9% 2.3 60% 60% - Investment property 10.3 2.7 26.4% 2.7 26.4% 1.4 54% 54% - Land and development 1.5 1.2 78.9% 1.2 78.9% 0.9 75% 75% Consumer 3.6 0.1 3.3% 0.1 3.3% 0.1 106% 106% Total loans and advances to customers 85.1 9.9 11.7% 8.7 10.3% 4.9 49% 56% Composition (Dec 15) Advances Non-performing Non-performing Defaulted Defaulted (€bn) loans (€bn) loans as % of advances loans (€bn) loans as % of Impairment provisions Impairment Impairment advances (€bn) provisions as % of non-performing provisions as % of defaulted loans loans Residential Mortgages 52.9 4.2 7.9% 2.8 5.2% 1.3 31% 47% - Republic of Ireland 25.0 3.0 12.2% 2.3 9.3% 1.2 39% 52% - UK 27.9 1.2. 4.1% 0.5 1.6% 0.1 9% 22% Non-property SME and Corporate 21.0 2.7 13.0% 2.7 13.0% 1.5 53% 53% Republic of Ireland SME 9.3 2.0 21.9% 2.0 21.9% 1.1 52% 52% - UK SME 2.4 0.3 11.1% 0.3 11.1% 0.1 51% 51% Corporate 9.3 0.4 4.6% 0.4 4.6% 0.3 59% 59% Property and construction 13.4 4.9 36.8% 4.9 36.8% 3.0 61% 61% - Investment property 11.4 3.2 28.5% 3.2 28.5% 1.7 53% 53% - Land and development 2.0 1.7 84.8% 1.7 84.8% 1.3 76% 76% Consumer 3.3 0.2 4.1% 0.2 4.1% 0.1 105% 105% Total loans and advances to 90.6 12.0 13.2% 10.6 11.6% 5.9 49% 56% customers 34#37ROI Mortgages: €24.6bn Bank of Ireland Group Owner Occupied Non-performing loans 32% 33% €1.6bn €1.4bn €0.4bn €0.3bn €1.2bn €1.1bn Dec 15 Jun 16 Defaulted Loans Probationary Mortgages Coverage Ratio Buy to Let Non-performing loans 48% €1.4bn €0.3bn €1.1bn Dec 15 Defaulted Loans Probationary Mortgages 49% €1.2bn €0.3bn €0.9bn Jun 16 Coverage Ratio Portfolio Performance Reduced NPLs1 by €0.4bn to €2.6bn in H1 2016 Defaulted loans component of €2.0bn; down 49% since reported June 2013 peak Continued trend of probationary mortgages returning to performing status €22.6bn or 92% of mortgages at H1 16 are on a capital and interest repayment basis (Dec 15: 91%) Impairment credit of €71m in H1 2016 reflects ongoing improvement in portfolio performance Coverage ratio of 40% (Dec 15: 39%) 93% of mortgage accounts are in the up to date book; 9 out of 10 accounts in forbearance are meeting the terms of their arrangement Industry Comparison BOI OO arrears (3.52%) at 38% of industry level2 (Dec 15: 43%); BOI BTL arrears (8.78%) at 47% of industry level³ (Dec 15: 56%) BOI OO arrears >720 days reducing and at 34% of industry level (Dec 15: 37%); BOI BTL arrears >720 days reducing and at 37% of industry level 5 (Dec 15: 43%) 'Non-performing loans comprise defaulted loans plus probationary mortgages (i.e. primarily mortgages that were previously defaulted but which are no longer defaulted at the reporting date; the mortgages are awaiting the successful completion of a 12 month probation period) 2At March 2016, BOI owner occupied arrears level (based on number of accounts >90 days in arrears) was 3.52% compared to 9.28% for industry excl BOI 3At March 2016, BOI buy to let arrears level (based on number of accounts >90 days in arrears) was 8.78% compared to 18.74% for industry excl BOI "At March 2016, BOI owner occupied arrears (based on number of accounts >720 days in arrears) was 1.89% compared to 5.62% for industry excl BOI 5At March 2016, BOI buy to let arrears (based on number of accounts >720 days in arrears) was 4.73% compared to 12.74% for industry excl BOI 35#38UK Residential Mortgages: £20.5bn/€24.8bn Bank of Ireland Group UK Residential Mortgages (gross) UK Residential Mortgages (gross) £20.5bn £20.5bn £20.5bn £20.5bn £19.8bn £19.8bn £2.6bn £2.4bn £2.9bn £4.2bn £6.9bn £7.8bn £7.6bn £7.4bn £7.8bn £6.1bn £4.9bn £4.5bn £10.4bn £10.7bn £9.5bn £9.1bn £8.7bn £8.3bn Dec 14 Dec 15 Tracker Variable Rates Fixed Rates Jun 16 Dec 14 Dec 15 Jun 16 Standard Buy to Let Self Certified UK Residential Mortgages Average LTV of 62% on existing stock at H1 2016 (Dec 15: 63%) Average LTV of 69% on new UK mortgages in H1 2016 (Dec 15: 69%) 36#39Asset Quality Available for Sale Financial Assets Bank of Ireland Group ROI UK France Other Carrying Value €bn €bn €bn €bn Jun 16 €bn Dec 15 €bn Sovereign bonds 1.9 0.7 0.8 1.3 4.7 5.7 Senior debt 0.2 1.4 1.6 1.5 Covered bonds 0.3 0.7 0.6 1.8 3.4 2.2 Subordinated debt 0.3 0.3 0.3 Asset backed securities. IO 0.1 0.1 =7 0.2 0.4 Total AFS Reserve 2.5 1.5 1.6 4.6 10.2 10.1 0.4 0.4 0.5 Ireland ► AFS reserve reduced by €0.1bn in H1 2016, primarily due to bond sales during the period In June 2016, there was €1.5bn nominal value (€1.95bn fair value) of euro denominated Held to Maturity bonds with a carrying value of €1.9bn NAMA subordinated bond - €0.3bn nominal value, valued at 94% (Dec 15 - 96%) Separately, BOI holds €0.8bn of NAMA senior bonds (Dec 15: €1.4bn) Other exposures Supra-national - €1.3bn Spain - €0.7bn Belgium - €0.6bn Netherlands - €0.4bn Sweden €0.4bn Canada - €0.3bn Italy - €0.2bn Norway €0.2bn Other €0.5bn (all less than €0.1bn) 37#40Capital CET1 ratios - June 2016 Total equity Less Additional Tier 1 Deferred tax¹ Pension deficit Available for sale reserve Removal of national filters Intangible assets and goodwill Other items² Common Equity Tier 1 Capital Credit RWA Operational RWA Market, CVA and other RWA³ Total RWA Common Equity Tier 1 ratio CRD-IV phasing impacts Bank of Ireland Group Transitional ratio (€bn) 8.7 Fully loaded ratio (€bn) 8.7 (0.8) (0.8) (0.3) (1.3) 0.4 (0.3) (0.1) (0.5) (0.5) (0.4) (0.6) 6.7 5.5 43.1 43.1 4.8 4.8 4.1 3.9 52.0 51.8 12.8% 10.7% Deferred tax asset - certain DTAs are deducted at phased rate of 20% from 1 Jan 2016 Pension deficit - Basel II addback is phased out at 60% in 2016, increasing by 20% per annum thereafter Available for sale reserve - non-sovereign unrealised losses and gains are phased in 60% in 2016, increasing by 20% per annum thereafter. The Group has opted to maintain its sovereign filter on both gains and losses on exposures to central governments classified in the "available for sale" category In March 2016, the ECB published a new regulation on options and discretions which comes into force on 1 October 2016. These regulations include an increase in the phase in of the DTA deduction (negative 50bps) and the removal of the sovereign filter (positive 40bps). If these changes were implemented at 1 July 2016, the pro forma transitional CET1 ratio would reduce from 12.8% to 12.7% 1RWA impact includes a 250% risk weighting applied to deferred tax assets due to temporary differences 2Other items - the principle items being the cash flow hedge reserve and 10% /15% threshold deduction Other RWA includes RWA relating to non-credit obligations / other assets and RWA arising from the 10/15% threshold deduction 38#41Regulatory Capital Requirements 12.8% 10.25% Transitional CET1 Ratio 2016 CET1 SREP requirement (Incl. Capital Conservation Buffer) June 2016 2016 Requirements expected to be reviewed annually Bank of Ireland Group +1.5% +1.0% +0.5% O-SII buffer phased in from July 2019 SREP requirement from 2017 onwards not known at this point 2017 2018 2019 2020 2021 Minimum Regulatory Capital Requirement SSM CET1 SREP¹ requirement for 2016 of 10.25%, calculated on a transitional basis O-SII buffer¹ will be phased in at 0.5% from July 2019, 1.0% from July 2020 and 1.5% from July 2021 The CBI (ROI) and FPC (UK) have set the countercyclical buffer (CCyB)² at 0% Capital Guidance EBA stress test result will be an input into the 2017 SREP requirement The Group expects to maintain sufficient capital to meet, at a minimum, applicable regulatory capital requirements plus a management buffer ¹SREP and O-SII requirement are subject to annual review by the Single Supervisory Mechanism (SSM) and the Central Bank of Ireland (CBI) respectively 2CCyB is subject to quarterly review by Central Bank of Ireland (ROI) and Financial Policy Committee (UK) 39#42Risk weighted assets (RWA) RWA Density¹ Bank of Ireland Group Customer lending Avg. Credit Risk Weights² As at June 2016 (Based on regulatory exposure class) EAD³ RWA Avg. Risk (€bn) (€bn) Weight ROI mortgages 25.0 6.6 26% UK mortgages 24.3 5.0 20% SME 21.2 14.7 69% Corporate 12.7 12.8 101% Other Retail 4.3 2.6 60% 46% 47% Total customer lending 87.4 41.6 48% 41% 41% Dec 15 Jun 16 Total RWA / Total Assets (Incl BOI Life Assets) Total RWA / Total Assets (Excl BOI Life Assets) Total Credit RWA IRB approach accounts for: 77% of credit EAD (Dec 2015: 75%) 81% of credit RWA (Dec 2015: 81%) RWA density calculated as Total RWA / Total balance sheet assets as at June 2016 ²Data sourced from the Group's regulatory reporting platform. EAD and RWA include both IRB and Standardised approaches. Comprises both non-defaulted and defaulted loans Exposure at default (EAD) is a regulatory estimate of credit risk consisting of both on balance exposures and off balance sheet commitments 40#43BOI Credit Ratings STANDARD & POOR'S Senior Unsecured BBB- (Positive) Issuer Specific Rating Progress on BOI Credit Ratings MOODY'S Baa2 (Positive) Bank of Ireland Group Fitch Ratings BBB- (Positive) Stand Alone Credit Profile: bbb Baseline Credit Assessment (BCA): ba2 Viability Rating: bbb- July 2015: 1 notch upgrade from BB+ to BBB- (Positive outlook) Aug 2016: BBB- rating affirmed by S&P (Positive outlook) May 2015: 2 notch senior unsecured upgrade from Ba1 to Baa2 (Stable outlook) Nov 2015: Outlook upgraded to Positive Dec 2015: 1 notch senior unsecured upgrade from BB+ to BBB- (Positive outlook) Key Rating Drivers Upside could develop from: Reduction in non-performing loans Additional loss-absorbing capacity (ALAC) uplift Improvements in profitability and internal capital generation Reduction in non- performing loans Reduction in non- performing loans Strong internal capital generation 41#44Ordinary stockholders' equity and TNAV Movement in ordinary stockholders' equity Ordinary stockholders' equity at beginning of period Movements: Profit attributable to stockholders Available for sale (AFS) reserve movements Distribution on other equity instruments - Additional Tier 1 coupon Dividends on preference stock Remeasurement of the net defined benefit pension liability Foreign exchange movements Cash flow hedge reserve movement Other movements Ordinary Stockholders' equity at end of period Tangible net asset value Ordinary stockholders' equity at 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 (€ cent) Bank of Ireland Group 2015 (Єm) 2016 (€m) 7,392 8,308 940 439 (81) (148) (55) (257) (4) 91 (394) 255 (355) (45) 108 13 8,308 7,899 Dec 15 (€m) Jun 16 (Єm) 8,308 7,899 (509) (526) 11 9 7,810 7,382 32,363 32,363 24.1 c 22.8c 42#45Defined Benefit Pension Schemes Group IAS19 Pension Deficit Bank of Ireland Group 3.65% 2.20% 2.30% 1.60% €1.19bn €0.79bn €0.99bn €0.84bn €0.74bn Dec 13 Dec 14 IAS19 Pension Deficit Dec 15 Jun 16 Jun 16 EUR AA Corporate bond curve Pro-forma Group IAS19 Pension Deficit following €0.4bn expected cash or other suitable assets contribution BSPF1 Surplus/ Deficit under Relevant Bases Dec 15 Minimum funding standard *Actuarial / on-going basis (362) (12) (428) **IAS19 (78) Estimated surplus/ (deficit) at Dec 15 303 653 Pro-forma position following €350m expected cash or other suitable assets contribution to BSPF *Triennial actuarial valuation currently in progress **BSPF IAS19 deficit at June 16 was €693m Group IAS19 pension deficit of €1.2bn at Jun 16 (€0.74bn at Dec 15) Primary drivers of the increase in the deficit were Euro and UK AA corporate bond discount rates decreased from 2.3% to 1.6% and 3.8% to 2.75% respectively, partly offset by Long term ROI and UK inflation rate expectation decreasing from 1.6% to 1.3% and 3.3% to 2.85% respectively, and Group pension scheme asset returns of €379m There is a further €400m of deficit reducing contributions expected to be made between 2016 and 2020 (€350m to BSPF) The Pension Review programmes of 2010 and 2013 resulted in significant restructurings of scheme benefits, which were accepted by staff and unions through individual member consent In return for the deficit reduction achieved through these programmes, Group agreed to increase its support for the schemes by making matching contributions ► Allowing for the remaining deficit reducing contributions, the overall Group IAS 19 deficit would have been c.€0.8bn at Jun 16 IAS19 requires that the rate used to discount Defined Benefit pension liabilities be selected by reference to market yields on high quality corporate bonds with a corresponding duration. However, only a small number of such AA corporate bonds exist at the c.22 year duration and those bonds tend to be relatively illiquid In addition to the IAS19 accounting valuation, the funding position of the main BSPF scheme is also measured under the Minimum Funding Standard basis and the Actuarial / on-going basis. Estimated valuations on both of these measures showed a stronger funding position than IAS19 at Dec 15 for main BSPF scheme *BSPF represents approx. 75% of the overall Group Defined Benefit liabilities 43#46Defined Benefit Pension Schemes Bank of Ireland Group Group has developed a framework for pension funding and investment decision-making as part of long-term plan Management of Group's DB pension position involves a multi-year programme, categorised into 3 broad areas. Activity in these areas includes; Review Liabilities Pensions Review 2010 and 2013 - shared solutions with members - successfully executed and extended to smaller schemes in 2014 and 2015 A Defined Contribution ('DC') scheme was introduced in 2014 for new hires and existing hybrid Life Balance scheme closed An enhanced transfer value exercise is under consideration for the BSPF scheme in H2 2016 2 Increase Assets ▶ >€750m of deficit-reducing contributions made since 2010; further €400m expected to be made across Group schemes between 2016 and 2020 ►BSPF asset returns of c. 10.5% p.a. were achieved over 3 years to end Jun 16 despite market volatility 3 Improve correlation between assets and liabilities ► Group has supported trustees in diversifying asset portfolios away from listed equity into other return-seeking but less volatile asset classes e.g. allocation to private infrastructure The €150m BSPF deficit reducing contribution in December 2015 was invested in the LDI portfolio in January 2016 Group has supported the Trustees of BSPF scheme in their decision to extend the level of sterling interest rate and inflation hedging to 60% in 2016 Group has also supported the Trustees of the BOI Group UK scheme in their decision to extend the level of interest rate and inflation hedging to 60% in 2016 Continuing programme to better match asset allocation with the nature and duration of liabilities 57% 60% Mix of BSPF DB Pension Scheme Assets (%)¹ 45% 11% 19% 44% 24% Dec 12 Dec 15 20% 20% Jun 16 Listed equities Diversified 2 Credit / LDI / Hedging Group Schemes Asset & Liability Sensitivities Jun 16 Sensitivity of scheme assets is: Fall in global equity markets with allowance for other correlated diversified asset classes Sensitivity of liability-matching assets to a 10bps movement in interest rates Sensitivity of IAS19 liability is: IAS19 Liability Discount Rate Long Term Inflation Change 5.00% decrease Impact on plan assets increase (decrease) (€120m) 0.10% decrease €60m Change 25bps decrease 10bps decrease ROI Schemes €376m (€95m) UK Schemes €80m (€20m) 1Graphs shows BSPF asset allocation which is representative of the Group schemes overall 2Diversified category includes infrastructure, private equity, hedge funds and property 44#47Reimbursing and rewarding taxpayers support Jan 09 Jun 16 c.14% Shareholding c.€6.0bn c.€4.8bn Cash invested by the State Cash returned to date Bank of Ireland Group State Aid repaid Risk to the State dealt with - ELG expired From 2009-2011, c.€4.8bn cash invested by the State Cumulative c.€6bn cash returned to the State State continues to hold valuable c.14% equity shareholding In H1 2016, BOI paid taxes of €94m and collected taxes of €487m on behalf of the Irish State 45#48Contact details For further information please contact: Group Chief Financial Officer Andrew Keating tel: +353 76 623 5141 Investor Relations Alan Hartley Niall Murphy tel: +353 76 623 4850 tel: +353 76 624 1385 Group Treasurer Sean Crowe tel: +353 76 623 4720 Capital Management Brian Kealy Alan McNamara tel: +353 76 623 4719 tel: +353 76 624 8725 [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Wholesale Funding Darach O'Leary Redmond O'Leary Joanne Guerin tel: +353 76 624 4224 tel: +353 76 62 44198 tel: +353 76 62 44219 Investor Relations website www.bankofireland.com/investor [email protected] [email protected] [email protected] Bank of Ireland Group 46#49Forward-Looking statement Bank of Ireland Group This document contains certain forward-looking statements with respect to certain of the Bank of Ireland Group's (the '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. Such risks and uncertainties include, but are not limited to, the following: ▶ geopolitical risks which could potentially adversely impact the markets in which the Group operates; ▸ uncertainty following the UK vote to exit the EU as to the nature, timing and impact of a UK exit, could impact the markets in which the Group operates including pricing, partner appetite, customer confidence and demand, and customers' ability to meet their financial obligations and consequently the Group's financial performance, balance sheet and capital; ▶ concerns on sovereign debt and financial uncertainties in the EU and the potential effects of those uncertainties on the financial services industry and on the Group; ▶ general and sector specific economic conditions in Ireland, the United Kingdom and the other markets in which the Group operates; ▶ the ability of the Group to generate additional liquidity and capital as required; ‣ property market conditions in Ireland and the United Kingdom; ▶ the potential exposure of the Group to credit risk and to various types of market risks, such as interest rate risk and foreign exchange rate risk; ▶ the impact on lending and other activity arising from the emerging macro prudential policies; ▶ the performance and volatility of international capital markets; ▶ the effects of the Irish Government's stockholding in the Group (through the Ireland Strategic Investment Fund) and possible changes in the level of such stockholding; ▶ changes in applicable laws, regulations and taxes in jurisdictions in which the Group operates particularly banking regulation by the Irish and United Kingdom Governments together with the operation of the Single Supervisory Mechanism and the establishment of the Single Resolution Mechanism; ▶ the impact of the continuing implementation of significant regulatory developments such as Basel III, Capital Requirements Directive (CRD) IV, Solvency II and the Recovery and Resolution Directive; the exercise by regulators of powers of regulation and oversight in Ireland and the United Kingdom; ▶ the introduction of new government policies or the amendment of existing policies in Ireland or the United Kingdom; ▸ the outcome of any legal claims brought against the Group by third parties or legal or regulatory proceedings more generally, that may have implications for the Group; ▶ the development and implementation of the Group's strategy, including the Group's ability to achieve net interest margin increases and cost reductions; ▶ the inherent risk within the Group's life assurance business involving claims, as well as market conditions generally; ▶ potential further contributions to the Group sponsored pension schemes if the value of pension fund assets is not sufficient to cover potential obligations; ▶ the Group's ability to address weaknesses or failures in its internal processes and procedures including information technology issues and equipment failures and other operational risk; ▶ the Group's ability to meet customers' expectations in mobile, social, analytics and cloud technologies which have enabled a new breed of 'digital first' propositions, business models and competitors; ► failure to establish availability of future taxable profits, or a legislative change in quantum of deferred tax assets currently recognised; and ▶ difficulties in recruiting and retaining appropriate numbers and calibre of staff. Nothing in this document should be considered to be a forecast of future profitability or financial position 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. 47#50Bank of Ireland Group#51Empty#52Empty