#12018 Bank of Ireland Credit Presentation June 2018 Bank of Ireland Group#2Empty#3Bank of Ireland Overview Bank of Ireland Group#4H1 2018 Highlights Strong Financial Performance €500m Underlying profit before tax NIM of 2.23% • Net impairment gains of €81m • NPES reduced by 10% to €5.9bn; NPE ratio now at 7.5% Growth €7.7bn 16% increase in new lending volumes Transformation 3% Reduction in costs • Net loan book growth of €0.5bn to €76.6bn New lending up 16% vs. H1 2017; new Irish mortgages up 30% Maintaining strong commercial pricing and risk discipline Costs reduction of €27m (3%) vs. H2 2017 Business model initiatives to drive efficiencies progressing at pace Phase 1 of Core Banking Programme completed in April 2018 Capital 14.1% Strong CET1 ratio Organic capital generation of 90bps Bank of Ireland Group 2#5Strong businesses with competitive strengths in attractive markets Attractive markets Significant opportunities for growth Strong businesses Unique customer franchises Significant growth expected in Irish house building, • home buying and SME lending Growing Irish population with increasing need for wealth management and retirement planning solutions Attractive under-served segments of the UK market Bank of Ireland Group NEW IRELAND POST Bank of Ireland ASSURANCE OFFICE Money Bank of Ireland AA Corporate Banking • Ireland's leading retail and commercial bank with #1 or #2 market share in all principal product lines • Extensive distribution network; Ireland's only bancassurer • • A diverse portfolio of profitable businesses in UK and internationally Strong track record of credit risk management with commercial pricing and risk discipline 3#6Supportive Economic Backdrop Irish GDP growth well above Euro area average 2 0 -2 -4 7.2% 2017 6.5% 2.4% 2.1% 2018(f) Ireland GDP (annual real growth) Euro area GDP (annual real growth) 4.2% 16 12 2.0% 8 Irish economy to continue creating jobs 4 2019(f) 2007 2008 Source: CSO, Ireland forecasts: Bank of Ireland, Euro area: EU Commission Irish credit growth after many years of deleveraging -6 -8 2012 2013 2014 2015 2016 1.7% 2017 2017 2018 4.4% Stock of lending to households (annual % change) Stock of lending to businesses2 (annual % change) Source: Central Bank of Ireland Bank of Ireland Group 2017 Unemployment Rate 2018(f) 5.3% 2019(f) 4.5% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 - Unemployment Rate (%) Source: CSO, forecasts (annual average): Bank of Ireland UK GDP growth (annual real growth) 1.5% 2018(f) UK unemployment (annual average) 4.1% 2018(f) Source: ONS, forecasts: Bank of Ireland Banks' balance sheet basis: excludes loan sales and securitisations 2 Non-financial corporations 1.6% 2019(f) 4.0% 2019(f) 4#7Three Strategic Priorities Transform the Bank Transform the Bank 5.3 Serve Customers Brilliantly Grow Sustainable (no.1) Profits • • • Culture H1 2018 Progress Systems Organisation re-design to create a leaner, flatter business is well advanced Phase 1 of Core Banking Programme completed in April 2018, delivering a single customer record for over 2 million customers across all products Expect first end-to-end use of new Core Banking platforms in H2 2018 with a pilot launch of personal loan and deposit origination Ambition, purpose and values firmly embedded in organisation with over 6,000 colleagues attending 50 culture roadshows Business Model Target outcomes Cost base to reduce to c.€1.7bn in 2021 Absolute cost level declining year- on-year to 2021 • Income growth Strengthened culture Bank of Ireland Group 5#8Serve Customers Brilliantly Ö (no.1) Embedding voice of customer in • our businesses Investing in digital and physical channels H1 2018 Progress Number of full-service branches increasing by more than 160% Customer facing roles increasing by more than 15% . . Over 40% of consumer product sales in Ireland in H1 2018 were completed digitally end to end (20% increase vs. H1 2017) • Direct and digital wealth sales increased to 30% in H1 2018 (from 0% 18 months ago) Enterprise programme events giving in excess of 5,000 businesses the opportunity to showcase products and services • • Strong progress towards the launch of new mobile app and new digital wealth channels in the first half of 2019 New brand strategy 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 Group 6#9Grow Sustainable Profits H1 2018 Progress Improved profitability Efficient business امر 2021 Target Headline ROTE of 9.6% Adjusted ROTE of 6.8%¹ ROTE in excess of 10% Costs reduction of 3% vs. H2 2017 Cost base of c.€1.7bn Costs reduce every year: 2018-2021 Cost income ratio of c.50% Robust capital position Fully loaded CET1 ratio of 14.1% CET1 ratio in excess of 13% Sustainable dividends Bank of Ireland Group Deduction for potential full year dividend; equivalent to an annualised dividend of 14c per share Increase prudently and progressively from 11.5c per share; over time will build towards a payout ratio of around 50% of sustainable earnings 1See Slide 44 for calculation 7#10Operating Performance Bank of Ireland Group#11Overview H1 2018 Underlying profit before tax of €500m Other income of €322m Operating expenses of €882m, broadly in line with H1 2017; reduction of €27m (3%) vs. H2 2017 Income Statement H1 2017 H1 2018 • (€m) Net interest income of €1,076m (€m) Total income 1,532 1,398 • Operating expenses (887) (882) Transformation Investment charge² (49) (51) Levies and Regulatory charges (63) (67) Net Impairment (losses) / gains (59) 81 • Underlying profit before tax 492 500 Non-core items (32) (46) Net Interest Margin (NIM) 2.32% 2.23% Robust balance sheet metrics Transformation investment in H1 2018 of €141m (CET1 ratio impact of c.30bps); €51m charged to the income statement (36%) Net impairment gains of €81m, reflecting the positive economic environment and outlook in Ireland Non-core charge of €46m primarily related to costs associated with the Group's restructuring programme Balance Sheet Group loan book of €76.6bn at Jun 2018 reflecting; New lending of €7.7bn • Customer redemptions of €6.6bn Redemptions on NPES and GB non-core book³ of €0.5bn IFRS 9 day 1 / FX/ other of €0.1bn Group customer deposits of €76.7bn at Jun 2018, an increase of €0.8bn • Dec 2017 Jun 2018 Customer loans (net) €76.1bn €76.6bn Customer deposits €75.9bn €76.7bn • Non-performing exposures (NPES) €6.5bn €5.9bn CET1 ratios: Fully Loaded 13.8% 14.1% 15.8% 15.8% Regulatory Total Capital Ratio 20.2% 19.8% • 136% 139% 127% 127% 100% 100% Regulatory Liquidity metrics: LCR NSFR LDR Bank of Ireland Group NPES of €5.9bn, reduction of 10% during H1 2018 Strong organic capital generation continues; capital and liquidity available to support growth HoldCo senior investment grade ratings of Baa3, BBB-, and BBB from Moody's, S&P and Fitch. Positive Outlook from Moody's and S&P (see Slide 17 for full ratings) ¹Comparative figures have been restated to reflect the impact of: (i) the voluntary change in the Group's accounting policy for Life assurance operations in H2 2017 and (ii) the reclassification of €6 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 the six months ended 30 June 2017 Transformation Investment charge was previously disclosed as 'Core Banking Platforms Investment', it has been updated for the six months ended 30 June 2018 to include the broader scope of Transformation covering Culture, Systems and Business Model 3GB business and corporate loan books, which BOI was required to run down under its EU approved Restructuring Plan (Remaining stock: H1 2017 - £0.7bn; H2 2017 - £0.6bn; H1 2018 - £0.5bn) 9#12Loan book growth of €0.5bn Group loan book movement €76.1bn €7.7bn €6.6bn €0.5bn €0.1bn Total €7.1bn €76.6bn • Dec 17 Loan Book New Lending Redemptions Redemptions IFRS 9 Day 1/ on NPES, GB FX / Other non-core¹ Jun 18 Loan Book New lending / redemption volumes +16% Net loan book growth of €0.5bn to €76.6bn New lending of €7.7bn, an increase of 16% vs. H1 2017 • Group redemptions of €7.1bn, in line with H1 2017 • • Expect to re-enter Irish mortgage broker market in H2 2018 Expect further loan book growth in H2 2018, while maintaining strong commercial pricing and risk discipline Retail Ireland: €2.7bn • ° Mortgage new lending of €1.0bn, up 30% on 2017; market share of 28% SME new lending of €1.4bn Consumer new lending of €0.2bn • Retail UK: £2.6bn €6.6bn €7.2bn H1 2017 New Lending Redemptions Bank of Ireland Group €7.7bn €7.1bn 0 0 Mortgage new lending of £1.6bn, up 25% on 2017 SME new lending of £0.1bn • Consumer new lending of £0.9bn (H1 2017: £0.5bn) Corporate Banking: €2.1bn • Property Finance new lending of €0.6bn • Hồ 2018 Corporate Ireland new lending of €0.5bn • Corporate UK new lending of €0.5bn • Acquisition Finance new lending of €0.5bn 'GB business and corporate loan books, which BOI was required to run down under its EU approved Restructuring Plan (Remaining stock: H1 2017 - £0.7bn; H2 2017 - £0.6bn; H1 2018 - £0.5bn) 10#13Strong commercial pricing discipline Net interest margin drivers 285bps 4bps H1 2017 282bps 3bps H2 2017 Loan Asset Spread¹ Liquid Asset Spread Net interest margin 282bps (11bps) H1 2018 2.32% 2.25% 2.23% H1 2017 H2 2017 H1 2018 Net interest income • Net interest income of €1,076m, reduction of €75m vs. H1 2017 reflecting lower NIM primarily due to the cost of securities issued in advance of TRIM and MREL during H2 2017 Average interest earning assets • NIM • Increased by €1.4bn to €98.6bn in H1 2018, primarily due to higher average liquid asset volumes H1 2018 NIM of 2.23% primarily reflecting: • . Strong commercial discipline on pricing; Positive impact from new lending margins, offset by; Lower liquid asset yields due to bond sales and the impact of the ongoing low interest rate environment; NAMA sub debt reclassification due to the introduction of IFRS 9 Expect H2 2018 NIM to be broadly in line with FY 2018 guidance of 2.24% ¹Spread = Loan asset yield or Liquid asset (excl. NAMA bonds) yield less Group's average cost of funds Bank of Ireland Group 11#14Asset quality Non-performing exposures 10.1% €8.1bn Jun 17 8.3% €2.2bn reduction €6.5bn Dec 17 Asset quality continues to improve • 7.5% €5.9bn Jun 18 NPES as a % of gross customer loans Non-performing exposures Net impairment (losses) / gains €81m €44m Non-performing exposures (NPES) of €5.9bn, a reduction of €0.6bn (10%) during H1 2018 NPES reduced to 7.5% of gross customer loans Reductions reflect successful resolution strategies and the positive economic environment Expect further reductions in H2 2018 and beyond; pace will be influenced by a range of factors NPE reduction strategies will be kept under review in response to the associated and evolving regulatory capital framework Net impairment gains • First reporting period under new IFRS 9 accounting standard Net impairment gains of €81m for H1 2018, primarily reflecting: • Strong performance of the Group's loan portfolios Better than expected outcomes from ongoing resolution of NPES (€59m) H1 2017 H2 2017 Net impairment (losses) / gains Bank of Ireland Group H1 2018 0 Higher than expected recoveries post write-off • More positive than expected economic environment and outlook in key markets, driving lower impairment loss allowances under IFRS 9 models Absent a deterioration in the economic environment or outlook, expect net impairment gains for the full year 2018 Expect cost of risk to be in the range of up to 20bps to 30bps p.a. during 2019-2021 12#15Dec 2017 (€bn) Jun 2018 Customer loans 76 77 Liquid assets 24 23 Wealth and Insurance assets 17 17 Other assets 6 5 Total assets 123 122 Capital and liquidity available to support growth (€bn) Strong liquidity ratios Liquidity Coverage Ratio: 139% Net Stable Funding Ratio: 127% . Loan to Deposit Ratio: 100% Customer deposits: €76.7bn Customer deposits predominantly sourced through retail distribution channels • Customer deposits 76 77 Wholesale funding 13 11 • Wealth and Insurance liabilities 17 17 • Other liabilities 7 7 Shareholders' equity 9 9 • Additional Tier 1 security & other 1 1 Total liabilities 123 122 • TNAV per share €7.52 €7.71 • Closing EUR/GBP FX rates 0.89 0.89 Wholesale funding: €11.4bn Modest wholesale funding requirement Monetary Authority borrowings of €3.7bn¹ have reduced by €1.3bn since Dec 2017 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 19.6% at June 2018 (based on RWA at Dec 2016) MREL issuance of c.€4bn-€5bn, allowing for redemptions and an appropriate buffer, to meet MREL requirement by 1 Jan 2021 Bank of Ireland Group 1€2.0bn of ECB TLTRO funding and €1.7bn of BOE funding through TFS (c.€1.5bn) and ILTR (c. €0.2bn) 13#16H2 2018 outlook Income growth Transformation of cost base Capital generation, investment and return ⚫ Net loan book growth while maintaining commercial pricing and risk discipline • NIM to be broadly in line with FY 2018 guidance of 2.24% Operating expenses to continue to reduce • Absent a deterioration in the economic environment or outlook, expect net impairment gains for the full year 2018 • Expect further reductions in NPES • Continue to generate strong organic capital Bank of Ireland Group 14#17Capital & MREL Bank of Ireland Group#18Corporate Reorganisation BOIG established in July 2017 Unchanged Corporate Structure New HoldCo 100% Bank of Ireland Group plc (BOIG) Bank of Ireland Group 100% AT1 Tier 2 Senior unsecured X Bank of Ireland O 100% The Governor and Company of the Bank of Ireland (GovCo) Senior unsecured New Ireland Assurance Company plc NEW IRELAND ANNURANCE 100% Bank of Ireland Mortgage Bank (BOIMB) Bank of Ireland (UK) plc Bank of Ireland Bank of Ireland UK For small steps, for big steps, for life Irish Covered Bonds (ACS) Capital/MREL Funding • • Resolution Authorities preferred resolution strategy for the Group consists of a Single Point of Entry (SPE) bail-in strategy through the Group holding company (BOIG) • • Transparent and well-defined resolution strategy in comparison to other jurisdictions BOIG introduced on top of the existing group structure supporting an SPE preferred resolution strategy No change to any of the Group's existing operating companies Bail-in at BOIG is the primary resolution tool. MREL requirements are expected to be met through junior and senior issuance from BOIG Losses are passed to BOIG on the write-down of intragroup assets. BOIG investors bear loss in accordance with the resolution² hierarchy. Resolution authorities required to apply the "No Creditor worse off" principle in application of the bail-in tool Funding requirements may also continue to be met, as required, through the issue of Irish Covered Bonds (ACS) by Bank of Ireland Mortgage Bank and senior unsecured issuance by GovCo Bank of Ireland Group 1100% shareholding via intermediate holding company 2Per Regulations 87 and 96 of the European Union (Bank Recovery and Resolution) Regulations 2015 16#19BOI Credit Ratings Investment grade ratings for BOIG and GovCo BOIG Issuer Ratings GovCo Issuer Ratings Progress on BOI Credit Ratings Key Rating Drivers Upside could develop from: STANDARD & POOR'S BBB- (Positive) BBB (Positive) Jul 2017: Assigned BBB- (Stable) rating to newly established holding company Dec 2017: Affirmed the BBB- and BBB ratings on BOIG and GovCo respectively, outlook revised to Positive from Stable on both Further reductions in non- performing loans Additional loss-absorbing capacity (ALAC) uplift MOODY'S Baa3 (Positive) Baa1 (Positive) Jun 2017: 1 notch senior unsecured upgrade for GovCo from Baa2 to Baa1 (outlook remains Positive) Jul 2017: Assigned Baa3 (Positive) rating to newly established holding company Improvements in capital metrics, while maintaining stable profitability, funding and liquidity metrics Further reductions in non- performing loans Fitch Ratings BBB (Stable) BBB (Stable) Jul 2017: Assigned BBB- (Positive) rating to newly established holding company Nov 2017: 1 notch upgrade for both BOIG and GovCo issuer ratings to BBB, Stable outlook Further reductions in non- performing loans Strong internal capital generation and strengthening capital ratios Irish Covered Bonds (ACS) Bank of Ireland Group Aaa MOODY'S 17#20Strong capital generation and position Fully loaded CET1 ratio movement 0.9% (0.2%) (0.3%) 0.2% (0.2%) 0.3% 13.6% 14.1% 1 Jan 18 Organic CET1 (post capital Loan growth Transformation Potential (RWA) investment dividend Other (incl. pension) Jun 18 CET1 IFRS 9 impact) generation¹ Capital position • CET1 ratio IFRS 9 impact CET1 movements Strong organic capital generation of 90bps in H1 2018: • • Fully loaded CET1 ratio of 14.1% Regulatory CET1 ratio of 15.8% Regulatory Total Capital ratio of 19.8% • Strong asset performance in H1 2018 and positive impact • . of changes in long term assumptions reduced the regulatory capital impact of pension deficit by €160m (c.35bps) Irish Countercyclical Buffer (CCYB) of 1% from 5 July 2019 (Group requirement of c.60bps²) Capital guidance remains unchanged: 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 Bank of Ireland Group Investment / allocation of capital in H1 2018 1 Growth in loan ⚫ book Investment of c.20bps • Net loan book growth of €0.5bn 2 Transformation ⚫ Transformation investment of €141m (c.30bps) 3 Regulatory capital demand • 4 Dividend / distributions • As previously announced, CRT executed in Nov 2017 in anticipation of TRIM (c.50bps benefit included in Jun 18 CET1 ratio) TRIM update: now largely complete for Irish mortgages - changes to credit risk models will be made in H2 2018; pro forma impact at Jun 2018: a reduction of c.70bps in fully loaded CET1 ratio A range of potential options are available for consideration to offset this capital impact • Expect to increase prudently and progressively from 11.5c per share - over time will build • towards a payout ratio of around 50% of sustainable earnings Deduction for potential full year dividend as per regulatory requirements of €75m, equivalent to an annualised dividend of 14c per share (c.20bps) • Other means of capital distribution will be considered to the extent the Group has excess capital 'Organic capital generation primarily consists of attributable profit and movements in regulatory deductions 2The CCyB will be applied in proportion to the Group's credit risk weighted assets in Ireland, resulting in a c.60bps Irish CCyB requirement for the Group from July 2019 (c. 60% of the Group's credit risk weighted assets are located in Ireland) and 1.5% in July 2021 The Other Systemically Important Institution (O-SII) buffer will be introduced at 0.5% in July 2019, increasing to 1.0% in July 2020 18#21Robust capital ratios Dec 2017 Jun 2018 CET1 ratio: Regulatory 15.8% 15.8% Fully Loaded 13.8% 14.1% Tier 1 ratios: Regulatory 17.0% 16.9% Tier 1 & Total Capital . . Tier 1 and Total Capital ratios reflect growth in the CET1 ratio in the period and movement in the haircuts associated with subordinated debt issued by BOIG subsidiaries² Total Capital ratios also include the partial amortisation of Tier 2 instruments Fully Loaded 14.9% 15.2% Total Capital ratios: . Regulatory 20.2% 19.8% Fully Loaded 17.9% 18.1% MREL Regulatory MREL ratio¹ 19.6% • Leverage ratios: Regulatory 7.0% 7.2% Fully Loaded 6.2% 6.4% Risk Weighted Assets: Regulatory €45.0bn €45.8bn MREL MREL target of €13.3bn (representing 26.4% of RWA at Dec 2016) to be met by 1 Jan 2021: • Regulatory MREL ratio of 19.6% at June 2018 (based on RWA at Dec 2016) MREL issuance of c.€4bn-€5bn, allowing for redemptions and an appropriate buffer, to meet MREL requirement by 1 Jan 2021 Risk Weighted Assets RWA has increased from €45.0bn at Dec 2017 to €45.8bn at June 2018 primarily driven by: Fully Loaded €44.8bn €45.6bn • Changes in book size and quality (€0.7bn) Impact of FX movements (€0.1bn) Bank of Ireland Group 'Regulatory MREL Ratio for 2018 is calibrated using December 2016 RWA position as required by 2017 SRB MREL Policy. Pro forma MREL ratio using June 2018 RWA is 21.6% 2Further to EBA Q&A 2017 3329 the calculation of Tier 1 and Total Capital ratios is stated after a prudent application of the requirements of Articles 85/87 of CRR. The application of the requirements of Articles 85/87 by SSM banks is under review by the ECB 19#22Regulatory Capital Requirements Pro forma CET1 Regulatory Capital Requirements Set by Range 2017 2018 2019 2020 2021 Pillar 1 - CET1 CRR 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% Pillar 2 Requirement (P2R) - reviewed annually SSM O-SII buffer² Capital Conservation Buffer (CCB) Countercyclical buffer (CCyB) Ireland (c.60% of RWA) UK (c.30% of RWA) US and other (c.10% of RWA) Systemic Risk Buffer - Ireland Pro forma Minimum CET1 Regulatory Requirements CRD 2.5% 2.25% 2.25% 2.25% 1.25% 1.875% 2.25% 2.25% 2.5% 2.5% 2.5% CBI 0% - 2.50% 0.6% 0.6% 0.6% FPC (UK) 0% - 2.50% 0.3% 0.3% 0.3% 0.3% Fed/Various 0% - 2.50% CBI 0% - 2.00% 0.5% 1% 1.5% Minister for Finance 0% - 3.00% N/A 8.0% N/A 8.925% N/A N/A N/A 10.65% 11.15% 11.65% Pillar 2 Guidance (P2G) - reviewed annually Not disclosed in line with regulatory preference 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 period² in July 2021. This includes meeting applicable regulatory capital requirements plus an appropriate management buffer Regulatory Capital Requirements • A minimum CET1 ratio of 8.625% on a regulatory basis from 1 Jan 2018, includes: A Pillar 1 requirement of 4.5%, a Pillar 2 requirement (P2R) of 2.25% and a capital conservation buffer for 2018 of 1.875% • The FPC (UK) has set the UK CCYB at 0.5% from June 2018 and 1% from November 2018 • The CBI (ROI) announced its intention to increase the CCyB in Ireland from 0% to 1.0%, effective from 5 July 2019 • The Systemic Risk Buffer under Article 133 CRD IV is currently not implemented in Irish law but may be introduced at the discretion of the Minister for Finance • Pillar 2 Guidance (P2G) is not disclosed in accordance with regulatory preference Bank of Ireland Group ¹CCyB 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 The Other Systemically Important Institution (O-SII) buffer will be introduced at 0.5% in July 2019, increasing to 1.0% in July 2020 and 1.5% in July 2021 20#2326.39% MREL Requirement¹ Loss absorption amount MREL Target 1.5% O-SII² 2.5% CCB2 2.25% P2R2 8% Own Funds Pillar 1 Requirement Recapitalisation + + amount Market Confidence Charge 1.5% O-SII² 2.5% CCB2 -0.86%4 2.25% P2R2 8% Own Funds Pillar 1 Requirement -1.25% 2.75% 9.39% 14.25% • The Group has been advised of the decision by the SRB and the Bank of England of its binding MREL requirement to be met by 1 January 2021. This has been set at a level of 12.86% of total liabilities and own funds as at December 2016 (equivalent to 26.39% of risk weighted assets) Based on current capital issuance³, modest new MREL issuance expected to meet this requirement 1 Minimum Requirement for Own Funds and Eligible Liabilities 2 Other Systemically Important Institution (O-SII), Capital Conservation Buffer (CCB) and Pillar 2 Requirement (P2R) 3 Pro-forma Group regulatory total capital ratio as at 31 December 2018 of 21.8% prior to reductions in respect of the Corporate Reorganisation (1.4%) and Prudential Amortisation (0.2%) 4 Bank Specific Adjustment of 0.86% Bank of Ireland Group 21#24Risk Weighted Assets (RWAs) Customer lending average credit risk weights - June 20181&2 (Based on regulatory exposure class) EBA Transparency Exercise 2017 Country by Country Average IRB risk weights Residential Mortgages - June 2017 Avg. EAD³ RWA Risk (€bn) (€bn) Weight Sweden 4.2% SME ROI Mortgages UK Mortgages Corporate 24.4 7.0 29% Norway 5.1% Finland 9.0% 22.1 4.6 21% UK 10.5% 15.9 11.6 73% Belgium 10.6% France 11.7% 9.9 8.8 89% Netherlands 11.9% Other Retail 5.6 3.8 67% Austria 13.8% Denmark 14.1% Customer lending credit risk 77.9 35.8 46% Germany 14.2% • IRB approach accounts for: Spain 14.5% Italy 19.4% • 71% of credit EAD (Dec 2017: 70%) Portugal 19.6% • 72% of credit RWA (Dec 2017: 73%) 42.5% • • RWA has increased from €45.0bn at Dec 2017 to €45.8bn at June 2018 primarily driven by: • Changes in book size and quality (€0.7bn) Impact of FX movements (€0.1bn) TRIM: • As previously announced, CRT executed in Nov 2017 in anticipation of TRIM (c.50bps benefit included in Jun 18 CET1 ratio) Ireland Corporates - June 2017 Sweden Denmark 27.3% 33.7% Germany 40.4% Norway 42.6% Netherlands 44.5% Austria 44.6% Finland 45.7% • TRIM update: now largely complete for Irish mortgages changes to credit risk models will be made in H2 2018; pro forma impact at Jun 2018: a reduction of c.70bps in fully loaded CET1 ratio Belgium 46.5% Italy 47.3% UK 47.3% France 52.9% Spain 58.1% • A range of potential options are available for consideration to offset this capital impact Portugal 63.1% Ireland 65.5% Bank of Ireland Group 1EAD and RWA include both IRB and Standardised approaches and comprises both non-defaulted and defaulted loans 2Securitised exposures are excluded from the table (i.e. excludes exposures included in CRT executed in December 2017 and November 2016) ³Exposure at default (EAD) is a regulatory estimate of credit risk exposure consisting of both on balance exposures and off balance sheet commitments 20 22#25Capital/MREL Summary Highlights Corporate Reorganisation Corporate Reorganisation implemented; Group holding company (BOIG) introduced on top of the existing Group structure Ratings Economy Regulatory Ratios MREL Bank of Ireland Group BOIG assigned investment grade ratings from Moody's, S&P and Fitch; future senior and junior debt issuance for MREL purposes expected be issued from BOIG Continued economic growth in core markets; supporting strong organic capital generation Robust regulatory ratios provide significant buffer to credit investors (c.700bps buffer to MDA) Based on current total capital issuance and SRB MREL Policy, modest new MREL issuance expected 23#26Additional Information Bank of Ireland Group#27Additional Information BOI Overview • • Business profile Historic financial results Gross new lending volumes in H1 2018 • Profile of customer loans ROI mortgage loan book UK mortgage loan book Interest Rate Sensitivity Net interest income analysis Transformation Investment Asset Quality • Non-performing exposures by portfolio • ROI Mortgages . UK Customer Loans Debt Securities at fair value through other comprehensive income (FVOCI) Capital CET1 ratios - June 2018 Capital Guidance and Distribution Policy Ordinary shareholders' equity and TNAV Return on tangible equity (ROTE) Cost income ratio: June 2018 Defined Benefit Pension Schemes Contact details Forward-Looking statement Bank of Ireland Group Slide No. 26 28 30 42 45 46 47 223 F4444448 33 34 35 36 37 38 39 40 25#28BOI Overview: Ireland Ireland's leading retail and commercial bank Consumer Retail Ireland Business Wealth Corporate/Markets Corporate Banking Property Finance Unique customer franchise Supporting local communities and enterprises Growing preference for digital channels • 1.7m active consumer customers with average tenure 15 years • 200k SME customers and 500k Wealth and Insurance customers ⚫ #1 or #2 market share across all principal product lines • 265 branches, >2,800 front line staff Branches evolving into business development hubs driving local commerce • >3,000 enterprise and community events last year 79% digitally active current account base • >250% increase in mobile users 2012 - 2018 • 15m interactions in our digital channels every month Ireland #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: average 5 products held per customer . Disciplined approach to risk management 60 Specialist staff; >175 customers Markets & Treasury Leading treasury service provider • Track record of innovation Bank of Ireland Group 26#29BOI Overview: UK / International 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 Acquisition Finance • Over 40 years in • A distribution Great Britain • 11.5k branches • through Post Office partnership #1 travel money business in the UK (FRES) • • Access to 3.3m . AA members network of 28 branches, including six business centres 190 years since first branch opened c.300k customers across Northern Ireland • Motor asset finance and motor lease finance business • Proven track record of strong growth and disciplined risk appetite ⚫ #1 independent bank-owned motor finance lender ⚫ £1.6bn loan book with >170k customers Sector focussed business in UK with 5 specialist • Mid market US / European Acquisition Finance business; strong 20 year+ record industry sectors • >50 Customers • Scalable • Well recognised platform with ° highly disciplined approach and growth lead arranger 5 international offices 200 customers, c.85% business from repeat sponsors Bank of Ireland Group 27#30BOI Overview Income Statement FY 2014 FY 2015 FY 20164 FY 2017 H1 2018 (€m) (€m) (€m) (€m) (€m) Total income 2,974 3,272 3,126 3,049 1,398 - Net interest income 2,358 2,454 2,298 2,248 1,076 Other income (net) before additional gains 448 591 677 727 312 - Additional gains (incl. ELG fees)1 168 227 151 74 10 Operating expenses (1,601) (1,746) (1,741) (1,796) (882) Transformation Investment charge² (41) (104) (51) Levies and Regulatory charges (72) (75) (109) (99) (67) Operating profit pre-impairment 1,301 1,451 1,235 1,050 398 Net impairment (losses) / gains (472) (296) (178) (15) 81 Share of associates / JVS 92 46 41 43 21 Underlying profit before tax 921 1,201 1,098 1,078 500 Non-core items (1) 31 (63) (226) (46) Profit before tax 920 1,232 1,035 852 454 Net interest margin 2.11% 2.19% 2.20% 2.29% 2.23% Cost income ratio³ Dividend per share 54% 53% 57% 62% 67% 11.50 TBC5 Bank of Ireland Group 'For ease of presentation additional gains has been adjusted to include ELG fees which ceased in 2016 Transformation Investment charge was previously disclosed as 'Core Banking Platform Investment charge', it has been updated to include the broader scope of Transformation covering Culture, Systems and Business Model "Cost income ratio is calculated as operating expenses (excluding levies and regulatory charges) divided by total income "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 5FY 2018 dividend will be decided by the Board at year end consistent with our distribution policy as set out in Slide 42 28#31BOI Overview Summary Balance Sheet Dec 14 Dec 15 (€bn) (€bn) Dec 16 (€bn) Dec 17 (€bn) Jun 18 (€bn) Customer loans1 82 85 78 Liquid assets 25 24 21 24 Wealth and Insurance assets 16 16 17 Other assets 7 6 7 Total assets 130 Customer deposits 75 80 Wholesale funding 20 Private Sources Monetary Authority/TLTRO Wealth and Insurance liabilities 16 4 16 Other liabilities 8 5112160 123 75 14 14 13 13 11 17 37 6 Subordinated liabilities and AT1 2 3 2 3 172527114753 12262658575 Shareholders' equity 9 8 9 9 9 Total liabilities & Shareholders' equity 130 131 123 123 122 Fully loaded CET1 ratio 9.3% 11.3% 12.3% 13.8% 14.1% Liquidity coverage ratio 103% 108% 113% 136% 139% Net stable funding ratio Loan to deposit ratio TNAV per share 114% 120% 122% 127% 127% 110% 106% 104% 100% 100% €6.49 €7.24 €7.40 €7.52 €7.71 Bank of Ireland Group 'Loans and advances to customers is stated after impairment loss allowance 29 29#32Gross new lending volumes in H1 2018 Retail Ireland €2.7bn €2.5bn Retail UK £2.6bn Corporate Banking €2.1bn £1.9bn €0.8bn €1.0bn €1.9bn £1.6bn €0.6bn €0.5bn €0.2bn €0.2bn £1.3bn €1.5bn €1.4bn H1 2017 H1 2018 €0.5bn €0.4bn €0.5bn €0.7bn £0.9bn £0.5bn £0.1bn H1 2017 £0.1bn H1 2018 €0.3bn H1 2017 ■Mortgages Consumer Business Banking Property Corporate Ireland Acquisition Finance Corporate UK Bank of Ireland Group €0.5bn H1 2018 30#33BOI Overview Profile of customer loans (gross)1 ROI UK ROW Total Total Composition (Jun 2018) (€bn) (€bn) (€bn) (€bn) (%) Mortgages 23.7 22.3 0.0 46.0 59% Non-property SME and corporate 10.7 4.42 4.0 19.1 24% SME 7.8 1.6 0.0 9.4 12% Corporate 2.9 2.8 4.0 9.7 12% Property and construction 5.6 2.4 0.4 8.4 11% Investment property 5.1 2.2 0.4 7.7 10% Land and development 0.5 0.2 0.0 0.7 1% Consumer 21 2.1 2.8 0.0 4.9 6% Customer loans (gross) 42.1 31.9 4.4 78.4 100% Geographic (%) 54% 41% 5% 100% Bank of Ireland Group Based on geographic location of customer 2Includes £0.5bn relating to GB business and corporate loan books, which BOI was required to run down under its EU approved Restructuring Plan (H1 2017: £0.7bn; H2 2017: £0.6bn) 31#34ROI Mortgages: €23.7bn New Lending volumes and Market Share 28% 27% 26% 24% ROI Mortgages (gross) 28% €24.3bn €24.1bn €23.7bn €5.3bn €7.3bn €8.6bn €7.2bn €5.8bn €4.7bn €1.2bn €1.0bn €0.8bn €0.8bn €0.6bn H1 2016 H2 2016 H1 2017 New Lending Volumes¹ H2 2017 Market Share H1 2018 Pricing strategy €11.8bn €10.9bn €10.4bn Dec 16 Dec 17 Tracker Variable Rates Fixed Rates Jun 18 • 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 2018, up from c.30% in 2014 Distribution strategy • Market share of 28% in H1 2018 in line with H2 2017 • Expect to re-enter the Irish mortgage broker market in H2 2018 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 June 2018 (Dec 17: 63%, Dec 16: 72%) • Average LTV of 73% on new mortgages in H1 2018 (Dec 17: 69% 2, Dec 16: 67%²) Tracker mortgages • €9.8bn or 94% of trackers at June 18 are on a capital and interest repayment basis • 79% of trackers are Owner Occupier mortgages; 21% of trackers are Buy to Let mortgages • Loan asset spread on ECB tracker mortgages was c.66bps³ in H1 2018 Bank of Ireland Group ¹Excluding portfolio acquisitions (H1 2016 - €0.1bn; H2 2016 - €0.1bn; H1 2017 - Nil; H2 2017 - €0.1bn; H1 2018 - Nil) 2LTV on new business includes the impact of the portfolio acquisitions ³Average customer pay rate of 109bps less Group average cost of funds in H1 2018 of 43bps 32#35UK Mortgages: £19.8bn/€22.3bn £20.4bn UK Mortgages (gross) £20.0bn £20.4bn £19.8bn £2.2bn UK Mortgages (gross) £20.0bn £2.0bn £19.8bn £1.9bn £8.5bn £9.6bn £10.0bn £7.4bn £7.5bn £7.7bn £4.0bn £3.3bn £3.0bn £10.8bn £10.6bn £10.2bn £7.9bn £7.1bn £6.7bn Dec 16 Dec 17 Jun 18 Tracker Variable Rates Fixed Rates UK Mortgages New Lending volumes £3.2bn £2.8bn £1.6bn FY 2016 FY 2017 Hồ 2018 Bank of Ireland Group Dec 16 Dec 17 Standard Buy to let Self certified Jun 18 LTV profile • Average LTV of 61% on existing stock at June 2018 (Dec 17: 62%, Dec 16: 62%) • Average LTV of 69% on new UK mortgages in H1 2018 (2017: 72%, 2016: 71%) 33#36Interest Rate Sensitivity 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 17 Jun 18 (€m) (€m) c.170 c.180 (c.200) (c.220) The estimates are based on 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 In addition, changes in market interest rates could impact a range of other items including the valuation of the Group's IAS 19 defined benefit pension schemes Bank of Ireland Group 34#37Income Statement Net interest income analysis H2 2016 (€bn) Average Gross Gross Volumes Interest Rate (€m) (%) H1 2017 Average Gross Gross Volumes Interest Rate (€bn) (€m) (%) H2 2017 H1 2018 Average Gross Gross Average Gross Volumes Interest Rate Volumes Interest (€bn) (€m) Gross Rate (%) (€bn) (€m) (%) Ireland Loans 36.0 559 3.08% 35.5 547 3.11% 35.3 545 3.07% 34.6 531 3.09% UK Loans 30.2 489 3.22% 29.5 460 3.15% 28.0 430 3.05% 28.1 440 3.16% C&T Loans 12.7 254 3.98% 12.7 254 4.03% 12.8 253 3.92% 13.6 259 3.85% Total Loans & Advances to Customers 78.9 1,302 3.28% 77.7 1,261 3.27% 76.1 1,228 3.20% 76.3 1,230 3.25% Liquid Assets¹ 20.2 62 0.61% 21.3 49 0.46% 20.8 43 0.41% 22.1 35 0.32% NAMA Sub Debt 0.3 16 11.05% 0.3 17 11.97% 0.3 17 11.97% Total Interest Earning Assets 99.4 1,380 2.76% 99.3 1,327 2.70% 97.2 1,288 Ireland Deposits 21.9 (17) (0.15%) 20.6 (12) (0.12%) 20.4 Credit Balances² UK Deposits C&T Deposits 25.3 (1) (0.01%) 27.1 (0) (0.00%) 29.3 (9) 4 20.7 (111) (1.07%) 19.3 (83) (0.86%) 18.2 (74) 2.63% (0.08%) 20.5 0.03% 30.5 (0.80%) 18.9 0.2 98.6 4 3.50% 1,269 2.60% (8) (0.08%) 2 0.01% (81) (0.86%) 6.8 (14) (0.41%) 6.0 (10) (0.35%) 5.2 (9) (0.35%) 4.7 (9) (0.39%) Total Deposits 74.7 (143) (0.38%) 73.0 (105) (0.29%) 73.1 (88) (0.24%) 74.6 (96) (0.26%) Wholesale Funding³ 13.4 (32) (0.47%) Subordinated Liabilities 1.5 (48) (6.13%) 14.3 1.4 (43) (0.60%) 12.3 (36) (0.58%) 12.3 (45) (0.73%) (35) (5.17%) 1.8 (42) (4.80%) 2.1 (49) (4.77%) Total Interest Bearing Liabilities 89.6 (223) (0.49%) 88.7 (183) (0.42%) 87.2 (166) (0.38%) 89.0 (190) (0.43%) IFRS Income Classification (13) (8) 5 7 Other (9) 7 (25) 9 Net Interest Margin 99.4 1,135 Average ECB Base rate Average 3 month Euribor Average BOE Base rate Average 3 month LIBOR 2.27% 0.00% 99.3 1,143 2.32% 97.2 1,102 2.25% 98.6 1,095 2.23% 0.00% 0.00% 0.00% (0.31%) (0.33%) (0.33%) (0.33%) 0.30% 0.41% 0.25% 0.32% 0.50% 0.33% 0.38% 0.62% Bank of Ireland Group Excludes any additional gains from portfolio re-configuration during the period 2Credit balances in H1 2018: ROI €23.1bn, UK €3.1bn, C&T €4.3bn Includes impact of CRT transactions executed in December 2016 and November 2017 "Includes customer termination fees, EIR adjustments and other adjustments that are of a non-recurring nature 35#38Transformation Investment 2016-21 investment: €1.4bn Increasing our investment to support growth and drive efficiencies Average of €275m p.a. • Scope: Culture, Systems, Business Model . Average CET1 capital investment: c.50-60 bps p.a. Accounting treatment of annual investment (€275m p.a.): • 0 2016 2017 2018 2019 2020 2021 • Costs will decrease every year in absolute terms c.65%1 c.50% c.€1.9bn €1,796m €104m c.€1.7bn 2021 40% capitalised as intangible asset 40% charged as Transformation Investment in the Income statement 20% charged as non-core restructuring costs in the Income statement H1 2018 Transformation investment charge • Total transformation investment in H1 2018 of €141m, (CET1 ratio impact of c.30bps): €39m capitalised as intangible asset (28%) €51m charged as Transformation Investment in the Income statement (36%) €51m charged as non-core restructuring costs in the Income statement (36%) 2017 2018 2019 2020 Operating expenses Transformation Investment charge Cost income ratio Bank of Ireland Group 1See Slide 45 for calculation 36#39Non-performing exposures by portfolio Advances Composition (Jun 18) (€bn) Non-performing exposures (€bn) Non-performing exposures as % of advances Impairment loss allowance (€bn) Impairment loss allowance as % of non-performing exposures Residential Mortgages 46.0 3.0 6.4% 0.6 20% - Republic of Ireland 23.7 2.5 10.5% 0.5 20% - UK 22.3 0.5 2.2% 0.1 13% Non-property SME and Corporate 19.1 1.5 7.9% 0.8 52% - Republic of Ireland SME 7.8 1.1 14.4% 0.5 47% - UK SME 1.6 0.1 6.9% 0.1 44% - Corporate 9.7 0.3 2.7% 0.2 73% Property and construction 8.4 1.3 15.3% 0.6 46% - Investment property 7.7 1.2 14.9% 0.5 45% - Land and development 0.7 0.1. 20.2% 0.1 52% Consumer 4.9 0.1 2.1% 0.1 132% Total loans and advances to customers 78.4 5.9 7.5% 2.1 36% Advances Non-performing Composition (Dec 17) exposures (€bn) (€bn) Non-performing exposures as % of advances Impairment Impairment loss loss allowance allowance as % of (€bn) non-performing exposures Residential Mortgages 46.7 3.0 6.6% 0.7 23% - Republic of Ireland 24.1 2.6 11.0% 0.6 24% - UK 22.6 0.4 1.9% 0.1 14% Non-property SME and Corporate 18.7 1.7 8.9% 0.9 49% - Republic of Ireland SME 8.2 1.3 15.4% 0.6 46% - UK SME 1.7 0.1 8.6% 0.1 42% - Corporate Property and construction 8.8 0.3 3.0% 0.2 69% 8.8 1.7 19.1% 0.7 44% - Investment property 8.3 1.5 17.9% 0.6 43% - Land and development 0.5 0.2 39.4% 0.1 55% Consumer 4.3 0.1 2.1% 0.1 98% Total loans and advances to customers 78.5 6.5 8.3% 2.4 36% Bank of Ireland Group 37#40ROI Mortgages Arrears performance 4 times better than Industry Average Industry Average >90 days arrears¹ Industry Average 18.0% Bank of Ireland 7.9% Bank of Ireland 2.2% Owner Occupier Owner Occupier Buy to let Buy to let 5.0% >90 days arrears . Bank of Ireland is significantly below the industry average for both Owner Occupier (28% 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 (25% of industry average) and Buy to Let (19% of industry average) >720 days arrears¹ Industry Average Industry Average 13.4% Bank of Bank of Ireland 4.9% Ireland 2.6% 1.2% Owner Occupier Owner Occupier Buy to let Buy to let Bank of Ireland Group 'As at March 2018, based on number of accounts, industry average excluding BOI 38#41UK Customer Loans: £28.2bn (€31.9bn) UK Mortgages - £19.8bn Scotland, Northern Ireland, £1.0bn £1.0bn Rest of England, £8.9bn Wales, £0.7bn Greater London, £3.8bn Outer Metropolitan, £2.4bn South East, £2.0bn Other UK Customer Loans - £8.4bn £0.1bn £0.2bn £0.1bn £2.4bn £1.8bn £1.3bn £0.01bn £0.14bn SME Corporate Investment Property Land & Development Performing loans Non-performing exposures Bank of Ireland Group £0.03bn £2.4bn Consumer UK Mortgages Analysis - £19.8bn Total UK mortgages of £19.8bn; (NPES: 2%) ° Average LTV of 61% on total book (2017: 62%) Average LTV of 69% on new mortgages (2017: 72%) • UK mortgage book continues to perform in line with industry averages¹ 79% of mortgages originated since January 2010 are standard owner Occupier mortgages BTL book is well seasoned with 75% of these mortgages originating prior to January 2010 Average loan balance of Greater London mortgages is c.£192k, with 94% of Greater London mortgages having an indexed LTV <70% Other UK Customer Loans Analysis - £8.4bn Non-performing exposures of £0.4bn with strong coverage ratios Performing loans of £8.0bn; • SME: broad sectoral diversification with low concentration risk Corporate: specialist lending teams in Acquisition Finance, Project Finance, and Corporate lending through a focussed sector strategy Investment Property: primarily Retail, Office and Residential sectors Consumer (£2.4bn): Northridge (£1.3bn): Asset backed motor finance business; net loan book increase of £0.2bn in H1 2018; mid-market pricing targeting prime business only; below industry arrears and loan losses Personal loan volumes (£0.5bn): net loan book increase of £0.1bn in H1 2018; improved credit risk process has driven increase in customer applications and drawdowns Credit cards (£0.6bn): AA / PO branded credit card portfolio; unchanged net loan book in H1 2018; undertaking strategic review of business including front book and back book options 'Data published by the Council of Mortgage Lenders (CML) for March 2018 indicates that the proportion of the Retail UK mortgage book in default (defined for CML purposes as greater than 90 days but excluding possessions and receivership cases) is in line with the UK industry average 39#42Asset Quality Debt Securities at fair value through other comprehensive income (FVOCI) ROI (€bn) UK France Other June 18 (€bn) (€bn) (€bn) (€bn) Dec 171 (€bn) Sovereign bonds 3.4 0.8 2.0 6.2 7.5 Senior debt 0.1 0.3 1.4 1.8 2.1 Covered bonds 0.2 0.4 0.5 2.1 3.2 3.1 Subordinated debt 0.1 0.1 0.4 Asset backed securities - - 0.1 Total FVOCI Reserve 3.7 0.2 0.4 1.6 5.6 11.3 13.2 0.2 0.3 Portfolio • On 1 Jan 2018, debt securities classified as AFS financial assets under IAS39 were reclassified in accordance with IFRS 9 The Group held €11.3bn of FVOCI debt securities at June 2018. Weighted average instrument level credit rating of the FVOCI portfolio is AA / AA- • • Other exposures include supranational entities (€1.1bn), Spain (€0.8bn), Sweden (€0.8bn), Belgium (€0.7bn), and Other (€2.2bn - all exposures less than €0.5bn) NAMA • The Group held NAMA subordinated bonds (€0.3bn nominal value) at Dec 2017 • On 1 Jan 2018, on transition to IFRS 9, the previous unamortised discount? which was amortising to the income statement under IAS39, was transferred in full to retained earnings (NIM impact c.2bps) In April 2018, the Group sold €0.2bn of NAMA subordinated bonds in a buy-back auction generating an additional gain in the income statement of c.€9m • The Group holds NAMA subordinated bonds - €0.1bn nominal value, valued at 106% at Jun 2018 (Dec 17 - 104%) Bank of Ireland Group 'The Group held €13.2bn of AFS financial assets at Dec 17 which were reclassified under IFRS 9 to FVOCI (€10.1bn), Amortised Cost (€2.8bn) and FVTPL (€0.3bn) 2An initial discount was recognised on the NAMA subordinated bonds with subsequent changes in fair value being recognised in the AFS Reserve 40#43Capital CET1 ratios - June 2018 Regulatory ratio (€bn) Fully loaded ratio (€bn) Total equity Less Additional Tier 1 Deferred tax¹ Intangible assets and goodwill Potential dividend deduction² Expected loss deduction Other items³ Common Equity Tier 1 Capital Credit RWA Operational RWA Market, CCR and Securitisations Other Assets/10%/15% Threshold deduction Total RWA Common Equity Tier 1 ratio Phasing impacts on Regulatory ratio 9.9 9.9 (0.8) (0.8) (0.4) (1.1) (0.7) (0.7) (0.1) (0.1) (0.4) (0.4) (0.3) (0.4) 7.2 6.4 36.5 36.5 4.6 4.6 1.7 1.7 3.0 2.8 45.8 45.6 15.8% 14.1% • Deferred tax assets - certain DTAs are deducted at a rate of 40% for 2018, 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 an 95% add- back in 2018, decreasing to 85%, 70%, 50% and 25% in subsequent years Regulatory leverage ratio of 7.2%; Fully loaded leverage ratio of 6.4% Bank of Ireland Group 'Deferred tax assets due to temporary differences are included in other RWA with a 250% risk weighting applied 2Potential dividend deduction of €75m 3Other items - the principal items being the cash flow hedge reserve, securitisation deduction and 10% / 15% threshold deduction 41#44Capital Guidance and Distribution Policy 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 period¹ Distribution Policy • This includes meeting applicable regulatory capital requirements plus an appropriate management buffer The Group recommenced the payment of dividends with a payment of €124m equivalent to 11.5c per share in respect of the 2017 financial year • 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: 0 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 H1 2018 Position Regulatory rules require that a deduction is made at the half year in respect of potential dividends; in that regard the Group has made a deduction of €75m (c.20bps) in arriving at its CET1 ratio of 14.1% which is equivalent to an annualised dividend per share of 14c Bank of Ireland Group 'The Other Systemically Important Institution (O-SII) buffer will be introduced at 0.5% in July 2019, increasing to 1.0% in July 2020 and 1.5% in July 2021 42#45Ordinary shareholders' equity and TNAV Movement in ordinary shareholders' equity Ordinary shareholders' equity at beginning of period 2017 (€m) 8,612 H1 2018 (€m) 8,859 Movements: Profit attributable to shareholders 664 350 Impact of adopting IFRS 9 (113) Dividends on preference equity interests (4) Distribution on other equity instruments - Additional Tier 1 coupon (net of tax) (24) Dividend paid to ordinary shareholders (124) Remeasurement of the net defined benefit pension liability (113) 159 Debt instruments at FVOCI reserve movements (58) Available for sale (AFS) reserve movements Cash flow hedge reserve movement Liability credit reserve movements Foreign exchange movements Other movements Ordinary shareholders' equity at end of period Tangible net asset value (9) (115) (37) 11 (147) 19 (5) 8 8,859 9,074 Dec 17 Jun 18 (€m) (€m) Ordinary shareholders' equity at the end of period 8,859 9,074 Adjustments: Intangible assets and goodwill (779) (786) Own stock held for benefit of life assurance policyholders 33 28 Tangible net asset value (TNAV) 8,113 8,316 Number of ordinary shares in issue at the end of the period (millions of shares) TNAV per share (€) 1,079 1,079 €7.52 €7.71 Bank of Ireland Group 43#46Return on tangible equity (ROTE) H1 2018: Headline vs. Adjusted H1 2018 Headline (€m) 377 Additional gains, & valuations items', net of tax Adjustments H1 2018 net impairment gains, net of tax "Normalised" impairment adjustment, net of tax H1 2018 Adjusted (€m) Profit for the period Non-core items, net of tax 39 Coupon on Additional Tier 1 securities (24) Preference share dividends (3) 389 16 (67) (63) 275 778 550 Adjusted profit after tax Annualised profit after tax At June 2018 Shareholders' equity 9,074 Intangible assets (786) Shareholders' tangible equity 8,228 Average shareholders' tangible equity 8,120 Return on tangible equity (ROTE) 9.6% H1 2018 Adjusted Return on Tangible Equity is adjusted for; Additional gains and valuations items¹, net of tax - €16m Reversal of H1 2018 net impairment gains 2018, net of tax - €67m "Normalised" impairment charge (20bps), net of tax - €63m Bank of Ireland Group Excludes IFRS income classifications of €19m which is fully offset in net interest income 9,074 (786) 8,228 8,120 6.8% 44#47Cost income ratio: June 2018 Headline vs. Adjusted Net interest income Other income - Business income. - Additional gains - Other valuation items¹ Total Income Costs - Operating expenses H1 2018 Headline (€m) 1,076 323 Adjustments (€m) . H1 2018 Adjusted (€m) 1,076 323 10 (11) (10) 30 19 11 1,398 20 1,418 882 - Transformation Investment 51 Costs Cost income ratio 933 67% 882 51 933 66% Cost income ratio excludes; Levies and Regulatory charges Non-core items H1 2018 adjusted cost income ratio is adjusted for; Additional Gains and valuation items¹ (€20m) Bank of Ireland Group Excludes IFRS income classifications of €19m which is fully offset in net interest income 45#48Defined Benefit Pension Schemes Group IAS19 Defined Benefit Pension Deficit 1.60% 2.20% 2.30% 2.10% 2.05% Mix of BSPF Defined Benefit Pension Scheme Assets (%)¹ €4.0bn €5.5bn €5.6bn €1.19bn 45% 61% 61% 11% €0.45bn €0.49bn €0.48bn €0.26bn 21% 44% 18% Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 IAS19 DB Pension Deficit EUR Discount Rate Dec 12 Dec 17 24% 15% Jun 18 IAS19 Pension Deficit Sensitivities (Jun 2016 / Dec 2016 Dec 2017/ Jun 2018) Listed equities Diversified assets² Credit / LDI / Hedging 'Graphs shows BSPF asset allocation. BSPF represents approx. 77% of DB Pension assets 2Diversified assets includes infrastructure, private equity, hedge funds and property • IAS19 Pension deficit of €0.26bn at Jun 2018: schemes in deficit €0.33bn, schemes in surplus €0.07bn • The primary drivers of the movement were: €313m €176m €173m €162m €162m €159m €122m €124m €128m €123m €118m 106m €71m €55m €28m €25m Interest Rates¹ Credit Spreads² Inflation³ Global Equity *Sensitivity of Group deficit to a 0.25% decrease in interest rates 2Sensitivity of IAS19 liabilities to a 0.10% decrease in credit spread over risk free rates 3Sensitivity of Group deficit to a 0.10% increase in long term inflation "Sensitivity of deficit to a 5% decrease in global equity markets with allowance for other correlated diversified asset classes . Strong asset performance in H1 2018; • Positive impact of changes in long term assumptions; and • Deficit reducing contributions of €25m to BSPF • The improvement in the pension deficit reduced the regulatory capital deduction required by €160m (c.35bps) • The Group continues to support the Trustees in taking action to improve the correlation between assets and liabilities and reduce volatility Bank of Ireland Group 46#49Contact details For further information please contact: • Group Chief Financial Officer Andrew Keating tel: +353 76 623 5141 [email protected] • 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 tel: +353 76 624 8409 tel: +353 76 624 8725 tel: +353 76 624 4371 • Lorraine Smyth Alan McNamara Alan Elliott Wholesale Funding Darach O'Leary Redmond O'Leary tel: +353 76 624 4224 tel: +353 76 624 4198 Investor Relations website www.bankofireland.com/investor [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Bank of Ireland Group 47#50Forward-Looking statement This document contains forward-looking statements with respect to certain of Bank of Ireland Group plc (BOIG plc') and its subsidiaries' (collectively 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 losses, 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 the 6 months ended 30 June 2018 beginning on page 38 and also the discussion of risk in the Group's Annual Report for the year ended 31 December 2017. Nothing in this document should be considered to be a forecast of future profitability, dividends or financial position of the Group and none of the information in this document is or is intended to be a profit forecast, dividend forecast or profit estimate. Any forward-looking statement speaks only as at the date it is made. The Group does not undertake to release publicly any revision to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date hereof. Bank of Ireland Group 48#51Bank of Ireland Group 49#52Empty#53Empty