#1Bank of Ireland Credit Presentation 6 November 2015 Bank of Ireland For small steps, for big steps, for life#2Empty#3Bank of Ireland Overview#4Bank of Ireland Overview H1 2015 Strong Operating Performance H1 2014 Hồ 2015 Total income €1,475m €1,759m Net interest margin (NIM) 2.05% 2.21% Operating expenses (€813m) (€875m) Impairments: Customer loans NAMA bonds (€444m) €70m (€168m) Underlying profit before tax¹ €327m €743m Robust balance sheet metrics Dec 14 Jun 15 €82.1bn €14.3bn €85.3bn €13.3bn Customer loans (net) Defaulted loans CET1 ratios: Transitional 14.8% Fully Loaded (excl Prefs) 9.3% 15.9% 11.1% Total capital ratio 18.3% 20.7% Liquidity metrics: NSFR 114% 118% LCR 98% 101% LDR 110% 108% 1 Includes share of associates/JVs Bank of Ireland Group Underlying profit of €743m in H1 2015; >100% improvement over H1 2014 NIM improved by 16 bps to 2.21% All trading divisions contributing to the Group's profitability Increased new lending by 50% over H1 2014 Largest lender to the Irish economy UK mortgage lending of £1.3bn (£0.6bn H1 2014) Reduced defaulted loans to €13.3bn in H1 2015; (€5bn (27%) below H1 2013 peak), €12.5bn Sep 2015 Organic capital accretion continued in H1 2015; 180bps increase in fully loaded CET1 to 11.1% Transitional CET1 ratio of 15.8%, fully loaded CET1 ratio of 10.6% and total capital ratio of 20.7% at Sep 2015 Positive credit rating action with return to Investment Grade by Moody's and Standard & Poor's 2#5Bank of Ireland Franchises 51% Customer Loans¹ 45% €47.4bn €1.5bn €8.5bn €41.1bn -€1.7bn €6.4bn €12.1bn €4.9bn €25.3bn €28.1bn ROI UK 4% €3.9bn €0.2bn €3.7bn International Businesses Residential Mortgages Non-property SME & Corporate Property and Construction Consumer % Geographical Split 1 Gross loans and advances to customers at 30 Jun 2015 of €92.4bn. Bank of Ireland Group ROI-Leading bank in a growing economy Largest lender to the Irish economy in H1 2015 Full service retail/commercial bank with #1 or #2 positions across all principal product lines #1 Business and Corporate Bank Ireland's only bancassurer, 23% share of life assurance market UK - A leading consumer bank Exclusive financial services partner of UK Post Office; Legal & General and other partnerships also in place Recent announcement of long term AA partnership complementary to Post Office partnership Full service retail/commercial bank in Northern Ireland International Business - Acquisition finance business Well recognised lead arranger/underwriter US/European business Focused on mid-market transactions Expertise developed over c.20 years 3#6Financial Performance#7Net interest income Further growth in net interest income achieved in H1 2015 2.05% Net interest income trend 2.15% 2.21% €1,161m €1,197m €1,219m Net interest income - €1,219m Bank of Ireland Group Delivered net interest income growth of €22m (c.2%) vs H2 2014 reflecting NIM growth and higher interest earning assets Average interest earning assets Increased to €109bn in H1 2015 from €108bn in H2 2014, driven predominantly by FX translation effects NIM H1 2014 H2 2014 H1 2015 Net interest income Net interest margin 3.60% Net interest margin drivers 3.56% 1.72% 1.56% 3.58% H1 2015 H1 NIM improved to 2.21% reflecting; Lower funding costs; Positive impact of new lending volumes; partially offset by; Lower yields on replacement liquid assets following bond sales maturities Q2 2015 NIM was 2.17%; Reflects impact of bond sales and pre-funding of planned UK mortgage growth in H1 2015 Expect modest growth from Q2 level reflecting benefits of lower funding costs and new lending, partially offset by impact of lower liquid asset yields Q3 NIM was 2.18% 1.23% 1.15% 1.03% 0.89% H1 2014 H2 2014 Loan Asset Yield Liquid Asset Yield Cost of Funds 5#8Loans and advances to customers Group new lending up 50% to €6.5bn in H1 2015 New lending volumes +36% €3.4bn¹ €2.5bn €1.3bn +84% €2.5bn €0.5bn €0.6bn Irish business UK business Acquisition Finance - H1 2014 - H1 2015 % growth half on half Bank of Ireland Group +22% ROI Variable / Fixed Mortgages Customer loans (net of provisions), increased by c.€3.2bn to €85.3bn (FX translation benefit of €3.6bn) New lending amounted to €6.5bn¹ in H1 2015; Up 50% vs H1 2014 Irish businesses new lending up 36%, customer credit appetite increasing as recovery continues Substantial increase in UK business new lending up 84%; primarily reflects success of mortgage strategy Group redemptions of €6.9bn in H1 2015 include Cash payments on defaulted loans redemptions / sales €0.7bn ROI tracker redemptions of €0.5bn (with a further €0.2bn reduction primarily relating to conversions to variable rate) GB non-core business banking book redemptions of €0.4bn Confident of further progress in H2 and beyond Growth in underlying economies provides supportive backdrop Good momentum in our Irish and UK businesses Net lending growth for selected books² ROI Trackers €0.5bn GB non-core business €0.4bn €0.3bn €0.2bn ROI SME €0.2bn UK mortgages €0.2bn Acquisition Finance *Includes €0.5bn in respect of IBRC mortgages and Danske business portfolio acquisitions completed during H1 2015. ²Shows gross new lending less redemptions in H1 2015. New lending includes portfolio acquisitions. 6#9Asset Quality#10Defaulted loans and impairment charge Defaulted loan volumes €5bn reduction €18.3bn €16.7bn €14.3bn €13.3bn Jun 13 Jun 14 Dec 14 Jun 15 Defaulted Loans Impairment charge on customer loans 50% 52% 97bps 83bps 53% 36bps H1 2014 H2 2014 Coverage ratio H1 2015 Annual impairment charge on customer loans as a % of average gross loans for the period Bank of Ireland Group €1bn reduction during H1 2015, notwithstanding FX translation headwinds of c.€0.4bn: Reductions in all asset classes €5bn or 27% reduction since peak in Jun 13 Further €0.8bn reduction in Q3 2015; expect level of defaulted loans to continue to reduce Charge of 36 bps for H1 2015 vs 97bps in H1 2014 Reduced charge across all loan portfolios Coverage ratio increased to 53% (52% at Dec 14) Expect H2 impairment charge to remain at broadly similar levels to H1 charge 8#11ROI Mortgages: €25.3bn 42% Owner Occupied 40% 41% €2.1bn €1.7bn €1.5bn Dec 13 Dec 14 Jun 15 Defaulted Loans Coverage ratio Buy to Let 57% 53% 55% Bank of Ireland Group Owner Occupied: €20.0bn Reduced defaulted loans by 12% to €1.5bn in 2015 Arrears at <50% of industry1 BOI arrears >720 days reducing and at 39% of industry² 50% or €9.9bn of mortgages are ECB trackers (Dec 14: €10.2bn) Buy to Let: €5.3bn Reduced defaulted loans by 13% to €1.3bn in 2015 Arrears at <60% of industry³ BOI arrears >720 days reducing and at 43% of industry4 72% or €3.8bn of mortgages are ECB trackers (Dec 14: €4.2bn) €1.7bn €1.5bn €1.3bn Impairment credit Dec 13 Dec 14 Jun 15 Defaulted Loans Coverage ratio Impairment credit of €32m reflects improved portfolio performance At June 2015, BOI owner occupier arrears level (based on number of accounts >90 days in arrears) was 4.77% compared to 10.56% for industry excl BOI 2 At June 2015, BOI owner occupier arrears (based on number of accounts >720 days in arrears) was 2.27% compared to 5.80% for the industry excl BOI 3 At June 2015, BOI buy to let arrears level (based on number of accounts >90 days in arrears) was 12.10% compared to 21.06% for industry excl BOI 4 At June 2015, BOI buy to let arrears (based on number of accounts >720 days in arrears) was 5.51% compared to 12.82% for the industry excl BOI 9#12Defaulted loans by portfolio Defaulted loans reducing across all portfolios ROI Mortgages 51% 46% 48% 22% €3.7bn €3.2bn €2.8bn Bank of Ireland Group UK Mortgages 23% 24% €0.6bn €0.5bn €0.5bn Jun 14 Dec 14 Jun 15 Jun 14 Dec 14 Jun 15 Defaulted Loans Coverage Ratio Defaulted Loans Coverage Ratio 48% Non property SME and Corporate 51% 52% 51% Property and Construction 56% 57% €3.8bn €8.4bn €3.3bn €7.1bn €3.1bn €6.8bn Jun 14 Dec 14 Jun 15 Jun 14 Dec 14 Jun 15 Defaulted Loans Coverage Ratio Defaulted Loans Coverage Ratio 10#13Funding & Capital#14Funding Update Dec 14 €bn Jun 15 €bn Customer Deposits Retail Ireland Retail UK Corporate Wholesale Funding 37 Private Markets Monetary Authority 2222264 75 79 38 29 12 15 14 1 Liquidity Metrics NSFR 114% 118% LCR 98% 101% LDR 110% 108% Credit Ratings of BOI Debt Securities Rating Agencies Moody's Senior unsecured Covered Bond Baa2 Outlook Stable Aa1 BBB- Standard & Poor's N/A Outlook Positive DBRS N/A AA (low) as of 06 Nov 2015 Bank of Ireland Group Customer deposits - €79bn Jun 15 Funding >90% of customer loans Diversified stable source of deposit funding ROI €38bn, UK €29bn (£21bn) and Corporate €12bn Predominantly retail customer oriented Customer deposits of €78bn at Sep 15 Wholesale funding - €15bn Jun 15 (unchanged at Sep 15) Continuing to access wholesale markets at economic costs c.€3.6bn debt issuance YTD Oct 15 Repaid c.€3bn of ECB funding during H1 2015 Credit Ratings - Positive action Upgrade of senior debt rating to Investment Grade by Moody's (May 15) and S&P (July 15) Strong covered bond credit ratings; Moody's upgrade to Aa1 in May 15 and DBRS upgrade to AA (low) in Oct 15 12#15Capital¹ On track to de-recognise 2009 Preference Shares CET1 ratio Total capital ratio 20.7% 18.3% 15.9% 14.8% Dec 14 Jun 15 Dec 14 Jun 15 Transitional CET1 Ratio Capital Build 1.2% 0.3% 14.8% (0.5%) 12.3% 0.1% 15.9% 13.4% Dec 14 CET1 Impact of Attributable CRD IV profit RWA² Pension deficit Jun 15 CET1 phasing Transitional CET1 ratio (excl Prefs) Transitional CET1 ratio (incl Prefs) Bank of Ireland Group Significant pace of organic capital accretion continued in H1 2015 Robust CET1 ratios Transitional CET1 ratio of 15.9% at H1 2015; 15.8% at Sep 2015 Continue to expect to maintain a buffer above a CET1 ratio of 10%, taking account of the transitional rules and our intention to de-recognise 2009 Preference Shares between Jan 16 and Jul 16 Fully loaded CET1 ratio (excl Prefs) of 11.1%; 10.6% at Sep 2015 Total capital ratio of 20.7%; reflects CET1 increase and €750m of AT1 issuance in June 2015; 20.7% at Sep 2015 Transitional leverage ratio of 7.5%; fully loaded leverage ratio (excl Prefs) of 5.4% RWA density of 40%³ (46% excluding BOI Life assets) On track to de-recognise 2009 Preference Shares (€1.3bn) between Jan 16 and Jul 16 1 Capital ratios have been presented including the benefit of the retained profit for the period. 2 RWA movement is calculated on a constant currency basis. 3 RWA density calculated as RWAS / total balance sheet assets as at June 2015. 13#16Irish Economy Overview#17Favourable macroeconomic environment and outlook Ireland is... Bank of Ireland Group Growing Fastest growing economy in Europe GDP increased by 6.7% year-on-year in Q2 2015 Growth of 6.2% forecast for the full year, 4.8% in 2016 Increasing activity supporting employment & incomes Rebalancing Domestic demand and net exports to contribute to growth in 2015 & 2016 Year-on-year gains in exports, investment and consumer spending in Q2 Quarterly growth across all sectors in Q2 Attractive Flexible, small open economy Globalised and competitive - c.33% more productive per person than euro area Leading FDI hub with young educated workforce Domestic economy strengthening Sources: BOI Economic Research Unit, Central Statistics Office GDP 2014: 5.2% 2015f: 6.2% 2016f: 4.8% Level of real GDP now back above 2007 peak Ireland leading the way % 8 7 6 5 4 3 2 1 0 2014 2015(f) 2016(f) Ireland Euro Area Graph shows annual real GDP growth Source: CSO, Eurostat; Forecasts: Ireland: Bol ERU Euro area: IMF 15#18Strong export performance Supported by trading partner growth, competiveness gains and a weaker euro Highly open economy - exports at record high and > 100% of GDP Exports 2014: 12.1% 2015f: 12.0% 2016f: 6.5% Leading destination for exporting multinationals 20 15 10- 5 0 -5- -10- -15- -20- Ireland Greece Competitiveness Spain EA UK Bank of Ireland Group Investment gaining ground Underpinned by strengthening domestic and external demand, high level of sentiment and FDI inflows FDI investments up 10% year-on-year in H1 2015 Investment 2014: 14.3% Construction picking up from a low base as the property market recovers 2015f: 14.2% 2016f: 8.5% 701 60 50 House completions up 14.4% year-on-year in Jan-Sept 2015 40 2013 Germany Graph shows change in unit labour costs 2009-2017. Source: EU Commission PMIS 2014 Services Euro area - Services Ireland Manufacturing Euro area Manufacturing Ireland Graph shows PMI indices. Source: Markit 2015 16#19Employment rising 15 Over 130,000 new jobs since start of 2012, gains broadening out across sectors and regions Unemployment rate well below euro area average, down to 9.3% from a peak of c.15 % Employment Consumer returning Core retail sales rose 6.2% year-on-year in Jan - Sept 2015, new car sales up 31.7% in same period 2015f: 2.7% 2016f: 2.4% High consumer confidence, rising employment & incomes and low inflation are supporting spending 2014: 1.7% Rate projected to fall to close to 9% by end 2015 and c.8% by end 2016 Young educated workforce - in top 10 of IMD World Talent Ranking 12. 9 2013 Consumption growth to continue, albeit deleveraging a headwind Unemployment Rate 110- 100- 90- 80- 70 60- 2014 50 2015 2013 Ireland Euro Area Graph shows seasonally adjusted unemployment rate by quarter. Source: CSO, Eurostat Bank of Ireland Group Consumer Spending 2014: 2.0% 2015f: 3.2% 2016f: 3.2% Consumer Confidence 25 15 15 5 -5 -15 -25 2014 2015 Ireland (LHS) Euro Area (RHS) Graph shows consumer confidence indices for Ireland (3m MA) and Euro Area. Source: ESRI, EU Commission 17#2030.01 Bank of Ireland Group Property market recovering Residential and commercial activity improving Residential transactions up c27% year-on-year in Jan - Aug 2015 (cash purchases c.50% of market in H1 2015) Volume of mortgages up 44% year-on-year in H1 2015; cost of servicing average 25 year mortgage < 30% of gross income versus peak of c. 45% House prices rising, albeit at a slower pace than in 2014 Supply shortages in urban areas - supporting construction activity Property Prices and Rents Public finances improving 7-year consolidation programme ended in 2014 Budget 2016 package injects €1.5bn into economy Deficit projected to fall to 2.1% of GDP this year; debt to GDP ratio down to 97% by year end and Euro area average by end of 2016 Ireland is fully engaged in debt markets, sovereign yields at low levels (approaching semi-core, well below peripherals), rating upgraded General Government Deficit 20.0 10.0 0 -10.0 -20.0 -30.0 2011 2012 2013 0 -1- -2- -3- -4- 2014 2015 -5- Rents National National Ex Dublin Dublin Graph shows year-on-year change in residential property prices and private rents Source: CSO Commercial Capital Growth 21.7% Rental Growth 17.4% Graph shows year-on-year change Q3 2015. Source: IPD -6- 2013 2014 2015(f) Euro Area 2016(f) 2017(f) Ireland Graph shows general Government deficit as a % of GDP. Source: IE dept of finance stability programme and EU Com Spring outlook 18#21Additional Information#22Additional Information Bank of Ireland Group Group Income Statement BOI Overview Income Statement Summary Balance Sheet Financial targets Income Statement Divisional performance Other income analysis (net) Non-core Items ECB Tracker mortgage loan book Asset quality Profile of customer loans at Jun 15 (gross) Defaulted customer loans & impairment provisions ROI Mortgage book profile UK Residential mortgages SME & Corporate loans Property & Construction loans Available for Sale Financial Assets Capital CET1 ratios Group Credit Ratings Fully loaded CET1 ratio (excl Prefs) capital build Defined Benefit Pension Schemes Defined Benefit Pension Schemes Ordinary stockholders' equity and TNAV Contact details Slide No. 21 21 23 24 25 26 27 28 30 33 34 36 222 222 22523ZE O 31 37 39 40 41 42 20#23Group Income Statement Underlying profit more than doubled to €743m H1 2014 (€m) H1 2015 (€m) % Change Total income 1,475 1,759 19% Net interest income 1,161 1,219 5% Other income (net) 335 545 63% ELG fees (21) (5) 76% Operating expenses (813) (875) (8%) Operating profit 662 884 34% pre-impairment Impairment charge (374) (168) 55% Customer loans (444) (168) 62% NAMA bonds 70 Share of associates / JVS 39 27 (31%) Underlying profit 327 743 127% before tax Non-core items 72 (18) Statutory profit 399 725 82% before tax Bank of Ireland Group Underlying profit more than doubled to €743m in H1 2015 Pre-provision operating profit up €222m (34%) Increased Net interest income by €58m; higher net interest margin partially offset by lower interest earning assets Other income of €545m; reflecting good momentum in our business income and additional gains Lower cost/income ratio of 50% (H1 2014: 55%) Impairment charge reduced by >60% to €168m / 36bps Underlying PBT includes additional gains of €228m (H1 2014 €140m) Liquid asset portfolio rebalancing (€171m) Sale of investment properties / other assets (€57m) 21#24BOI Overview Income Statement¹ Bank of Ireland Group y/e Dec 11 (€m) y/e Dec 12 y/e Dec 13 y/e Dec 14 (Єm) (€m) (€m) Jun 15 (6 month) (Єm) Total income 2,058 1,862 2,646 2,974 1,759 Net interest income 1,983 1,755 2,133 2,358 1,219 Other income 524 495 642 653 545 ELG fees (449) (388) (129) (37) (5) Operating expenses (1,645) (1,638) (1,576) (1,635) (875) Bank levy² (38) Operating profit pre-impairment 413 224 1,070 1,301 884 Impairment charge (1,971) (1,769) (1,665) (472) (168) Customer loans (1,939) (1,724) (1,665) (542) (168) AFS3 (32) (45) 70 Share of associates / JVs 39 46 31 92 27 27 Underlying (loss) / profit before tax (1,519) (1,499) (564) 921 743 Non core items 1,329 (679) 44 (1) (18) Statutory (loss) / profit before tax (190) (2,178) (520) 920 725 NIM 1.33% 1.25% 1.84% 2.11% 2.21% Cost income 79% 88% 60% 55% 50% *Figures as reported, with the exception of y/e Dec 13 which includes a €5m reduction in operation expenses relating to IFRIC 21 adjustments. 2Irish bank levy is a 3 year levy for 2014 to 2016, that is accounted for in the second half of each year. ³Includes impairment charge and losses on assets sold to NAMA. 22 24#25BOI Overview Summary Balance Sheet¹ Bank of Ireland Group Dec 11 (€bn) Dec 12 (€bn) Dec 13 (€bn) Dec 14 (€bn) Jun 15 (€bn) Net Customer Loans² 102 93 85 82 85 Liquid assets 31 33 27 25 24 Other assets 10 9 6 7 6 Total Assets 143 135 118 114 115 Customer deposits 71 75 74 75 79 Wholesale funding 51 39 27 Private Sources Monetary Authorities 22 28 24 19 23 15 8 264 20 15 16 14 1 Subordinated liabilities 1 2 2 2 3 Other liabilities 10 10 10 7 8 8 Stockholders' equity 10 9 8 9 9 Other equity instruments 1 Total Liabilities & Stockholders' Equity 143 135 118 114 115 CET1 Core Tier 1 Ratio³ 14.3% 14.4% 12.3% 14.8% 15.9% Total capital ratio³ 14.7% 15.3% 14.1% 18.3% 20.7% Loan to deposit ratio 144% 123% 114% 110% 108% Balance sheet excludes BOI Life assets and liabilities. 2 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 2011 - 2012 and under Basel III transitional rules for 2013 - 2015. 23#26BOI Overview Financial targets Metrics Target Hồ 2015 Bank of Ireland Group Status Balance Sheet Loans and advances to customers¹ c.€90bn €85bn On track Group loan/deposit ratio ≤120% 108% Buffer Transitional CET1 ratio 15.9% maintained >10% ELG covered liabilities Fully €1bn disengaged €5m ELG fees Profitability Net interest margin >2.0% 2.21% Cost income ratio <50% c.50% On track Impairment charge² 55-65bps 36bps 'Loans and advances to customers are stated net of impairment provisions. 2Annual impairment charge on customer loans as a % of average gross loans for the period. 24#27Income Statement Divisional performance Bank of Ireland Group Retail Bank of Retail Corporate & 6 months ended Jun 15 Ireland Ireland Life UK Treasury (€m) (€m) (€m) (€m) Group Centre & Other (€m) Group (€m) Operating profit/(loss) before 315 58 152 429 (70) 884 impairment charge Impairment charge (59) (75) (34) (168) Share of results of associates and joint ventures 5 22 27 Underlying profit/(loss) before tax 261 58 99 99 395 (70) 743 6 months ended Jun 14 Retail Ireland (€m) Bank of Retail Ireland Life UK Corporate & Treasury Group Centre & Other Group (€m) (€m) (€m) (€m) (Єm) Operating profit/(loss) before 236 69 152 349 (144) 662 impairment charge Impairment (charge) / reversals (285) (113) (46) 70 (374) Share of results of associates and joint ventures 21 18 39 Underlying (loss) / profit before tax (28) 69 69 57 57 303 (74) 327 25 25#28Income Statement Other income analysis (net) Bank of Ireland Group Retail Ireland Bank of Ireland Life Retail UK (net) Corporate and Treasury Group Centre and other Business income Other gains Transfer from available for sale reserve on asset disposal -Sovereign bonds - Other financial instruments Gain on disposal and revaluation of investment property Other Valuation items Financial instrument valuation adjustments (CVA, DVA, FVA and other) Fair value movement on Contingent Capital Note (CCN) embedded derivative Investment variance - Bank of Ireland Life Economic assumptions - Bank of Ireland Life IFRS income classification Other Income Hồ 2014 (€m) H1 2015 (€m) 156 167 71 81 7 5 66 71 (17) (5) 283 319 89 80 9 883 206 171 35 22 ེརྨུ༠་ (15) 25 (21) (8) 9 10 14 (27) (29) 335 545 26#29Income Statement Non-core items Cost of restructuring programme Gross-up for policyholder tax in the Life business Gain (Charge) arising on the movement in Group's credit spreads Impact of changes to pension benefits in the Group sponsored defined benefit schemes Payments in respect of the career and reward framework Loss on liability management exercises Investment return on treasury stock held for policyholders Loss on disposal of business activities. Total non-core items Bank of Ireland Group H1 2014 (€m) H1 2015 (€m) (27) (18) 8 10 8 (8) 87 က (1) 72 (18) 27 22#30ECB tracker mortgage loan book Irish tracker book (gross) €2.2bn €15.9bn €15.2bn €14.4bn €13.7bn Dec 13 Jun 14 Dec 14 Jun 15 Margin impacts Customer pay rate at Jun - ECB repo rate¹ - Average fixed spread Cost of funds² Net interest margin Bank of Ireland Group Jun 2015 (bps) 112 5 107 89 223 Volume of loans Reduced by €0.7bn since Dec 14 €12.2bn or 89% of trackers at Jun 15 are on a capital and interest repayment basis Net interest margin Net interest margin from ECB tracker mortgages is c.23bps compared to Group net interest margin (including ECB trackers) of 221bps in H1 2015 ¹ECB repo rate at period end.. 2Average cost of funds (annualised) to BOI in H1 2015. 28#31Asset Quality Profile of customer loans' at Jun 15 (gross) Bank of Ireland Group ROI UK ROW Total Total (€bn) (€bn) (€bn) (€bn) (%) 25.3 28.1 53.4 58% Mortgages Non-property SME and corporate 12.1 4.92 3.7 20.7 22% SME 9.5 2.6 12.1 13% Corporate 2.6 2.3 3.7 8.6 9% Property and construction Investment property Land and development 8སྤུ༔ 8.5 6.4 0.2 15.1 16% 6.8 5.5 0.2 12.5 14% 1.7 0.9 2.6 2% Consumer 1.5 1.7 3.2 4% Customer loans (gross) 47.4 41.1 3.9 92.4 100% Geographic (%) 51% 45% 4% 100% *Based on geographic location of customer. Includes €2.2bn relating to GB business and corporate loan books, which BOI is required to run down under its EU approved Restructuring Plan. 29#32Asset Quality Defaulted customer loans & impairment provisions Bank of Ireland Group Advances Composition (Jun 15) (€bn) Defaulted Loans (€bn) Defaulted Loans as % of advances Impairment Provisions (€bn) Impairment Provisions as % of defaulted loans Residential mortgages 53.4 3.3 6.2% 1.5 - Retail Ireland 25.3 2.8 11.1% 1.4 - Retail UK 28.1 0.5 1.8% 0.1 Non-property SME and corporate 20.7 3.1 15.0% 1.6 - Republic of Ireland SME 9.5 2.3 24.3% 1.2 - UK SME 2.6 0.4 13.9% 0.2 - Corporate 8.6 0.4 5.1% 0.2 Property and Construction 15.1 6.8 44.9% 3.9 - Investment 12.5 4.5 35.8% 2.2 - Land and development 2.6 2.3 90.1% 2 2 2 2 2 2G G 44% 48% 24% 52% 52% 46% 59% 57% 48% 1.7 75% Consumer 3.2 0.1 5.3% 0.1 100% Total loans and advances to customers 92.4 13.3 14.4% 7.1 53% Composition (Dec 14) Advances (€bn) Defaulted Loans (€bn) Defaulted Loans as % of advances Impairment Provisions (€bn) Impairment Provisions as % of Residential mortgages 51.0 3.7 7.3% 1.6 Retail Ireland 25.6 3.2 12.6% 1.5 - Retail UK 25.4 0.5 2.0% 0.1 Non-property SME and corporate 20.3 3.3 16.4% 1.7 6529 defaulted loans 43% 46% 23% 51% - Republic of Ireland SME 9.6 2.5 25.6% 1.3 51% - UK SME 2.5 0.4 16.9% 0.2 44% - Corporate 8.2 0.4 5.6% 0.2 54% Property and Construction 15.2 7.1 46.5% 3.9 56% - Investment 12.5 4.7 37.2% 2.1 46% - Land and development 2.7 2.4 89.5% 1.8 74% Consumer 3.0 0.2 6.4% 0.2 98% Total loans and advances to customers 89.5 14.3 16.0% 7.4 52% 30#33ROI Mortgage book profile ROI Owner Occupier - book profile 161k 158k 162k 35k Bank of Ireland Group ROI Buy to Let - book profile 33k 32k 1.8% 1.0% 0.7% 3.5% 2.6% 6.9% 5.5% 7.0% 6.2% 8.4% 7.0% - 10.0% - 21.7% 13.7% 18.8% 12.5% 16.2% 12.5% 0.8% 1.1% 1.2% 1.6% 1.2% 2.3% 90.0% Dec 13 91.6% Dec 14 Number of accounts Up to Date Book Arrears Restructure & Resolution 93.0% 78.3% Jun 15 Dec 13 Early Arrears Late Arrears¹ 81.2% Dec 14 Number of accounts Up to Date Book Arrears Restructure & Resolution 83.8% Jun 15 Early Arrears Late Arrears 93% of mortgage accounts are in the up to date book 95% on a capital and interest repayment basis (Dec 14: 94%) Since December 2013, accounts in arrears have reduced by 29% or 4.7k accounts 9 out of 10 accounts in forbearance are meeting the terms of their arrangement 84% of mortgage accounts are in the up to date book 73% on a capital and interest repayment basis (Dec 14: 70%) Since December 2013, accounts in arrears have reduced by 32% or 2.4k accounts 9 out of 10 accounts in forbearance are meeting the terms of their arrangement 'Late arrears is defined as any account greater than 90 days past due, or impaired and excludes arrears restructure and resolution. 31#34UK Residential mortgages: £20.0bn/€28.1bn 22% Defaulted loan volumes 23% 24% £457m £395m £351m Jun 14 Dec 14 Jun 15 Coverage Ratio Defaulted Loans June 14 Dec 14 June 15 Impairment charge (6-month) (£3m) (£3m) (£2m) Bank of Ireland Group UK residential mortgage books continue to perform well Impairment reversal reflects on-going favourable economic and property market conditions and continued low level of arrears 32#35SME & Corporate loans: €20.7bn ROI SME - €9.5bn UK SME -£1.9bn / €2.6bn 51% 51% 52% 44% 44% 46% 38% €2.7bn €2.5bn €2.3bn €0.7bn £344m £327m £262m Bank of Ireland Group Corporate - €8.6bn 54% 59% €0.4bn €0.4bn Jun 14 Dec 14 Jun 15 Jun 14 Dec 14 Jun 15 Jun 14 Dec 14 Jun 15 Defaulted Loans Coverage Ratio Defaulted Loans Coverage Ratio Defaulted Loans. Coverage Ratio Jun 14 Dec 14 Jun 15 Jun 14 Dec 14 Jun 15 Jun 14 Dec 14 Jun 15 Impairment charge (6-month) €64m €63m €46m Impairment charge (6-month) £17m (£3m) (£2m) Impairment charge (6-month) €44m €30m €31m Reduced impairment charge reflects general improvements in economic and trading conditions in the Irish SME sector We have restructuring and resolution arrangements in place with 9 out of 10 challenged customers; >90% of restructured customers meeting their agreed arrangements - H1 reversal portfolio benefitting from continued positive macroeconomic conditions Domestic Irish and international corporate portfolios continue to perform well 33#36Property & Construction: €15.1bn 41% Investment Property - €12.5bn 46% 48% 73% Bank of Ireland Group Land and Development - €2.6bn 74% 75% €5.7bn €4.7bn €4.5bn €2.8bn €2.4bn €2.3bn Jun 14 Dec 14 Jun 15 Defaulted Loans Coverage Ratio Jun 14 Dec 14 Jun 15 Defaulted Loans Coverage Ratio Jun 14 Dec 14 Jun 15 Jun 14 Dec 14 Jun 15 Impairment charge (6-month) €135m €172m €94m Impairment charge (6-month) €80m €64m €35m Continued progress in reducing defaulted loans - reduction would have been c.€0.2bn higher on a constant FX basis 90% of loans are in default with a coverage ratio of 75% Reduced charge reflects continued recovery in ROI / UK investment property markets 34#37Asset Quality Available for Sale Financial Assets Bank of Ireland Group Carrying Value ROI UK Spain Other Jun 15 Dec 14 €bn €bn €bn €bn €bn €bn Sovereign bonds 2.6 0.7 0.3 1.7 5.3 8.3 Covered bonds 0.3 0.3 0.6 1.1 2.3 2.5 Senior debt 1.6 1.6 2.3 Subordinated debt 0.3 0.3 0.2 Asset backed securities. 0.1 10 0.1 0.2 0.3 Total AFS Reserve Ireland 3.2 1.1 0.9 4.5 9.7 13.6 0.5 0.5 0.6 Performance of Irish sovereign bonds - AFS reserve reduced by €0.1bn (net) in H1 2015 In H1 2015, €1.5bn nominal value (€1.9bn fair value) of euro denominated bonds were reclassified from AFS to Held to Maturity NAMA subordinated bond - €0.3bn nominal value, valued at 92% (Dec 14 - 83%) Separately, BOI has €1.9bn of NAMA senior bonds (Dec 14: €2.4bn) Other exposures Supra-national - €1.1bn France €1.3bn Netherlands - €0.4bn United States - €0.2bn Norway - €0.2bn Sweden €0.2bn Portugal - €0.2bn Italy - €0.2bn Other €0.7bn (all less than €0.1bn) 35#38Capital¹ CET1 ratios Total equity (excl additional Tier 1 capital) Less 2009 Preference Shares Deferred Tax² Pension Deficit Available for sale reserve Removal of National Filters Other Items³ Common Equity Tier 1 Capital Bank of Ireland Group Transitional ratio (€bn) 9.5 Fully loaded ratio (excl Prefs) (€bn) 9.5 (1.3) (0.1) (1.4) 0.4 (0.4) (0.2) (0.9) (1.0) 8.3 5.8 52.6 52.5 15.9% 11.1% RWAS Common Equity Tier 1 Capital Basel III phasing impacts Deferred Tax Asset - deduction is phased in at 10% per annum commencing 1 Jan 15 Pension deficit - addback is phased out at 20% per annum commencing 1 Jan 14 Available for sale reserve - between 2015-2018, unrealised losses and gains will be phased in at the following rates: 40%, 60%, 80%, 100%. The Group has opted to maintain its filter on both gains and losses on exposures to central governments classified in the "Available for Sale" category. The reserve is recognisable in capital under fully loaded CRD IV rules ¹Capital ratios have been presented including the benefit of the retained profit for the period. 2RWA impact for deferred tax assets includes a 0% risk weighting for deferred tax assets on losses carried forward, partially offset by 250% risk weighting applied to deferred tax assets due to temporary differences. Other CET1 items primarily reflect intangibles and cash flow hedge reserve. 36#39BOI Credit Ratings Return to Investment Grade by S&P and Moody's Bank of Ireland Group Standard & Poor's Anchor Business Position Capital & Earnings Progress on BOI Credit Ratings ► Standard & Poor's July 2015: 1 notch upgrade from BB+ to BBB- (Positive outlook) May 2015: 2 notch senior unsecured upgrade from Ba1 to Baa2 (Stable outlook) May 2015: 2 notch upgrade to Viability Rating to bb+ offset by the removal of 4 notches of Sovereign Support bbb- (Strong) +1 (Moderate) -1 Moody's Risk Position (Adequate) 0 Funding & Liquidity (Average & Adequate) 0 Fitch Stand Alone Credit Profile (SACP) bbb- Sovereign Support +1 Additional Factors -1 Issuer Credit Rating BBB- (Positive) Moody's Baseline Credit Assessment (BCA) ba2 Adjusted BCA ba2 Government support +1 Loss Given Failure (LGF) +2 Issuer Rating (deposit/Senior unsecured rating) Baa2 (Stable) Fitch Individual Rating/Viability Rating (VR) Support Rating Floor Issuer Default Rating (IDR) Higher of the Viability Rating and Support Rating Floor BB+ No Floor BB+(Positive) Key Rating Drivers Standard & Poor's ratings upside could develop from: Improvement in the Group's Risk Adjusted Capital (RAC) ratio Additional loss-absorbing capacity (ALAC) uplift Moody's ratings upside could develop from continued: Improvements in profitability and efficiency Improvements in fully loaded capital and leverage metrics Fitch ratings upside could develop from continued: Reduction in non-performing loans Strong internal capital generation 37#40Fully loaded CET1 ratio (excl Prefs) capital build¹ Increased CET1 fully loaded ratio by 180bps to 11.1% Bank of Ireland Group 9.3% 0.3% 0.1% 1.2% 0.2% 11.1% Dec 14 CET1 Attributable profit RWA² Pension deficit Other Jun 15 CET1 ¹Capital ratios have been presented including the benefit of the retained profit for the period. 2RWA movement is calculated on a constant currency basis. 38#41Defined Benefit Pension Schemes Bank of Ireland Group Group IAS19 Pension Deficit 3.65% 2.45% 2.20% €0.99bn €0.84bn €0.80bn Dec 13 Dec 14 Jun 15 €0.30bn Jun 15 IAS19 Pension Deficit EUR AA Corporate bond curve Pro-forma Group IAS19 pension deficit following €0.5bn expected cash or other suitable assets contribution BSPF1 estimated Surplus/ Deficit under Relevant Bases Dec 14 Minimum funding standard €m Actuarial / on-going basis (293) 207 (612) IAS19 (112) 475 975 Group IAS19 pension deficit of €0.8bn at Jun 15 (€0.99bn at Dec 14) Primary drivers of the reduction in deficit were; Group pension scheme assets returns were c.4% during the period Euro AA Corporate Bond discount rate² increased from 2.20% to 2.45%, partially offset by; Long term ROI inflation rate expectation increased from 1.5% to 1.8% IAS19 requires that rate used to discount DB 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 at the c.20 years duration, and those bonds tend to be relatively illiquid Announcement of the QE policy in Q1 2015 appeared to cause significant volatility in the bond market. This resulted in long duration AA corporate bond discount rates reaching an historic low of 1.4% at end Mar 15 with a resulting increase in deficit to €1.7bn. This impact on the deficit has now been reversed 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, the Group agreed to increase its support for the schemes by making matching contributions. The remaining deficit-reducing contributions of €550m are expected to be made between 2016 and 2020 Allowing for these future contributions, the overall Group IAS 19 deficit would have been c.€0.30bn at June 15 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. Both of these measures showed a stronger funding position than IAS19 at Dec 14. This situation is not expected to be materially different at June 15 Estimated deficit/ surplus at Dec 14 Pro-forma position following €500m expected cash or other suitable assets contribution to BSPF ¹BSPF represents approx. 75% of the overall Group DB liabilities. 2Sensitivity of the IAS19 liability to a 25bps movement in the discount rate is c.€0.4bn and sensitivity to 10bps movement in the RPI inflation assumption is c.€0.1bn. 39#42Defined Benefit Pension Schemes Bank of Ireland Group Group has developed a framework for pension funding and investment decision-making as part of a 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; 1 Review Liabilities Pensions Review 2010 and 2013 - shared solutions with members - successfully executed Pension Review programme was further extended to smaller schemes in 2014 and 2015 A Defined Contribution ('DC') scheme was introduced in 2014 for new hires and existing hybrid scheme closed Further exercises to reduce volatility in liabilities have been undertaken e.g. successful enhanced transfer value pilot exercise in H1 2015 2 Increase Assets >€600m of deficit-reducing contributions made since 2010; further €550m expected to be made across Group schemes between 2016 and 2020 Timing of contributions takes account of Basel III transitional capital rules BSPF asset returns of c.11.5% p.a. were achieved over 3 years to end 2014, with further c. 4% in H1 2015 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. 20% of return seeking assets were switched to matching assets in 2014 Continuing programme to better match asset allocation with the nature and duration of liabilities (ref chart below) Since the end of Jun 15, a further €350m of liability hedging has been executed through the LDI portfolio and €270m of investment in Secure Income Assets is in train Mix of BSPF DB Pension Scheme Assets (%)¹ 45% 11% 44% Dec 12 Listed Equities 53% 19% 28% Jun 15 Diversified² Credit / LDI / Hedging 1Graphs shows BSPF asset allocation which is representative of the Group schemes overall. 2Diversified category includes Infrastructure, Private Equity, Hedge funds, Property. 40#43Ordinary stockholders' equity and TNAV Bank of Ireland Group Movement in ordinary stockholders' equity Ordinary stockholders' equity at beginning of period Movements: Profit attributable to stockholders Dividends on preference stock Foreign exchange movements 2014 2015 (Єm) (Єm) 6,528 7,392 786 617 (141) (137) 275 334 Cash flow hedge reserve movement 159 (79) Available for sale (AFS) reserve movements 133 (122) Remeasurement of the net defined benefit pension liability (353) 172 Other movements 5 (3) Ordinary Stockholders' equity at end of period 7,392 8,174 Tangible net asset value Ordinary stockholders' equity at end of period Dec 14 (€m) Jun 15 (€m) 7,392 8,174 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) (405) (429) 12 11 6,999 7,756 32,363 32,363 21.6c 24.0c 41#44Contact details For further information please contact: Group Chief Financial Officer Andrew Keating tel: +353 76 623 5141 Investor Relations Mark Spain Niall Murphy tel: +353 76 623 4850 tel: +353 76 624 1385 Capital Management Brian Kealy Tony Morley [email protected] [email protected] [email protected] Alan McNamara Wholesale Funding Darach O'Leary Redmond O'Leary Joanne Guerin tel: +353 76 623 4719 tel: +353 76 623 4722 tel: +353 76 624 8725 tel: +353 76 624 4224 tel: +353 76 62 44198 tel: +353 76 62 44219 Group Communications Pat Farrell tel: +353 76 623 4770 Investor Relations website www.bankofireland.com/investor [email protected] [email protected] [email protected] [email protected] redmond.o'[email protected] [email protected] [email protected] Bank of Ireland Group 42#45Forward-Looking statement Bank of Ireland Group This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934 and Section 27A of the US Securities Act of 1933 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,' 'can,' 'might,' 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 charge, 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; ▶ concerns on sovereign debt and financial uncertainties in the EU and in member countries such as Greece and the potential effects of those uncertainties 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 or any Irish banking inquiry 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 risks; ▶ 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; ▸ uncertainty relating to the forthcoming UK European Union 'In / Out' referendum; ► 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. The reader should however, consult any additional disclosures that the Group has made or may make in documents filed or submitted or may file or submit to the US Securities and Exchange Commission. 43#46Bank of Ireland Group 44#47Empty#48Empty