Bank of Ireland 2020 Debt Investor Presentation
Structural hedge, liquid assets and negative
rate deposits
Bank of Ireland 2020 Debt Investor Presentation
Interest income from structural hedge and liquid assets
reducing from low interest rate environment
Structural Hedge¹
Liquid Assets
Structural hedge & liquid assets
•
Average
volume
€33.3bn
€35.6bn
€23.4bn
€27.6bn
€165m
€124m
€95m
Interest
€60m
income
€67m
€70m
€64m
2019
2020
2019
EUR GBP
€13m
2020
Liquid Asset interest income
Increased application of Negative Interest Rates
delivering reduction in funding costs
Year-end deposit volume
on Negative Rates
€2.7bn
€8.5bn
€55m
€31m
€18m
€13m
2019
2020
Annualised reduction in funding costs Actual reduction in funding costs
1 Gross interest income from fixed leg of hedging swap
-
Average structural hedge volume in 2020 of €35.6bn
(EUR 84%, GBP 16%); c.73% of equity and credit balances
hedged and weighted average life of c.3.5 years
In 2020, €4bn of hedges matured at 0.51% and were
replaced at (0.40%)
Liquid Asset income primarily impacted by higher
liquid asset volumes at negative yields and the impact
of lower EUR and GBP rates
2021 interest income from structural hedge and liquid
assets is expected to reduce as the low interest rate
environment persists
Negative Interest Rates
•
•
As a mitigant to the negative interest rate environment,
the application of negative interest rates to non-personal
customers was expanded during 2020
-
-
Volume of customer deposits on negative rates
increased to €8.5bn at Dec 20 vs. €2.7bn Dec 19
Reduction in funding costs of €31m in 2020; €55m on
an annualised basis
The Group continues to evaluate options to expand the
application of negative interest rates
Bank of Ireland
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