REG - Bank of Ireland Grp - Bank of Ireland Annual Results 31 December 2024

Bank of IrelandAnnouncement

24/02/2025 07:00

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RNS Number : 1797Y  Bank of Ireland Group PLC  24 February 2025

Bank of Ireland Group plc (the "Group")

2024 Annual Results

 

24 February 2025

 

Bank of Ireland has today published its Full Year 2024 Annual Results
reporting profit before tax of €1.9 billion, an adjusted Return on Tangible
Equity of 16.8% and shareholder distributions of €1.2 billion. This very
strong performance is underpinned by growth in loans, deposits, and wealth
assets under management. The Group has also provided an update on its positive
outlook to 2027, targeting an adjusted Return on Tangible equity of above 17%
in 2027 supported by a positive macroeconomic backdrop, balance sheet and
income growth, and cost efficiency. This outlook translates to continued
strong levels of capital generation over 2025 - 2027 supporting growth,
investment, and shareholder returns.

 

Comment: Myles O'Grady, Bank of Ireland Group CEO:

 

"In 2024, the Group delivered a very strong performance reporting a profit of
€1.9 billion. We are now two-thirds of the way through our current strategic
cycle and continue to meet or beat all our business targets. This performance
reflects focussed and consistent strategic execution, our differentiated
business model, and the attractive markets where we do business. Our strategy
is to build stronger customer relationships, a simpler business, and a more
sustainable company. These pillars are driving our performance and will future
proof our business as we look to the future with confidence.

 

"The Group enters 2025 with momentum across all business lines.
Notwithstanding potential impacts to global trade, our business model
continues to be highly capital generative for the coming year and beyond,
supporting customer growth, business model investment and attractive
shareholder returns."

 

Key 2024 highlights:

 ·         €1.9 billion profit before tax
 ·         Net interest income €3.565 billion, in line with guidance and supported by
           growth, particularly in Ireland; Irish loans +6% and deposits +2%
 ·         Business income (including share of associates and JVs) +4% supported by
           strong Wealth and Insurance performance; fee income +6% and AuM +19% to
           €54.9 billion
 ·         Adjusted RoTE of 16.8%; statutory RoTE of 14.1%
 ·         Total distribution of €1.22 billion, up 6% versus 2023, comprising proposed
           ordinary dividend of €630 million (41% payout, equivalent to dividend per
           share of 63 cents and +5% versus 2023) and €590 million additional
           distribution via approved share buyback; total distribution equivalent to 80%
           of our earnings and 14% of our end-2024 market capitalisation
 ·         Strong capital position with capital generation of 310 basis points; fully
           loaded CET1 ratio 14.6% reflecting prudent management of our balance sheet and
           the strategic allocation of our capital to reward our shareholders
 ·         TNAV per share +8% to 1,043 cents
 ·         Operating expenses €1.97 billion in line with guidance; cost to income ratio
           of 46%
 ·         Non-core items of €275 million including UK motor finance provision of
           €172 million (£143 million)
 ·         Significant improvement in asset quality with NPE ratio of 2.2% versus 3.1%
           December 2023
 ·         Net credit impairment charge of €123 million (15bps)
 ·         32% increase in Sustainable Finance lending versus 2023 to €14.7 billion; on
           track to deliver c.€15 billion target by 2025. New CSRD disclosures
           significantly enhance our sustainability-related information for stakeholders

 

Customer and colleague outcomes

The Group continues to strengthen its relationship with customers and
colleagues. New to bank customers increased by 5% while the Net Promoter
Score, a key measure of customer satisfaction, increased by 11 points in the
year. At the same time, complaints fell 21%, reflecting the improvements the
Group has made in a wide range of products and services including in its
digital channels. For colleagues, the Culture Embedding Index, another key
measure, is now above the Global Financial Services benchmark. We see further
progress being delivered this year, with a range of investments underway to
improve services, accelerate digitisation, protect customers from the risk of
fraud, and enhance our ability to attract and retain talent.

 

Income

Net interest income in 2024 of €3.565 billion was supported by organic loan
growth in Ireland, customer deposits increasing by 3%, and pricing discipline
across all portfolios set against the impact of higher funding costs.

 

Business income of €764 million, including share of associates and joint
ventures, was 4% higher than 2023. This primarily reflected growth in our
Wealth and Insurance and Retail Ireland businesses. Across our Wealth and
Insurance business, AuM increased by 19% to €54.8 billion with net inflows
of €4 billion, equivalent to 9% of opening AuM.

 

Costs

The Group continues to maintain tight control over its cost base. Operating
expenses have progressed in-line with expectations (6% higher in 2024),
primarily reflecting inflation, increased pension costs and continued
investment. This included an additional investment of €30 million in
strategic growth and simplification opportunities to drive future
efficiencies. Cost to income ratio was 46% in 2024.

 

Balance Sheet

The Group's loan book increased by €2.8 billion during 2024 to €82.5
billion, including a €3.2 billion increase across our Irish portfolios, a
modest increase of €0.2 billion in Retail UK, partially offset by planned
deleveraging in our international loan portfolios, primarily reflecting
planned rundowns in Corporate GB and US CRE.

 

Our liquidity profile remains strong, supported by our retail franchise in
Ireland. Customer deposits were €103.1 billion, €2.9 billion higher versus
2023, predominantly driven by higher Retail Ireland volumes of €1.5 billion.

 

The Group's liquid assets of €44 billion at December 2024 were relatively
stable with wholesale funding of €10.9 billion, lower by €0.9 billion. On
subordinated liabilities, the Group successfully issued €0.5 billion Tier 2
and refinanced €0.6bn of AT1 securities in 2024.

 

At December 2024, the Group's liquidity coverage ratio was 202% (December
2023: 196%), loan to deposit ratio was 80% (December 2023: 80%), and net
stable funding ratio was 155% (December 2023: 157%).

 

Asset Quality

The Group has significantly improved its asset quality, with a reduction in
its NPE ratio to 2.2% compared to 3.1% in December 2023. An underlying net
credit impairment charge of €123 million (15 basis points of gross customer
loans) arose in 2024. This charge reflected loan loss experience in the
period, partially offset by a small release on model updates including
macroeconomic assumptions, and a reduced quantum of management adjustments.

 

Capital Position

Our fully loaded CET1 capital ratio was 14.6% at December 2024. The Group's
capital performance in 2024 benefitted from strong net organic capital
generation of 310 basis points, partially offset by investment in RWA. Capital
ratios also reflect the full impact of the Group's announced capital
distributions of €1.2 billion, including the foreseeable cash dividend for
2024 of €630 million, and the approved share buyback of €590 million.
Total distributions are up 6% versus 2023, equivalent to an 80% payout, up
from 72% in 2023.

 

2025 guidance

2025 net interest income is expected to be greater than €3.25 billion.
Business income in 2025 is expected to be c.5% higher than 2024, supported by
continued growth in Wealth and Insurance. 2025 operating expenses are expected
to be c.3% higher than 2024, with stable levies and regulatory charges
expected. Non-core costs are expected to be €100-125 million. In 2025,
subject to no material change in economic conditions or outlook, an impairment
charge in the low to mid 20 basis points is expected. Adjusted RoTE of c.15%
is expected in 2025.

 

Strong capital generation is expected to continue in 2025, with 250 to 270
basis points of organic capital generation. In addition, Basel IV
implementation in 2025 is expected to benefit the CET1 ratio by c.110 basis
points, up from our previous guidance of c.80 basis points. 2025 distributions
expected to comprise a combination of a progressive ordinary dividend per
share and share buybacks.

 

2026 & 2027 outlook

As we approach the last year in our strategic cycle, we are providing an
update on our positive medium-term outlook to 2027, including:

·    GDP growth in Ireland greater than 3% each year with an ECB deposit
rate of 2%;

·    Deposit growth of c.3% and loan growth of c.4% each year;

·    AuM growth of 7-8% each year;

·    Operating expenses of c.€2 billion each year, with a cost to income
ratio less than 50%; and

·    Adjusted RoTE building to greater than 17% by 2027, supporting
capital generation of 250-270 basis points each year.

This outlook translates into net capital generation over 2025-2027 equivalent
to c.45% of end December 2024 market cap, supporting a progressive DPS (40-60%
payout), with surplus capital considered annually.

 

Ends

 

The annual report is available at
https://investorrelations.bankofireland.com/results-centre/
(https://investorrelations.bankofireland.com/results-centre/)

 

For further information please contact:

 

Bank of Ireland

 

 Mark Spain, Group Chief Financial                                                                                                           +353 1 2508900 ext 43291
 Officer
 Eamonn Hughes, Chief Sustainability & Investor Relations Officer                                                                            +353 (0)87 2026325
 Darach O'Leary, Head of Group Investor Relations                                                                                            +353 (0)87 9480650
 Damien Garvey, Head of Group External Communications and Public Affairs                                                                     +353 (0)86 8314435

 

 

Forward Looking Statement

This announcement contains forward-looking statements with respect to certain
of Bank of Ireland Group plc (the 'Company' or 'BOIG plc') and its
subsidiaries' (collectively the 'Group' or 'BOIG plc Group') plans and its
current goals and expectations relating to its future financial condition and
performance, the markets in which it operates and its future capital
requirements. These forward-looking statements often can be identified by the
fact that they do not relate only to historical or current facts. Generally,
but not always, words such as 'may,' 'could,' 'should,' 'will,' 'expect,'
'intend,' 'estimate,' 'anticipate,' 'assume,' 'believe,' 'plan,' 'seek,'
'continue,' 'target,' 'goal,' 'would,' or their negative variations or similar
expressions identify forward-looking statements, but their absence does not
mean that a statement is not forward-looking.

 

Examples of forward-looking statements include, among others: statements
regarding the Group's near term and longer term future capital requirements
and ratios, loan to deposit ratios, expected impairment charges, the level of
the Group's assets, the Group's financial position, future income, business
strategy, projected costs, margins, future payment of dividends, future share
buybacks, 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, plans and objectives for future
operations, and the continued impact of regional conflicts on the above issues
and generally on the global and domestic economies. 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, those as set out
in the Risk Management Report in the Group's Annual Report for the year ended
31 December 2024.

 

Nothing in this announcement should be considered to be a forecast of future
profitability, dividend forecast 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.

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