TIDMBIRG
RNS Number : 1969R
Bank of Ireland Group PLC
13 June 2018
Bank of Ireland Group plc (together with its subsidiaries, the
"Group")
Announcement of strategic plan and financial targets
13 June 2018
The Group is holding an Investor Day this morning at 9am in
London.
Group CEO Francesca McDonagh commented:
'I am delighted to announce our strategic plan today.
Our strategic ambition is clear - to be the National Champion
Bank in Ireland, with UK and selective international
diversification.
After a period of restructuring, the Group is in a strong
financial position.
The Group is now in a growth phase. We expect to grow our loan
book by c.20% by 2021, enabled by the strength of our franchises
and a supportive economic backdrop in our main markets. We are also
focussed on transforming our efficiency. We are targeting a
reduction in our cost base to c.EUR1.7bn by 2021, while delivering
on our growth ambitions.
I am confident in our ability to execute our plan, materially
enhance the sustainable returns for our shareholders and deliver on
our shared common purpose of "Enabling our customers, colleagues
and communities to thrive".'
Key highlights of strategic plan
The Group's strategic plan is focussed on growth and
transformation.
Growth
-- Expect loan book growth of c.20% by 2021;
- c.65% of loan book growth is expected to be in Ireland; c.35%
through selective international diversification
- Loan book growth supported by the macro-economic outlook, the
quality of our franchises and distribution, and our customer
propositions
- 200-250bps of CET1 capital indented to accommodate loan
growth
- Group has a competitive edge in risk management and growth is
within risk appetite. Expect impairment charge under IFRS9 to be up
to c.20bps-30bps p.a.
-- Expect net interest margin to be broadly in line with exit
2017 level of 2.24%, with positive impact from loan book growth and
modest benefits from higher interest rates prudently assumed to be
offset by manageable competitive pressures
-- Expect business income to represent c.20-25% of total income
and to increase on the back of economic growth and higher income
from wealth management and insurance initiatives in Ireland
-- The Group is committed to the UK market, with a focus on increasing returns through:
- Investing in and supporting growth in businesses where we are
generating above hurdle returns
- Improving, through a range of actions, those businesses that
have good potential but are currently below return hurdles
- Repositioning businesses where there is less certainty on
achieving hurdle expectations within a reasonable timeframe
- The Group expects UK RoTE to double from low single digit
today to high single digit by 2021, with a continued focus on
further increasing returns thereafter
Transformation
-- The Group is accelerating and broadening its multi-year transformation programme
- Transformation programme broadened to now encompass culture,
systems and business model
- Total investment will amount to EUR1.4bn over 2016-21,
comprising the following:
-- EUR0.25bn to deepen the transformation of our IT systems,
supporting planned growth (additional to EUR0.9bn core banking
systems investment previously announced)
-- EUR0.25bn to broaden the extent of transformation to deliver
business model benefits and accelerate the reduction in our cost
base
- Transformation investment will average EUR275m p.a. from
2018-21, equivalent to c.50-60bps of CET1 capital annually
-- This investment will:
- support expected loan book growth and increase in wealth
management and insurance income
- enable the Group to reduce its absolute cost base from
EUR1.9bn to c.EUR1.7bn (which includes c.EUR0.1bn transformation
investment costs) in 2021
- enable the Group to reduce its costs every year between now
and 2021 in absolute terms
- support the Group in achieving a cost income ratio of c.50% in
2021, compared to c.65% in 2017
Financial targets
The Group has set the following financial targets:
-- Profitability: Return on tangible equity (RoTE): in excess of 10% by 2021
-- Efficiency:
- Absolute cost declining year every year from 2018 to 2021
(inclusive)
- Cost base to be c.EUR1.7bn in 2021
- Cost-income ratio in 2021 to improve to c.50%
-- Capital: 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 period
-- Dividends/ distributions: Dividends to increase on a prudent
and progressive basis and, over time, to build towards a payout
ratio of around 50% of sustainable earnings. To the extent the
Group has excess capital, other means of capital distribution will
be considered
2018 Outlook
The Group is trading in line with expectations and the guidance
provided at the Group's 2017 full year results in February
2018.
Ends
Notes: The Investor Day will be live webcast and is also open to
participants to join via conference call. For further information
log on to www.bankofireland.com/investor or contact:
Bank of Ireland
Andrew Keating Group Chief Financial Officer +353 (0)766 23
5141
Alan Hartley Director of Group Investor Relations +353 (0)766 23
4850
Pat Farrell Head of Group Communications +353 (0)766 23 4770
Forward-Looking Statement
This document contains forward-looking statements with respect
to certain of the 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, 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.
Nothing in this document should be considered to be a forecast
of future profitability, dividends or financial position and none
of the information in this document is or is intended to be a
profit forecast, profit estimate or dividend forecast. 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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END
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