2006 Final Results - Investis Digital › ~ › media › Files › ...2 2006 Final Results Index Section Page Highlights 3 Total profit after tax 7 Life operating profit 9 Bank operating

2006 Final Results1

2006 Final Results

St Stephen’s Green Shopping Centre, Dublin

Images of Modern Irelandwww.irishlifepermanent.ie

2006 Final Results2

IndexSection Page

Highlights 3Total profit after tax 7Life operating profit 9Bank operating profit 12Associate operating profit 15Capital and Dividend 16Review of the Life business 19Review of the Banking business 27Outlook 34

Additional informationEmbedded Value 37Bank Capital 38Analysis of PAT and EPS 39IFRS PAT & IFRS / EV reconciliation 42Other activities operating profit 44Bank non-interest income 45Group Costs 46Life variances & assumptions 47Life & investment sales 48Retail life sales 49

2006 Final Results3

Winning in Competitive Markets

Record market beating year for sales

Excellent financial results

Focus on service quality and customer satisfaction

Strongly placed to face opportunities and challenges ahead

2006 Final Results4

Sales Highlights

Life Assurance

Retail life sales 33%

Corporate life sales 27%

ILIM sales 44%

Banking

Irish residential mortgage lending 37%

Commercial mortgage lending 97%

84,500 new current accounts opened 26%

2006 Final Results5

Financial Highlights

Operating profit

Banking 36%

Life 23%

Value of New Life business 36%

Operating EPS 32%

Dividend 12.4%

2006 Final Results6

Financial Review

Peter FitzpatrickGroup Finance Director

2006 Final Results6

2006 Final Results7

Group Profit After Tax

Operating profit

Investment variances

Economic assumptions

Disposals / Other

Profit before tax

Taxation

Profit after tax

Discontinued / Minority

Total profit after tax

Total EPScent

2006 205

2005 176

2006

€m

529

101

(38)

-

592

(28)

564

(3)

561

2005

€m

420

94

13

4

531

(28)

503

(28)

475

Change

%

26

11

12

18

2006 Final Results8

Group Operating Profit

Operating EPScent

2006 178

2005 135

Life Assurance

Banking

General Insurance

Other

Operating profit

Taxation / Levy

Operating profit after tax

2006

€m

274

202

476

56

(3)

529

(42)

487

2005

€m

222

148

370

54

(4)

420

(54)

366

Change

%

23

36

29

4

26

33

2006 Final Results9

Life Operating Profit

New Business

In-force business:

• Total expected return

• Experience variances

• Assumption changes

Operating profit

2006

€m

128

115

14

17

274

2005

€m

94

94

15

19

222

Change

%

36

23

2006 Final Results10

Life New Business

APE Sales2006 2005

€m €m

Life 516 388

ILIM 190 132

PVNBP Sales2006 2005

€m €m

Life 3,482 2,571

ILIM 1,901 1,319

New Business Contribution

Life

ILIM

Margin - APE

Life

ILIM

Margin - PVNBP

Life

ILIM

2006

€m

106

22

%

20.6

11.4

3.1

1.1

2005

€m

79

15

%

20.4

11.4

3.1

1.1


Life Costs

Retail

Corporate Business

ILIM

Other

2006

€m

146

33

16

14

209

2005

€m

127

30

15

14

186

Change

%

15

10

12


Banking Operating Profit

Net interest income

Other income

Trading income

Expenses

Impairment provisions

Investment gains

Operating profit

2006

€m

429

45

12

486

(273)

(14)

3

202

2005

€m

377

40

(4)

413

(255)

(12)

2

148

Change

%

14

18

36

Cost / Income Ratio

2006 2005% %

Reported 56 62

Incl. Commission 53 60

Incl. Bank EV Earnings 50 56


Net Interest Margin

2006 Movement

Dec 2005

Basis risk

Retail

CHL

Treasury

Funding

Dec 2006

Assets2006 2005€bn €bn

Lending 33.8 26.3

Liquidity 9.7 8.0

bps

129

(5)

(2)

(2)

3

(4)

119


Bank Funding

Long-term Debt

Securitisation

Extendible Notes

Commercial Paper

Customer Accounts

Interbank

Total

2006

€bn

9.2

3.8

1.7

9.4

13.6

5.1

42.8


General Insurance Operating Profit

Combined Ratio%

2006 71

2005 74

Underwriting results

Investment return

Disposal

Taxation

Operating profit

2006

€m

52

12

3

67

(11)

56

2005

€m

48

18

-

66

(12)

54

Change

%

4


Bank Capital

Movement RAR€m %

Dec 2005 2,138 12.6

Post tax earnings 157

Dividends received 141

Dividends paid (173)

125

Capital issued 93

Capital amortised (104)

(11)

IFRS adjustments (100)

Dec 2006 2,152 10.4


Life CapitalSolvency

Movement Cover€m %

Net Worth Dec 2005 750 163

In-force earnings 203

Investment fluctuations 53

256

New business (163)

Other (6)

Dividend (90)

Net Worth Dec 2006 747 180

New business IRR 13.2%[2005: 12.5%]

€200m Perpetual debt raisedin Q1 ‘07


Operating EPS & Dividend

0

20

40

60

80

100

120

140

160

180

200

1998 1999 2000 2001 2002 2003 2004 2005 2006

cent

CAGR 1998 - 2006: EPS 12% & DPS 11%

86

115 112124

135

178

9987

73

EPS

DPS

39.035.128.5

51.047.543.0

68.060.555.0


Business Review

David WentGroup Chief Executive



Life Business

Investment markets strongly supportive

Record sales increase market share

Robust margins

Focus on customer and intermediary service


Life & Investment Sales

0

100

200

300

400

500

600

700

800

1998 1999 2000 2001 2002 2003 2004 2005 2006

€m

Retail

Corporate Business

ILIM

520470

706

316331

414

320

167

232

Sales* CAGR 1998 - 2006: 20%

* APE basis


Retail Life Products

Sales* €317m [2005: €238m]

Investments

Pension

Protection / Risk

Savings

Mix%32

39

18

11

Growth

%+68

+18

+26

+26

* APE basis


Retail Life Distribution

Sales* €317m [2005: €238m]

40%

Bancassurance• permanent tsb

• Institutions

Direct Salesforce

Brokers / IFAs

Mix%

28

12

28

32

Growth

%

+33

+86

+30

+22

* APE basis


Corporate Life Products

Sales* €165m [2005: €130m]

Defined Contribution

Annuities / Other

Protection / Risk

Mix%72

18

10

Growth

%+40

+53

-36

* APE basis


%

28%

26%25%

21%

23%22%

21%

19%19%

New Business 1998 - 2006

Source: Irish Insurance Federation

Life Market Share

10

15

20

25

30

1998 1999 2000 2001 2002 2003 2004 2005 2006E


Irish Life Investment Managers

0

5

10

15

20

25

30

35

1998 1999 2000 2001 2002 2003 2004 2005 2006

€bn

Institutional

Funds Under Management 1998 - 2006

1514

17

21

25

31

1615

12

Life company


Banking Business

Record year for Irish housing market

Increasing market share in highly competitive market

Continued success in customer acquisition

Building the no.1 retail bank


Bank New Lending

0

2000

4000

6000

8000

10000

12000

14000

1998 1999 2000 2001 2002 2003 2004 2005 2006

€m

* APE basis

ROI Mortgages

UK Mortgages

Commercial

Consumer Finance

New Lending CAGR 1998 - 2006: 27%

3,5944,494

5,978

7,980

9,750

12,861

1,8952,853 3,147


Loan Book

0

5

10

15

20

25

IrelandMortgages

UK Mortgages ConsumerFinance

Commercial

2006 €33.8bn2005 €26.3bn

€bn

+31%

+28%

+30%

+19%


New Lending LTVs

New Lending

Home Loans

First Time Buyers

Second Time Buyers

Average

RIPs Average

Equity Release Average

Total New Lending*

2005

%

84

61

69

65

51

64

2004

%

81

60

68

65

49

63

* Weighted average

2006

%

87

58

71

68

51

66

Residential Mortgages (Ireland)


Mortgage Arrears

3

6

9

12

2002 2003 2004 2005 2006140

150

160

170

180

190Residential Mortgages (Ireland)

No. in Arrears *

No. of Mortgages (RHS)

000’s 000’s

* > 1 month


Mortgage Market Share

15

20

25

1998 1999 2000 2001 2002 2003 2004 2005 2006

€bnNew Residential Mortgage Lending 1998 - 2006

22%

19%

20%

23%

20%

23%

21%

19% 19%

Source: IMC / Irish Banking Federation


Customer Acquisition

84,500 new current accounts opened in 2006

68,000 new customers

16,500 upgrades

Opening 1,250 accounts per week

Account balances up 18% yoy

Credit card sales doubled to 20,000 in 2006


Outlook - Economy

SSIAs boost consumer and investor demand

Housing market slowed by stamp duty uncertainty

Another year of 5%+ economic growth forecast*

* ESRI Quarterly Economic Commentary, Winter 2006


Outlook - Trading

Life sales - another buoyant year

Bank lending - slower first half

Earnings target: low to mid-teens growth in banking & life


Additional Information

Page

37 Change in Embedded Value

38 Bank Capital

39 Operating profit after tax

40 Operating EPS

41 Total profit after tax

42 IFRS (Statutory) profit after tax

43 IFRS / EV reconciliation

44 Other activities operating profit

45 Bank non-interest income

46 Group costs

47 Life variances and assumptions

48 Life & investment sales

49 Retail life sales


Embedded Value Change

* All movements net of tax

Opening 1 Jan 2006

Operating profit

Investment fluctuations


Capital movements

Closing 31 Dec 2006

Net Worth

€m

750

40

53

(6)

(90)

747

VIF

€m

1,103

221

63

(33)

-

1,354

Total

€m

1,853

261

116

(39)

(90)

2,101

Required Capital

€m

535

560


Bank Capital

Risk weighted assets

Capital:

Tier 1

Less Goodwill (Irish Life & TSB)

Tier 2

Total Capital

Less Embedded Value deduction

Available Capital

RAR

2005

€bn

17.1

4.1

(1.5)

2.6

1.4

4.0

(1.9)

2.1

12.6%

2006

€bn

20.6

4.4

(1.5)

2.9

1.4

4.3

(2.1)

2.2

10.4%


Operating Profit After Tax

Life assurance

Banking

Other activities

Associate

Levy

Pre-tax

€m

274

202

(3)

473

56

-

529

2006

Tax

€m

(13)

(30)

1

(42)

-

-

(42)

Post-tax

€m

261

172

(2)

431

56

-

487

2005

Post-tax

€m

206

122

(4)

324

54

(12)

366


Operating EPS

Note: “own shares” included for EPS calculation

Operating profit

Taxation

Government levy

Operating PAT

Average no. of shares

EPS

2006

€m

529

(42)

-

487

274m

178c

2005

€m

420

(42)

(12)

366

270m

135c

Change

%

33

32


Total Profit After Tax

Operating profit

Investment fluctuations


Other changes / Credits

Discontinued / Minority

Total profit

Pre-tax

€m

529

101

(38)

-

592

(3)

589

2006

Tax

€m

(42)

15

(1)

-

(28)

-

(28)

Post-tax

€m

487

116

(39)

-

564

(3)

561

2005

Post-tax

€m

366

125

8

4

503

(28)

475


IFRS (Statutory) Profit After Tax

Life assurance

Banking

General Insurance

Other

Taxation

Total Profit after Tax*

2006

€m

186

202

56

(3)

441

(80)

361

2005

€m

223

148

54

(4)

421

(69)

352

Change

%

(17)

5

3

(37)

IFRS Life Earnings Movement€m

Economic Variance (29)Investment fluctuations (26)Surplus on Investment contracts 24New Business strain (8)Interest on insurance VIF 5Expected Investment Return 6Other (9)

* Continuing activities


IFRS / EV Reconciliation

Embedded Value basis

Investment business

• Value of in-force

• Deferred costs & fees

• Restatement of liabilities

Own shares adjustment

Owner occupied property

Other

IFRS (Statutory) basis

S’Holders

Equity

€m

3,199

(808)

61

39

(81)

-

(25)

2,385

Total Profit*

after Tax

€m

564

(131)

39

(34)

(28)

(34)

(15)

361

2006

* Before minority interest


Other Activities Operating Profit

Cornmarket / IPSI

Springboard

Corporate costs

2006

€m

16

(1)

15

(18)

(3)

2005

€m

11

-

11

(15)

(4)


Banking Non Interest Income

Note: Bancassurance Embedded Value operating profit €56m [2005: €46m] included in life assurance

Fees & Comms (rec’d)

Fees & Comms (payable)

Trading income

2006

€m

51

(6)

45

12

57

2005

€m

46

(6)

40

(4)

36

Change

%

13

58


Group Costs

Banking:

• Operational

• Restructuring

Life:

• Administrative

• Development costs

Other operations

2006

€m

273

-

209

-

58

2005

€m

255

11

186

8

50

Change

%

7

12

540 510 6


Life Variances & Assumptions

Experience Variances Assumption Changes

2006

€m

3

19

(5)

17

-

17

2005

€m

(3)

17

13

27

(8)

19

Persistency

Risk

Other

Development Expenses

2006

€m

(1)

23

(8)

14

-

14

2005

€m

-

15

-

15

-

15


Life & Investment Sales

Recurring Premium Single Premium

2006 Interim Results

2006

€m

1,347

348

1,901

339

3,935

394

3,935

2005

€m

892

225

1,319

200

2,636

264

2,636

Retail

Corporate

ILIM

ILI

Total

APE Basis

PVNBP Basis

2006

€m

182

130

-

-

312

312

1,448

2005

€m

149

107

-

-

256

256

1,254


Retail Life Sales

Products

Pension

Investments

Protection / Risk

Savings

Distribution

Bancassurance

Direct Salesforce

Brokers / IFAs

Institutions

2006

€m

123

101

59

34

317

88

90

100

39

2005

€m

104

60

47

27

238

66

69

82

21

Change

%

18

68

26

26

33

33

30

22

86

317 238 33


Contact Information

Please contact our Investor Relations Department for any furtherinformation or visit our group website at

www.irishlifepermanent.ie

Contact details:

Barry Walsh [email protected] +353 1 704 2678

Orla Brannigan [email protected] +353 1 704 1345

http://www.irishlifepermanent.ie/

mailto:[email protected]

mailto:[email protected]

Documents

2006 Final Results - Investis Digital › ~ › media › Files › ...2 2006 Final Results Index Section Page Highlights 3 Total profit after tax 7 Life operating profit 9 Bank operating