Q1 Interim Management Statement

The Group continues to deliver against our 2021 strategic targets for loan book growth, transformation and associated cost reduction together with our ambition to grow our wealth and insurance business.

Economic growth in our core markets of Ireland and the UK remained positive notwithstanding ongoing uncertainties related to the UK’s decision to leave the European Union.

Income Statement

The Group continues to trade in line with expectations.

Net interest margin (2.16% for the 3 months to March 2019), Net interest income and Other income were all in line with expectations.

The Group continues to maintain tight control over the cost base, while making appropriate investments in our businesses, infrastructure and people including our multi-year business transformation programme. We continue to expect that Operating expenses will reduce in 2019 and in that regard Operating expenses (excluding levies and regulatory charges) are lower in Q1 2019 by c.3.5% compared to the same period in 2018.

Expect levies and regulatory charges to total €115 million – €120 million in 2019.

Balance Sheet

Customer loan volumes were €79.1 billion at the end of March 2019, an increase of €2.1 billion since the end of December 2018 (€0.6 billion on a constant currency basis) primarily driven by Corporate (€0.5 billion) and Retail UK. The Group’s market share of new mortgage lending in Ireland averaged c.23% in the first 3 months of 2019 with mortgage applications and drawdowns increasing during the quarter. For our SME customers, we have seen increasing activity, confidence and credit demand in Q1 2019 with positive momentum into Q2.

Asset quality across our loan portfolios has continued to improve in line with our expectations. The Group will continue to progress with a full range of resolution strategies in response to the associated and evolving regulatory framework.

Customer deposits were €79.7 billion at the end of March (€78.7 billion on a constant currency basis), from €78.9 billion at December 2018. Wholesale funding was €10.8 billion at the end of March 2019.

Capital Position

The Group’s fully loaded CET1 ratio at the end of March 2019 was 13.3%, from 13.4% at December 2018. The Group’s organic capital generation during the quarter was offset primarily by investments in risk weighted assets associated with new lending, investments in our business transformation programme, IFRS 16 and a dividend deduction.

The Group’s regulatory CET1 ratio was 14.6%, and the Group’s Total Capital ratio was 18.7% at the end of March 2019.


In April 2019, the Group provided an update on the following strategic transactions:

The Group announced the agreement of terms to acquire a portfolio of c.€260 million performing commercial loans from KBC Bank Ireland with the transaction expected to close in the coming months. The acquisition requires c.5-10bps of CET1; and

The Group entered into a securitisation of a portfolio of non-performing ROI mortgages secured on buy-to-let investment properties. The portfolio has a gross value of c.€377 million and the transaction results in a pro-forma reduction in the Group’s NPE ratio of c.40bps and a pro-forma improvement in the CET1 ratio by c.30bps.