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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
2006 Final Results11
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
2006 Final Results12
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
2006 Final Results13
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
2006 Final Results14
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
2006 Final Results15
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
2006 Final Results16
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
2006 Final Results17
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
2006 Final Results18
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
2006 Final Results19
Business Review
David WentGroup Chief Executive
2006 Final Results19
2006 Final Results20
Life Business
Investment markets strongly supportive
Record sales increase market share
Robust margins
Focus on customer and intermediary service
2006 Final Results21
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
2006 Final Results22
Retail Life Products
Sales* €317m [2005: €238m]
Investments
Pension
Protection / Risk
Savings
Mix%32
39
18
11
Growth
%+68
+18
+26
+26
* APE basis
2006 Final Results23
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
2006 Final Results24
Corporate Life Products
Sales* €165m [2005: €130m]
Defined Contribution
Annuities / Other
Protection / Risk
Mix%72
18
10
Growth
%+40
+53
-36
* APE basis
2006 Final Results25
%
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
2006 Final Results26
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
2006 Final Results27
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
2006 Final Results28
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
2006 Final Results29
Loan Book
0
5
10
15
20
25
IrelandMortgages
UK Mortgages ConsumerFinance
Commercial
2006 €33.8bn2005 €26.3bn
€bn
+31%
+28%
+30%
+19%
2006 Final Results30
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)
2006 Final Results31
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
2006 Final Results32
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
2006 Final Results33
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
2006 Final Results34
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
2006 Final Results35
Outlook - Trading
Life sales - another buoyant year
Bank lending - slower first half
Earnings target: low to mid-teens growth in banking & life
2006 Final Results36
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
2006 Final Results37
Embedded Value Change
* All movements net of tax
Opening 1 Jan 2006
Operating profit
Investment fluctuations
Economic assumptions
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
2006 Final Results38
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%
2006 Final Results39
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
2006 Final Results40
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
2006 Final Results41
Total Profit After Tax
Operating profit
Investment fluctuations
Economic assumptions
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
2006 Final Results42
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
2006 Final Results43
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
2006 Final Results44
Other Activities Operating Profit
Cornmarket / IPSI
Springboard
Corporate costs
2006
€m
16
(1)
15
(18)
(3)
2005
€m
11
-
11
(15)
(4)
2006 Final Results45
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
2006 Final Results46
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
2006 Final Results47
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
2006 Final Results48
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
2006 Final Results49
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
2006 Final Results50
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