Bank of Ireland Group plc ... Bank of Ireland Group plc Pillar 3 Disclosures 2017 Pillar III Disclosures

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  • Bank of Ireland Group plc Pillar 3 Disclosures 2017

    Pillar III Disclosures 2017.qxp_Layout 1 27/02/2018 09:45 Page i

  • Pillar III Disclosures 2017.qxp_Layout 1 27/02/2018 09:45 Page ii

  • Pillar 3 Disclosures for the year ended 31 December 2017

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  • 2 Pillar 3 Disclosures - year ended 31 December 2017

    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, level of ownership by the Irish Government, 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, 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 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.

    Such risks and uncertainties include, but are not limited to, those as set out in the Risk Management Report. Investors should read ‘Principal Risks and Uncertainties’ in this document beginning on page 42 of the Group’s Annual Report.

    Nothing in this document should be considered to be a forecast of future profitability or financial position of the Group and none of the information in this document is or is intended to be a profit 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.

    For further information please contact:

    Andrew Keating Alan Hartley Pat Farrell Group Chief Financial Officer Director of Group Investor Relations Head of Group Communications Tel: +353 76 623 5141 Tel: +353 76 623 4850 Tel: +353 76 623 4770

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  • 3Pillar 3 Disclosures - year ended 31 December 2017

    Pillar 3 overview 4

    Index of tables 4

    Key highlights 7

    Introduction 9

    Areas covered 9

    Supervision and regulation 10

    CRD IV 10

    Key capital ratios and key RWA movements 11

    Preparation and basis of consolidation 13

    Distinctions between Pillar 3 and IFRS disclosures 15

    Capital 18

    Capital overview 18

    Capital requirements and buffers 20

    Capital requirements / RWA 21

    Breakdown of the Group’s regulatory

    capital requirement 22

    Capital resources 22

    Capital instruments 32

    Risk management 33

    Risk management overview 33

    Credit risk 35

    - Exposure to credit risk 36

    - Geographic analysis of exposures 38

    - Industry analysis of exposures 40

    - Maturity analysis of exposures 45

    - IRB approach 46

    - Analysis of credit quality - Foundation IRB 50

    - Analysis of credit quality - Retail IRB 54

    - Analysis of credit quality - Standardised approach 58

    - Loan loss experience in the year ended

    31 December 2017 60

    - Past due and impaired exposures 60

    - Specific credit risk adjustments (provisions) 62

    - Comparison of expected versus actual loss 64

    - Credit risk mitigation 64

    Risk management (continued)

    Counterparty credit risk 66

    Securitisation 72

    Market risk 76

    - Overview 76

    - Discretionary risk 76

    - Customer risk 76

    - Structural risk 76

    Operational risk 77

    - Overview 77

    - Operational risk management objective 77

    - Operational risk management framework 77

    Liquidity risk 78

    - Overview 78

    - Encumbered and unencumbered assets

    held by the Group 80

    Leverage ratio 82

    Appendices 85

    Appendix I: CRD IV capital resources 85

    Appendix II: Equity holdings not in the Trading Book 87

    Appendix III: Remuneration 88

    Appendix IV: Significant subsidiaries 93

    - Bank of Ireland (UK) plc 93

    - Bank of Ireland Mortgage Bank 95

    - The Governor and Company of the Bank of Ireland 114

    Appendix V: Difference in scope of consolidation 140

    Appendix VI: CRR Roadmap 144

    Glossary 154

    Abbreviations 159

    Contents

    View this report online This Report and other information relating to Bank of Ireland is available at:

    www.bankofireland.com

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  • 4 Pillar 3 Disclosures - year ended 31 December 2017

    Pillar 3 overview

    Tables Page

    Key highlights 1.1 KM1: Key metrics - Regulatory basis 8

    Introduction 1.2 Transition period phase-in rates 10 1.3 Risk weighted assets (RWA)