#120 19 2019 Credit Presentation 31 December 2019 Bank of Ireland#2Empty#3Bank of Ireland Overview Bank of Ireland 2019 Credit Presentation Bank of Ireland 3#42019 Highlights Profitability €758m Underlying profit before tax Growth €2.0bn Net lending growth Bank of Ireland 2019 Credit Presentation • Stable net interest income; NIM of 2.14% Costs reduced by €67m (4%) • NPE ratio reduced by 190bps to 4.4% • New lending up 3% to €16.5bn Irish mortgage market share of 24%; increased SME market share 11% income growth in Wealth and Insurance . Cost reduction delivered in each of the last four reporting periods UK making progress on 'invest, improve and reposition' strategy New digital platforms launched Transformation 4% Reduction in costs • • Capital 13.8% CET1 increased • by 60bps • Organic capital generation of 170bps Unlocked additional 40bps through capital initiatives Dividend increased by 9% to 17.5c per share (€189m) Bank of Ireland 4#5Economic and interest rate outlook Bank of Ireland 2019 Credit Presentation Strong growth in Ireland UK remains resilient Lower for longer interest rates 1.50% 1 4.6% 4.6% 3.9% 3.8% 3.8% 1.00% 5.0% 0.50% BoE 5.8% 0.00% 4.8% 3.6% -0.50% - 1.4% 1.3% 1.4% -1.00% 2019e 2020f 2021f 2019 GDP1 Unemployment Rate 2020f 2021f 2019 ECB 2020f 2021f 2022f 2023f GDP1 Unemployment Rate -EUR2 GBP3 • • Irish economy continues to expand Economic fundamentals in our home market remain supportive although Brexit related uncertainties persist Labour market dynamics are strong Moderate GDP growth forecast Unemployment rate remains low Competitive dynamics have intensified in the mortgage market • Euro and sterling interest rates are expected to remain at historically low levels for a number of years • Inflation remains low in the Euro area (1.2%) and the UK (1.8%) Negative rates increasingly becoming a feature of Corporate and SME deposit market Sources: Bank of Ireland Economic Research Unit; CSO; ONS; Bloomberg; Eurostat 1 Annual real growth 2 Market derived forecasts for the ECB deposit rate at end year 3 Market derived forecasts for the BoE Bank rate at end year 4 Euro area HICP and UK CPI, 2019 annual average rate Bank of Ireland 5#6Continued to deliver on our strategic priorities throughout 2019 Bank of Ireland 2019 Credit Presentation 00 Transform the Bank Serve customers brilliantly 12 Grow Sustainable Profits Culture Systems Business model Colleague engagement of 60%, up 10% since 2017; Culture Embedding Index up 11% since 2018 customer digital platforms (Mobile App, • New payments infrastructure; new Wealth and Insurance); 40% increase . • in robotics automation Exit from credit cards, ATMs and current accounts in the UK Agile working has reduced our property footprint by c.30% over the last two years Embedding voice of customer in our businesses • • • Investing in digital and New brand strategy Improved Efficient profitability business physical channels Leading supporter of home building and buying in Ireland; approved facilities supporting c.9,000 new homes in Ireland Customer Effort Score up 13 points Customer complaints down 29% Ireland's first Financial Wellbeing programme launched New brand strategy rolled out Robust Sustainable capital dividends position Net Lending growth of €2.0bn . SME and Life market share growth; business income up 6% • NPES reduced by €1.5bn; NPE ratio of 4.4% Costs down 4%; cost income ratio reduced by 2% • Organic capital generation of 170bps; CET1 ratio up 60bps • Dividend increased by 9% Bank of Ireland 6#7Responsible and Sustainable Business Bank of Ireland 2019 Credit Presentation • Signatory to the UN Principles for Responsible Banking • Enhanced board and management governance to drive our RSB agenda; supported by a framework of robust policies across key areas • Good progress on environmental and social aspects • Supporting the low- carbon economy Launched €1bn Sustainable Finance Fund; including first Green Mortgage in Irish market 40% reduction in carbon emissions intensity since 2011; 100% of our Irish electricity procured from renewable sources Integrating climate risk into our risk frameworks Supporter of the Task Force on Climate-related Financial Disclosures recommendations TCFD TASK FORCE CLIMATE RELATED PANCIAL bocco Enabling customers to thrive . Financial Wellbeing strategy launched +50k financial health checks completed; +100k children participated in financial education programme New Vulnerable Customer Unit launched in Ireland • €2bn Brexit Fund to support businesses in Ireland . Enabling colleagues to thrive New People Strategy launched >€11m invested in learning and development Agile Ways of Working rolled out across Group Continued focus on inclusion and diversity Colleague Engagement Index of 60% (+10% since 2017) • UNEP PRINCIPLES FOR FINANCE RESPONSIBLE INITIATIVE BANKING Enabling communities to thrive Significant community investments 4th year of National Enterprise Town Awards with 117 entries from 80 towns and urban villages Continued support of the Arts; Bank of Ireland Cultural and Heritage Centre at College Green Behaving in a responsible and sustainable way is fundamental to achieving our purpose of enabling our customers, colleagues and communities to thrive Bank of Ireland 7#8Financial Targets 2021 Investor Day Bank of Ireland 2019 Credit Presentation Updated Improved profitability ROTE in excess of 10% ROTE of c.8.0% ROTE >10% over longer term Efficient business Cost base of c.€1.7bn in 2021 Costs reduce every year 2018-2021 Cost income ratio of c.50% Cost base of €1.65bn in 2021 Costs reduce every year 2018-2021 Cost income ratio of c.50% over longer term Robust capital position if CET1 ratio in excess of 13.0% CET1 ratio in excess of 13.5% Sustainable dividends Unchanged policy Increase prudently and progressively; over time will build towards a payout ratio of around 50% of sustainable earnings Bank of Ireland 8#9Operational Performance Bank of Ireland 2019 Credit Presentation Bank of Ireland 9#10Underlying profit before tax of €758m FY 2018 (€m) FY 2019 (€m) Total income 2,805 2,836 • Operating expenses (before levies and (1,852) (1,785) regulatory charges) • Levies and Regulatory charges (101) (117) • Net Impairment (losses) / gains 42 (215) Share of associates / JVs 41 39 - Underlying profit before tax 935 758 - Non-core items (100) (113) Profit before tax 835 645 - Net interest margin (NIM) 2.20% 2.14% Adjusted ROTE 7.2% 6.8% - Dec 18 Dec 19 Customer loans (net) €77bn €79bn Customer deposits €79bn €84bn Non-performing exposures (NPEs) €5.0bn €3.5bn - CET1 Ratios: Fully Loaded 13.4% 13.8% • Regulatory 15.0% 15.0% Total Capital Ratio: Regulatory 18.8% 18.6% Liquidity Metrics: LCR 136% 138% NSFR 130% 131% . LDR 97% 95% Leverage Ratios: Fully Loaded 6.3% 6.5% Regulatory 7.0% 7.1% 1 On a constant currency basis Bank of Ireland 2019 Credit Presentation Income statement Operating profit pre-impairment increased 10% from higher income and lower costs Stable net interest income Other income up 4% 4% reduction in operating expenses Increased impairment charge reflects: More normalised level of impairments Losses on small number of cases in 2019 Non-core items include charges associated with: Tracker Mortgage Examination (€67m, of which €12m in H2 2019) Restructuring costs Balance Sheet Group loan book of €79.5bn at Dec 2019: New lending of €16.5bn increased by 3% in 20191 Redemptions of €14.5bn; in line with 2018 Customer deposits of €84bn predominantly sourced through retail distribution channels NPES of €3.5bn with NPE ratio now at 4.4%, a reduction of 190bps during 2019 Continued organic capital generation with 170bps of fully loaded CET1 generated in 2019 HoldCo senior investment grade ratings of Baa2, BBB- and BBB from Moody's, S&P and Fitch Bank of Ireland 10#11Net interest income and NIM Net interest income¹ / NIM movement €2,146m (4bps) (3bps) 1bps 2.20% Net Interest Income Bank of Ireland 2019 Credit Presentation • €2,150m Stable net interest income benefitting from loan book growth and pricing discipline 2.14% FY 2018 UK (Cards exit / Competitive pressures) Liquid asset growth/MREL issuance Other FY 2019 Net interest margin drivers² 286bps 286bps 285bps 280bps (11bps) (12bps) (17bps) (21bps) H1 2018 H2 2018 Loan asset spread³ H1 2019 Liquid asset spread³ H2 2019 1 Excludes IFRS income classifications which are included in NIM calculation 2 Prior periods restated, see slide 43 for further detail 3 Spread = Loan asset yield or Liquid asset (excl. NAMA bonds) yield less Group's average cost of funds NIM of 2.14% • . Strong commercial pricing discipline Loan asset spread lower in H2 2019 primarily reflecting competitive pressure in the UK mortgage market Impact of UK credit card sale Growth in liquid assets MREL issuance Outlook • Exit NIM Q4 2019 of 2.10% • • Full Year 2020 NIM to be c.2.05% primarily reflecting: - Impact of low rate environment on structural hedge Growth in liquid assets 2020 net interest income expected to be broadly in line with 2019 Bank of Ireland 11#12Net lending growth of €2.0bn Group loan book movement €16.5bn (€14.5bn) (€1.0bn) €0.2bn €1.3bn Total €2.0bn €77.0bn €79.5bn Dec 18 Loan book New Redemptions Loan book/ Disposals/ FX / Other lending Acquisitions Securitisation Dec 19 Loan book Net lending increased to €2.0bn in 2019 (€0.9bn) 2017 1 On a constant currency basis Bank of Ireland 2019 Credit Presentation Net lending growth of €2.0bn in 2019 • • • Diversified mix of Group's loan portfolios continuing to benefit net lending growth Net lending growth in 2019 driven by UK and international portfolios. Net loan book decrease in Retail Ireland (€0.3bn) New lending €16.5bn increased by 3% in 20191: - - Retail Ireland new lending €5.8bn, +1% vs. 2018 Retail UK new lending €6.7bn, +15% vs. 2018 Corporate new lending €4.0bn, 10% lower vs. 2018 Redemptions in line with 20181 ROI mortgage NPE disposals and securitisation providing positive benefit to NPE ratio and CET1 capital Outlook Net lending growth of c.€2.0bn in 2020 Growth supported by strong economic fundamentals in core markets Maintaining commercial discipline on risk and pricing €2.0bn • €1.3bn 2018 2019 Bank of Ireland 12#13Strong cost discipline - net reduction €67m (4%) Cost Movement 2017-2019 €1,900m €1,852m €1,785m Operating expenses¹ • €104m €113m (€108m) €41m €108m • Bank of Ireland 2019 Credit Presentation Gross cost savings of €108m (6%): Process efficiencies, organisational design and sourcing strategically Portfolio disposals including UK cards 4% net reduction after absorbing wage inflation and higher depreciation €1,796m €1,739m €1,677m • Staff costs and average FTE down 2% . Cost income ratio reduced by 2% to 63% 2017 2018 Cost reduction Inflation / Investment 2019 Transformation Investment Charge Operating Expenses Transformation • Investment of €263m split across the income statement (41%), balance sheet (38%) and non-core items (21%) Transformation Investment: €1.4bn (2016-2021) Average of €275m p.a. €306m €263m €195m €105m Outlook • 2020 costs to be lower than 2019 • 2021 cost target lowered by €50m to €1.65bn . Total transformation investment of €1.4bn 2016-2021 unchanged 2016 2017 2018 2019 2020 2021 1 See slide 44 for further detail Bank of Ireland 13#14NPE ratio 4.4%; reduction of 190bps Non-performing exposures (NPEs) movements 8.3% 6.3% 4.4% (€0.9bn) €6.5bn (€0.6bn) €5.0bn €3.5bn Bank of Ireland 2019 Credit Presentation Non-performing exposures • €1.5bn reduction during 2019 . Group working closely with customers to agree sustainable solutions; organic NPE resolution reduced NPEs by €0.9bn . . ROI BTL mortgage securitisation (c.€0.4bn) and portfolio sale (c.€0.2bn) executed in 2019; c.30bps benefit to Group CET1 ratio ROI mortgage NPE coverage ratio increased by 4% to 25% during 2019 Group NPE coverage ratio increased to 37% (2018: 35%) · Dec 17 Dec 18 Organic resolution Disposals/ Securitisation Dec 19 NPE ratio NPEs by portfolio Mortgages (ROI) €2.3bn €1.5bn Non-property SME €1.2bn and Corporate €0.9bn Property and €0.9bn Construction €0.6bn €0.5bn Mortgages (UK) €0.5bn Consumer (ROI & UK) €0.1bn €0.1bn Dec 18 Dec 19 Outlook Expect further progress in 2020 Pace of reduction during 2020 will be influenced by a range of factors, including implementation of new Definition of Default regulatory framework in H1 2020 Potential NPE transactions in 2020 will focus on ROI mortgages · Dec 19 Coverage Ratio 25% 55% 39% 13% Bank of Ireland 14#15Asset Quality Net impairment (charges) / gains Bank of Ireland 2019 Credit Presentation (2bps) (€15m) 2017 5bps €36m 2018 (26bps) (€210m) 2019 Net impairment (charges) / gains Net impairment (charges) / gains in bps Asset Quality • Net impairment charges in 2019 of €210m / 26bps (H1 2019: 21bps, H2 2019: 32bps) Increase in 2019 vs. 2018 reflects: - A more normalised level of impairments in line with guidance Higher charges in H2 2019 driven by losses on a small number of large exposures Increased coverage on ROI mortgage NPEs in advance of NPE calendar coverage requirements Growth in UK consumer lending; and Model updates in line with the macroeconomic outlook Net impairment (charges) / gains by portfolio Non-property SME and Corporate (€76m) €14m €60m Outlook • Absent a deterioration in the economic environment or outlook, expect net impairment charge to be at the upper end of a range of 20-30bps p.a. during 2020-2021 (€60m) Mortgages (ROI) (€24m) Property and €12m Construction (€58m) Consumer (ROI & UK) (€37m) Mortgages (UK) €8m (€13m) 2018 2019 Bank of Ireland 15#16Capital and liquidity available to support growth Bank of Ireland 2019 Credit Presentation Strong funding and liquidity from increased customer deposits and MREL issuance Customer deposits: €84.0bn Growth of €5.1bn primarily reflecting strong economic activity in Ireland Wholesale funding: €11.0bn • Senior and subordinated debt issuance of €1.55bn during 2019 to meet MREL regulatory requirements MREL requirement of 27.1% of RWA to be met by 1 Jan 2021: MREL ratio of 23.8% based on RWA at Dec 2019 MREL eligible senior debt issuance of c.€1bn - €2bn p.a. anticipated Leverage Ratio Fully Loaded Leverage Ratio: 6.5% Regulatory Leverage Ratio: 7.1% Tangible Net Asset Value 4% growth in TNAV to €8.21 in 2019 Liquidity Dec 2018 Dec 2019 (€bn) (€bn) Customer loans Liquid assets Other assets Total assets Customer deposits Wholesale funding Shareholders' equity Other liabilities 722222 77 79 25 27 26 124 132 79 84 11 11 • 9 10 25 27 Total liabilities 124 132 TNAV per share Closing EUR/GBP FX rates €7.87 €8.21 0.89 0.85 . Dec 2018 Dec 2019 . Liquidity Coverage Ratio 136% 138% Net Stable Funding Ratio 130% 131% • Loan to Deposit Ratio 97% 95% Bank of Ireland 16#17Strategic Outlook Bank of Ireland 2019 Credit Presentation Bank of Ireland 17#18Significant progress in systems and business model transformation Bank of Ireland 2019 Credit Presentation • Back Transformation Investment of €1.4bn from 2016 to 2021 Core systems transformation of €1.1bn (Transaction processing) New card payment of 2m customers Continued modernisation of payment platforms Middle (Data and integration layers) Open banking enablement through API platform Front (Customer channels) New Mobile App Digital Investment platform technology including migration • Automated credit decisioning engines • Digital Insurance Wallet • Group Scheme Digital Regulatory programmes Enhancements to resilience, security and efficiency . · Markets/Treasury platform Reduced IT and operational risk Increased efficiency Single View of Customer Digitised Mortgage Originations New products/features/ capabilities • Reduced cost of change • Pension platform Digital Money Management Improved customer outcomes New functional features Growth in sales and customer interactions • Increased efficiency ...Beyond 2021 Regulatory change and ongoing improvements in the resilience and security of our technology estate mean transformation investment will continue beyond 2021, albeit at a lower level of capital spend. Areas of investment will include • Modernisation of Business Banking platform Continued modernisation of core systems Advanced customer analytics and decisioning capabilities Clean, complete and fully integrated data in the Group's enterprise infrastructure Business model transformation of €0.3bn A leaner, simplified and agile organisation Repositioning of UK portfolios Streamlining and simplifying End to End customer journeys Bank of Ireland 18#19Strategic imperative to improve UK returns Invest • Pivot to niche mortgages: higher margins and lower LTV; £225m new lending in 2019 • Auto finance: increased new lending and distribution; supporting growth in market share . Maintaining commercial discipline on risk and pricing . • • Bank of Ireland 2019 Credit Presentation зда Improve 1000 UK Post Office: partnership extended with enhanced alignment and benefits Costs: reduced by 18%; cost income ratio of 60% (2018: 66%) Funding costs: inaugural wholesale funding transaction (£350m) completed PBT: contributed 23% to Group underlying PBT A Reposition • UK credit cards: sale added 10bps to Group CET1 ratio Current accounts: exit from PO current accounts • ATMs: exiting from unprofitable business in line with strategy Non-core: continue to reduce legacy portfolios . Outlook . Growth: focused on profitable lending growth in our core businesses of mortgages, auto finance and consumer lending • • Risk: commercial discipline and risk focus in context of ongoing Brexit uncertainty Margin: ongoing margin optimisation across lending and liabilities; however competitive market backdrop expected to persist . Costs: continue to reduce costs to drive improved efficiency and returns • Returns: ROTE target of high single digits will be beyond 2021; strategic imperative to improve returns Bank of Ireland 19#20€250m cost reduction 2017-2021; target lowered to €1.65bn €1.9bn €1,900m €1,852m €1,785m €1.65bn 2017 2018 2019 2020 2021 Bank of Ireland 2019 Credit Presentation • Strong momentum with net cost reduction of €115m since 2017: - €215m (11%) gross cost saves driven by simplifying our organisation, sourcing strategically and ways of working Created capacity for €100m to absorb higher depreciation and targeted investment in our people and infrastructure • 2021 cost target lowered by a further €50m; from c.€1.7bn to €1.65bn Simplifying our 888 Organisation Sourcing Strategically Ways of Working Delivering the Digital Bank €142m of gross savings €62m of gross savings €215m of gross savings since 2017 Enabling Brilliant Customer Experiences €11m of gross savings Building capability 2020 onwards 20 20 Bank of Ireland#212020 outlook Growth Efficiency Bank of Ireland 2019 Credit Presentation Returns 21 21 • Net lending growth of c.€2bn while maintaining commercial discipline on risk and pricing NIM expected to be c.2.05% 2020 net interest income is expected to be broadly in line with 2019 Continued growth in Wealth and Insurance business · Costs in 2020 to be lower than 2019 • Further progress in NPES • • • Net impairment charge to be at the upper end of a range of 20bps-30bps p.a. during 2020-2021 Capital benefitting from organic generation and capital initiatives Dividend to increase prudently and progressively; over time will build towards a payout ratio of around 50% of sustainable earnings • Progress towards 2021 ROTE target of c.8.0% Bank of Ireland#22Capital & MREL Bank of Ireland 2019 Credit Presentation 22 22 Bank of Ireland#23Corporate Structure Bank of Ireland 2019 Credit Presentation 23 23 . . Operating subsidiaries Holding company Bank of Ireland Group plc (BOIG) Bank of Ireland 100% AT1 → Tier 2 Senior unsecured The Governor and Company of the Bank of Ireland (GovCo) Bank of Ireland 100% 100% New Ireland Assurance Company plc Bank of Ireland Mortgage Bank (BOIMB) NEW IRELAND ANNURANCE Bank of Ireland Irish Covered Bonds (ACS) → Senior unsecured 100% ↓ Bank of Ireland (UK) plc Bank of Ireland UK RMBS Preferred resolution strategy for the Group consists of a Single Point of Entry (SPE) bail-in strategy through the Group holding company (BOIG) Transparent and well-defined resolution strategy in comparison to other jurisdictions BOIG introduced on top of the existing group structure supporting an SPE preferred resolution strategy No change to any of the Group's existing operating companies Bail-in at BOIG is the primary resolution tool. MREL requirements are expected to be met through junior and senior issuance from BOIG Losses are passed to BOIG by the write-down of intragroup assets. BOIG investors bear loss in accordance with the resolution² hierarchy. Resolution authorities required to apply the "No creditor worse off" principle in application of the bail-in tool Funding requirements may also continue to be met, as required, through the issue of Irish Covered Bonds (ACS) by Bank of Ireland Mortgage Bank, Residential Mortgage Backed Securities (RMBS) by Bank of Ireland (UK) plc and senior unsecured issuance by GovCo 1 100% shareholding via intermediate holding company 2 Per Regulations 87 and 96 of the European Union (Bank Recovery and Resolution) Regulations 2015 Capital / MREL Funding Bank of Ireland#24Credit Ratings Bank of Ireland 2019 Credit Presentation 24 24 (Stand alone BOIG ratings) GovCo MOODY'S Instrument Ratings Fitch Ratings S&P Global BOIMB BOIG GovCo BOIG GovCo BOIG GovCo (ACS)³ Aaa Aaa Aaa c AAA AAA AAA AAA MOODY'S baa2 Stable A2 Stable Fitch Ratings bbb Stable BBB Investment Grade Aa1 Aa1 Aa1 AA+ AA+ AA+ AA+ Aa2 Aa2 Aa2 Aa3 Aa3 Aa3 A1 A1 A1 A2 A2 S A2 A3 A3 A3 < < < < AA AA AA AA AA- AA- AA- AA- A+ A+ A+ A A A A- A- A- A- S Baa1 Baa1 Baa1 BBB+ BBB+ BBB+ BBB+ Positive Baa2 Baa2 Baa2 BBB BBB BBB BBB Baa3 T2 Baa3 Baa3 BBB-1 T2 BBB- BBB- BBB- S&P Global bbb2 Stable A- Stable Sub Investment Grade Ba1 Ba1 Ba1 BB+ BB+ BB+ Ba2 Ba2 AT1 Ba2 BB BB BB T2 Ba3 Ba3 Ba3 BB- BB- BB- BB+ T2 BB BB- AT1 B1 B1 B1 B+ B+ B+ B+ B2 B2 B2 B B B B B3 B3 B3 B- B- B- B- (...) (...) (...) (...) (...) (...) (...) Covered bond S Senior unsecured T2 Tier 2 AT1 Additional Tier 1 1 Fitch rating in respect of BOIG 2.375% 10/2029 2 BOIG (HoldCo) entity rating = BBB- 3 BOIMB is the Group's issuer of Irish Covered Bonds (ACS). Moody's has not yet assigned an issuer rating to BOIMB Bank of Ireland#2525 25 Strong capital generation and robust capital position Bank of Ireland 2019 Credit Presentation RWAs €48.2bn 13.2% 170bps Fully loaded CET1 ratio Increased by 60bps 40bps (50bps) (50bps) (40bps) (10bps) RWAS €49.9bn Capital Generation . 13.8% • Growth in loan book • Jan 19 CET1 (post IFRS 16 Organic capital Capital Loan Transformation Dividend initiatives Growth/RWA2 investment Other (inc. pension) Dec 19 impact 20bps) generation' Robust Capital Position • Fully loaded CET1 ratio of 13.8% • Regulatory CET1 ratio of 15.0% . Regulatory Total Capital ratio of 18.6% Outlook • 2020 CET1 capital ratio to benefit from organic generation and capital initiatives • • Transformation • Regulatory capital Dividend / distributions 1 Organic capital generation primarily consists of attributable profit and movements in regulatory deductions 2 Loan Growth/ RWA primarily consists of RWA movements from net loan growth and changes in asset quality and book mix • Capital Management Organic capital generation of 170bps in 2019 Capital initiatives of 40bps in 2019: Securitisation ROI BTL mortgage NPEs (c.30bps) Sale of UK credit card portfolio (c. 10bps) Continuing to pursue opportunities to unlock capital in balance sheet Net lending growth of €2.0bn (c.50bps) in 2019 CET1 of c.30-35bps p.a. to support further net lending growth in 2020 and 2021 Investment of €263m (c.50bps) in 2019 Average investment of 50-60bps p.a. to 2021 Investment to continue beyond 2021 at a lower level of capital investment Net impact of evolving regulatory framework including EBA and ECB guidelines expected to consume up to 80bps of CET1 by end 2021, with the majority expected in H1 2020 Unchanged dividend policy Dividend increased by 9% to 17.5c per share, €189m / 40bps (2018: 16c / €173m / 40bps) Bank of Ireland#26Capital guidance increasing to >13.5% Bank of Ireland 2019 Credit Presentation 26 26 Regulatory Capital Requirements • Capital guidance increasing from >13% to >13.5% on regulatory basis and on fully loaded basis by end of O-SII phase-in (July 2021) Increase reflects recent announcement by the Bank of England of 1% increase in the UK countercyclical buffer, increasing Group capital requirements by c.0.30% from Dec 2020 Pro forma CET1 Regulatory Capital Requirements Pillar 1 CET1 Pillar 2 Requirement (P2R) Capital Conservation Buffer (CCB) Countercyclical buffer (CCYB)² Ireland (c.60% of RWA) UK (c.30% of RWA) US and other (c. 10% of RWA) O-SII Buffer Systemic Risk Buffer - Ireland Pro forma Minimum CET1 Regulatory Requirements Pillar 2 Guidance (P2G) Outlook Range 2019 2020 2021 4.50% 4.50% 4.50% 4.50% 1% -2.25%¹ 2.25% 2.25% 2.25% 2.50% 2.50% 2.50% 2.50% 0% - 2.50% 0.90% 1.20% 1.20% 0.60% 0.60% 0.60% 0.30% 0.60% 0.60% 0% - 2.00% 0.50% 1.00% 1.50% 0% - 3.00% TBC TBC 10.65% 11.45% 11.95% Not disclosed in line with regulatory preference There are offsetting regulatory capital developments that may emerge in 2020 and 2021. These include: Introduction of Systemic Risk Buffer (SyRB) in Ireland - the timing, sizing and application of the SyRB are not yet known The ECB may also permit banks to meet some of P2R from non-CET1 own funds, potentially reducing CET1 capital requirement 1 This is the expected range for P2R, which is subject to annual review 2 CCуB could be set in excess of 2.50% in exceptional circumstances. A change in the CCуB could also be implemented in less than 12 months in exceptional circumstances Bank of Ireland#27Robust capital ratios Dec 18 Dec 19 · CET1 Ratios: Fully Loaded 13.4% 13.8% Regulatory 15.0% 15.0% Tier 1 Ratios: Fully Loaded 14.4% 15.1% • Regulatory 16.0% 16.3% Total Capital Ratios: Fully Loaded 17.2% 17.4% - Regulatory 18.8% 18.6% MREL: Regulatory MREL ratio 23.1% 23.8% Leverage Ratios: Fully Loaded Regulatory 6.3% 6.5% 7.0% 7.1% Risk Weighted Assets: Fully Loaded Regulatory €47.6bn €47.8bn €49.9bn €50.1bn 1 c.60bps post implementation of IFRS16 on 1 January 2019 which reduced CET1 by c.20bps Bank of Ireland 2019 Credit Presentation CET1 The Group's fully loaded CET1 ratio increased by c.40bps' to 13.8% and the regulatory CET1 ratio is unchanged at 15% in 2019 Tier 1 & Total Capital • Tier 1 ratios reflect movement in CET1 ratios and a reduction in the adjustment under Article 85 of CRR Total Capital ratios reflect movements in CET1 ratios and: Redemption of a €750m Tier 2 instrument in Jun 2019 Issue of a €300m Tier 2 instrument in Oct 2019 Continued amortisation of other bullet Tier 2 instruments; and MREL A reduction in the adjustment under Article 87 of CRR MREL requirement of 27.09% to be met by 1 Jan 2021: MREL ratio of 23.8% based on RWA at Dec 2019 MREL eligible senior debt issuance of c.€1bn - €2bn p.a. anticipated Risk Weighted Assets RWA, on a regulatory basis, has increased from €47.8bn at Dec 2018 to €50.1bn at Dec 2019. The increase is primarily due to net loan book growth and changes in asset quality and book mix, FX impact on RWA and the implementation of IFRS 16 offset by the impact of the disposal of NPES and the sale of the UK Cards business Bank of Ireland 27#28MREL requirement Loss absorption Amount 14.58% 27.09% MREL Target 0.33% CCYB 1.5% O-SII¹ 2.5% CCB1 2.25% P2R¹ 8% Own Funds Pillar 1 Requirement Recapitalisation Amount 9.62% + Bank of Ireland 2019 Credit Presentation Market Confidence Charge 2.89% 0.33% CCYB 1.5% O-SII¹ -1.25% -0.19%2 2.5% CCB¹ -0.63%2 2.25% P2R1 Own Funds 8% Pillar 1 Requirement 28 28 • The Group has been advised of the decision by the SRB and the Bank of England of its binding MREL requirement to be met by Jan 2021 • This has been set at a level of 11.93% of total liabilities and own funds as at Dec 2017 (equivalent to 27.09% of risk weighted assets) . • Current MREL target calibration excludes introduction of Irish CCyB and increased UK CCyB. Increases to CCyB expected to be included in future calibrations MREL eligible senior debt issuance of c.€1-2bn p.a. expected to meet this requirement MREL ratio of 23.8% based on RWA at Dec 2019 1 Other Systemically Important Institution (O-SII), Capital Conservation Buffer (CCB), Pillar 2 Requirement (P2R) and Countercyclical Buffers (CCyB) 2 Bank specific adjustment of -0.82% Bank of Ireland#2929 29 Customer lending average credit risk weights - Dec 20191,2 (Based on regulatory exposure class) EAD³ RWA (€bn) (€bn) Avg. Risk Weight Risk Weighted Assets (RWAs) / Leverage Ratio Bank of Ireland 2019 Credit Presentation EBA Transparency Exercise 2019 Country by Country Average IRB risk weights Residential Mortgages - Jun 2019 Sweden 4.2% Belgium 10.1% United Kingdom 10.2% ROI Mortgages 23.7 7.1 30% Austria 10.7% France 10.9% UK Mortgages 23.3 4.4 19% Netherlands 11.0% SME 17.0 13.2 78% Germany 14.3% Spain 14.4% Corporate 11.7 11.0 94% Denmark 14.6% Other Retail 6.3 4.4 70% Finland 15.8% Portugal 18.0% Italy 18.9% Customer lending credit risk 82.0 40.1 49% Norway 20.9% Ireland 35.0% • IRB approach accounts for: 69% of credit EAD (Dec 18: 70%) EBA Risk Dashboard Q2 2019 Country by Country Average Leverage ratio Regulatory Leverage Ratio - Jun 2019 73% of credit RWA (Dec 18: 74%) Regulatory RWA has increased from €47.8bn at Dec 2018 to €50.1bn at Dec 2019. The increase is primarily due to net loan book growth and changes in asset quality and book mix, FX movements and the implementation of IFRS 16 offset by the impact of the disposal of NPES and the sale of UK credit cards Leverage Ratio • Fully Loaded Leverage Ratio: 6.5% • Regulatory Leverage Ratio: 7.1% United Kingdom Sweden Germany Netherlands 4.4% 4.5% 4.6% Denmark 4.6% 5.1% France 5.1% Spain 5.6% Finland 5.6% Italy 5.8% Belgium 6.2% Norway 7.0% Austria 7.0% Portugal Ireland 1 EAD and RWA include both IRB and Standardised approaches and comprise both non-defaulted and defaulted loans 2 Securitised exposures are excluded from the table (i.e. excludes exposures included in CRT executed in Nov 2017 and Dec 2019) 3 Exposure at default (EAD) is a regulatory estimate of credit risk exposure consisting of both on balance sheet exposures and off balance sheet commitments 7.6% 10.1% Bank of Ireland#30Capital/MREL - Summary highlights Capital Economy Growth & Efficiency Bank of Ireland 2019 Credit Presentation • Fully loaded organic capital generation of 170bps in 2019, providing capacity for investment in loan growth, transformation and dividend; unlocked additional 40bps through capital initiatives • Group expects to maintain a CET1 ratio in excess of 13.5% on a regulatory basis and on a fully loaded basis by the end of the O-SII phase-in period¹ • Ireland's leading retail and commercial bank primarily operating in the growing Irish and UK economies. Irish economy continues to perform with strong GDP growth, and unemployment at a 13 year low · €2bn net lending growth in 2019 NPE ratio reduced by 190bps to 4.4%; further progress on NPEs in 2020 • 4% reduction in costs; costs in 2020 to be lower than 2019 2020 CET1 ratio to benefit from organic generation and capital initiatives BOIG on stable rating outlook with Moody's, Standard & Poor's and Fitch Continued progress on Responsible and Sustainable Business Based on current MREL ratio and SRB MREL policy, MREL eligible senior debt issuance of c.€1bn-€2bn p.a. anticipated • Outlook • 1 The Other Systemically Important Institution (O-SII) buffer was introduced at 0.5% in July 2019, increasing to 1.0% in July 2020 and 1.5% in July 2021 30 30 Bank of Ireland#31Appendix Bank of Ireland 2019 Credit Presentation Bank of Ireland 31#32Appendix • BOI Overview . - Ireland UK International Profile of customer loans Gross new lending volumes Debt Securities at fair value through other comprehensive income (FVOCI) ROI mortgage loan book UK mortgage loan book • Income Statement - - Sustainable business income Divisional performance Interest Rate Sensitivity Net interest income analysis Operating Expenses Non-core Items Asset Quality Non-performing exposures by portfolio ROI mortgages UK Customer Loans Ordinary shareholders' equity and TNAV Capital CET1 ratios Capital Guidance and Distribution Policy Cost income ratio: Dec 2019 Return on tangible equity (ROTE) Underlying earnings per share: Dec 2019 Defined Benefit Pension Schemes Forward-Looking statement Contact details Bank of Ireland 2019 Credit Presentation Slide No. 33 34 35 36 37 38 39 40 41 42 43 44 ASSSSSS! wwww www 46 47 48 49 45 50 51 52 53 54 55 56 57 Bank of Ireland 32#33BOI Overview: Ireland Ireland's leading retail and commercial bank Bank of Ireland 2019 Credit Presentation 33 33 Consumer Unique customer franchise Driving local community, enterprise and business development activity Retail Ireland Business • 1.7m active consumer customers • c.200k SME customers . >500k Wealth and Insurance customers • • Wealth 264 branches, with €20m invested in upgrades in 2019 Over the past three years we have invested over €30m and have upgraded c.200 branches Community and enterprise programme activity in 2019, supporting local growth and development, includes: National Enterprise Town Awards Enterprise events, including Brexit related events attended by over 3,000 customers c.1,000 local customer events hosted in 12 workbenches nationwide Extensive engagement via digital channels B • 77% digitally active current account base • Over three quarters of interactions are via mobile device • Corporate Ireland Corporate Banking Ireland #1 Corporate Bank in Ireland ⚫ #1 Bank for FDI into Ireland • Country-wide coverage via regional hubs Banking relationship with 60% of Ireland's top companies • >500 corporate customers: average 5 products held per customer Property Finance • Actively supporting new home & office development ⚫ Disciplined . • approach to risk management 70 Specialist staff; >175 customers Leading lender to investment & construction sectors Markets & Treasury • Leading treasury service provider • Track record of innovation Bank of Ireland#3434 === BOI Overview: UK / International Bank of Ireland 2019 Credit Presentation UK and International businesses provide diversification and further opportunities for growth Retail UK Partnerships Northern Ireland Niche Businesses Corporate UK / International Corporate Banking UK Acquisition Finance • Over 40 years in Great Britain • >11.5k branches through Post Office partnership ⚫ #1 travel money business in the UK (FRES) • Access to 3.2m AA members ⚫ Full service retail and commercial bank A distribution network of 28 branches, including six business centres Over 190 years since first branch opened Motor asset finance and motor lease finance business . Proven track record of strong growth and disciplined risk appetite £2.3bn loan book with >200k customers • Sector focused business in UK with 5 specialist industry sectors, industrials & manufacturing, technology, consumer & hospitality, media and business services Based in London and Manchester ⚫ c.100 Customers • Scalable platform with highly disciplined approach and attractive growth opportunity • • Mid market US / European Acquisition Finance business; strong 20 year+ record Longstanding and embedded sponsor relationships • Senior Debt focus • Disciplined risk appetite • Active lead arranger / underwriter • 6 international offices • >200 customers, c.75% business from repeat sponsors Bank of Ireland#35BOI Overview Profile of customer loans' at Dec 19 (Gross) Bank of Ireland 2019 Credit Presentation ROI UK RoW Total Total Composition (Dec 19) (€bn) (€bn) (€bn) (€bn) (%) Mortgages 23.1 23.2 0.0 46.3 58% Non-property SME and corporate 10.8 5.22 4.4 20.4 25% SME 7.2 1.8 0.0 9.0 11% Corporate 3.6 3.4 4.4 11.4 14% Property and construction 5.3 2.0 0.8 8.1 10% Investment property 4.7 1.8 0.8 7.3 9% Land and development 0.6 0.2 0.0 0.8 1% Consumer 2.2 3.5 0.0 5.7 7% Customer loans (gross) 41.4 33.9 5.2 80.5 100% Geographic (%) 51% 42% 7% 100% 1 Based on geographic location of customer 2 Includes GB business and corporate loan books, which BOI is required to run down under its EU approved Restructuring Plan (Dec 2019: £0.3bn; Dec 2018: £0.4bn) Bank of Ireland 35#36BOI Overview: Gross new lending volumes €5.7bn Retail Ireland €5.8bn €2.3bn €2.3bn £5.2bn £3.3bn €0.6bn €0.5bn Retail UK £5.9bn Bank of Ireland 2019 Credit Presentation Corporate Banking €4.4bn €4.0bn £3.6bn €1.1bn €1.3bn €1.1bn €0.7bn €1.2bn €2.9bn €2.9bn €1.3bn £2.1bn £1.6bn 2018 2019 £0.2bn 2018 £0.2bn 2019 €0.9bn €0.7bn 2018 Mortgages Consumer Business Banking Property Corporate Ireland Acquisition Finance Corporate UK 2019 Bank of Ireland 36#37Debt Securities at fair value through other comprehensive income (FVOCI) Bank of Ireland 2019 Credit Presentation ROI UK France Other (€bn) (€bn) (€bn) (€bn) Dec 19 (€bn) Dec 18 (€bn) Sovereign bonds 2.3 0.7 20 2.8 5.8 6.0 Senior debt 0.3 1.2 1.5 2.2 Covered bonds 0.2 0.2 0.8 2.2 3.4 3.7 Subordinated debt 0.1 0.1 0.1 Total 2.5 0.2 1.9 6.2 10.8 12.0 FVOCI Reserve 0.2 0.2 0.2 37 37 • • The Group held €10.8bn of FVOCI debt securities at Dec 2019. Weighted average instrument level credit rating of the FVOCI portfolio is A+ Other exposures include supranational entities (€1.0bn), Spain (€1.3bn), Belgium (€0.8bn), Sweden (€0.8bn) and Other (€2.3bn - all exposures less than €0.5bn) Portfolio • The Group holds NAMA subordinated bonds - €70m nominal value, valued at 100% at Dec 19 (Dec 18: 104%) NAMA Bank of Ireland#38ROI Mortgages: €23.0bn New Lending volumes and Market Share 27% €2.0bn 27% €2.3bn Bank of Ireland 2019 Credit Presentation ROI Mortgages (gross) €24.1bn €23.7bn €23.0bn 24% €7.3bn €9.5bn €11.1bn €5.8bn €4.4bn €3.2bn €2.3bn €10.9bn €9.8bn €8.7bn Dec 17 Dec 18 Tracker Variable Rates Dec 19 Fixed Rates 2017 2018 2019 ■New Lending Volumes¹ Market Share Pricing strategy • Fixed rate led mortgage pricing strategy which provides value, certainty and stability to our customers and to the Group • Fixed rate products accounted for c.93% of our new lending in 2019, up from c.30% in 2014 Distribution strategy - expansion into broker channel • Successful acceleration of on-boarding of new brokers during 2019 following re-entry into broker market in Q4 2018 (brokers accounted for 27% of the market in 2019) Wider proposition 7 in 10 ROI customers who take out a new mortgage take out a life assurance policy through BOI Group 3 in 10 ROI customers who take out a new mortgage take out a general insurance policy through BOI Group with insurance partners 1 Excluding portfolio acquisitions (2017 - €0.1bn; 2018 - Nil; 2019 - Nil) 2 Average customer pay rate of 110bps less Group average cost of funds of 46bps LTV profile Average LTV of 59% on mortgage stock at Dec 19 (Dec 18: 61%) • Average LTV of 74% on new mortgages in 2019 (2018: 71%) Tracker mortgages • €8.3bn or 95% of trackers at Dec 19 are on a capital and interest repayment basis • 81% of trackers are Owner Occupier mortgages; 19% of trackers are Buy to Let mortgages • Loan asset spread on ECB tracker mortgages was c.64bps² in 2019 NPE disposal / securitisation • ROI mortgages reduction in 2019 primarily driven by NPE disposal and securitisation transactions (€0.6bn) • Potential NPE transactions in 2020 will focus on ROI mortgages Bank of Ireland 38#39UK Mortgages: £19.8bn / €23.2bn £20.0bn UK Mortgages (gross) £19.4bn £19.8bn £20.0bn £2.0bn Bank of Ireland 2019 Credit Presentation UK Mortgages (gross) £19.4bn £1.7bn £19.8bn £1.6bn £9.6bn £10.4bn £11.9bn £7.5bn £7.5bn £7.4bn £3.3bn £2.7bn £2.3bn £10.6bn £10.2bn £10.8bn £7.1bn £6.3bn £5.6bn Dec 17 Dec 18 Dec 19 Dec 17 Tracker Variable Rates Fixed Rates Dec 18 Standard Buy to let Dec 19 Self certified LTV profile . Average LTV of 63% on stock at Dec 19 (Dec 18: 62%) • Average LTV of 73% on new UK mortgages in 2019 (2018: 72%) 39 39 Bank of Ireland#40Sustainable business income Bank of Ireland 2019 Credit Presentation 40 40 FY 2018 FY 2019 6% growth in business income (€m) (€m) Wealth and Insurance 250 277 Retail Ireland 267 254 Retail UK (34) (18) Corporate and Treasury 145 154 • Group Centre and other 2 (1) 11% increase in Wealth and Insurance: New business sales (APE) increased by 11% 2% growth in Life market share to 22% Penetration of bank customer base increased from 26% to 32% Retail Ireland income slightly lower from lower cash handling fees and customer efficiency initiatives Retail UK benefiting from improved commission mix Business Income 630 666 Retail UK Cards and ATMs¹ 42 Additional Gains 9 5 • IFRS income classifications² 34 17 Valuation and other items (56) Other Income 659 686 Valuation and other items Unit-linked assets valuation driven by movements in the value of equity markets - 2019: €30m, 2018: (€27m) Financial instrument valuation adjustments - 2019: (€37m), 2018: (€9m) . Impact of interest rate movements in Wealth and Insurance - 2019: €5m, 2018: (€20m) 1 Classified as non-core in 2019 2 IFRS income classifications include c.€13m of interest income in 2019 on 'Life loan mortgage products' which on transition to IFRS 9 were mandatorily classified as FVTPL, with all income on such loans reported in 'net other income'. IFRS income classifications are fully offset in net interest income Bank of Ireland#41Income Statement Divisional performance Bank of Ireland 2019 Credit Presentation 12 months ended Dec 19 Operating Profit pre-impairment Underlying profit/(loss) before tax and additional gains, valuation and other items valuation and other items¹ Additional gains, Underlying profit/(loss) before tax (€m) (€m) (Єm) (€m) Retail Ireland 513 469 (1) 468 Wealth and Insurance 169 134 35 169 Retail UK - € 219 168 3 171 Retail UK - £ 193 149 3 152 Corporate and Treasury 537 481 (26) 455 Group Centre & other (396) (389) (397) Transformation Investment charge (108) (108) (108) Group 934 755 3 758 Operating Profit 12 months ended Dec 18 pre-impairment Underlying profit/(loss) before tax and additional gains, valuation and other items Additional gains, valuation and other items¹ Underlying profit/(loss) before tax (€m) (€m) (€m) Retail Ireland 488 665 (16) (€m) 649 Wealth and Insurance 67 114 (47) 67 Retail UK - € 219 170 12 182 Retail UK - £ 194 150 11 161 Corporate and Treasury 527 465 21 486 Group Centre & other (336) (319) (17) (336) Transformation Investment charge (113) (113) (113) Group 852 982 (47) 935 1 Excludes IFRS income classifications which is fully offset in net interest income Bank of Ireland 41#42Interest Rate Sensitivity Bank of Ireland 2019 Credit Presentation The table below shows the estimated sensitivity of the Group's income (before tax) to an instantaneous and sustained 1% parallel movement in interest rates Estimated sensitivity on Group income (1 year horizon) 100bps higher 100bps lower The estimates are based on management assumptions primarily related to: • the re-pricing of customer transactions; Dec 18 (€m) Dec 19 (€m) c.180 c.210 (c.210) (c.250) . the relationship between key official interest rates set by Monetary Authorities and market determined interest rates; and • the assumption of a static balance sheet by size and composition In addition, changes in market interest rates could impact a range of other items including the valuation of the Group's IAS19 defined benefit pension schemes 42 42 Bank of Ireland#43Income Statement Net interest income analysis¹ Bank of Ireland 2019 Credit Presentation H1 2018 H2 2018 H1 2019 H2 2019 (€bn) Average Gross Gross Volumes Interest Rate (Єm) (%) Average Gross Gross Volumes Interest Rate (€bn) (€m) (%) Average Gross Gross Volumes Interest Rate (€bn) (€m) (%) Ireland Loans² 34.6 594 3.46% 34.4 595 3.43% 34.2 582 3.43% 33.7 Average Gross Gross Volumes Interest Rate (€bn) (Єm) (%) 583 3.43% UK Loans 28.1. 383 2.75% 27.6 391 2.82% 27.5 377 2.76% 28.0 375 2.66% C&T 13.6 267 3.97% 14.6 294 3.98% 15.8 314 3.99% 16.8 330 3.90% Total Loans and Advances to Customers 76.3 1,244 3.29% 76.6 1,280 3.31% 77.5 1,273 3.31% 78.5 1,288 3.26% Liquid Assets 22.1 35 0.32% 22.7 38 0.33% 22.9 33 0.29% 23.9 30 0.25% NAMA Sub Debt 0.2 4 3.50% 0.1 2 5.24% 0.1 2 5.40% 0.1 2 5.26% Total Liquid Assets 22.3 39 0.35% 22.8 40 Total Interest Earning Assets 98.6 1,283 2.62% 99.4 1,320 Ireland Deposits 20.5 (8) (0.08%) 20.7 (8) Credit Balances³ 30.5 2 0.01% 32.8 3 UK Deposits C&T Deposits 18.9 (81) (0.86%) 18.6 (88) 4.7 (9) (0.39%) 4.9 (9) Total Deposits 74.6 (96) (0.26%) 77.0 Wholesale Funding 12.3 (45) (0.73%) 11.0 (102) (52) Subordinated Liabilities 2.1 (49) (4.77%) 2.1 Total Interest Bearing Liabilities 89.0 (190) (0.43%) 90.1 (51) (205) 0.35% 2.63% (0.08%) 20.7 0.02% 34.5 (0.94%) 18.3 (0.37%) 5.1 (0.26%) 78.6 (0.94%) 10.3 (4.86%) 2.0 (0.45%) 90.9 23.0 100.5 35 1,308 (7) 0.31% 2.62% (0.07%) 21.0 24.0 32 0.27% 102.5 1,320 2.56% 3 (91) 0.02% (1.00%) 18.6 36.6 56 (5) (0.05%) 0.03% (103) (1.09%) (9) (0.35%) 5.0 (9) (0.34%) (104) (0.27%) 81.2 (111) (0.27%) (54) (1.06%) 9.9 (62) (1.24%) (49) (207) (4.85%) 1.5 (41) (5.44%) (0.46%) 92.6 (214) (0.46%) Other5 2 (30) (22) (18) Net Interest Margin as reported 98.6 1,095 Average ECB Base rate Average 3 month Euribor 2.23% 0.00% (0.33%) 99.4 1,085 2.17% 0.00% 100.5 1,079 2.16% 102.5 1,088 2.11% 0.00% 0.00% (0.32%) (0.31%) (0.40%) Average BOE Base rate 0.50% 0.70% 0.75% 0.75% 0.78% Average 3 month LIBOR 0.62% 0.82% 1 Previously, income and expense from derivatives in designated cash flow hedge and fair value hedge relationships was allocated to 'Loans and Advances' in proportion to average volumes, and IFRS income classification (derivatives) was unallocated. This approach has been refined, and the allocation is now made (including prior year periods) based on derivative currency and hedging purpose to better represent the performance of each portfolio 2 Includes average interest earning assets of c.€0.3bn in 2019 carried at FVTPL with associated FY19 interest income of c.€13m 3 Credit balances in H2 2019: ROI €28.6bn, UK €3.6bn, C&T €4.4bn 4 Includes impact of credit risk transfer transactions executed in Dec 2016, Nov 2017 and Dec 2019 5 Includes IFRS 16 lease expense, interest on certain FVPTL items and adjustments that are of a non-recurring nature such as customer termination fees and EIR adjustments 0.84% Bank of Ireland 43 43#44Operating expenses Total staff costs - Staff costs - Pension costs Other costs¹ Depreciation¹ Operating Expenses Transformation Investment charge Operating Expenses (before levies and regulatory charges) Levies and Regulatory charges Total Operating Expenses Average staff numbers Cost income ratio² Bank of Ireland 2019 Credit Presentation (€m) FY 2018 FY 2019 (Єm) 868 844 721 710 147 134 659 544 212 289 1,739 1,677 113 108 1,852 1,785 101 117 1,953 1,902 10,595 10,424 65% 63% 1 The adoption of IFRS 16 resulted in a decrease in other costs of €72m and an increase in depreciation of €72m. 2 See slide 52 for calculation Bank of Ireland 44#45Non-core items Bank of Ireland 2019 Credit Presentation FY 2018 (Єm) FY 2019 (€m) (74) (111) (59) (25) Customer redress programme - Tracker Mortgage Examination - Other programme Cost of restructuring programme¹ (Loss) gain on disposal / liquidation of business activities Gain on disposal of Property Investment return on treasury stock held for policyholders UK business divestments, net of disposal costs² Gross-up for policyholder tax in the Wealth and Insurance business 01 5 7 6 ง Total non-core items (67) ཅི ༤® སྐྱེ ་ སེ " ⌘ 45 45 (100) (113) 1 Restructuring costs of €59m in 2019 primarily relate to a reduction in employee numbers (€34m), programme management costs (€17m), costs related to the implementation of the Group's property strategy (€4m), and other restructuring costs (€4m) 2 Relates to UK Credit Cards, Post Office ATMs and Post Office Current Accounts Bank of Ireland#46Non-performing exposures by portfolio Bank of Ireland 2019 Credit Presentation Advances Composition (Dec 19) (€bn) Non-performing exposures (€bn) Non-performing exposures as % of advances Impairment loss allowance (€bn) Impairment loss allowance as % of non-performing exposures Residential Mortgages 46.3 1.9 4.2% 0.4 22% - Republic of Ireland 23.1 1.5 6.3% 0.3 25% - UK 23.2 0.5 2.1% 0.1 13% Non-property SME and Corporate 20.4 0.9 4.3% 0.5 55% - Republic of Ireland SME 7.3 0.6 7.5% 0.3 54% - UK SME 1.7 0.1 6.3% 0.0 46% - Corporate 11.4 0.2 2.0% 0.2 60% Property and construction 8.1 0.6 7.3% 0.2 39% - Investment property 7.2 0.6 7.7% 0.2 37% - Land and development 0.9 0.0 3.8% 0.0 64% Consumer 5.7 0.1 1.7% 0.2 159% Total loans and advances to customers 80.5 3.5 4.4% 1.3 37% Composition (Dec 18) Advances (€bn) Non-performing exposures (€bn) Non-performing exposures as % of advances Impairment loss allowance Impairment loss allowance as % of (€bn) non-performing exposures Residential Mortgages 45.4 - Republic of Ireland 23.7 - UK 21.7 Non-property SME and Corporate 19.5 - Republic of Ireland SME 7.6 - UK SME 1.6 - Corporate 10.3 NNO FOOO 2.8 2.3 0.5 1.2 0.8 0.1 0.3 83528 13 6.0% 0.5 20% 9.5% 0.4 21% 2.3% 0.1 15% 6.2% 0.6 52% 11.2% 0.4 49% 6.1% 0.1 53% 2.6% 0.1 60% Property and construction 8.3 0.9 11.0% 0.4 45% - Investment property 7.7 0.8 10.7% 0.4 44% - Land and development 0.6 0.1 14.0% 0.0 54% Consumer 5.2 0.1 2.1% 0.2 140% Total loans and advances to customers 78.4 5.0 6.3% 1.7 35% Bank of Ireland 46#47ROI Mortgages Continued proactive arrears management >90 days arrears¹ Industry Average Industry Average 16.5% Bank of Ireland 6.9% 1.9% Owner Occupier Owner Occupier Buy to let >720 days arrears¹ Industry Average Industry Average 12.3% Bank of Ireland 4.5% 1.0% Bank of Ireland 2019 Credit Presentation Bank of Ireland 3.6% Buy to let >90 days arrears • Bank of Ireland is significantly below the industry average for both Owner Occupier (28% of industry average) and Buy to Let (22% of industry average) >720 days arrears • Bank of Ireland is significantly below the industry average for both Owner Occupier (22% of industry average) and Buy to Let (15% of industry average) Bank of Ireland 1.9% Owner Occupier Owner Occupier Buy to let Buy to let 1 As at September 2019, based on number of accounts, industry average excluding BOI Bank of Ireland 47#48UK Customer Loans £28.9bn (€33.9bn) UK Mortgages - £19.8bn South East Scotland £1.2bn ■Rest of England £9.2bn £2.0bn Wales £0.8bn Greater London £3.4bn ■Northern Ireland £1.0bn Outer Metropolitan £2.2bn Other UK Customer Loans - £9.1bn £0.1bn £3.0bn £0.2bn £0.1bn £2.8bn £1.4bn £1.3bn £0.2bn Land & Development Consumer SME Corporate Investment Property Performing loans Non-performing exposures UK Mortgages Analysis - £19.8bn Bank of Ireland 2019 Credit Presentation • Total UK mortgages of £19.8bn; (NPES: 2.1%): Average LTV of 63% on existing stock at Dec 2019 (Dec 18: 62%) Average LTV of 73% on new UK mortgages in 2019 (2018: 72%) 69% of the current mortgage portfolio originated since January 2010 are standard owner occupier mortgages BTL book is well seasoned with 65% of these mortgages originated prior to January 2010 Average balance of Greater London mortgages is c.£193k, with 91% of Greater London mortgages having an indexed LTV <70% Other UK Customer Loans Analysis - £9.1bn • Non-performing exposures of £0.4bn with strong coverage ratios • Performing loans of £8.7bn: SME: broad sectoral diversification with low concentration risk Corporate: specialist lending teams in Acquisition Finance and Corporate lending through a focused sector strategy Investment Property: primarily retail, office and residential sectors Consumer (£3.0bn): Northridge (£1.9bn): Asset backed motor finance business; net loan book increase of £0.5bn in 2019; mid-market targeting prime business only; below industry arrears and loan losses Personal loan volumes (£1.1bn): net loan book increase of £0.4bn in 2019; improved credit risk process has driven increase in customer applications and drawdowns Bank of Ireland 48#49Ordinary shareholders' equity and TNAV Bank of Ireland 2019 Credit Presentation Movement in ordinary shareholders' equity Ordinary shareholders' equity at beginning of period Movements: Profit attributable to shareholders Impact of adopting IFRS 9 Dividend paid to ordinary shareholders Remeasurement of the net defined benefit pension liability Debt instruments at FVOCI reserve movements Available for sale (AFS) reserve movements Cash flow hedge reserve movement Foreign exchange movements Other movements Ordinary shareholders' equity at end of period Tangible net asset value Ordinary shareholders' equity at the end of period Adjustments: Intangible assets and goodwill Own stock held for benefit of life assurance policyholders Tangible net asset value (TNAV) Number of ordinary shares in issue at the end of the period TNAV per share (€) Dividend per share (€) paid during period 1 Dec 2018 numbers have been restated to exclude treasury shares held for the benefit of life assurance policyholders 2018 (Єm) 8,859 2019 (€m) 9,243 620 448 (31) (124) (173) 129 39 133 26 (341) (51) (5) 19 10 132 39 (85) 9,243 9,625 (€m) 9,243 Dec 181 Dec 19 (Єm) 9,625 (802) (838) 25 30 8,466 8,818 1,076 1,074 €7.87 €8.21 €0.115 €0.160 19 49 Bank of Ireland#50Capital - fully loaded CET1 ratio improved by 60bps Capital ratios - Dec 2019 Bank of Ireland 2019 Credit Presentation Total equity Less Additional Tier 1 Deferred tax Intangible assets and goodwill Foreseeable dividend' Expected loss deduction Other items² Common Equity Tier 1 Capital Credit RWA Operational RWA Market, Counterparty Credit Risk and Securitisations Other Assets/10/15% threshold deduction Total RWA Common Equity Tier 1 ratio Total Capital Ratio Leverage ratio Phasing impacts on Regulatory ratio Regulatory ratio (€bn) Fully loaded ratio (€bn) 10.5 10.5 (0.8) (0.8) (0.5) (1.0) (0.8) (0.8) (0.2) (0.2) (0.4) (0.4) (0.3) (0.4) 7.5 6.9 40.5 40.4 4.4 4.4 1.6 1.6 3.6 3.5 50.1 49.9 15.0% 13.8% 18.6% 17.4% 7.1% 6.5% • Deferred tax assets - certain DTAs are deducted at a rate of 50% for 2019, increasing annually at a rate of 10% thereafter until 2024 • IFRS 9 - the Group has elected to apply the transitional arrangement which, on a Regulatory CET1 basis, resulted in minimal impact from initial adoption and will partially mitigate future impacts in the period to 2022. The transitional arrangement allows a 85% add-back in 20194, decreasing to 70%, 50%, and 25% in subsequent years 1 Dividend deduction of €189m (c.40bps of CET1 capital), equivalent to an annualised dividend per share of 17.5c 2 Other items - the principal items being the cash flow hedge reserve, securitisation deduction and 10%/15% threshold deduction 3 Deferred tax assets due to temporary differences are included in other RWA with a 250% risk weighting applied 4 The IFRS9 addback to the Regulatory CET1 was c.15bps at 31 Dec 2019, reduced from c.18bps at 31 Dec 2018 Bank of Ireland 50 50#51Capital Guidance and Distribution Policy Capital Guidance Distribution Policy Bank of Ireland 2019 Credit Presentation • The Group expects to maintain a CET1 ratio in excess of 13.5% on a regulatory basis and on a fully loaded basis by the end of the O-SII phase-in period¹ • This includes meeting applicable regulatory capital requirements plus an appropriate management buffer² • The Group expects that dividends will increase on a prudent and progressive basis and, over time, will build towards a payout ratio of around 50% of sustainable earnings • Dividend level and rate of progression will reflect, amongst other things: Strength of the Group's capital and capital generation - Board's assessment of growth and investment opportunities available Any capital the Group retains to cover uncertainties; and Any impact from the evolving regulatory and accounting environments • Other means of capital distribution will be considered to the extent the Group has excess capital Dividend Accrual Proposed dividend of 17.5c per share / €189m in respect of 2019, increased from 16c per share / €173m in 2018 1 The Other Systemically Important Institution (O-SII) buffer was introduced at 0.5% in July 2019, increasing to 1.0% in July 2020 and 1.5% in July 2021 2 The Central Bank of Ireland has requested the power to introduce a Systemic Risk Buffer (SyRB) in Ireland, which could increase capital demand. The size, timing and application of any potential SyRB are currently unknown Bank of Ireland 51#52Cost income ratio: Dec 2019 Headline vs. Adjusted Net interest income Other income Bank of Ireland 2019 Credit Presentation FY 2019 Headline (€m) 2,150 Pro forma adjustments (Єm) FY 2019 Pro forma (Єm) 2,150 - Business income 666 666 - Additional gains 5 (5) - Other valuation items¹ 15 2 17 Total Income 2,836 (3) 2,833 Costs - Operating expenses - Transformation Investment Costs Cost income ratio Cost income ratio excludes: • - - Levies and Regulatory charges Non-core items 1 Excludes IFRS income classifications which is fully offset in net interest income 1,677 108 1,785 63% 1,677 108 1,785 63% 2019 adjusted cost income ratio is adjusted for: Additional gains and valuation items¹ (€3m) - 52 62 Bank of Ireland#53Return on tangible equity (ROTE) 2019: Headline vs. Adjusted Bank of Ireland 2019 Credit Presentation 2019 Headline (Єm) Additional gains Adjustments 'Normalised' and valuation items' net of tax impairment adjustment, net of tax Adjusted for CET1 ratio at 13% 2019 Adjusted (Єm) Profit for the period 448 Non-core items including tax 177 Coupon on Additional Tier 1 securities (55) Preference share dividends (7) Adjusted profit after tax 563 (3) 560 At Dec 2019 Shareholders' equity 9,625 Intangible assets (838) Shareholders' tangible equity 8,787 Average shareholders' tangible equity 8,528 Return on tangible equity (ROTE) 6.6% (464) 9,160 (838) (464) 8,322 (235) 8,293 6.8% ⚫ 2019 Adjusted Return on Tangible Equity is adjusted for: No adjustment to impairment charge - "Normalised" impairment charge (26bps) in 2019 reflected in headline numbers Additional gains and valuation items¹, net of tax - €3m - Average shareholders' tangible equity calculated on a CET1 ratio at 13% - €235m 1 Excludes IFRS income classifications which is fully offset in net interest income Bank of Ireland 53 53#54Underlying earnings per share: Dec 2019 Bank of Ireland 2019 Credit Presentation Profit attributable to shareholders Non-core items including tax Underlying profit attributable to ordinary shareholders Weighted average number of ordinary shares in issue excluding treasury shares Underlying earnings per share (cent) FY 2018 (€m) FY 2019 (€m) 620 386 78 177 698 563 1,075 1,075 64.8c 52.4c Bank of Ireland 54#55Defined Benefit Pension Schemes Group IAS19 Defined Benefit Pension Deficit €313m 1.60% €1.19bn 2.10% 2.00% Bank of Ireland 2019 Credit Presentation Total Group Defined Benefit Pension Scheme Assets (%) €7.1bn 1.30% €7.2bn €7.2bn €8.4bn 58% 55% 65% 65% €0.48bn 17% 21% €0.23bn €0.14bn 21% 23% 25% 24% 12% 12% Jun 16 Dec 17 IAS19 DB Pension Deficit Dec 18 Dec 19 Jun 16 Dec 17 Dec 18 Dec 19 EUR Discount Rate Listed equities Diversified assets Credit / LDI / Hedging IAS19 Pension Deficit Sensitivities (Jun 2016 Dec 2017 / Dec 2018 / Dec 2019) €173m €162m €153m €181m €122m €128m €118m 102m €109m €90m €102m €71m €28m €28m €38m Interest Rates¹ Credit Spreads² Inflation³ Global Equity4 1 Sensitivity of Group deficit to a 0.25% decrease in interest rates 2 Sensitivity of IAS19 liabilities to a 0.10% decrease in credit spread over risk free rates 3 Sensitivity of Group deficit to a 0.10% increase in long term inflation 4 Sensitivity of deficit to a 5% decrease in global equity markets with allowance for other correlated diversified asset classes • 'Diversified assets includes infrastructure, private equity, hedge funds and property IAS19 Pension deficit of €0.14bn at Dec 2019 (€0.23bn Dec 2018). Schemes in deficit €0.27bn, schemes in surplus €0.13bn The net negative impact of changes in long term assumptions was substantially offset by the return on scheme assets The interest rate and inflation rate hedging strategies in the investment portfolios have largely offset the impact of the significant reductions in discount rates in 2019 • De-risking strategies have also reduced the schemes' sensitivity to global equity movements. Listed equity asset holdings have been reduced in favour of increases in Diversified assets and Credit / LDI / Hedging allocations • In 2019, the Group continued to support Trustees in further asset diversification and increasing the level of hedging BSPF asset returns of +17.3% and +5.9% were achieved over 1 year and 3 years respectively to end December 2019 Bank of Ireland 55#56Forward-Looking statement Bank of Ireland 2019 Credit Presentation 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 in the Group's Annual Report for the year ended 31 December 2019. Investors should also read 'Principal Risks and Uncertainties' in the Group's Annual Report for the year ended 31 December 2019 beginning on page 111. 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. Bank of Ireland 56#57Contact Details For further information please contact: • Group Chief Financial Officer Myles O'Grady tel: +353 76 624 3291 . Investor Relations Darach O'Leary Eoin Veale tel: +353 76 624 4711 Philip O'Sullivan Catriona Hickey tel: +353 76 624 1873 tel: +353 76 623 5328 tel: +353 76 624 9051 • Chief Executive, Markets and Treasury Sean Crowe tel: +353 76 623 4720 • Capital Management Lorraine Smyth Alan Elliott tel: +353 76 624 8409 [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Alan McNamara Wholesale Funding Redmond O'Leary Deirdre Ceannt tel: +353 76 624 4371 tel: +353 76 624 8725 tel: +353 76 624 4198 tel: +353 76 624 4219 • Investor Relations website www.bankofireland.com/investor [email protected] [email protected] [email protected] [email protected] [email protected] Bank of Ireland 2019 Credit Presentation Bank of Ireland 57#58Empty