AIB : 2020 Half-Yearly Financial Results Presentation

Backing our Customers

Half-Yearly Financial Results 2020 for the six months ended

30 June 2020

AIB Group plc

Forward looking statement

This document contains certain forward looking statements with respect to the financial condition, results of operations and business of AIB Group and certain of the plans and objectives of the Group. These forward looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward looking statements sometimes use words such as 'aim', 'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'may', 'could', 'will', 'seek', 'continue', 'should', 'assume', or other words of similar meaning. Examples of forward looking statements include, among others, statements regarding the Group's future financial position, capital structure, Government shareholding in the Group, income growth, loan losses, business strategy, projected costs, capital ratios, estimates of capital expenditures, and plans and objectives for future operations. Because such statements are inherently subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward looking information. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward looking statements. These are set out in Principal risks on pages 40 to 43 in the Annual Financial Report 2019 and updated on pages 36 and 37 of this Half-Yearly Financial Report. In addition to matters relating to the Group's business, future performance will be impacted by Irish, UK and wider European and global economic and financial market considerations. Any forward looking statements made by or on behalf of the Group speak only as of the date they are made. The Group cautions that the list of important factors on pages 40 to 43 of the Annual Financial Report 2019 is not exhaustive. Investors and others should carefully consider the foregoing factors and other uncertainties and events when making an investment decision based on any forward looking statement.

Figures presented may be subject to rounding.

2

H1 2020: pre-provision operating profit €0.4bn; loss €0.7bn

• Effective COVID-19 crisis management - living our purpose of backing our customers
• • Swift and supportive action to protect our customers, colleagues and communities
  • Multiple measures introduced to help customers through the peak of the crisis; c. 64,000 Retail Banking payment breaks implemented
• Playing our role in aiding the economic recovery
• • €4.4bn of new lending; Retail Banking focused
  • 36% increase in high quality green lending

 Conservative, comprehensive and forward-looking approach to expected credit losses (ECL)

• • €1.2bn ECL charge in H1 2020 to substantially cover expected FY 2020 ECL charge
• Strong capital base of CET1 16.4% or 15.6% post-TRIM 80bps indicative impact
• • Optimising changes in regulatory capital requirements; capital efficiency enhanced by successful AT1 issuance
• Progressing strategy and planning ahead
• • Committed to medium-term targets with focus on cost base and other strategic initiatives

Maintaining focus on dealing with legacy issues

• Closing out tracker mortgage examination; reduction and prevention of NPEs

3

AIB strength and agility evident during Q2

COVID-19 supports in action

• Backing our customers when most needed
• • Supporting cashflow needs
  • Implementing payment breaks
  • Postponement of fees
• Operationally resilient with minimal disruption
• • 81% of workforce working remotely seamlessly and securely
  • Underpinned by modern, agile and robust systems
  • Customer channels - physical and digital - remained open and operational
• Committed to ESG agenda and sustainable communities
• • Community investment programme: AIB Together
  • €2.4m donation to Trinity College for COVID-19 research
  • Employee supports

4

Payment breaks - process of roll-off and roll-over underway

Payment breaks - Retail Banking (# of accounts)

Mortgages (000s)

	5	€2.1bn
17	21	8
13
	7
3
Mar-20Apr-20May-20Jun-20	Jul-20

Personal (000s)

	1	€0.2bn
		5
22	21
17		13
3
Mar-20Apr-20May-20	Jun-20Jul-20

Business (000s)		€0.6bn
			3
14	17	17
	11
	1
	Mar-20Apr-20May-20	Jun-20Jul-20
	Payment break (PB1)	Payment break 2 (PB2) Value

Retail Banking payment breaks granted

c.64k

	• 48% remain on PB1
	• 27% rolled off
€4.2bn	• 25% rolled onto PB2

Mortgages payment breaks granted

c.22k

	• 31% remain on PB1
	• 34% rolled off
€3.1bn	• 35% rolled onto PB2

Currently in place

c.47k

€2.9bn

Currently in place

c.15k

€2.0bn

Payment breaks data as at 24 July 2020

5

AIB is well positioned to play a leading role in the recovery

COVID-19 Fiscal support

Programme for government (PFG)(2) - AIB opportunity

• July Stimulus Package of €7.4bn
• Income supports extended to 2021
• • Pandemic Unemployment Payment (PUP) recipients falling
  • 598k at peak to 286k
• Business support schemes:
• • €0.8bn Future loan growth scheme
  • €2bn SBCI credit guarantee scheme
  • €2bn ISIF fund for larger corporates
• Total fiscal support of €24.5bn(1)
• • 14% of GNI(1)
  • Benchmarks well internationally

Ready to play our role

Our strong funding and

capital allow us to deploy our balance sheet to support the

Backing our customers

• Aiding the re-booting of the economy as we support our personal and business customers
• Payment breaks
• Roll-outof credit guarantee scheme

Reigniting the economy

Leader in Irish housing finance

• Finance across the entire spectrum
• • Current dev. finance leader for >10k new homes
  • Equity investment
  • Social housing- long term debt
  • Mortgage finance
• New €300m debt fund for 2k new social houses
• Up to €50m equity for social housing projects
• >€1bn development finance over 3 years

Key

tenets

of PFG

Pledging to do more

• AIB €5bn fund for green lending
• AIB up to €100m equity to invest in sustainability projects
• 'A revolution in renewables' - government aim of at least 70% renewable electricity by 2030
• Retrofit of 500k homes

A new green deal

Ireland's No. 1 digital bank

• Ongoing improvements to digital customer propositions
• Streamlining and automating credit processes
• Facilitating remote ways of working while supporting the 'right to disconnect'

economic recovery

Housing for all

National digital strategy

(1)	Source: Department of Finance (DOF) 'July Stimulus' Policy Initiative: Overview of economic support measures ; GNI relates to modified Gross National Income and DOF projection is c. €175 billion for 2020.	6
(2)	Source: Programme for Government Our Shared Future, published 15 June 2020

Irish economy starts to emerge from lockdown

Strong GDP growth expected in 2021, but off a low base due to impact of COVID-19 in 2020

% 10				6.3	5.7	4.8	3.5	4.5
5
0
		2020		2021			2022
-5
-10		-7.5	-6.8
	-9.0
			AIB	CBI		OECD

Source: AIB, OECD 'World Economic Outlook', CBI 'Q3 Quarterly Bulletin'

Housing output continues to be well below estimated demand

# of completions & commencements

40,000
30,000
20,000
10,000
0
2015	2016	2017	2018	2019	2020 (f)
Completions	Commencements	Estimated Demand

Source: CSO, Dept. of Housing

Unemployment rate (COVID-adjusted) spikes to 28.2% in April, but falls to an estimated 17% by July

• 30
  25
  20
  15
  10
  5

0
Jul-18	Jan-19	Jul-19	Jan-20	Estimate Jul-20
Source: CSO		Unemployment rate (%)

Business sentiment rebounds, having hit low in April

PMI index
70
60
50
40
30
20
10
Jul-18	Jan-19	Jul-19	Jan-20	Jul-20
	Irish Services	Irish Manufacturing	Eurozone Composite

Source: Markit via Thomson Datastream

7

Pick-up in activity since easing of restrictions

550	Weekly card spend (€m)

500

450

400							2019
350							2020
300
250
Jan	Feb	Mar	Apr	May	June	July

250			Weekly mortgage applications (€m)
200
150
100							2019
						2020
50
0
Jan	Feb	Mar	Apr	May	June	July

Increase in customer activity and digital adoption

Shift from cash

38%* reduction	66%* increase
in volume of	in volume of
ATM	Digital Wallet
withdrawals	payments

* versus H1 2019

End to end digital mortgage journey

34%** of value	35%** of volume
of applications	of applications
now online	now online

** in June 2020

Capitalising on our position as Ireland's

No 1 digital bank

8

New lending impacted by lower economic activity

Total new lending down 27%; Retail Banking new lending down 13%

H1 2020 new lending €4.4bn	Outlook for new lending in H2
	Retail Banking
		• Consensus estimates for 2020 new mortgage market lending €6bn - €7bn
€6.0bn		• Retail sales rebound across multiple consumer spending categories
	• Positive PMIs show encouraging improvement in business sentiment
-27%		Corporate, Institutional and Business Banking (CIB)
1.3
	• Rollout of credit guarantee scheme
€4.4bn		• Maintain momentum in housing and green lending
		• Cautious approach to syndicated and international lending
0.9		UK
2.4		• New lending supported by government backed schemes

1.5

2.32.0

2019	2020
Retail Banking	CIB UK

Strong market shares in key segments

Stock (%)		43%
35%	31% (1)	36%
22%		20%

Main current	Personal loan	Mortgages	Business main Main leasing	Main business
account	(excl car)		current account	loan
Source: Ipsos MRBI Personal Market Pulse Q2 2020; Ipsos MRBI AIB SME Market Pulse 2019, Feb 2020
(1) Mortgage new lending flow based on BPFI industry drawdown data to end June 2020	9

Crisis validates strategy to simplify, streamline and strengthen

STRATEGIC PILLARS

CUSTOMER FIRST	SIMPLE & EFFICIENT	RISK & CAPITAL	TALENT & CULTURE	SUSTAINABLE
COMMUNITIES

Backing in time of need

Digital adoption continues

Business continuity and resilience proven

Positive organisational response to crisis

Advancing ESG agenda

• Meeting changing customer behaviours
• Multi-channelapproach proven during crisis
• 64k payment breaks to retail banking customers
• Increase in NPS scores
• • Homes +54 (H119: +53)
  • SME +65 (H119: +60)

• >1.5m active digital customers
• c. 60% of credit products sold digitally
• Increased use of E2E mortgage journey
• Continued work on automating business credit process

• Focus on asset quality
• • Conservative ECL approach
  • NPE reduction and prevention are key
• Strong balance sheet
• • MREL issued €5bn
  • AT1 €625m in H1

• Culture of customer-first, collaboration and 'can do' evident in Q2
• Launch of evolved values
• Employee well-being initiatives and COVID supports
• >80% positive response to employee check-in survey

• FTSE4Good inclusion
• CDP "A-" leadership status
• Green lending momentum
• • +36% and no COVID-19 modification requests
  • Publication of CIB exclusions list
• €2.4m Trinity College Covid-19 research hub donation

10

Targets remain unchanged

Strategic	COVID-	Going
update	19	forward

Growing Irish

economy

Strong AIB

franchise and balance sheet

Proven and progressive strategy

Significantly	Sustainability	Digitisation
changed operating
environment
Longer term impact		Accelerating
continues to evolve		trends
Challenges and
opportunities
		Flexible
		working

Financial targets (2020-2022)	Cost base	CET1	ROTE
€1.5bn	>14%	>8%	11

Financial Performance

Financial performance H1 2020

Operating profit €0.4bn; loss after tax €0.7bn

• €1.2bn ECL charge reflecting changes to macro-economic scenarios and staging impact on loan book from COVID-19

Total income decreased 13% to €1.2bn

• Net Interest Income €967m reduced 8% and Other Income €220m reduced 31% from H1 2019

Costs €747m(1) well managed and in line with H1 2019

• FTEs reduced 6% versus H1 2019 (excluding Payzone)

Performing loans €56.8bn decreased €2bn (-3%) from Dec 2019 as redemptions exceeded new lending

• new lending €4.4bn; €1.6bn (-27%) lower than H1 2019; Retail Banking new lending 13% lower to €2.3bn

AT1 €625m, MREL issuance €5bn

• MREL ratio in excess of the expected intermediate target of 27.1% of RWAs

Reported CET1 (FL) 16.4%; CET1 (FL) pro-forma 15.6%(2)

• comfortably ahead of regulatory requirements and >14% medium-term target

(1)	Excludes exceptional items, bank levies and regulatory fees	13
(2)	CET1 (FL) pro-forma includes 80bps indicative TRIM impact for AIB mortgage model

Income Statement

Income statement - Pre-provision operating profit €0.4bn

Summary income statement (€m)				H1 2020				H1 2019
Net interest income	967	1,050
Other income
220	319
Total operating income
1,187	1,369
Total operating expenses (1)
(747)	(744)
Bank levies and regulatory fees
(63)	(58)
Operating profit before impairment and exceptional items
377	567
Net credit impairment charge
(1,216)	(9)
Associated undertakings & other
5	9
(Loss)/Profit before exceptionals
(834)	567
Exceptional items
(75)	(131)
(Loss)/Profit before tax
(909)	436
Income tax credit / (charge)
209	(75)
(Loss) / profit
(700)	361
	Metrics				H1 2020				H1 2019
	Net interest margin (NIM)		2.10%			2.46%
	Cost income ratio (CIR)(1)		63%			54%
	Return on tangible equity (RoTE)(2)(3)				n/a	4.5%
	Earnings per share (EPS)				(27.0c)				12.6c

1. Excludes exceptional items, bank levies and regulatory fees
2. RoTE using (PAT - AT1) / (CET1 @ 14%)
3. RoTE for H1 2020 is not reported as it would require the loss to be annualised which is considered not appropriate at this stage. Dec 2019 RoTE 4.5%

• Net interest income reduced 8% impacted by the lower interest rate environment
• Other income €220m - down 31%; net fee and commission income down 16%
• Total income €1,187m - down 13%
• Operating expenses €747m in line with H1 2019
• Net credit impairment €1,216m charge
• Exceptional costs €75m

15

Net interest income, down 8% on H1 2019

NII - material movements

(€83m reduction in NII / 18bps reduction in NIM)

2.46%	5 bps	(12 bps)
		(7 bps)	2.10%
		(4 bps)
1,050			(18 bps)
		967	967

H1 19	Cust. Deposits Customer loans Investment	Cost of excess	H1 20	Excess liquidity /	H1 20
	securities	liquidity		Higher AIEAs

NIM %

• NII €967m down €83m / 8% from H1 2019 impacted by:
• • +€24m: lower cost of customer accounts offset by
  • -€54m:lower customer loan income from reduced volumes and lower interest rate environment
  • -€34m:lower investment securities income as higher yielding assets rolling off and lower rate environment
  • -€20m:interest expense on excess liquidity placed with central banks
• Excess liquidity management actions in place
• • tailored negative deposits strategy
  • grossing up impact of excess liquidity distorts NIM
  • each €1bn excess liquidity impacts NIM c. 3bps
• TLTRO 3 - under consideration for Sept 2020 drawdown
• • Impact: NII positive; NIM distortionary

FY 2020 - expected Net Interest Income €1.9bn if

macro-environment evolves as expected

16

Other income - COVID-19 impact lowers fees & commission 16%

Net fee & commission income (€m)

230
36				192
			7
24
			26
37
			18
26				30
					21
107				90
	H1 2019				H1 2020
	Customer accounts	Credit related fees	Card
	Other fees & commission	Customer related FX	Payzone
Other income (€m)				H1 2020	H1 2019
Net fee and commission income				192			230
Other business income
			(8)			14
Business income
			184			244
Gains on disposal of investment securities	-			39
Realisation of cash flows on restructured loans	21			28
Other gains / losses
			15			8
Other items
			36			75
Total other income
			220			319

• Other income €220m down 31%
• Fee and commission income €192m, down €38m (16%) from H1 2019 predominantly due to reduced economic activity:
• • customer account fees reduced due to
  • • higher volume of contactless payments
    • lower business cash handling fees
    • lower customer ATM usage
  • card income reduced due to lower credit / debit card spend
  • other fees & commission down due to lower wealth income
  • customer related FX lower due to less transactions
• Other business income includes
• • €23m NAMA subordinated bond dividend (matured)
  • -€36mfrom reduction in the value of long term customer derivative positions and foreign exchange contracts
• Other items €36m
• • €15m other gains include net income from equity investments

FY2020 - expected Other Income c. €420m	17

Costs - stable and well-managed in H1

744		747
108		136
243		243
393		368
H1 2019		H1 2020
Staff	G&A	Depr

FTEs (2) - employees (#)

9,888		9,402
9,831		9,310
1,290
	939
8,541		8,371
H1 2019		H1 2020
Average FTEs	Other	FSG

1. Excluding exceptional items, bank levies & regulatory fees
2. Full time equivalent - period end

• Costs €747m, in line with H1 2019
• Factors impacting costs
• • increased depreciation €28m
  • lower FTEs partially offset by wage inflation
  • COVID-19related expenditure (sanitation, technology to facilitate remote working) absorbed
• FTEs reduced by 521 (5%) from H1 2019 (6% excl. 91 Payzone FTE)
• • FTEs declined 2% YTD
• Exceptional items €75m primarily includes:
• • €58m restitution costs
  • €6m termination costs
  • €10m other specific once off COVID-19 system and resourcing related costs

FY 2020 - expect c. 2% cost inflation

Medium-term target - Costs €1.5bn

18

ECL and Asset Quality

ECL charge €1.2bn - conservative, forward looking and comprehensive

• Conservative, forward looking and comprehensive - Expected Credit Loss (ECL) of €1.2bn in H1 2020

• Conservative and forward looking
• • changes in macro economic indicators in line with external data
  • five scenarios with weightings to the downside to reflect uncertainty
• Comprehensive
• • transfers of loan exposures to Stage 2 and Stage 3
  • net re-measurement within stage
  • increasing coverage across all stages
  • post model adjustments (including payment breaks)

1

€0.7bn

ECL

increase

2

€0.4bn

ECL

increase

3

€0.1bn

ECL

increase

H1 2020: 196bps cost of risk, front loading of provisions to substantially cover FY 2020 charge

FY 2020: 235-250bps annualised cost of risk, based on current view of economic scenarios

20

Overview - stage 2 increases, coverage increases

Loan book* by Staging & Coverage (€bn)

62.0	2%	60.5	4%
3.3	27%	3.7	32%
4.0	5%

0.3%	10.5	7%
		0.9%

54.7

46.3

Dec-19Jun-20

Stage 1

Stage 2

Stage 3**

ECL coverage

• • Stage 2 exposures - increased €6.5bn
  • Stage 3 exposures - increased €0.4bn
• Loan book at amortised cost
• Includes Purchased or Originated Credit Impaired Loans (POCI)

ECL movements (€bn)

4%

2.4

0.132%

0.4

1.2

0.7

1.2 2%

	27%		7%
0.9		0.8
0.2	5%	0.4	0.9%

0.1 0.3%

ECL Stock -	Macroeconomic	Staging	Post model	ECL Stock -
Dec-19	scenarios	movement	adjustments	Jun-20
	ECL - Stage 1	ECL - Stage 2	ECL - Stage 3**

ECL coverage

• Provision coverage doubled on the total loan book to 4%
• Provision coverage increased across all stages

21

Outlook for macroeconomic environment has deteriorated

1 New macroeconomic scenarios reflect a more negative economic environment - increased ECL €0.7bn

H1 2020 - Base case scenario (55%)	2020	2021	2022
Irish GDP	-7.5%	6.3%	3.5%
Irish Unemployment	10.0%	9.0%	7.1%
Irish House Price Index (HPI)	-5.5%	-4.5%	4.0%
Irish Commercial Real Estate Index	-9.5%	-5.5%	6.0%

H1 2020 - Severe case scenario (5%)	2020	2021	2022
Irish GDP	-9.5%	-5.0%	8.5%
Irish Unemployment	12.8%	14.5%	12.0%
Irish House Price Index (HPI)	-7.5%	-14.0%	-6.0%
Irish Commercial Real Estate Index	-11.5%	-16.0%	-6.0%

H1 2020 - ECL probability weighted	2020	2021	2022
macroeconomic assumptions*
Irish GDP	.	5.2%	3.7%
Irish Unemployment	.	9.9%	8.0%
Irish House Price Index (HPI)	-5.9%	-5.3%	1.8%
Irish Commercial Real Estate Index	-9.8%	-6.3%	3.3%

• Significant changes to GDP and unemployment
• • GDP to decline sharply by 7.8% before recovery
  • Unemployment 10.6% and continuing to remain elevated
• GDP, unemployment and HPI are key drivers in the IFRS 9 models impacting PDs and LGDs both increasing ECL cover within stage (€0.5bn) and contributing to stage transfers (€0.2bn)
• Weighted average LTV for new ROI mortgages 68%

H1 2020 - impact of updated
macroeconomic scenarios on ECLs by	€m
Asset Class
Mortgages	166
Personal	39
Property & Construction	267
Corporate & SME	233
Total	705

*HY 2020 economic scenarios - COVID -19 base scenario (55%); Upside scenario 'Virus eliminated' (10%); Downside scenario 1 'Persistent virus' (20%); Downside scenario 2 'Failed EU/UK trade talks' (10%) and Downside scenario 3 / Severe 'Persistent virus plus second wave' (5%)

22

Downward stage migration in COVID-19 impacted sectors

2 Impact of downward staging movements - increased ECL €0.4bn
Loan book* by Staging & Coverage (€bn)		Stage 2 increased by €6.5bn to €10.5bn (17% of the loan book at HY 2020)
				of which:
62.0				• €4.1bn relates to Corporate & SME
2%	60.5	4%	 Hotels, Bars & Restaurants - €1.2bn
			 Retail/Wholesale - €0.3bn
3.3	27%	3.7	32%
	5%	 Syndicated & International Finance - €0.7bn
		7%
		• €1.9bn relates to Property & Construction predominantly Commercial
	0.3%
		0.9%	Real Estate Retail/Shopping Centres

• Stage 3 increase by €0.4bn (6% of the loan book at HY 2020)

54.7		46.3		 Coverage has increased across all stages
				H1 2020 - impact of transfers between stages and
				re-measurement within stage on ECL	€m
				Net transfer Stage 1 to Stage 2	154
				Net transfer to Stage 3	55
Dec-19		Jun-20
		Net re-measurement within stage / other	157
Stage 1	Stage 2	Stage 3**		Total	366

ECL coverage

* Loan book at amortised cost
** includes Purchased or Originated Credit Impaired Loans (POCI)	23

Post model adjustments - payment breaks

3 Impact of post model adjustments - increased ECL €0.1bn

• Post model adjustments €131m primarily relates to:

€42m increase in ECL - Payment breaks in Retail Banking - Mortgages and Personal €67m increase in ECL - Mortgage (PDH) deep arrears portfolio

• Payment breaks - Retail Banking Mortgage and Personal

Remain in	Risk of	Management		€42m
downward
stage	prudence		overlay
stage migration
Retail Banking - Payment breaks	Mortgages	Personal	Business		Total
No of accounts		14,557	18,320	14,004		46,881
Amount in Euro		€2,053m	€201m	€647m		€2,901m
% of number of customer loan accounts	6%	3%	11%		-
% of portfolio value		7%	8%	16%		-

Data as at 24th July 2020

24

Balance Sheet

Balance sheet - strong funding & liquidity to support economic recovery

Balance sheet (€bn)		June 2020		Dec 2019
Performing loans		56.8		58.8
Non-performing loans
	3.8		3.3
Gross loans to customers
	60.6		62.1
Expected credit loss allowance
	(2.4)		(1.2)
Net loans to customers
	58.2		60.9
Investment securities
	19.6		17.3
Loans to central banks and banks
	16.6		13.5
Other assets
	7.0		6.9
Total assets
	101.4		98.6
Customer accounts
	75.7		71.8
Deposits by banks
	0.8		0.8
Debt securities in issue
	6.3		6.8
Other liabilities
	4.8		5.0
Total liabilities
	87.6		84.4
Equity
	13.8	14.2
Total liabilities & equity
	101.4		98.6

Assets

• Performing loans decreased €2.0bn (-3%)
• Sustainable new lending €4.4bn was exceeded by redemptions €5.3bn
• • New lending was €1.6bn lower than H1 2019 driven by the contraction of the economy impacting all asset classes
• Investment securities €19.6bn increased €2.3bn as the Group invested in Irish Government bonds
• Due to excess liabilities, balances placed with central banks increased €3.1bn

Liabilities

• Customer accounts €75.7bn increased €3.9bn mainly due to increased current accounts reflecting higher savings rate

Key capital metrics		June 2020		Dec 2019
Reported CET1 ratio (FL)(1)	16.4%	17.3%
Leverage ratio (FL)
9.2%	9.7%

1. Reported CET (FL) excludes 80bps indicative TRIM impact for AIB mortgage model, including this impact CET1 (FL) pro-forma:15.6%

26

Gross performing loans - redemptions contribute to 3% decline

Performing loans (€bn)

58.8	-3%	5656..88
58.8

Mortgages (€bn)

29.1	-1%	28.8
Dec 19		June 20

Personal (€bn)	Performing loans

2.8	-11%	12% 4%
	2.5	€56.8bn	51%
		33%
Dec 19	June 20	Mortgages

		Corporate & SME
Property (€bn)	Corporate & SME (€bn)	Property
Personal

Dec 19

June 20

7.0	-5%	6.7
Dec 19		June	20

19.9	-5%	18.8	New lending
				10%	25%
			15%
				€4.4bn
Dec 19		June 20		50%

27

New lending €4.4bn down 27%; Retail Banking down 13%

New lending Q2 impacted by lower economic activity	New lending across all asset classes(1) declined in H1 2020
New lending (€bn)	Mortgages (€bn)	Personal (€bn)

6.0			-17%
1.3	-27%	1.3
		1.1
		4.4
		0.9
2.4		H1 2019	H1 2020

	-18%
0.5	0.4
H1 2019	H1 2020

1.5

Property (€bn)

Corporate & SME (€bn)

2.32.0

H1 2019		H1 2020
Retail banking	CIB	UK

	-36%
1.1
	0.7
H1 2019	H1 2020

	-29%
3.1
	2.2
H1 2019	H1 2020

1. Includes UK

28

NPE normalisation remains a priority

NPEs (€bn)

6.3%

5.4%

		0.5	0.3	3.8
3.3
0.3			0.8
0.4
0.4				0.6
0.2				0.2

2.3

2.2

NPEs	Defintion of	Net flow to NPEs Redemptions	NPEs
Dec 2019	Default				June 2020
	Mortgages	Personal	Property	Corp & SME

% of Gross Loans

NPE - €3.8bn

Arrears profile

42%	46%
6%6%
Not Past Due	< 90DPD
>90 < 180DPD	> 180DPD

NPE ROI Mortgages - €2.2bn

Arrears profile

49% 44%

3%

4%

Not Past Due	< 90DPD
>90 < 180DPD	> 180DPD

29

Funding and Capital

Strong funding driven by increased customer deposits

Total funding (€bn)

€94.9bn +5%

4.1 NBFI (1)

27.1

Corporate / SME

40.6

Retail

		MREL target (% of RWAs)
€97.9bn
4.2
27.8		€5bn MREL
	issued
Customer accounts
(including
€75.7bn
AT1 €625m	30.0%
77% of total funding:
executed in	27.1%
•	Retail +8%	2020)
•	Corporate / SME +2%
43.7

Actual MREL ratio	MREL expected intermediate target
Jun-20	Jan-22

8.9	Wholesale funding	8.4		Liquidity metrics (%)	Jun 2020	Dec 2019
				Loan to deposit ratio (LDR)	77	85
14.2	Equity	13.8		Liquidity coverage ratio (LCR)	158	157
				Net stable funding ratio (NSFR)	136	129
Dec-19		Jun-20

(1) Includes Credit Unions & Government deposits

31

Reported CET1 (FL) 16.4% in excess of >14% target

Reported - Capital ratios fully loaded (FL) (%)

€52bn RWAs	€50bn RWAs	 Reported CET1 (FL) ratio 16.4%
• 6.7% buffer to MDA / SREP of 9.69%
20.5%	21.1%
1.9	2.2	 Transitional CET1 ratio 20.2%
1.3	2.5	• 10.5% buffer to MDA / SREP of 9.69%

	17.3			16.4		 AT1 ratio FL 2.5%
						•	new issue €625m AT1; filled AT1
							bucket
	Dec 2019			June 2020
	Total	CET1	AT1	T2
CET1 movements (%)
17.3	+100bps	(230bps)*		+40bps	+70bps		(80bps)
		(30bps)	(40bps)	16.4	15.6
€52bn	HY 2020 Loss -130bps				€50bn		€52bn

Reported CET1 HY 2020 (ex ECL ECL Charge	Investment	Other capital	Ordinary dividend Lower RWA	Reported CET1	TRIM - Mortgage Proforma CET1
(FL) Dec 2019	charge)	securities reserve	adjustments	cancelled	(FL) June 2020	(FL) June 2020

RWA

32

• simple calculation for illustrative purposes

Capital - medium-term target: CET1 >14%

Capital requirements	Dec 2020(1)
Pillar 1	4.50%
Pillar 2 requirement (P2R)	3.00% - 1.31% = 1.
Capital Conservation Buffer (CCB)	2.50%
O-SII Buffer	1.00%
Total CET1	9.69%
AT1	1.50% + 0.56% = .
Tier 2	2.00% + 0.75% = .
Total capital	14.50%

Capital outlook

• Dec 2020 capital requirements - Under Article 104a 1.31% of current P2R (3.00%) can now be met with hybrid capital
• Capital headwinds/tailwinds to broadly offset over time:
• • Software intangibles
  • SME 501
  • TRIM (SME & Corporate model)
  • Calendar provisioning
• Transitional capital benefits
• • IFRS 9 add back €736m (146bps)

CET1 outlook (%)			For illustration
16.4	(80bps)	15.6	>14%
		90-120bps
		100-110bps
			2020-2022

Reported CET1 (FL) HY	TRIM - Mortgage Proforma CET1 (FL) HY Capital headwinds	Capital tailwinds	Capital generation /	Capital > 14%
2020	2020		distribution / Other

Medium term target CET1 > 14%

(1) The Group's minimum CET1 requirement is 9.69% at Dec 20 under Article 104a. In addition any shortfall of AT1 & Tier 2 must be held in CET1

33

Guidance (2020) and medium-term targets (2022)

Guidance 2020

Medium-term targets by 2022

• Net interest income c. €1.9bn

• Other Income c. €420m

•	Cost inflation c.2%	Focused	Appropriate	Deliver
• Cost of risk c. 235-250bps	cost(1)	capital	sustainable
discipline	target	returns
•	New lending to reduce c.30%	€1.5bn	CET1(2) > 14%	RoTE(3) > 8%

Acknowledging the need for caution, we look forward with confidence as the fundamentals of AIB remain

healthy and strong

1. Costs before bank levies and regulatory fees and exceptional items

2)	Fully loaded	34
3)	RoTE = (PAT - AT1) / (CET1 @ 14% of RWAs)

Appendices

Average balance sheet

		H1 2020			H1 2019
	Average Volume	Interest	Yield	Average Volume	Interest	Yield
	€m	€m	%	€m	€m	%
Assets
Customer loans	60,417	1,004	3.33	61,577	1,058	3.47
Investment securities	17,417	72	0.82	16,666	106	1.28
Loans to banks	14,571	(4)	(0.05)	7,643	16	0.41
Interest earning assets	92,405	1,072	2.33	85,886	1,180	2.77
Non interest earning assets	7,649			7,932
Total Assets	100,054	1,072		93,818	1,180
Liabilities & equity
Customer accounts	39,819	36	0.18	38,670	60	0.31
Deposits by banks	999	3	0.57	885	6	1.43
Other debt issued	6,567	39	1.19	6,090	41	1.37
Subordinated liabilities	1,299	20	3.15	796	16	4.00
Lease liability	419	7	3.21	448	7	3.10
Interest earning liabilities	49,103	105	0.43	46,889	130	0.56
Non interest earning liabilities	36,869			32,933
Equity	14,082			13,996
Total liabilities & equity	100,054	105		93,818	130
Net interest income / margin		967	2.10		1,050	2.46

36

Net interest margin (NIM)

NIM - material movements

(8 bps) impact NII & NIM(7 bps) impact NIM

2.41%		(6 bps)
	3 bps
2.25%
	(3 bps)			2.30%
			(3 bps)
			(5 bps)
				(2 bps)	2.10%

Q4 19	Cust.	Loan yields /	Invest sec. Exc. Liq. inc. Exc. Liq. vol	Invest sec.	Jun-20
	Deposits	vol.	yields	vol
NIM excl. excess Euro liquidity %

NIM trajectory (%)

2.54	2.49		NIM (%)	NIM (%) excl. excess liquidity
(4bps)	2.43	2.41
	2.38
2.50	2.43				2.23
		2.32	2.25	2.19	(22bps)
					2.01
Q1 19	Q2 19	Q3 19	Q4 19	Q1 20	Q2 20

37

Loan book by Staging and Coverage

	June 2020	Stage 1	Stage 2	Stage 3*	Total
	Gross loan exposures (€bn)	exposure
	Mortgages	26.2	2.5	2.3	31.0
	Personal	2.1	0.4	0.2	2.7
	Property & Construction	4.3	2.3	0.4	7.1
	Corporate & SME	13.6	5.2	0.8	19.6
	Total	46.3			60.5
	Stage composition	77%	17%	6.2%	100%
	ECL	0.4	0.7	1.2	2.4
	ECL coverage	0.9%	7%	32%	4%
	December 2019	Stage 1	Stage 2	Stage 3*	Total
	Gross loan exposures (€bn)	exposure
	Mortgages	27.0	2.1	2.3	31.5
	Personal	2.5	0.3	0.2	3.0
	Property & Construction	6.5	0.4	0.4	7.3
	Corporate & SME	18.7	1.1	0.4	20.3
	Total	54.7			62.0
	Stage composition	88%	6%	5.4%	100%
	ECL	0.1	0.2	0.9	1.2
	ECL coverage	0.3%	5%	27%	2%
	Movements in loan exposures	Stage 1	Stage 2	Stage 3*	Total
	& ECL (€bn)	exposure
	Mortgages	(0.7)	0.4	(0.1)	(0.4)
	Personal	(0.4)	0.1	0.0	(0.3)
	Property & Construction	(2.2)		0.1	(0.2)
	Corporate & SME	(5.1)		0.4	(0.7)
	Total	(8.5)			(1.6)
	ECL movement	0.3	0.5	0.3	1.1

Loan book by Staging - €60.5bn loan exposures

• Stage 2 loan exposures increased by €6.5bn to €10.5bn (17% of the loan book at June 2020) of which:
• • Corp & SME Stage 2 loan exposures increased €4.1bn as sectors like Hotels, Bars, Restaurants, Retail/Wholesale have felt the impact of the 'lockdown' in Q2 in Ireland
  • Property & Construction loan exposures increase €1.9bn as Retail / Shopping Centres in particular have been adversely impacted from the measures in place to contain COVID-19.
• Stage 3 loan exposures increased by €0.4bn to €3.7bn (6.2% of the loan book at June 2020) primarily driven by definition of default change €0.2bn

ECL - €1.2bn charge

• Coverage has increased across all stages - total loan book coverage has doubled to 4%; Stage 1 coverage has tripled to 0.9%
• Increase in exposures in Stage 2 & Stage 3 along with increased coverage rates (7% and 32%) drives ECL increase of €0.5bn & €0.3bn

38

* includes Purchased or Originated Credit Impaired Loans (POCI)

Stage 2 movements

June 2020	Stage 1	Stage 2	Stage 3*		Total exposure	 The majority of the Stage 2 loan exposures increase (€6bn) is
Gross loan exposures (€bn)
	primarily due to movement in certain sectors in Property and
(excluding Mortgages & Personal)
Property & Construction	4.3		2.3		0.4		7.1		Corporate & SME sectors
Hotels, Bars & Restaurants	1.3		1.5		0.2		2.9		• Property & Construction - €1.9bn increase in Stage
Retail /Wholesale	1.0		0.5		0.1		1.6
Manufacturing	0.9		0.7		0.1		1.7		2 loan exposures. Retail / Shopping Centres in
Energy	1.4		0.1		0.0		1.5		particular have been adversely impacted from the
Transport	1.0		0.3		0.0		1.3		measures in place to contain COVID-19.
Financial	0.4		0.1		0.0		0.5		• Hotels, Bars & Restaurants - €1.2bn increase in
Agriculture	1.1		0.5		0.1		1.7
Other Services	3.1		0.7		0.1		4.0		Stage 2 loan exposures, as businesses would have
Syndicated & International Finance	3.5		0.8		0.1		4.4		been impacted by the 'lockdown' in Q2 in Ireland.
Total	18.0		7.6		1.2		26.8		• Retail/Wholesale - €0.3bn increase in Stage 2 loan
Movements									exposures; many retailers have been negatively
Gross loan exposures (€bn)	Stage 1	Stage 2		Stage 3*	Total exposure		impacted by COVID-19.
(excluding Mortgages & Personal)									• Syndicated and International Finance (SIF) - €0.7bn
Property & Construction	(2.2)	1.9		0.1	(0.2)
Hotels, Bars & Restaurants	(1.3)	.		0.1	(0.0)		increase in Stage 2 loan exposures reflecting the
Retail /Wholesale	(0.4)	0.3		0.0	(0.0)		slowdown of the global economy. We have tightened
Manufacturing	(0.6)	0.6		0.0	(0.1)		our risk appetite for this business. Exposures in SIF
Energy	(0.1)	0.1		0.0	0.1		are well diversified by name and sector with the top 20
Transport	(0.2)	0.2		0.0	0.1		names accounting for 21% of the total and 68% of the
Financial	(0.2)	0.1		(0.0)	(0.1)		book is rated B+ or above.
Agriculture	(0.4)	0.3		0.0	(0.0)
Other Services	(0.8)	0.5		0.1	(0.3)
Syndicated & International Finance	(1.2)				0.1	(0.3)
Total	(7.3)	.		0.4	(0.9)

* includes Purchased or Originated Credit Impaired Loans (POCI)

39

Loans to customers

€bn	Performing Loans	Non-Performing Loans	Loans to Customers
Gross loans (1 Jan 2020)	58.8	3.3	62.1
New lending	4.4	-	4.4
Redemptions of existing loans	(5.0)	(0.3)	(5.3)
Write-offs / restructures	-	(0.1)	(0.1)
Net flow to NPE	(0.8)	0.8	-
Foreign exchange / other movements	(0.6)	0.1	(0.5)
Gross loans (30 Jun 2020)	56.8	3.8	60.6
ECL allowance	(1.2)	(1.2)	(2.4)
Net loans (30 Jun 2020)	55.6	2.6	58.2

40

Asset quality by portfolio

€bn	Mortgages	PDH	BTL	Personal	Property	Corporate & SME	Total
Jun 2020
Customer loans	31.0	28.7	2.3	2.7	7.2	19.6	60.6
Total ECL cover (%)	3%			9%	7%	4%	4%
of which NPEs	2.2	1.9	0.3	0.2	0.5	0.8	3.8
ECL on NPE	0.6	0.5	0.1	0.1	0.2	0.3	1.2
ECL / NPE coverage %	28	28	26	61	39	32	32
Dec 2019
Customer loans	31.5	29.0	2.5	3.0	7.3	20.3	62.1
Total ECL cover (%)	2%			6%	3%	2%	2%
of which NPEs	2.3	2.0	0.3	0.2	0.4	0.4	3.3
ECL on NPE	0.5	0.5	0.1	0.1	0.1	0.2	0.9
ECL / NPE coverage %	22	21	22	60	35	32	27

41

Asset quality -total portfolio

Credit quality (€bn)

	62.1			60.6
			32%
27%	3.3	5.	3.8	6.3%
	3.5	5.5%		3.8	6.3%
	55.3	89.1%		53.0	87.4%
	Dec 19			Jun 20

Strong / Satisfactory

Criticised

NPE

ECL/NPE coverage

• Asset quality has been impacted by the deterioration in the economic outlook as a result of COVID-19 in H1 2020
• 87.4% of the loan book is strong / satisfactory, down €2.4bn (-1.7%)
• 97% of new lending flow is strong / satisfactory
• 94% of the loan book is performing, down slightly from 95%
• Criticised loans €3.8bn increased by €0.4bn
• • includes €0.9bn that are classified as 'criticised recovery'

42

Asset quality - Mortgages

Credit quality (€bn)

RoI mortgages

	31.5			31.0		Dec-19	Jun-20
22%	2.3			7%
7%	28%	2.2	21%
	1.8	6%		1.6	5%	27%	26%	26%
						52%		48%
	27.4	87%		27.2	88%	€30.2bn	€30.0bn
			Tracker	Variable	Fixed
						 Portfolio €31bn declined €0.5bn in H1 2020
						• Total new lending €1.1bn declined 18%; ROI down 16%
	Dec 19			Jun 20		 88% of portfolio is strong / satisfactory
						 NPE 7% of portfolio, in line with Dec 19
	Strong / Satisfactory	Criticised	NPE	• Coverage increased to 28% from 22%
ECL/NPE coverage					 ROI loans in arrears decreased by 27% (decrease 31% PDH,
				increase 1% BTL)
						 Weighted average LTV for new ROI mortgages 68%

43

Asset quality - Personal

Credit quality (€bn)

	3.0
60%	0.2	6%		2.7
9%
	0.3	61%	0.2	8%
				8%
				0.2
	2.5	85%
			2.2	84%
0.0	Dec 19			Jun 20
Strong / Satisfactory	Criticised		NPE

ECL/NPE coverage

Portfolio has been negatively impacted by COVID-19 in Q2 with demand for personal new lending reducing significantly in April and May. June volumes indicate a return to pre COVID-19 application activity.

• 84% of portfolio is strong / satisfactory compared to 85% Dec 19
• Personal €2.7bn comprises €2.2bn in loans and overdrafts and €0.5bn in credit card facilities

44

Asset quality - Property & construction

Credit quality (€bn)

35%	7.4			7.2
0.4	5%	39%
	7%
	0.5
	0.4	5%		6%
				0.4
	6.6	90%		6.3	87%
	Dec 19			Jun 20
	Strong / Satisfactory	Criticised	NPE

ECL/NPE coverage

Property sector was impacted by COVID-19 as construction activity stalled on both residential and commercial sites during the lockdown.

• 87% of portfolio is strong / satisfactory, down from 90% Dec 19
• NPEs €0.5bn increased by €0.1bn from €0.4bn Dec 19

45

Asset quality - Corporate & SME

Credit quality (€bn)

32%	20.3	2%	32%	19.6
0.4		4%
5%	0.8
	1.0		8%
			1.6
	18.9			17.2	88%
		93%
	Dec 19			Jun 20
Strong / Satisfactory	Criticised		NPE

ECL/NPE coverage

Portfolio has been negatively impacted by COVID-19 in Q2 with demand for new lending reducing significantly

• 88% of portfolio is strong / satisfactory, down from 93% Dec 19

46

Asset quality - internal credit grade by ECL staging*

			Jun 2020						Dec 2019
€m	Stage 1	Stage 2	Stage 3	POCI	Total		Stage 1	Stage 2	Stage 3	POCI	Total
Strong	35,531	1,955	-	2	37,488	42,123	329	-	2	42,454
Satisfactory	9,785	5,581	-	-	15,366	11,346	1,452	-	-	12,798
Total strong /	45,316	7,536	-	2	52,854	53,469	1,781	-	2	55,252
satisfactory
Criticised watch	813	2,115	-	1	2,929	1,111	1,163	-	1	2,275
Criticised recovery	23	856	-	8	887	119	1,048	-	8	1,175
Total criticised	836	2,971	-	9	3,816	1,230	2,211	-	9	3,450
NPE	108	-	3,535	180	3,823	24	-	3,140	183	3,347
Total customer loans	46,260	10,507	3,535	191	60,493	54,723	3,992	3,140	194	62,049

* Excludes €76m loans FVTPL (Dec 19 €77m)

 Stage 1 loans €46.3bn decreased €8.5bn from Dec 19, 98% are strong / satisfactory
	Stage 2 loans €10.5bn increased €6.5bn from Dec 19, 72% are strong / satisfactory
	Stage 3 loans €3.5bn increased €0.4bn mainly due to changes in definition of default	47

Investment securities - debt securities €19.3bn

Key components €bn

9.7
7.0
			5.3	5.3
	1.0	1.1			1.7	1.6
Government	Supernational banks Euro bank securities	Non Euro bank
securities	and gov agencies			securities
		Dec-19	Jun-20

• €19.3bn up from €16.5bn up €2.7bn mainly due to €2.8bn increase in Irish Government securities
• There were no material disposals in H1 2020
• Average yield of 0.82%, down from 1.28% from H1 2019
  • yield reducing as higher yielding assets mature

48

ECL- sensitivities

				Jun 2020
					Downside
				Downside	scenario
			Downside	scenario	('Persistent	Upside
			scenario	('Failed	virus plus	scenario
			('Persistent	EU/UK trade	second	('Virus
€m	Reported	Base	virus')	talks')	wave')	eliminated')
ECL allowance	2,441	2,270	2,908	2,736	3,519	1,984
Delta to reported		(171)	467	295	1078	(457)
Delta to base			638	466	1,249	(286)

The sensitivities reflect the approximate impact on the current ECL allowance before the application of probability weights to the forward looking macroeconomic scenarios. The sensitivities provide an estimate of ECL movements driven by both changes in model parameters and quantitative 'significant increase in credit risk' (SICR) staging assignments.

49

Reported capital ratios

Transitional capital ratios
	Jun 20	Dec 19
Total risk weighted assets (€m)	50,340	52,121
Capital (€m)	12,361
Shareholders equity excl AT1 and dividend	13,023
Regulatory adjustments	(2,200)	(2,434)
Common equity tier 1 capital	10,161	10,589
Qualifying tier 1 capital	1,238	625
Qualifying tier 2 capital	902	926
Total capital	12,301	12,140
Transitional capital ratios (%)	20.2
CET1	20.3
AT1	2.4	1.2
T2	1.8	1.8
Total capital	24.4	23.3

RWA (Transitional)
Risk weighted assets (€m)	Jun 20	Dec 19	Mvmt
Credit risk	44,925	46,811	(1,886)
Market risk	618	473	145
Operational risk	4,686	4,700	(14)
CVA	166	137	29
Total risk weighted assets	50,395	52,121	(1,726)

	Fully loaded capital ratios
		Jun 20	Dec 19
	Total risk weighted assets (€m)	49,763	51,999
	Capital (€m)
	Shareholders equity excl AT1	12,361	13,023
	Regulatory adjustments	(4,223)	(4,018)
	Common equity tier 1 capital	8,138	9,005
	Qualifying tier 1 capital	1,268	655
	Qualifying tier 2 capital	1,090	1,007
	Total capital	10,496	10,667
	Fully loaded capital ratios (%)
	CET1	16.4	17.3
	AT1	2.5	1.3
	T2	2.2	1.9
	Total capital	21.1	20.5
Shareholders' Equity (€m)		14,230
	Equity - Dec 2019
	Loss H1 2020		(700)
	Investment securities & cash flow hedging reserves		(54)
	AT1 (HoldCo)		620
	Redemption AT1 (OpCo)		(206)
	Other		(119)
	Equity - Jun 2020		13,771
	less: AT1		(1,410)
	Shareholders' equity excl AT1		12,361

50

Credit ratings

AIB Group plc (HoldCo)	Baa2	BBB	BBB-
Long term issuer rating
Outlook	Stable	Negative	Negative
Investment grade			

AIB p.l.c. (OpCo)	A2	BBB+	BBB+
Long term issuer rating
Outlook	Stable	Negative	Negative
Investment grade			

51

Loan book analysis and interest rate sensitivity

Concentration by sector (%)	H1 2020
Agriculture	3
Energy	3
Manufacturing	5
Property & construction	12
Distribution	9
Transport	3
Financial	1
Other services	9
Resi mortgages	51
Personal	4
Total	100

Concentration by location (%)	H1 2020
Republic of Ireland	76
United Kingdom	15
North America	5
Rest of World	4
Total	100

Sensitivity of projected net interest income to interest rate movements	FY 2019	FY 2018
	€m	€m
+100 basis point parallel move in all interest rates	234	211
-100 basis point parallel move in all interest rates	(274)	(245)

52

Contact details

Our Investor Relations Department are happy to facilitate your requests for any further information

Name	Email	Telephone
Niamh Hore	[e-mail]	+353	1 6411817
Head of IR
Janet McConkey	[e-mail]	+353	1 6418974
Siobhain Walsh	[e-mail]	+353	1 6411901
Pat Clarke	[e-mail]	+353	1 6412381
Susan Glynn	[e-mail]	+353	1 7724546

Visit our website at aib.ie/investorrelations

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