Bank of Ireland : Annual Report for the Year Ended 31 December 2020 - 9 MB

March 01, 2021 at 03:52 am EST

'2020 was an exceptional year with a myriad of challenges for people, communities where we operate, and for all businesses, including banks. At Bank of Ireland, from the start of the COVID-19 crisis, we quickly focused our resources and efforts on protecting and supporting our customers, colleagues and communities. The investment we've made in recent years in transforming our culture, systems and business model underpinned our ability to quickly adapt to the impacts of COVID-19.'

Francesca McDonagh

Group Chief Executive

Inside this report

Strategic Report 3

2020 key performance highlights 3

Chairman's review 4

Chief Executive's review 8

Our Ambition, Purpose and Values 12

Our strategy 13

Responsible and Sustainable Business

at Bank of Ireland 20

Governance in action 42

Risk review 45

Financial Review 47

Governance 71

Risk Management Report 134

Financial Statements 190

Other Information 342

View this report online

This Annual Report and other information relating to Bank of Ireland is available at:www.bankofireland.com

Strategic Report

2020 key performance highlights

Financial PerformanceAsset Quality

• Return to proﬁtability in H2 2020.
- • Net credit impairment charge of €1.1bn (2019: €0.2bn), of which c.60% relates to performing loans.
• Net interest margin of 2.00% (2019: 2.14%).
• 6th straight reporting period of reductions; costs reduced by further 4% vs. 2019.
- • NPE ratio increased from 4.4% in 2019 to 5.7%; stable in H2.
• Irish mortgage market; share increased 2% to 25.5% in 2020.
• Total operating income2 reduced by 8% versus 2019; lower business income and valuation item movements.

• Payment break outcomes more positive than expected; 94% expired and only c.4% have migrated into new arrears status3.

Transformation

Capital

• Achieved 2021 cost target of c.€1.7bn4 one year early.
• New cost target of €1.5bn by 2023.
- • Strong capital position; regulatory CET1 ratio 14.9% and c.510bps headroom to minimum
• Further progress in the UK; Northern Ireland strategic review complete.
regulatory requirements; fully loaded CET1 ratio 13.4%
• Digital progress supports new branch strategy; c.33% of branches to close

• Pre-impairment organic capital generation of 80bps in H2 vs 45bps in H1
• Successfully completed two Additional Tier 1 (AT1) transactions, totalling €975 million.

Further information on ﬁnancial measures referred to in our 2020 key performance highlights is found in Alternative performance measures on page 373.

1 The Group's financial results are presented on an underlying basis. Underlying excludes non-core items which are those items of €386 million that the Group believes obscure the underlying performance trends in the business. For further details on the Group's non-core items see page 52.
2 Operating income net of insurance claims.
3 Balances now categorised as arrears not in arrears prior to payment breaks; as at 12 February 2021.
4 Underlying costs include core transformation investment charges, exclude non-core items of €424 million, levies and regulatory charges of €125 million and impairment of intangible assets and goodwill of €12 million. Including these items total costs were €216 million or 10% higher than 2019. The calculation of which is set out on page 379.

67%	59:41	77%
employee	male / female	reduction in carbon
engagement score	appointments to	emissions intensity (on
(increase of 5% since	management and	2011 baseline)
Q4 2019)	leadership positions
c.€10m	10k	€2bn
invested in learning	secondary school pupils	Sustainable Finance
and development for	availed of 'Money	Fund and ﬁrst bank in
colleagues	Smarts', a free ﬁnancial	Ireland to introduce a
education programme	green mortgage

Chairman's review

Our purpose, to enable our customers, colleagues and communities to thrive, was a clear North Star for the Group in responding to COVID-19. The banking system supported the economy during the pandemic, and will continue to be a key player in the recovery.

Introduction

The impact of COVID-19 on our society has been unprecedented. On behalf of the Board of Bank of Ireland, I would like to extend our sympathies to all who have been affected by the pandemic. I would also like to thank Francesca and her leadership team, and all of our colleagues across the Group, for their ongoing commitment to our customers over a uniquely challenging year.

A path to post-COVID-19 normality is now becoming visible; however, the consequences of the pandemic will endure for some considerable time for us all, including for Bank of Ireland. Other external challenges include the interest rate environment, and continued uncertainties relating to the UK's decision to leave the European Union.

That said, as the leading lender to the fastest-growing economy in Europe lastyear, the Group benefits from an extensive customer base and franchise in a country with one of the youngest, fastest-growing populations in the developed world.

Strategy

Good progress was made in 2020 on advancing the Group's strategy. We maintained strong momentum on our key priorities and accelerated certain initiatives in response to changing customer behaviours, needs and expectations.

Our customers availed of a wide range of new digital enhancements during the year. We hit our 2018 Investor Day target to reduce our cost1 base to c.€1.7 billion one year early and we now target reducing our cost base to €1.5 billion by 2023. We continued to progress our strategic priority to improve returns in our UK business.

In Great Britain, we will have a more focused, smaller, but more profitable business. In Northern Ireland, we will optimise our physical footprint while also investing in technology to support our business. We will also relocate our UK Headquarters from London to Belfast, reinforcing our commitment to Northern Ireland, where Bank of Ireland has had a presence since 1825.

Customer preferences continue to evolve, and our significant transformation investment over recent years has improved our technology infrastructure, digital offering and customer engagement. At the same time, we have seen a sustained decline in the use of our branches. Our customers tell us that they expect visits to branches to reduce further as they move away from cash towards digital and contactless payments. We are adapting to these clear changes in behaviour as we work towards a long-term, sustainable and modern banking system.

Accordingly, following an extensive review of our network, we have taken the decision to close 103 branches in the Republic of Ireland and Northern Ireland. We will continue to operate 182 branches across the island of Ireland. The branches will be an integral part of the Group's strategy of blending physical and digital services to meet our customers' evolving needs.

Capital and Regulation

The resilience of the Bank's business model and balance sheet was well evidenced in 2020. Despite the unprecedented impact of the pandemic, the Group ended the year with a strong capital position. This is after taking a prudent and comprehensive view of the

The Group's financial results are presented on an underlying basis. Underlying excludes non-core items which are those items that the Group believes obscure the underlying performance trends in the business.

Chairman's review (continued)

impact of COVID-19 on our loan book, as well as continuing to invest in the Group's transformation.

We also benefitted from relief provided by our regulators as they accelerated implementation of measures which resulted in lowering risk weightings for our SME loan book, and changing the capital treatment of our software assets. This was one of a number of supportive regulatory changes following the onset of the pandemic. Countercyclical buffers were set to zero in Ireland and the UK; the ECB also announced an acceleration of changes to the composition of banks' Pillar 2 Requirements; and the introduction of a Systemic Risk Buffer in Ireland was deferred. Collectively, these measures have bolstered the strong headroom the Group has over its minimum regulatory capital requirements, and we acknowledge the regulators' supportive actions.

In relation to capital requirements, we believe it important for institutions to be able to plan over a medium-to-long term cycle. We encourage as much visibility and stability as possible from our regulators on this matter, as is the case in many other regulated sectors. This is important for potential future providers of capital to the sector.

Remuneration

Certain participants in the Irish banking sector remain at a competitive disadvantage due to the remuneration restrictions that apply. These restrictions are far reaching, and prohibit the Group from approaching remuneration in a similar way to other corporates - both banking and non-banking - with whom we compete for talent. Meanwhile, the substantial increase in the presence of international financial services firms in Ireland has led to greater intensity in competition for talent in a variety of areas, including key prudential functions. The restrictions are a concern for investors, as they seek assurance that the Group can attract and retain talent and that management is appropriately incentivised to deliver sustainable returns.

The Irish banking system received extraordinary support during the financial crisis of a decade ago, for which we remainvery grateful. Bank of Ireland is unique amongst Irish banks in being the only institution to have fully repaid the Irish taxpayer, which we did in 2013; the State is now showing a sizeable profit on its investment in the Group. Having repaid the taxpayer in full, Bank of Ireland's view is that it should now be permitted to develop a more normalised remuneration approach, aligned to European Banking Authority Guidelines, which have been significantly extended to be much stricter than what operated in the past, with a much clearer emphasis on risk management and sustainability.

Purpose and Culture

To achieve our purpose, an appropriate corporate culture must be embedded across the organisation. We have adapted our culture very significantly over the last three years, and there has been further improvement in 2020 in our engagement and cultural embedding scores, assessed through staff surveys with very high participation rates. In cultural embedding, Bank of Ireland's score surpassed the global average for financial services for the first time in 2020.

Crises provide a true test of an organisation's culture; under pressure, we revert to our default behaviours. The speed, agility and customer focus with which colleagues responded to COVID-19 provided real-life evidence of the changes in Bank of Ireland in recent years.

Responsible and Sustainable Business

An effective and transparent Responsible and Sustainable Business (RSB) strategy is a fundamental expectation of all stakeholders, including investors, customers and colleagues. The Group fully endorses this expectation.

Following its commitment to the UN Principles for Responsible Banking in 2019, the Group has made good progress

CEO review (page 8) Responsible & sustainable business (page 20)

Risk management (page 34)

on its RSB agenda during 2020. Amongst other things, we undertook an exercise to understand the impact the Group's products and services have on the environment and society and we engaged with a broad range of stakeholders to understand their priorities. This has informed the development of our new RSB strategy, overseen by the Board's Nominations, Governance and Responsible Business Committee. Our RSB strategy is detailed from page 20 and sets out the Group's overarching approach to this critical area.

Board

As COVID-19 became a reality in early March, the Board moved to holding two meetings every week; this heightened level of engagement continued for a number of months. In total, the Board met 31 times during the year, and 84 times including all Committee meetings.

The Board's initial focus was on ensuring the health and safety of our colleagues and customers, the continuity of Group operations, and the availability and reliability of service to our customers. The Board also dedicated significant time to:

• our strategy, including how COVID-19 would impact it;
• supports required by customers facing financial distress as a consequence of the pandemic;
• the potential financial and capital impact of COVID-19 on the Group;
• the role of the Group and the banking industry generally in supporting the Irish economy.

There were a number of changes to the Board in 2020. Patrick Haren and Patrick Mulvihill retired at the end of the year, having each served nine years. They both made significant contributions to the Group, bringing experience, insight, rigour and exceptional commitment to their roles, and leave with our gratitude and very best wishes. Patrick Haren was succeeded as Deputy Chairman and Senior Independent Director by Richard Goulding, who has served as an independent Non-Executive Director since 2017. Patrick Mulvihill was succeeded as Chair of the Group Audit Committee by Evelyn Bourke.

Chairman's review (continued)

In November, Giles Andrews joined the Board. As a highly respected FinTech pioneer, Giles brings extensive experience in financial technology and technology transformation, as well as strong investment, lending and management experience.

We are committed to ensuring that we have the right balance of skills and experience within the Board. Eight of our nine non-executive directors have spent their careers in financial services, across the gamut of the sector. There is significant breadth of business line experience, including in corporate, business and retail lending; asset management; general insurance; life and pensions; health insurance; and FinTech. This is complemented by deep functional experience in risk, technology, operations, finance and regulatory management.

Diversity across all its dimensions is important to us, and gender diversity has been a particular area of focus for the Group at both workforce and Board level. Currently, the gender ratio on our Board is 45% female and 55% male.

Distributions

In light of the evolving COVID-19 pandemic, and following the recommendation of the ECB in March 2020 on dividend distributions for all significant institutions, the Group withdrew its proposed dividend for the year ended 31 December 2019.

In December 2020, the ECB provided updated guidance on distributions, requesting banks to consider not distributing any cash dividends or conducting share buy-backs, or to limit such distributions, until 30 September 2021.

The Board recognises the importance of distributions to shareholders, and our policy of approving distributions on a prudent and progressive basis remains unchanged. Our focus is on a return to profitability and our objective is for distributions to recommence as soon as possible based on performance and capital position.

Outlook

As the world recovers to a different economy, more reliant on technology, we must be ready. Whatever time any organisation thought it had to transform has been reduced by the consequences of the pandemic. We have commenced a strategic refresh process, and will communicate an updated strategy and financial targets to shareholders later in the year.

Successful delivery for shareholders will require the combination of rigorous prioritisation with very high-quality execution. Bank of Ireland has a proven track record of effecting transformation in recent years, and, while the external environment remains uncertain, the Board remains confident that the Group is well placed to deliver value for its shareholders through the cycle.

Patrick Kennedy Chairman

Chief Executive's review

Through an exceptionally challenging year, we continued to transform and deliver on our strategic objectives, while providing ongoing support to our customers, colleagues and communities.

2020 was an exceptional year with a myriad of challenges for people, communities where we operate, and for all businesses, including banks. At Bank of Ireland, from the start of the COVID-19 crisis, we quickly focused our resources and efforts on protecting and supporting our customers, colleagues and communities. The investment we've made in recent years in transforming our culture, systems and business model underpinned our ability to quickly adapt to the impacts of COVID-19.

At the same time, we maintained discipline and focus on our strategic priorities throughout 2020. We have further reduced costs and improved our efficiency. We built on the delivery of new digital capabilities to enhance customer service with customer complaints reducing and our Net Promoter Score (NPS) increasing significantly. Our market shares increased in Irish mortgages and SME lending, and we made good progress in the reshaping of our UK business.

The external environment

COVID-19 has devastated many families and businesses across Ireland and the UK. The impacts of COVID-19 on the Irish and UK economies during 2020 have been significant, leading to reduced levels of credit formation and business income. The low interest rate environment continued to negatively impact the Group's revenue, including net interest income and margins. The prolonged negotiation of final Brexit terms also created significant uncertainty, especially for business customers, for much of the year given that 16% of Irish services exports and 9% of Irish goods exports go to the UK.

These external factors are reflected in our 2020 financial results. The Group has reported an underlying1 loss before tax of €374 million, including an IFRS 9 impairment charge of €1,133 million. While the pandemic has had a material impact on earnings, the Group returned to profitability in the second half of 2020.

Capital has remained strong, with a fully loaded CET1 ratio at the end of December 2020 of 13.4%, and a regulatory CET1 ratio of 14.9%.

The Group has comprehensively captured the impact of COVID-19 in our €1,133 million impairment charge. Asset quality remains strong and over 90% of payment breaks offered to customers at the start of the pandemic have now concluded with a return to pre COVID-19 repayment terms, supporting an impairment charge at the lower end of our previous guidance.

While the low interest rate environment and the impact of the COVID-19 pandemic will continue to present near-term challenges, the overall economic outlook is positive. The Irish and UK economies are expected to see a recovery in Gross Domestic Product in 2021, underpinned by the rollout of vaccine immunisation programmes.

While it will take time to settle, the conclusion of post Brexit trade negotiations between the EU and the UK also provides clarity and confidence for future investment decisions, particularly for business customers.

Purpose and culture

The Group's purpose is to enable our customers, colleagues and communities to thrive. This purpose has guided our pandemic response throughout the year.

Customers

Supporting our customers is core to our purpose, beneficial for the wider economy and supports the Group's growth ambitions. During 2020, we launched a comprehensive suite of measures for our personal and business customers, including over 100,000 payment breaks for customers in Ireland and the UK. Specific

Our strategy (page 13) Responsible & sustainable business (page 20)

Risk management (page 34)

supports were provided for vulnerable customers, and a nationwide fraud awareness campaign was launched in line with an acceleration in digital banking adoption by customers. All key customer service metrics strengthened during the year including customer complaints which fell by 22% in Ireland from 2019 and the Group's customer NPS which improved by 5 points from the end of 2019.

Throughout the year, we continued to support our customers through various lending schemes, and we are an active participant in Government guaranteed lending schemes in Ireland and the UK. An additional €1 billion was made available to support homebuilding and green investment. As we enter 2021, we continue to support our customers while maintaining risk and pricing discipline.

Colleagues

The response of our colleagues to the challenges of the pandemic has been outstanding. I feel proud and grateful for the hard work of all our colleagues during 2020, especially those on the frontline who have supported our customers throughout the year. Our agile ways of working have enabled more than 75% of colleagues to work from home with minimal impacts on our customers and businesses. We have also delivered physical and mental health initiatives to promote colleague wellbeing. In survey responses, our colleagues have recognised this with engagement up by +5 points to 67% since Q4 2019 and culture embedding improved by +11 points to 77%, 3 percentage points ahead of the Global Financial Services benchmark.

Communities

The Group is embedded in the communities we serve, and our role in supporting those communities was never more important than during 2020. We are playing a key role in the re-boot of the Irish economy, with a 2% increase in mortgage market share to 25.5%, and a leading share in business lending. The Group's €1 million COVID-19 Emergency Community Fund was dispersed to meet urgent needs arising from the pandemic. We particularly focused on customers and communities impacted by COVID-19 and Brexit. In addition, the Group's €4 million BeginTogether campaign is improving financial, physical, and mental wellbeing in communities across the island of Ireland and includes a partnership with Business to Arts to assist the arts sector.

Strategic progress

2020 has seen good progress in delivery of our strategic priorities to transform the Bank, serve customers brilliantly, and grow sustainable profits, including:

• a reduction in costs for the sixth consecutive reporting period; down 4% in 2020 and 10% in the past three years;
• new digital customer propositions, including the rollout of our new mobile app, mobile payment capability, and new digital customer platforms in Wealth and Insurance. This progress supports increased customer preference for digital fulfilment, with a 26% increase in customers using the new mobile app since launch in 2020;
• a 2% increase in our mortgage market share in Ireland, while maintaining commercial discipline on risk and pricing;
• further strategic progress in the UK, growing our bespoke lending by c.£0.6 billion since launch, delivering a 9% reduction in costs, and completing our strategic review of Northern Ireland;
• the launch of our new Responsible and Sustainable Business strategy, which includes setting science based targets across our portfolios by 2022; and
• maintenance of strong capital ratios, with a buffer of c.510 basis points to our 2021 minimum regulatory capital requirements.

Digital banking

Customers are increasingly banking digitally and 2020 has seen an accelerated shift in this direction. At Bank of Ireland, c.70% of sales of key banking products are now originated digitally, and in-branch transactions are c.93% automated.

Digital journeys are being enhanced through our investments in over 15 End-to-End redesigned sales and servicing journeys for customers. Customer experience has improved by making

processes simpler and application times, withbenefitting from enhanced customer advocacy and cost efficiency.

Innovation through the rollout of new customer propositions is also at the forefront of our digital investment; c.810k customers have successfully migrated to the Group's new mobile app which delivered a 50% increase in functionality. Customers appreciate the investment, evidenced by a +19 point improvement in mobile app Customer Effort Scores compared to 2019, a key measurement of customer satisfaction.

The trend towards digital engagement accelerated in 2020, with 69% of customer interaction with everyday banking products going through digital channels, up 7 points on 2019. This trend, and the positive reaction to the roll out of our enhanced digital offerings, leads us to believe that we are now at a tipping point in terms of customer behaviour. In line with this, we are taking action to reshape our branch network and ensure our mix of physical and digital service reflects our customers' changing preferences.

During 2021, we will reduce our physical footprint in the island of Ireland, closing c.33% of branches, while continuing to increase our digital service offerings. In the Republic of Ireland, we are working with An Post, the Irish post office, to ensure that customers of the branches to be closed will still have access to banking services within an average distance of 0.5 kilometres from the closed branch. We are committed to supporting all customers through this period of change.

Wealth and Insurance

The Group has a unique position and opportunity in the Irish market as the only universal bancassurer, providing in-house product manufacturing and distribution. This ensures the Group captures all economic profits from the product life cycle. At the end of 2020, the Wealth and Insurance business had c.€20 billion of assets under management, and contributed 38% of Group business income. We further grew penetration of the bank customer base to 35%, up from 32% in 2019.

reducingthe

Group

We are continuing to strengthen the digital capabilities of this business with enhanced customer propositions across pension platforms (with a 90% reduction in onboarding times), Wealth and Insurance advice platforms (45% of customer transactions are now through direct channels), and broker channels.

Favourable demographics and market changes underscore future growth opportunities in Wealth and Insurance. The proven strength of our franchise, coupled with our digital investments, make us well placed to benefit from these opportunities.

Costs

Our strategic focus on cost reduction has continued. In 2020, costs reduced for the sixth successive reporting period and we have achieved our 2018 Investor Day target of a c.€1.7 billion cost base one year early.

Cost reductions have been delivered across a broad range of staff and non-staff initiatives and we continue to see additional opportunities to reduce our cost base and improve efficiency.

We target 2021 costs to be less than €1.65 billion and we are today announcing a new medium-term cost target for 2023 of €1.5 billion.

This new target equates to a c.20% reduction in costs since 2017 having absorbed significant investment in our people and infrastructure over that period.

Strategic progress in our retail businesses in the UK continued in 2020. Net interest income was stable, costs reduced by 9%, while new lending volumes in 2020 were £1 billion lower. This reflects our strategy to improve new business mix towards higher margin lending, including c.£0.6 billion of new Bespoke mortgage lending since launch in 2019.

Further progress is necessary to improve returns in our UK business. The strategic review of the Northern Ireland retail business was completed. This will result in a material restructure of the Northern Ireland business. c.50% of branches will close, helping to reduce costs. We will further simplify our product offering, leveraging our expertise in car finance and mortgages. We will also relocate our UK Head Office from London to Belfast.

The UK strategy will continue to focus on higher lending margins, lower costs, a reduction in deposit costs and operatingwith a smaller balance sheet. Consistent with this, during 2021, we expect the UK loan book to reduce by c.10%, reduced deposit volumes, margins to be in line with 2020 exit margins and costs to reduce by a further c.3%.

Responsible and Sustainable Business

Today we publish our new Responsible and Sustainable Business strategy 'Investing in Tomorrow', which we developed throughout 2020. This strategy comprises three key pillars; enabling current and future colleagues to thrive, enhancing customers' financial wellbeing, and supporting the green transition.

As part of this, we have committed to setting science based targets to align our lending to the Paris Climate Agreement. We are also committing to become Net Zero in our own operations by 2030. During 2020 we enhanced our RSB governance at both Board and management levels. We completed a materiality assessment, an initial impact assessment of the Group's products and services, and launched the Group's inaugural Green Bond Framework. We also increased the size of our Sustainable Finance Fund in 2020 by €1 billion to €2 billion.

Financial performance

The Group posted an underlying loss before tax of €374 million in 2020 with COVID-19 having a material impact on financial performance. Total income was 8% lower than 2019 with a return to profitability in the second half of 2020.

The Group's loan book decreased by €2.9 billion during 2020 (€0.8 billion on a constant currency basis) due to foreign exchange and other movement of €1.8 billion and impairment charges of €1.1 billion. Stable net lending includes €0.7 billion of revolving credit facility (RCF) drawdowns. Total new lending volumes, excluding RCF activity, of €13.3 billion were 19% lower than 2019, reflecting reduced activity in our core markets.

Net interest income of €2,115 million was 2% lower than 2019. The benefits of reduced liability costs and higher margins on new UK lending was more than offset by reduced yields on liquid assets and structural hedges. Liquid assets as a proportion of average interest earning assets increased to 26% in 2020 compared to 23% in 2019. Net interest margin (NIM) was 2.00%. The Group's NIM reflects the positive impact from new lending margins and our strong commercial pricing discipline, offset by growth in liquid assets and lower structural hedge income.

Fees and other income arise from diversified business activities including wealth, bancassurance, foreign exchange, and transactional banking fees. Business income of €557 million, including share of associates and joint ventures (JVs), is 21% lower than 2019, driven primarily from reduced levels of economic activity. A loss of €61 million on valuations and other items was reported in 2020.

Business income includes Wealth and Insurance income which decreased 23% versus 2019 due to lower new business sales and impact of assumption changes. Retail Ireland income decreased 18% from lower transaction fees and foreign exchange income. Corporate and Treasury fee income reduced by 10% from lower underwriting income. Share of associates and JV income reduced by €43 million in 2020 due to UK travel restrictions.

Delivery on transforming our culture, systems and business model continues to drive efficiencies across the Group.

Operating expenses (excluding levies and regulatory charges and impairment of intangible assets and goodwill) reduced by 4% compared to 2019 and includes €25 million of COVID-19 related expenses. We have successfully achieved our cost target of c.€1.7 billion one year early. Non-core charges of €386 million include €245 million related to business model restructuring, including €189 million voluntary redundancy costs, and a €136 million non-core charge taken in the first half of 2020 relating to impairment of intangible software assets. The voluntary redundancy costs will result in a €114 million in annualised staff costs when completed.

A net credit impairment charge of €1,133 million on financial instruments in 2020 compared to €215 million in 2019.

This charge, c.60% of which was taken on performing loans, reflects the impact on IFRS 9 models of Forward Looking Information (FLI) from the Group's latest macro-economic outlook, a management adjustment related to the risk that longer-term credit supports may be required for customers affected by COVID-19 and actual loan loss experience in the period.

Actual loan losses in the period of €437 million, primarily in corporate and property portfolios, include €253 million on legacy property exposures. The Group's impairment coverage increased to 2.9% from 1.6% at December 2019. Subject to no further deterioration in the economic conditions or outlook, the majority of the

credit impairment risk associated with COVID-19 has been captured; we expect the 2021 impairment charge to be materially lower than 2020.

Our non-performing exposures (NPEs) increased by €1 billion to €4.5 billion, equating to an NPE ratio of 5.7% of gross customer loans. This increase, all of which occurred in the first six months of 2020, primarily reflects credit migration in our property and construction portfolios, and the implementation of the new Definition of Default regulatory framework.

Our regulatory CET1 capital ratio of 14.9% and fully loaded CET1 capital ratio of 13.4% at December 2020 remain strong despite elevated levels of impairment charges in the period. Pre-provision organic capital generation and the reversal of the dividend declared in respect of 2019 was more than offset by the impact of credit deterioration, transformation investment and other movements. Minimum regulatory capital requirementswere reduced by c.188 basis points in 2020 with the Group's 2021 requirement set at 9.77%. The Group's 14.9% regulatory CET1 capital ratio at December 2020 provides headroom of c.510 basis points to our 2021 requirements. We expect 2021 CET1 ratios to remain broadly in line with December 2020 levels.

Sustainable returns

The challenges impacting on the operating environment during 2020 have been significant. Nonetheless, as set out, the Group's swift and proactive response was enabled by our investment in transformation prior to the pandemic. The Group successfully adapted to the challenges it faced, ensuring ongoing support to customers, colleagues and communities while remaining focused on strategic delivery, in particular the continued lowering of costs, the launch of new digital customer propositions, and improvements in the profile of our UK business.

Looking to 2021, while we recognise the necessary ongoing restrictions and consequent challenges as we start the new year, we anticipate these will moderate as the vaccine rollout progresses in our major markets. We have sufficient capital to support economic recovery, we are investing in our digital capabilities and customer propositions, we are continuing to reduce our costs, and we are making progress on our UK restructuring. We are committed to responsibly developing our long term franchises, to serve our customers brilliantly and deliver sustainable returns to our shareholders.

In 2018 the Group held an Investor Day which set out our strategic priorities for the period to 2021. We will provide an update on our strategy and outlook for 2021-24, including refreshed medium term targets, later this year.

In the meantime, keep well and stay safe.

Francesca McDonagh Group Chief Executive

Our Ambition, Purpose and Values

Amplified in response to COVID-19

Our Ambition, Purpose and Values were amplified in response to COVID-19, as challenges and restrictions were experienced by communities on a global scale. We demonstrated our commitment to customers and stakeholders, by rapidly adapting our approach and safely delivering service and supports at a time of great need.

Our ambition

Our ambition is to be the National Champion Bank in Ireland with UK and selective international diversification.

National Champions are recognised as consumer champions, drivers of economic growth with strong market shares, employers of choice, and having strong brand positions. As we work to deliver on this ambition, we continue to transform the Bank of Ireland experience for our customers, colleagues and communities. There is no doubt that 2020 was an exceptional year - presenting enormous challenges for so many. We acknowledged this by striving to support our customers, colleagues and the communities where we all live and work.

We invested in our colleagues and their wellbeing and continued to transform customer experiences by progressing with digital transformation initiatives and online products that meet customers' expectations around a shifting digital culture in society. We introduced a range of measures designed to make it easier for our customers to bank with us.

To achieve our ambition, in June 2018, we set out three clear strategic priorities as part of a three-year plan; to transform the Bank, serve customers' brilliantly and grow sustainable profits. During the COVID-19 pandemic, we have demonstrated that this strategy is flexible enough to adapt to rapidly changing external events.

Our purpose

Bank of Ireland's purpose is to enable our customers, colleagues and communities to thrive.

Customers are at the heart of our business and always come first. In 2020 we connected and supported them throughout the pandemic, with a range of initiatives and supports to assist throughout the crisis.

Colleagues keep our organisation working, by innovating and adapting to meet our customers' needs - never more than 2020 when they went above and beyond to deliver, in spite of challenging circumstances and a rapid transition to remote working.

Communities are where we live and work, and include groups such as our customers, shareholders, regulators and governments. Throughout 2020, we built on these relationships when the role of communities became ever so important. This is something we will continue to build on as we work towards rebooting the economy.

Our values

Our purpose is supported by four key values which guide us in everything we say and do and these values are embedded in how we run our business. In 2020, these values guided our actions as we mobilised to continue to serve customers brilliantly.

Customer focused

We understand our customers well. We listen to them to ensure they feel valued and use our insights to consider how best to serve their needs. We take appropriate actions to deliver solutions to meet customers' changing requirements.

One Group, One Team

We know we work smarter when we come together behind our common purpose. We learn from each other and share ideas to expand our thinking. We build an open, trusting and supportive environment, and foster diversity of thought, ideas and experiences to spark creativity and innovation.

Agile

We embrace change with an open mind and a can do attitude. We respond quickly and proactively seek different perspectives. We challenge ourselves to look for new and simplified ways to efficiently deliver the best solutions for our customers.

Accountable

We are empowered to take ownership and trusted to do the right thing to support our customers, colleagues and communities. We lead by example and challenge ourselves and each other to do our best work at all times. We learn from our mistakes and celebrate our successes together.

Our strategy

To transform the Bank, serve customers brilliantly and grow sustainable profits

CEO review (page 8) Responsible & sustainable

business (page 20)

Risk management (page 34)

Divisional review (page 58)

remain supportive and we have clear plans in place to deliver further against each of our three strategic priorities. And we provide an update on our strategy, including refreshed medium-term targets, later in the year.

The Group is delivering on its strategic plan as set out to 2021. Our three strategic priorities are transforming the Bank, serving customers brilliantly and growing sustainable profits.

We have continued to make solid progress on the delivery of these priorities over the past 12 months, building on the strong foundations of prior years. We have also continued to make progress on our RSB agenda, including developing our first formal RSB strategy. The key highlights of our strategic progress in 2020 are set out on the following pages.

Our operating environment has changed significantly since we set out our strategic plan, amplified by the profound societal and economic impacts of the COVID-19 pandemic. Other external factors include lower-for-longer interest rates, intense competition and the evolving regulatory and political environment. These, along with the impact of Brexit, remain key challenges for us to navigate.

Notwithstanding these headwinds, the economic fundamentals underpinning our strategic plan

Our strategy (continued)

Transform the Bank

We are transforming our culture, systems and business model to enable our customers, colleagues and communities to thrive.

Culture

We are on a multi-year culture transformation journey. Strengthening our culture will contribute to positive customer outcomes, long-term customer relationships, growth in sustainable revenue and improved staff engagement and talent acquisition.

Target outcomes

• Improved customer centricity.
• Best-in-class employee engagement.
• All management and leadership appointments to represent a 50:50 gender ratio by 2021.

How we performed in 2020

• The Group Colleague Culture Embedding Index, which measures the awareness, understanding, belief and demonstration of our purpose and values, continues to improve - up 11 points on 2019 to 77% and is now three points ahead of the Global Financial Services benchmark.
• Our colleague engagement score continues to increase and is up 5 points on Q4 2019 to 67%, reflecting our continued

2020 brought Apple Pay and Google Pay to our customers: more functionality, security and speed

This represents further proof of our strategic progress in systems transformation, with fully-digitised processes across key customer journeys. The current account customer journey is now the single largest channel of account origination, and given the amplified shift in customer preferences to digital across all customer groups, we're on course to activate more business this way in the future. Other milestones reached are a fully digitised mortgage-application process, a newly digitised small business lending proposition and card control features added for mobile app and 365 online customers.

focus. Enabling current and future colleagues to thrive remains a core focus and is now a core pillar of our new RSB strategy (page 20).

• Since March, we have launched a range of dedicated colleague supports as part of our response to COVID-19 including mental health, physical wellbeing and health supports.
• In 2020, the Group's gender ratio of management and leadership appointments was 59% male: 41% female. This figure is slightly down on last year, partially reflecting COVID-19 impacts. The Group remains committed to achieving a 50:50 ratio in 2021 and is continuing to invest in dedicated programmes such as 'RISE' which builds gender-balanced talent and accelerates female leaders of the future.
• During 2020, Bank of Ireland's 'With Pride Network' was recognised with both the LGBTQ+ Inclusion Award at the Diversity in Tech Awards; and the Best LGBT+ Employee Resource Group at the GALA Award.
• Following on from last year, our online colleague recognition portal was established to recognise achievements of co-workers in a remote-working environment. Over 6,500 colleagues were nominated, with 55 finalists attending a Virtual Recognition Awards ceremony in December.

Responsible & sustainable business (page 20)

Risk review (page 45) Divisional review (page 58)

Systems

We are making a signiﬁcant investment to transform our technology. This investment is critical to support our business growth, as well as improving efficiency and enhancing service to our customers.

Target outcomes

• Improved customer experience.
• Simplification of products and processes.
• Excellence in digitisation and robotics.
• Transforming our technology.

How we performed in 2020

• Our new mobile app was delivered in 2020 to over 800,000 customers and saw over 50% increased functionality rolled out throughout the year including Google Pay and Apple Pay deployments.
• We have improved key customer journeys through greater automation and robotics, enabling customers to increase their level of self-service. In Q3 2020, we introduced a new digital mortgage journey for first-time buyers allowingcustomers to apply for and fully draw-down a mortgage online, with 40% of all applicants now applying via this channel.

• Over the year we have digitised 15 retail sales journeys via our End-to-End process. This includes our small business lending proposition; and our digital insurance wallet which now generates c.38% of general insurance sales.
• We also enhanced voice automation services in areas such as online banking activation and mortgage arrears' payments, enabling telephone customers to self-serve at any time.
• All Bank Automated Teller Machines (ATMs) for RoI & UK (c.4,000 devices and 1 million transactions per day) were successfully migrated to an outsourced service provider in 2020, reducing costs and further simplifying our IT architecture.
• To enable widespread remote working, the Group provided significant digital workplace enhancements including a full suite of tools to enable secure collaboration across the organisation.
• We continue to invest in and transform our technology across key customer data and security platforms; enhance our data management, and ensure we meet regulatory requirements while reducing operational risk.

Business model

We are committed to optimising our business model and ensuring our organisation is efficient and effective. We are simplifying our structures, making our teams more eﬀective and improving the management of third-party providers. This will help us to become leaner, more agile and even closer to our customers.

Target outcomes

• A more simplified and customer centric organisation.
• Effective and sustainable sourcing arrangements.

How we performed in 2020

• During 2020, we continued to invest in our customer-facing businesses and building internal capability in key areas such as IT change-delivery and analytics, while achieving a €15 million or 2% reduction in staff costs excluding pension costs compared to 2019.
• A voluntary redundancy programme approved in Q3 will see c.1,450 full-time employees leaving the Group on a phased basis, and will bring staff numbers below 9,000 for the medium-term.

• The global pandemic has accelerated the move toward remote working, with two thirds of staff working from home for the majority of the year. We have reduced our occupied office space by 29% over the last three years; and exited four sites in Dublin in 2020. As we embed remote and more flexible ways of working, including agile hubs across the RoI, we will continue to review our property footprint.
• In Q4, we announced the simplification of our Personal current account fee structure replacing 26 existing fees and charges with a single monthly fee of €6, increasing transparency for customers and significantly reducing operational complexity.
• We have digitised more than 15 retail sales and servicing journeys through our End-to-End process in 2020; improving customer experience, reducing operational risk and delivering more than €20 million in cost savings.

Our strategy (continued)

Serve customers brilliantly

We are committed to building a customer-focused organisation that invests in improving service and digital capabilities, while also getting the basics right. We listen to customers and respond to their feedback.

Over 100,000 payment breaks, ﬂexible ﬁnancial options and faster SME payments

Enabling our customers to thrive is at the heart of our purpose, and in 2020 our actions were more important than ever. We quickly stepped up with a range of supports to help business and personal customers affected by COVID-19: ranging from working capital, trade finance and foreign currency assistance, to flexible payment arrangements. Extra resources were made available as we made changes to our branch network, diverting attention to the areas our customers needed us most. We also waived contactless fees, committed to fast-track payments for more than 1,000 SME suppliers.

Embedding voice of customer in our businesses

Customers are always at the very heart of our business, but never more than this year as we've seen their expectations around product, service and banking preferences - particularly in relation to digital - evolve at an accelerated pace. We are committed to supporting our customers' needs and ﬁnancial wellbeing by offering customer-centric propositions and services to enable them to thrive in all circumstances.

Target outcomes

• Significant improvement in customer satisfaction and advocacy.
• Serving customers during their key life moments.
• Customer centricity at the heart of our culture.

2020 highlights

• Customers remained at the heart of our response and we reacted to the rapidly unfolding crisis by diverting branch staff to our contact centres to answer over 2,000 calls a day, as well as issuing 2 million SMS notifications, over five times the normal rate, across our customer network in March alone.

• We saw a significant improvement in customer satisfaction through our Customer Effort Score (CES), which measures ease of customers' service experience across all channels, and continued to improve by 5 points to 54 in December 2020.
• Customer complaints were down 22% down on 2019 in the Republic of Ireland and 45% lower than 2018. This is the lowest yearly volume of complaints on record. In Retail UK we launched our First Contact initiative to reduce customer complaints, resulting in a reduction of 37% compared to 2019.
• Since March we provided over 100,000 payment breaks to personal and business customers impacted by the pandemic in Ireland and the UK.
• We continued to develop our Financial Wellbeing programme, which focuses on empowering people to thrive financially and make better financial decisions. Read more about Financial Wellbeing (page 26).
• We provided enhanced services and supports in our Vulnerable Customer Unit (VCU) - which played a central role in our COVID-19 response, with a new 'Just A Minute' (JAM) Card to help our more vulnerable customers' discreetly convey their need for more time. We also introduced a carers' debit card to provide a safe and secure way for carers to manage the daily living expenses of those in their care.
• We supported the €2 billion SBCI COVID-19 Credit Guarantee Scheme launched to provide liquidity to SMEs in the Republic of Ireland.

Responsible & sustainable business (page 20)

Risk review (page 45) Divisional review (page 58)

Investing in digital and physical channels

We are investing in all channels to improve customer experience and service. We are re-designing and digitising high-priority journeys, upgrading service in our branches and contact centres, reallocating colleagues to customer facing roles and upgrading advisory services through colleague training and development.

Target outcomes

• Great customer experience and increased digitally-enabled customer journeys.
• Extend the API foundation for Open Banking.

How we performed in 2020

• We continued to enhance our digital capabilities as our customers' needs changed with over 70% of personal customer applications now originating via digital channels (up from 62% in H1 2019), including 95% of cards, over 70% of personal loans and over 60% of personal current account applications.

• Strong Digital Channel growth continued in 2020, mostly driven by mobile app adoption. Our mobile app traffic is up 32% in the past two years (2020 vs. 2018) with 38% of personal loan applications now made via this channel.
• We saw over 240 million visits across all digital channels including Group Website in 2020, up 9% on 2019.
• Our new digital personal current account customer application journey (via camera-enabled device) takes only six minutes to complete on average. It is now the customer channel of choice with over 50% of applications being made via this route.
• In 2020, 45% of Wealth and Insurance customers transacted through our direct or digital channels supported by the Wealth and Insurance Digital Advice Platform, which enables End-to-End digital sales and fulfilment, up from 39% in 2019.
• We provided enhanced Open Banking through Application Programming Interfaces (APIs) providing customer data, device authentication and payments' services for customers on both digital and Open Banking channels.

Our brand strategy

We have identiﬁed our brand purpose and drivers, putting the customer at the heart of everything we do. We have repositioned our brand to bring our purpose to life in a way that differentiates us and offers real value to our customers, colleagues and communities. This positioning brings the constituent parts of the business together and is now reﬂected in our advertising and sponsorship assets. Our creative brand position will sustain us over the next three to ﬁve years.

Target outcome

• To become the number one banking brand in Ireland.

How we performed in 2020

• Our 'Begin' brand campaign is now in its second year of investment and has helped to amplify our brand, as demonstrated by our strong Customer Effort Score up 5 points in 2020 with a key focus on 'Financial Wellbeing'.

• Our brand consideration metrics continue to improve, increasing 2% to 21% in 2020.
• In 2020 we aligned many of the Group's philanthropic activities under one umbrella 'Begin Together' which is a three-year, €4 million programme designed to support community-focused initiatives across the island of Ireland. This includes €1 million for the Begin Together Arts Fund launched in September 2020, in partnership with Business to Arts.
• We continued to proudly sponsor Irish Rugby across the four provinces and are proud sponsors of the Emerald Warriors, Ireland's leading LGBTQ rugby club.

• In August 2020 we launched a multi-platform 'Fraud Awareness' campaign to highlight the dangers and tactics employed by criminals to trick customers into providing their banking details.

Our strategy (continued)

Grow sustainable profits

We are focused on delivering sustainable returns for our shareholders. This is based on business growth in our key markets to expand lending, grow fee income and increase revenue sustainability. At the same time, we are reducing our costs each year as we drive efficiency

and streamline our business.

Business growth

Creating growth in our Irish business will increase lending volumes, interest income and fee income. We are working towards our goal to be a lead supporter of home building and home buying in Ireland, and to grow our wealth management and insurance business. As Ireland's leading retail and commercial bank and the only bancassurer in the market, we are building on our strengths, in particular the demand for housing and supportive demographic changes as called out in 'Ireland 2040, the National Planning Framework'.

Target outcomes

• To become the National Champion Bank in Ireland with UK and selective international diversification.
• To be the leading supporter of home building and home buying in Ireland
• Continue to build on our Wealth and Insurance business
• Measured and commercially disciplined loan book growth in our Irish and international acquisition finance businesses; improve sustainable returns in our Retail UK business.

New digital advice platform: End-to-End applications and 35% uptake of investment products

More improvements as part of our technology transformation came in the form of our newly enhanced Wealth and Insurance digital advice and transaction platform - a first to market proposition. As Ireland's only bancassurer we increased penetration of our Wealth and insurance products from within the Bank's customer base, with product uptake of more than 35%. The platform provides an online one-stop-shop for customers opening an investment plan tailored to their unique risk profile, and caters for those who wish to invest regularly from a remote setting.

How we performed in 2020

• Underlying loss before tax of €374 million, with net lending volumes of €0.1 billion.
• Market share in new mortgage lending Ireland of 25.5%.
• Across the Group, we approved €1.1 billion in Residential development funding which will deliver c.11,000 residential units, including c.760 social housing units and c.3,000 student units over the coming years.
• In September 2020, we launched our Green Bond Framework enabling us to issue Green Bonds while financing additional projects across renewable energy, green buildings, and clean transportation. In 2020, we also doubled our Sustainable Finance Fund to €2 billion.
• The Group retained its position as Ireland's leading Corporate Bank with gross new lending of €2.8 billion. With loans and advances to customers closing at €16.4 billion, broadly flat on the year.
• Despite industry-wide disruption, we maintained our market share in lending to SMEs across Manufacturing, Agriculture, Retail Convenience and Healthcare.
• We continued to leverage our position as Ireland's only bancassurer, by increasing the penetration of Wealth and Insurance products to our Bank customer base to 35%, up 3 points on the prior year.
• Strong capital position maintained, with a fully loaded Common Equity Tier 1 (CET1) ratio of 13.4% at December 2020, pre-impairment organic capital generation of c.125 basis points.

Responsible & sustainable business (page 20)

Risk review (page 45) Divisional review (page 58)

Continued cost reduction

We expect our costs1 to reduce every year, delivering a total cost base of €1.65 billion in 2021 and €1.5 billion in 2023.

Target outcomes

• Reduction of costs from €1.9 billion in 2017 to €1.65 billion in 2021 and €1.5 billion in 2023.
• Reduction in costs every year.
• Underlying cost income ratio of c.50% over longer timeframe.

How we performed in 2020

• Further progress on our cost journey, with operating expenses of €1.7 billion now 4% lower than 2019 despite additional costs related to COVID-19 of €25 million.

• The Group has achieved its original 2021 cost target of c.€1.7 billion set in 2018 , one year earlier than planned.
• Reduction in operating expenses has been achieved in 2020 through ongoing organisational simplification, improved ways of working, more efficient IT transformation and a continued focus on strategic sourcing.
• Underlying cost income ratio increased by 1% compared with 2019.
• Announcing a more ambitious target of €1.5 billion for 2023.

Reshaping the UK business

We are committed to the UK market where our focus is on improving sustainable returns. We have commenced a multi-year restructuring programme that will reduce our balance sheet, enabling us to lower our funding and operating costs, and focus on higher margin businesses across mortgages, Car Finance and Travel Money.

Target outcomes

• Improving sustainable returns.
• Improve lending margins.
• Lower cost of funding, acquisition and servicing.

How we performed in 2020

• We announced in Q3 2020 our intention to further restructure the Retail UK business, to reduce our balance sheet; enabling us to lower our funding and operating costs, and focus on higher-margin businesses across mortgages, Car Finance and Travel Money.

• Pre-provision operating contribution of £224 million was up 16% on 2019.
• In 2020, we reduced our UK cost base (excluding impairment of goodwill) by £25 million, improving our cost income ratio from 60% to 53%.
• We have begun to re-shape our loan portfolios by running down our lower-margin mortgages, while growing our 'Bespoke' mortgage offering by 48% in 2020 and broadening our broker network to 200 over the last two years.
• In Northern Ireland, we have completed our strategic review, which will result in a material restructure of the business; delivering a reduced physical footprint, product simplification and lower costs.
• We completed the migration of our UK credit card business to Jaja in October 2020.

Costs and operating expenses refers to underlying operating expenses (before levies regulatory charges and impairment of intangible assets and goodwill).

Responsible and Sustainable Business at Bank of Ireland

Behaving in a responsible and sustainable way is fundamental to achieving our purpose of enabling our customers, colleagues and communities to thrive.

Our commitments

Bank of Ireland signed the United Nations Environment Programme Finance Initiative (UNEP FI) Principles for Responsible Banking in October 2019. Providing a framework for a sustainable banking industry, the UN Principles help to align the banking sector with the UN Sustainable Development Goals (SDGs) and the Paris Climate Agreement.

UN Principles for Responsible Banking

Task Force on Climate-Related Financial Disclosures

Bank of Ireland is a supporter of the Taskforce on Climate-related Financial Disclosures (TCFD), a voluntary and consistent climate-related financial risk disclosure framework.

Following our commitment to the UN Principles for Responsible Banking (UNPRB) in October 2019, our focus in 2020 was to work on better understanding our impact, the issues important to our stakeholders and our baseline.

All of this work has informed the development of our new RSB strategy, which is being launched in conjunction with our annual results and which sets out our key environmental, social and governance priorities. We recognise the ever-growing expectations from our investors, customers and society - for increased action as well as transparency - and we are cognisant of the growing regulatory requirements around the Environmental, Social and Corporate Governance (ESG) agenda.

For the first time, we are reporting our progress against our UNPRB commitments and in line with TCFD recommendations.

Governance and accountability

The Nomination, Governance and Responsible Business (NGRB) Committee oversees the Group's RSB Strategy and monitors the Group's progress against its UNPRB and other commitments. At senior executive level, the Chief Strategy Officer (CSO) has been delegated responsibility for development and delivery of the RSB strategy, as well as its integration into our overall Group strategy. The CSO is supported in this by the RSB Team and the RSB Forum, an advisory group which comprises senior business and functional Executives from across the Group. Both the NGRB and the Group Executive Committee (GEC) receive regular updates on RSB.

Low Carbon Pledge

Bank of Ireland signed the Business in the Community Ireland's Low Carbon Pledge in 2018 and committed to reducing our Scope 1 & 2 greenhouse gas emissions intensity by 50% by 2030.

Investing in Tomorrow

Throughout 2020, we have developed our new Responsible and Sustainable Business strategy 'Investing in Tomorrow'.

Investing in Tomorrow

CEO review (page 8) Our ambition, purpose and values (page 12) Our strategy (page 13)

We believe that by investing time, money, effort and resources in making things happen, we're giving tomorrow a better chance. Our new RSB strategy aligns with our purpose of 'enabling customers, colleagues and communities to thrive' and also helps to achieve our ambition of being a National Champion Bank.

The strategy comprises three pillars - enabling colleagues to thrive, enhancing financial wellbeing and supporting the green transition - and these are built on strong foundations which guide our commitment to being a responsible and sustainable business. The strategy was informed by our materiality and impact assessments which are outlined on the following pages.

Our Responsible and SustainableBusiness Strategy

Enabling colleagues to thrive

We will be a 'digitally able' learning organisation that values inclusion and diversity, reflecting society and our customer base.

Enhancing financial wellbeing

We aim to empower people to thrive financially by enabling them to make better financial decisions.

Supporting the green transition

We are committed to working with our customers, colleagues and communities to support their transition to a resilient, Net Zero economy by 2050.

Focus areas Digitally able Employability Inclusive developmentFocus areas Financial capability Financial inclusion Financial confidence

Foundations

Focus areas

Set science-based targets Provide sustainable financing Decarbonise own operations Manage climate-related risks

Transparently report

Underpinned by strong foundations which guide our commitment to being a responsible and sustainable business.

Developing our strategy

In developing our RSB strategy, we engaged with our stakeholders to understand what was important to them and we undertook an assessment of the impact we have on society and the environment.

Listening to our stakeholders

Understanding the role we play and the impact we have on our many stakeholder groups helps to inform our RSB strategy and improve the quality of our reporting, while also highlighting risks and emerging trends that may be on our customers or investors' radars.

We engage regularly with our stakeholders through a variety of media, including surveys, social media, meetings, working groups and more.

To inform the development of our new RSB strategy, we conducted our first materiality assessment in 2020. This allowed us to get a deeper understanding of the issues important to our stakeholders. There were four steps in the materiality assessment exercise.

Materiality assessment

1. Horizon Scanning
We engaged a specialist external consultancy to support our materiality assessment. To start, we completed a horizon scanning exercise to understand the key issues in this agenda. This was informed by our purpose, values and strategic priorities, existing surveys with customers and colleagues, peer reviews, regulation and a review of trends, media and relevant research. A shortlist of 25 topics was produced from this exercise.
2. Prioritisation
To prioritise, these topics were then explored in a comprehensive stakeholder engagement exercise which sought the views of customers, colleagues, suppliers, trade associations and NGOs among others; through interviews and surveys. Stakeholders were asked to indicate how important they considered each of the topics to be and their reasons for this.
3. Validation
The RSB Forum, together with other senior internal stakeholders, then validated these stakeholder engagement findings and assessed the impact and influence of each of the topics in detail against agreed criteria.
4. Finalisation
The output of this process is the materiality matrix set out below, which plots issues of material importance to stakeholders as well as the bearing they might have on the Group and its ability to influence each of them.

The materiality assessment findings have significantly informed our new RSB strategy and the various topics are reported on throughout this report.

ImportancetoStakeholders

Impact on Bank of Ireland

The size of the bubble indicates the level of influence Bank of Ireland believes it has over reach each topic.

CEO review (page 8)

Our strategy (page 13)

TCFD report (page 30)

Understanding our impact

In line with Principle 2 (Impact and Target Setting) of the UN Principles for Responsible Banking, the Group carried out an initial impact assessment to understand both the positive and negative impacts of its products and services on society and the environment.

Methodology

In conducting the impact assessment, the Group used the UNEP FI Portfolio Impact Analysis Tool for Banks. This was developed by over 40 UNPRB signatories and UNEP FI Member Banks, including Bank of Ireland, under the leadership of the UNEP FI Positive Impact Initiative. The Bank was an active participant in the consultation and feedback process of the tool development.

The Tool guides banks through a holistic analysis of their retail (consumer and business banking) and wholesale (corporate and investment banking) portfolios. A sector / impact map underpins the tool methodology and seeks to capture positive and negative associations between sectors / activities and the 23 impact areas which are linked to the 17 Sustainable Development Goals (SDGs) in areas comprising social, environmental, governance and economic information.

This initial assessment is presented (see across) against the four requirements for undertaking impact analysis i.e. scope, scale of exposure, context and relevance, and scale and intensity / salience.

The outcome of this impact assessment informed the development of our new RSB strategy. We cross referenced the outcomes of the impact assessment with that of our materiality assessment to ensure the correct focus. As climate has been identified as our most significant

Scope

Bank of Ireland's core business areas in two primary geographies - Ireland and the UK - is included in the scope:

• Consumer Banking (Including Mortgages, Consumer Credit, Car Finance).
• Business Banking (Including Real Estate, Wholesale and Retail Trade, Agriculture).
• Corporate Banking (Including Real Estate, Manufacturing, Agriculture).

Scale of exposure

Context and relevance

• The Irish and UK governments are fully committed to the Paris Climate Agreement and to the implementation of the Sustainable Development Goals.
• Both countries, as well as the EU, have committed to becoming Net Zero by 2050.
Non-Property SME and Corporate 25.2%
• Using the Portfolio Impact Tool, it was assessed that the most relevant needs and challenges in both countries are: climate change, biodiversity, waste and resources and inclusive, healthy economies.
• Engagement with stakeholders through ourmateriality assessment also informed this.

The above shows the current composition of our €78.8 billion loan portfolio. In terms of portfolio mix, the Group has minimal direct exposure to fossil fuels in energy and extraction, and as a predominantly retail lending bank, we have approximately 70% of our customer lending in residential and commercial property and car finance.

Scale and intensity / salience

The outcome of our initial assessment points to employment, inclusive healthy economies, housing, health and sanitation and mobility as our primary positive impacts, while our negative impacts are in the areas of climate, resource efficiency and security, biodiversity & ecosystem, waste and soil.

negative impact, this has been explored further and is the primary focus of our 'Supporting the Green Transition' pillar (see page 28). Building on our positive impact on 'inclusive healthy economies', financial inclusion forms a key element of our Enhancing Financial Wellbeing pillar. Employability, both within the Group and more broadly in society, is also a key focus of our RSB strategy.

Bank of Ireland continues to be an active member of the Working Group which is developing the UNEP FI Portfolio Impact Analysis Tool. As the tool evolves, we will also refine and update our impact assessment.

Enabling colleagues to thrive

Our increasingly digital world brings huge opportunities but also demands new skills for colleagues and across society. Unaddressed, the risk is that many will get left behind. We are committed to positive impact inside and outside the Bank, and will be a 'digitally able' learning organisation that values inclusion and diversity, reflecting society and our customer base.

Digitally able Employability

Inclusive development

Over 80% of colleagues engaged in self-led digital learning

Ethnic Diversity and Female talent programmes launched

We will focus on three areas - being Digitally Able, supporting Employability, and ensuring Inclusive Development.

Digitally able

To fulfil our ambition to be a digitally-enabled bank we will require an understanding of each colleague's skillsets and competencies to build an eco-system of learning supports keeping their careers future fit.

All colleagues have access to content that is focused on making them 'digitally fit' through our digital learning platform, which had 283,377 visits in 2020. Key programmes delivered included:

• The Career Agility programme is a twelve week programme helping colleagues to build cross-transferable skills across Personal Effectiveness, Business and Data Proficiency and the Fundamentals of Banking (2,000 registered colleagues).
• Data Fluency & Project Management Pathway is designed for all colleagues, encouraging a shift to 'digital first' and 'agile' mindsets and behaviours (Data

41% of senior appointments in 2020 were female

Key 2020 achievements

c.60% registrations for colleague wellbeing app / portal

€9.5 million invested in learning and development

fluency 1,000 registered and project management 1,500 registered).

• The Digital Fitness Programme will support and develop digital practices, tools, and ways of working via the implementation of a digital career platform and digital pathways in 2021.

Employability

Enabling colleagues, current and potential, to stay relevant and future fit in a world of work that is constantly changing and equipped with the skills they need to sustain their career.

In November 2020, the Bank of Ireland Academy was mobilised to provide every colleague with a Career Roadmap that is unique to their skills and capabilities, providing access to relevant learning pathways. To date, this has focused on:

• understanding current colleagues' experience of careers and an improved career journey, and
• using test-and-learn methodology to understand what a colleague requires for Digital Fitness Assessment.

We will further support career development with full implementation of a Digital Career Platform in 2021 which will give colleagues access to mentoring and the opportunity to access to supports and stretch assignments to improve skills.

In addition to providing specialist skills' programmes the Group also ensures allcolleagues are supported in their ongoing development, by delivering core programmes to all People Managers and Leaders to enable them to create an environment where all colleagues will thrive. Key programmes delivered in 2020 included:

• You as a Manager: launched in 2019, and is our core Management Development Programme for all People Managers at Bank of Ireland. In 2020, 64% of our 2,300 People Managers started the programme. However due to the COVID-19 pandemic a 'pause and pivot' approach was required to prioritise focus on critical customer services, while supporting colleagues during the pandemic. The programme has since been remobilised to virtual delivery and will recommence for the first cohort in Q2 2021.
• You as a Leader: was launched in April 2020 to 350 Leaders from across the Group and is designed to help them to lead, grow, connect and be as effective as possible during COVID-19 and beyond. The focus for 2021 is to build Leaders' technical and digital acumen on leading technology and digital topics to enable more informed discussions and raise their technical skills and drive behavioural change to support our transformation.
• Developing You programme: this 10-week programme was tailored to manage the new pressures associated with COVID-19. It provided access to a range of development supports to meet individual needs in three key areas:
- 1. Developing All Colleagues;
- 2. Developing People Managers; and
- 3. Developing Leaders.
• Bank of Ireland graduate programme: continues to have a strong reputation in the market, ranked top Banking, Investment and Financial Services' Employer in 2020 by GradIreland. We recruited 39 Graduates (M 51%, F 49%) to the 2020 programme in September, with significant excess demand at the application stage.

CEO review (page 8)

Our strategy (page 13)

Inclusive Development

Our Inclusive Development approach commits to allowing every colleague to grow and develop as a person, as we build an inclusive workplace that is reflective of society and our customer base. Our Inclusion and Diversity strategy as well as our Colleague Wellbeing programme are the key elements of this approach.

Inclusion and Diversity

We aim to foster an inclusive and welcoming working environment for all - where everyone is able to reach their full potential - and to attract, promote and retain diverse talent at all levels. In 2020, an Inclusion and Diversity (I&D) dashboard was developed and all leaders had a mandatory I&D goal. In December 2020, we launched a confidential Self ID campaign to better understand and measure the diversity of our colleagues. We will use this data to inform the further development of our approach in this area. We currently focus on six key areas of I&D and each are supported by an employee network: accessibility, gender balance, intergenerational, multicultural, parents & carers and 'With Pride' (LGBT+).

We are committed to providing dedicated learning opportunities and pathways that will act as a catalyst for the careers of targeted colleague groups; progressing female talent or colleagues from ethnically diverse backgrounds. These are supported by elements in our core people development programmes to create the environment in which all colleagues will thrive.

Supporting colleague wellbeing during COVID-19

With up to 70% of colleagues working remotely for most of 2020, colleague wellbeing took on even more importance. The Colleague Wellbeing programme and app played a central role in supporting our colleagues' wellbeing through the challenges of the pandemic. 'Staying Healthy Together' was a way to support staff through the upheaval of their working year. Fronted by Karl Henry, it included activities to support Mental, Physical & Financial Wellbeing. In November, over 2,500 colleagues joined Karl, participating in a virtual Couch to 5k, and subsidised fitness classes were also available. We provided a Mental Health Awareness learning programme, including the rollout of Mental Health First Aid as well as subsidised and digitised GP services, live Zoom sessions and webinars. We also promoted the Employee Assistance Programme (EAP) which gives free access to confidential support by phone, web, live chat, or on the EAP app at any time. For those who wanted light relief, there was social entertainment; with live gigs, and virtual Bingo and Christmas fun for families.

• RISE Female Development Programme: delivered to 45 participants, supported by 17 qualified internal coaches offering 1:1 coaching to female colleagues.
• RISE Ethnic Minority Talent Programme: developed in partnership with Involve, this launched in late 2020 and is currently being delivered to 14 colleagues across the Group.
• External Programmes: in addition to our internal talent-development programmes, in 2020, our colleagues participated in external programmes from the Black Business Association (UK) and INvolve's 'Emerging Leaders' programme (Global).

Our primary target in this area is our 50:50 gender balance target for management and leadership appointments by end of 2021 including new entrants and promotions. In 2020, females represented 41% of Management and Leadership appointments (in H2, this was 47%).

Other initiatives / achievements in 2020:

• We partnered with Dublin City University to develop a Race Equality Guide for recruitment. This is the first in a series of resources we are helping to develop, so that workplaces in Ireland become equitable for all. We are also benchmarking our plans externally with 'Business in the Community's UK Race-at-Work Charter.
• We launched the Reasonable Accommodations' Guide, Passport and Webinar to assist colleagues and people managers understand when and why reasonable accommodations might be required. It is designed toremove or reduce barriers for colleagues who require workplace adjustments with their disability-related needs.

• We announced the first recipients of Bank of Ireland's Gold Sovereign Award for leaders in society who are actively promoting Inclusion and Diversity.
• Bank of Ireland won the Northern Ireland Equality & Diversity Award for 'Best Large Employer for Equality and Diversity in NI', Best LGBT+ Employee Resource Group at the Irish Gay and Lesbian Awards (GALAs), and was joint winner of the Champion Diversity & Inclusion Strategy at the Irish HR Champion Awards.

Colleague Wellbeing

In 2020, we focused on the evolution of the new Colleague Wellbeing programme (launched in late 2019), and this became increasingly important in the face of COVID-19. The programme focuses on three aspects of wellbeing: mental, physical and financial, with an added element of 'social wellbeing' introduced to respond to the challenges of pandemic restrictions.

In February 2020, we launched a bespoke Bank of Ireland Wellbeing App and Portal for colleagues, now with over 6,000 colleague registrations. This was supported by an Instagram page for community and networking which saw more than 2,000 members. The impact of the Colleague Wellbeing programme is measured through our regular 'Open View' surveys with 68% of colleagues feeling the organisation is sufficiently supporting their health and wellbeing in the current environment (November 2020).

Enhancing financial wellbeing

Bank of Ireland launched its Financial Wellbeing programme in 2019 to support consumer financial capability and confidence. It is now one of the three pillars of our RSB Strategy, with an increased focus on Financial Inclusion.

Key 2020 achievements

c.60K financial healthchecks completed

Financial Wellbeing Index at 66 (+5 vs Feb 2019)

Over 100,000 customer payment breaks provided

Enhanced Senior & Vulnerable supports for over 10k customers in response to COVID-19

Over 50% of Irish Secondary Schools participated in Youth Financial Literacy

Capability Inclusion

Conﬁdence

Through our Financial Wellbeing programme, we aim to empower people to thrive financially by enabling them to make better financial decisions for themselves and the people that matter most in their lives - their family, their business and in their community. We aim to build customers' capability and confidence when managing their finances and we use behaviourally-informed insights to drive positive outcomes for them.

We will be inclusive in our approach recognising the diverse financial challenges that many in society face. We will be the leading voice for financial wellbeing in Ireland.

As part of our Financial Wellbeing Strategy we have set out three priority areas:

• Financial capability - Enabling people to know and do more.
• Financial inclusion - Protecting our most vulnerable customers and those experiencing difficult circumstances.
• Financial confidence - Enabling people to make better financial decisions.

Financial capability

Financial Wellbeing Index

We regularly check the financial pulse in Ireland through our Financial Wellbeing Index. This is based on a national survey that asks questions across four key topics that relate to people's finances - saving, spending, borrowing and planning. The answers are combined into a score on a scale of 0-100 which indicates whether a respondent is 'struggling', 'stretched', 'managing' or 'thriving' when it comes to managing their finances.

Results of the most recent survey (October 2020) show that Ireland has a national average Financial Wellbeing score of 66 (+2 compared to February 2020 and +5 since the initial measurement in February 2019).

The research suggests that the COVID-19 pandemic continues to affect everyone financially, and crucially, it is likely to be widening the gap between those who have high financial wellbeing scores and those who don't. We have used the research insights to develop our Financial Wellbeing strategy further, and direct our focus to the areas most needed.

Financial literacy

Improving financial literacy is a central aspect of building financial capability and Bank of Ireland offers useful tools and education in this area:

• Online Financial Wellbeing Centre - provides advice, guidance and articles as well as a free online financial healthcheck for consumers and businesses so they can assess their own financial wellbeing. Users receive a financial wellbeing score and targeted financial wellbeing tips. In 2020, c.60,000 people completed the financial healthcheck.
• Financial Wellbeing Needs' Review - redesigned in 2020 with a more user-friendly and holistic approach to customers' personal and business finances; including their current financial needs and future goals. In 2020, almost 32,000 people and over 13,000 businesses' completed a Financial Needs Review with Bank of Ireland.
• Financial Wellbeing Coaches - provide expert advice through community groups and workplaces on the key financial wellbeing topics of saving, spending, borrowing and planning. Due to the pandemic these talks are now delivered through online webinars with over 350 delivered by our Coaches in 2020.

Youth Financial Wellbeing

We developed a Youth Financial Wellbeing programme that is available in-classroom for primary and secondary schools, and also for parents to introduce the concept of 'financial wellbeing' to their children at home. In this, we offer a range of supports for schools and parents to help them teach children and students about the importance of financial wellbeing.

Primary, supportssecondaryandthird-level

In primary schools, we have developed and launched a financial literacy initiative, 'Talking Cents'. This programme supports both parents and teachers to help children to understand the concept of money, its uses, and to learn about planning, spending and saving. The programme takes a child-centric approach and is split into six easy-to-follow money lessons. This programme is available for free to all 3,000 primary schools in Ireland.

CEO review (page 8)

Our strategy (page 13)

The VCU showed sensitive and caring support from the onset of the pandemic

We quickly mobilised the VCU to take swift action by prioritising support offered to the Bank's elderly and vulnerable customers. One human story is that of an elderly couple in a West of Ireland nursing home, whose only contact with the outside world was their niece visiting weekly after collecting their pension in cash at the Post Office. With no bank account, she paid bills and ran errands for them. Sadly, this could not continue when the nursing home went into lockdown and their niece had to cocoon due to a pre-existing condition. She had the foresight to call our Freephone number after hearing Bank of Ireland was offering COVID-19 supports; and we were pleased to set up a bank account for the elderly couple within days - allowing pensions to be diverted and the nursing home standing order to be paid. The elderly couple passed away within a short time of each other some months' after. We were again contacted by their niece and stepped in again, sorting all funeral bills and expenses in days. The VCU was humbled to get a letter of thanks for showing sensitivity and caring in their efforts to help at a difficult and traumatic time.

In secondary schools, some of the initiatives included:

• Virtual financial literacy - four online presentations delivered by Bank of Ireland's Youth Coordinators which focused on the six pillars of financial wellbeing: Spending and Saving; Earning and Income; Credit and Debt; Investing; Risk and Protection; and Financial Decision Making.
• School Bank - a bank run by students for students.
• Practical Workshops - two workshops focusing on CV and interview skills, and starting a new business.
• Money Smarts Programme - a free financial education programme comprising financial literacy content, workshops and events designed to provide students with financial skills. Since the pandemic began, this programme was delivered virtually by our Youth Coordinators, with 10,000 students taking part in the programme in 2020.
• Third Level - catering for changes in third-level students' learning habits, we launched a number of financial-wellbeing videos on YouTube, featuring key influencers.

Financial inclusion

Protecting our most vulnerable customers, including those experiencing difficult circumstances, is a key part of our financial wellbeing commitment. 2020 provided a challenge to everyone in society, but vulnerable customers faced even steeper challenges than others.

In 2019, we launched the Vulnerable Customer Unit (VCU) to protect and support the financial wellbeing of customers in vulnerable circumstances.

The VCU played a central part in our response to the pandemic, during which new dedicated supports were launched for vulnerable customers. Bank of Ireland announced a new service designed to help customers self-isolating during the COVID-19 pandemic - including older customers and those in difficult situations - access cash for groceries and other day-to-day expenses. This cocooning support included priority hours and a dedicated phone line for over 65s and carers.

Other initiatives introduced to support Financial Inclusion in 2020 included:

• JAM (Just A Minute) Card: the JAM Card© allows people to ask for a moment of patience in any situation they might need it; including in banks, shops, restaurants or on public transport. So far over 2,000 staff have been trained on the JAM Card which includes online Disability Awareness Training, and over 3,000 JAM Cards have been distributed across our network, with most people preferring to use the JAM Card App.
• Carers' Debit Card: the Carers' Debit Card provides a safe and secure way for trusted relatives and friends (or other designated carers) to manage the day-to-day living expenses of those who are in their care. So far over 620 customers have applied for the carers' card.

• Vulnerable Customer Resource Centre: provides a one-stop-shop for colleagues' dealing with a vulnerable customer, with useful information and advice, on key topics.
• Begin Together Fund: funding was awarded to eight Financial Wellbeing-specific projects, to groups such as: vulnerable women, migrants, disadvantaged young people and people with learning difficulties. These projects were hands-on and practically helped people to better understand and manage their personal finances. For more information on our Begin Together Fund (see page 40).

Financial confidence

Financial confidence is about enabling people to understand their financial position and make better financial decisions.

Fraud awareness campaign

Bank of Ireland's fraud awareness campaign highlighted tactics deployed by criminals when tricking customers into giving their banking details. The campaign included emails and letters to customers - reinforced through a social media campaign and extensive fraud advice onwww.bankofireland.com/security-zone.

Later in the year, a broadcast and print campaign was also developed.

The volume of smishing has increased significantly over some years, i.e. where fraudsters gain access to confidential information so as to move quickly to extract customers' funds. The Bank works very closely with national and international authorities to combat fraud, and to recover all or part of the stolen funds, allowing customers to be reimbursed.

COVID-19 supports

In response to the COVID-19 Pandemic, we introduced a comprehensive range of supports for customers which included:

• mortgage and personal loan payment breaks for customers whose income was impacted by the pandemic. With over 100,000 payment breaks granted to personal and business customers across Ireland and the UK; and
• quicker access to savings for accounts that required seven-day notice period for withdrawal.

Supporting the green transition

Combating climate change is one of our greatest challenges as a global society.

In 2015, the Paris Agreement set out the global ambition of keeping warming well below 2 degrees Celsius, with the support from nations across the globe. Now, we are looking forward to the 26th UN Convention of the Parties (COP26), with many countries, including Ireland and the UK, having set Net Zero by 2050 ambitions. Regulators and investors are increasingly engaging on this, challenging businesses to make similarly ambitious commitments.

At Bank of Ireland, we understand the important role we can play in tackling climate change. We are committed to working with our customers, colleagues and communities to support their transition to a resilient, Net Zero economy by 2050.

To put this commitment into action, over the coming years, the Group will implement a 5-point plan which lays out a clear framework under which we will build on our progress to date and will continue to play our role in supporting the transition to a low-carbon economy.

The Group has committed to supporting customers and businesses in their move to environmentally sustainable solutions, to setting science-based targets across its portfolios by 2022 and to build the Group's own resilience by further embedding climate-related impacts in decision making processes for the Group's operations, in lending and investment decisions and the advice provided to customers.

Our ﬁve point plan:

Set science-based targets

Set our portfolios and lending practices on a pathway aligned with the Paris Agreement and commit to setting science-based targets across our portfolios and operations by the end of 2022.

Provide sustainable financing

Support our customers through our core financing and advisory capabilities to enable them to transition to Net Zero and develop and deploy low carbon technologies.

3 4

Decarbonise our own operations

Make our own operations Net Zero by 2030.

Manage climate related risks

Build our own resilience byembedding climate-related impacts in our decision making processes for our own operations, in lending and investment decisions and the advice we give our customers.

Transparently report our progress

Commit to transparently report on the progress we are making towards our ambitions, and reporting in line with the recommendations of the Task Force on Climate-related Financial Disclosures.

CEO review (page 8) Our strategy (page 13) Risk management report (page 138)

Key 2020 achievements

5. Transparently report our progress

In 2020, we became a supporter of

the TCFD, following on from becoming a

signatory to the United Nations Environment

Programme Finance Initiative's (UNEP FI)

Principles of Responsible Banking (PRB) in

2019. This report sets out our action on

climate to date, and our plans for future

years.

Our TCFD report is presented in the following pages.

Set science based targets

In 2020, we took steps to further understand our carbon emissions across our material portfolios by calculating a high-level emissions baseline across our lending book. Our assessment found that our emissions footprint varies across the portfolio with relatively low contribution from energy-related industries and higher contributions from property, transport and agriculture. Understanding our baseline emissions will enable us to set meaningful Science Based Targets before the end of 2022. In 2021, we will complete our emissions baselining in line with the SBTi's methodology.

3. Decarbonise our own operations

In 2020 we achieved our commitment to switch to 100% renewable electricity in Ireland and the UK. We are also proud to have also achieved a 77% reduction in carbon emissions intensity (on a 2011 baseline) across our Scope 1 and 2 emissions.

Bank of Ireland not in scope of BoE Stress Test.

2. Provide sustainable financing

In June 2020, we added €1 billion

to the Sustainable Finance Fund

which we launched in 2019 and in

September 2020 we released our

Green Bond Framework, fully

aligned to the ICMA Green Bond

Principles.

4. Manage climate related risks

We have begun progressively embedding climate risk into the Group's key risk processes throughout 2020. We

continued to develop our own internal climate scenario analysis and stress testing capability in line with emerging industry methodologies and platforms through our membership of the UNEP FI TCFD Working Group. The timeline below shows where we are on this journey as we work towards the European Central Bank (ECB) Climate Stress Testing exercise set to take place in 2022.

EBA launched pilot sensitivity exercise on

climate risk in May	BoE climate stress-	ECB climate stress
2020 in which we are	testing exercise	testing exercise
participating	deadline1	deadline

2020	2021	2022
Joined UNEP FI	Performed High	Learning from peer bank experience
TCFD Working	Level Impact	of BoE stress test through UK working
Group	Assessment	group channels

TCFD report

Governance

Incorporating climate change into Board-level decision making.

Ultimate oversight of climate-related risks and opportunities is at Board-level. In 2020, this oversight has been provided in two ways:

• review and approval of our climate strategy, one of three pillars of our overall RSB strategy; and
• consideration of climate risk implications across our portfolios.

In December 2020, the Board approved our climate strategy, which sets out our climate ambition and five point plan for action on climate. The NGRB committee, of which our Group Chairman is Chair, has overall responsibility for climate as part of its remit in overseeing the Group's RSB Strategy. It also monitors the Group's progress towards implementing the UN Principles for Responsible Banking.

The Board Risk Committee has oversight of climate risk as a transverse risk driver, through the Group Risk Framework. The Group recognises that climate change can drive increased risk across key financial, non-financial and strategic risk types. Each key risk owner is therefore required to consider the effect climate change will drive for their risk and to integrate climate risk management within their individual risk frameworks. In September 2020, the Board Risk Committee was updated on the progressive integration of climate into risk management processes and considered an initial assessment of the impact and implications of climate risk across our credit portfolios, highlighting key areas of focus and sensitivity.

In order to adequately assess climate risks and opportunities, the Board draws on expertise both internally and externally. The CSO regularly updates the NGRB on climate-related matters. The Board will also be taking part in climate-change training in 2021. The Group Audit Committee reviews climate-related financial disclosures as part of its wider role in reviewing our Annual Report and Accounts.

The role of management committees

The Group Executive Committee (GEC) has overarching responsibility for delivery of the Group's RSB framework and strategy, of which climate change is one of three

RSB & Climate Executive OversightRSB & Climate Advisory Forums

Group Nomination, Governance & Responsible

Business Committee

Board Risk Committee

Group Executive Committee

Executive Level

Risk Committees

Responsible & Sustainable

Business Forum

pillars. Members of the GEC include the Chief Financial Officer (CFO) and Divisional Chief Executive Officers (CEOs) who have been actively involved in shaping the Group's Climate Strategy. Specific GEC responsibility for RSB (including climate) has been delegated to the CSO. The CRO has overseen the development of an overarching ESG Risk Framework (incorporating climate risk) which was approved by the executive level Group Risk Policy Committee.

The Responsible and Sustainable Business Forum (RSBF) is an advisory body to the CSO. It consists of senior business and functional executives from across the Group and enables the Group to have a coordinated approach to both delivery and reporting of the Group's RSB framework and strategy to the GEC. The RSB team is responsible for developing the Group's RSB framework and strategy and supporting its implementation and delivery in all divisions across the Group. The team sits within the Group Strategy function and reports to the CSO.

Climate risk responsibilities extend across the organisation, based on a 'three lines of defence' approach, in line with the Group Risk Framework.

As climate risk impacts through existing risk channels, it requires a matrix approach and integration across multiple risk frameworks. With co-ordination from Enterprise Risk Management, Risk Owners are integrating climate into existing risk control frameworks, policies and strategies. Within Group Risk, an ESG Risk

ESG Risk Working Group

Working Group has been established to bring together second-line risk management from across key risk types (with the RSB team) to support an integrated approach to ESG management and climate-related risks within the Group.

Incorporating climate change into performance

To encourage behaviour consistent with the Group's RSB Strategy and risk approach, performance indicators are linked to successfully achieving the Group's RSB-related objectives; including those associated with climate change. These will be considered in 2021, as part of our balanced scorecard performance assessments.

Our vision for future oversight

Going forward:

• the NGRB Committee will oversee the implementation of our climate change action plan, which includes our progress on setting and monitoring SBTs (and any other associated targets).
• Group Risk will report on climate-related risks; including KPIs and progress against targets, to the Board Risk Committee and Board through the following channels:
- - the risk identification process;
- - the internal capital adequacy assessment process (ICAAP); and
- - ESG and climate risk monitoring and impact assessments.

TCFD report (continued)

Strategy

As a signatory to the UN's Principles for Responsible Banking, we have committed to aligning our strategy and practice with the Paris Climate Agreement. In 2020, we defined our climate strategy, incorporating our five point plan.

Identifying key risks and opportunities to our business

We recognise that climatechange presents both risks andopportunities to our business model and strategy. We see these emerging through three key channels:

Business opportunities arising as economies and customers transition to a low-carbon economy;

2. Transition risks arising from potential disruptions and shifts associated with the transition to a low-carbon economy; and

Physical risks relating to potential financial implications from physical impacts of climate change which could disrupt the business, operations, or supply chains of the Bank and its customers.

The Group recognises that both climate risks and opportunities will impact on its business model over short, medium and long-term horizons and that the materiality of these impacts should be considered in the Group-wide Climate Strategy. The chronology of this process and how it aligns with our five point plan is set out on top of the next page.

The Group has already begun to provide sustainable products and we are seeing an increase in demand from our customers.

The Group has committed to supporting customers and businesses in their move to environmentally sustainable solutions, by setting science-based targets across its portfolios and to build the Group's own resilience by embedding climate-related impacts in decision making processes for the Group's operations, in lending and investment decisions and the advice provided to customers.

Further detail on transition and physical risks and the processes we are developing to manage these can be found in the Risk Management section on page 34.

Setting our portfolios and lending practices on a pathway aligned with the Paris Agreement

In developing the strategy, a core element has been determining the best approach to ensuring our portfolios and lending practices are on a pathway aligned with the Paris Agreement. We have carefully considered emerging frameworks and evolving market practices to ensure that the approach we adopt is fit for purpose and credible. For these reasons, the Group has elected to commit to setting Science-based Targets and using the methodology that has been developed for financial institutions as a framework to guide our actions. We believe this approach (to align our lending with the Paris Agreement) will inform both the development of new sustainable finance products as well as our approach to managing climate risks.

Evolving our products in line with risks and opportunities

To support our customers'

transition to a low-carboneconomy, the Group launched the Sustainable Finance Fund (the 'Fund') in July 2019 and in doing so became the first bank in Ireland to introduce a green mortgage. An additional €1 billion was added in June 2020 bringing the total amount of the Fund to €2 billion. The Fund supports our customers on their low carbon journey by encouraging and rewarding energy efficient homes; and SME and agri investment in energy efficiency.

Initiatives associated with the Fund include the Green Mortgage Fixed Interest Rate, which is a rate discount for borrowers who may be buying or building energy-efficient homes, and a green home-improvement loan for energy-efficiency improvements. We have also introduced lower interest rates for investment in energy saving improvements for businesses. There has been significant uptake with over €950 million drawdowns from the Fund to date.

In September 2020, we released our Green Bond Framework which enables the Group to issue Green Bonds, the proceeds of which are used to finance and / orrefinance projects across renewable energy; green buildings; and clean transportation. This framework is fully aligned to the ICMA Green Bond Principles.

Using scenario analysis to understand the resilience of our business

The Group is already on its way toassessing resilience to climate-related risks. During 2020 we commenced the development of our internal climate scenario analysis and stress testing capability, in line with emerging industry methodologies and platforms. Through our involvement in the UNEP FI TCFD Working Group and other industry fora, we have been deeply engaged with these methodologies and their development.

As these methodologies continue to develop, we will be progressively drawing on our scenario analysis to inform strategic planning; providing insight to our corporate strategy, business model and financial plans.

We have used outputs from initial methodology developments in 2020 to develop an initial impact assessment to inform considerations in formulating our climate strategy. This analysis identified that as a predominantly retail bank we are not heavily exposed to certain carbon-intensive industries. The table on the next page shows risks and opportunities we have identified to date across our material portfolios and the impact they have on the business. As part of our commitment to setting SBTs we are now exploring strategic levers linked to opportunities.

Further detail on how we have assessed climate-related risks using scenario analysis can be found on page 36.

CEO review (page 8) Our strategy (page 13) Risk management report (page 138)

Further detail on this risk identification process can be found on page 34.

Risk identiﬁcation and materiality assessment

Our first step has been to identify and quantify material risks to the business. In identifying these we have also begun to map these to opportunities. The table below shows the key risks and opportunities identified across our portfolios with the most material lending exposure, and the associated impacts to our business.

KPI and target setting on material portfolios

In line with Action 1 of our 5 point plan:

In 2021, we will begin to integrate climate KPIs into our RSB strategic planning framework with a view to making achievement of the strategy measurable. These KPIs will be in line with the approach taken by peers.

In line with the SBT Initiative, for key portfolios, respective targets, and time horizons will be set and progress tracked and monitored against interim targets.

We have begun to engage teams across our business to identify strategic levers andrisk mitigation activities.

Identiﬁcation of strategic levers and risk mitigation activities

In line with Action 4 ofour 5 point plan:

We will develop and disclose

on these levers leveraging the

KPI and target setting exercise

ensuring that we have the

tools and controls necessary

across the business to evolve

as the economic landscape

transforms.

Seizing strategic opportunities

In line with Action 2 of our 5 point plan:

We have already launched a number of Green Products linked to climate change (as outlined on page 32).

As we identify further strategic levers, our suite of products will evolve in line with market trends, ensuring that we are offering leading Green products to our customers.

Lending portfolio1	Transition risks & business impacts in the medium to longer term	Physical risks and business impacts in the longer term	Opportunities in the short to mid-term
Mortgages and property and construction ﬁnance Mortgages loan exposure: €45.0 billion Property and construction loan exposure: €8.6 billion	Potential reduction in certain property values due to increasing move towards higher energy eﬃciency in properties	Potential reduction in certain property values due to increasing risks of ﬂoods and other destructive weather events	Green Mortgages; Lending for Property Energy Eﬃciency Retroﬁts; Green Bonds
Consumer car ﬁnance Loan exposure: €2.7 billion	Potential reduction in residual values on petrol / diesel cars due to market shift to EV cars	Increased potential for damage to assets due to extreme weather events	Lending for transition to EV Cars; Aﬀordable EV leasing; Funding charging infrastructure; Green Bonds
Non-property SME & corporate lending Loan exposure: €19.9 billion	Increased carbon costs and ability of business models to transition to green economy	Risk to business and agriculture from increased weather disruptions, ﬂood propensity and coastal erosion	Funding for Infrastructure Projects; Green Business Loans for Energy Eﬃciency; Green Bonds

Taking action in our own operations

During 2020, we took a number of actions in order to reduce Bank energy consumption and climate-related impact within our operations. Key actions taken were:

• 100% Renewable Electricity for Ireland and the UK operations. We remain focused on reducing our kWh consumption of green energy to ensure we manage this finite resource responsibly.
• Upgrades to our Data Centre facilities to improve energy efficiency.
• LED lighting upgrades across our branches and IT Centres.
• Improved ability to track unplanned and unpredictable energy consumption.

We will seek to further embed climate selection criteria to reduce Scope 3 emissions across our supply chain.

Priorities for disclosure in 2021

• Progress against our five-point climate action plan.
• Associate our identified risks and opportunities with specific time horizons.
• Link our risks and opportunities to Key Performance Indicators.
• Develop our scenario analysis capabilities to further inform our risk management, opportunity identification and results' disclosures.

Excluded from the lending portfolio is consumer lending not related to car finance of €2.6 billion.

TCFD report (continued)

Risk management

We are committed to supporting our customers' green transition while building Group resilience. We do this by embedding climate-related impacts in key decision-making processes.

Climate change is a risk driver thatintensifies impact within existing risktypes. As such it is not a new risk and we are managing climate change already in a variety of ways as it emerges. However, recognising the increasing importance and impact that climate change will have on our business and on our customers, we have designated climate risk (as part of ESG) as a transverse risk driver and recognised it in our Group Risk Framework. This allows us to apply a climate risk lens across the management of all our key risk types.

As a systemic and persisting risk to the Group's business model, we have detailed how it will be managed across our key risk types in a dedicated ESG Risk Framework. This framework will develop and evolve over a medium-term timeframe, and guide deepening integration of ESG and climate risk management into existing key risk management processes over annual planning cycles.

Regulatory developments

During 2020, there has been growing regulatory focus and momentum on climate risk management. In the EU, the European Central Bank (ECB) released guidance on how banks should manage climate-related and environmental risks in November 2020 and confirmed that it will conduct a supervisory review of banks' practices and a climate stress test exercise in 2022. In the UK, the Prudential Regulation Authority (PRA) issued guidance on how banks should manage climate-related risk in 2019, with the expectation that this will be embedded by the end of 2021.

Integration of climate risks at a Group level

We define ESG risk as the risk to value arising from an Environmental (including climate change), Social or Governance event or condition that, if it occurs, could cause an actual or potential material negative impact on:

• the Group's earnings, franchise value or reputation;
• the long-term sustainability of our customer's operations and financial wellbeing; and

• the communities and environment in which we and our customers operate.

Furthermore, in line with the ECB's guidelines on climate-related and environmental risks and the recommendations of the TCFD, we define two key sub-categories of climate related risks and environmental risks that impact our business. These are the risks associated with the transition to a low-carbon economy and from climate-related physical events.

Transition risks are risks arising from potential disruptions and shifts associated with the transition to a low-carbon economy which include:

Policy and legal risks (e.g. imposition of a carbon tax, climate-related litigation).

2. Technology risks (e.g. old technology replaced by cleaner technology).
3. Market demand / supply risks (e.g. changing consumer behaviour).
4. Reputational risks (e.g. reduced client satisfaction of companies with a reputation of harming the climate).

CEO review (page 8)

Our strategy (page 13)

Divisional review (page 58) Risk management

report (page 138)

Physical risks are risks related to potential financial implications from physical phenomena and associated climate trends which disrupt operations, supply value chains or damage property. These include:

1. Chronic risks (e.g. long term trends - extreme weather events, chronic weather patterns, sea level rises, temperature changes, etc).

Acute risks (e.g events such as floods, storms, water stress, resource scarcity, biodiversity loss, pollution, fires, heatwaves or droughts).

Both transition and physical risks can affect the creditworthiness of our customers and the stability of our lending portfolios, as well as the value of assets in the medium to long term.

These climate risk drivers can intensify risks to the Group, impacting across existing key risk categories including, but not limited to:

• Credit risk: increased costs associated with physical and transition risks may impact financial soundness of households and businesses reducing their ability to service debt and impairing asset values, resulting in financial loss to the firm through higher probability of default and higher losses given default.
• Operational risk: physical risks could impact continuity of the Group's operations or operations of its material suppliers resulting in sustained disruption of the supply chain and ultimately our ability to service customers.
• Reputation risk: customer, community and regulatory expectations of the Group's contribution to support transition to lower-carbon economy resulting in loss of business.

Climate risk responsibilities extend throughout the organisation based on a 'three lines of defence' approach in line with the Group Risk Framework.

The Chief Strategy Officer, advised by the Responsible & Sustainable Business Forum, acts as sponsor to ensure that climate risk is integrated into the Group's risk management processes in the 'first line of defence'.

With central support from Enterprise Risk Management, second-line Risk Owners are progressively integrating climate risk considerations into key risk management policies and control frameworks.

Identification and assessment of climate-related risks

Guided by the Group's ESG Risk Framework we have begun progressively embedding climate risk into the Group's key risk processes.

Risk identification: On an ongoing basis through its risk management frameworks and processes, the Group identifies and assesses risks to which the Group is exposed, including climate risks. Climate risk is being integrated into this process as a driver of existing risk types and due to the longer timeframes associated with climate impacts, a short, medium and long-term horizon as laid out below is being applied to the consideration of impacts.

Our timeframe for climate-related risks

Short term: less than 3 years

Medium term: 3-5 years Long term: more than 5 years

The Internal Capital Adequacy Assessment Process: Consideration of climate risk will be embedded in key processes where investment decisions are made and the level of climate risk being taken is material. The Internal Capital Adequacy Assessment Process (ICAAP) is a key planning process for the Group and facilitates the Board and senior management in identifying, measuringand monitoring the Group's risks and ensures that the Group holds adequate capital to support its risk profile. For further information on ICAAP refer to page 185. Work is ongoing to integrate climate considerations into ICAAP, particularly through scenario planning and stress tests (see page 36).

Risk measurement and monitoring: Methodologies are in development to allow climate risk to be actively analysed, measured and monitored by the Group in a similar manner to other key risk types.

These methodologies are being developed collaboratively with peer institutions by engagement in industry initiatives (such as the UNEP FI TCFD Working Group, climate-focused European Banking Federation Working Groups and the EBA Climate Sensitivity Pilot) with a view to working towards the 2022 ECB climate stress testing exercise.

Examples of potential climate KPIs (Key Performance Indicators) and KRIs (Key Risk Indicators) under consideration for monitoring purposes include:

• exposure to industry sectors and/or geographies considered highly sensitive to climate-related risks;
• the carbon emission footprint of lending portfolios;
• levels of sustainable financing; and
• scenario analysis outputs.

Further detail on how we are defining metrics and targets can be found in the Metrics and Targets section on page 38.

Risk appetite: Aligned with our strategy to align our portfolios and lending practices on a pathway to the Paris Agreement, Risk Appetite metrics will be set in due course consistent with the achievement of our science-based targets across our portfolios and operations.

Assessing climate risks across our portfolios

During 2020, we carried out an initial scoping assessment to understand potential climate risk impacts across our lending portfolios and to determine a baseline position, by leveraging emerging methodologies available at the time:

1. We assessed transition risks across our corporate and SME lending books, with a heatmap based on Transition Check, a modelling framework developed by Oliver Wyman. The transition heatmap was co-created with input from 39 banks (including BoI) through the UNEP FI TCFD program and we used it to classify our lending books at a granular sub-sector level. This exercise generated insightsinto how climate-sensitive sectors may be impacted during transition to a low carbon economy.

2. We analysed the main physical and transition risks specific to our UK Mortgage portfolio with the EnviroTech company Landmark (see case study below).
3. Informed by this and other supporting analysis, we assessed physical and transition risks to portfolios identified as material: property & construction, residential mortgages and car finance lending portfolios.
4. We assessed the baseline carbon emissions of our lending portfolios to understand our emissions impact and exposure.

This assessment of the Group's lending portfolios identified emerging key focus areas such as residential and commercial property lending and car finance. It also highlighted that the Group's direct exposure to fossil fuels and to commercial lending segments with high emissions is relatively low (with the exception of the agricultural sector, which due to its specific challenges will require broader support and in which we will play an active role). On a case-by-case basis, exposure to climate risk will vary across sectors for commercial customers and transactions. To mitigate this risk, enhanced ESG procedures have been incorporated into the Corporate Banking credit policy and credit framework in February 2021, and are being rolled out in H1 2021.

Landmark mortgage assessment: a deep-dive on our initial climate risk analysis of the UK Mortgage Lending portfolio

In 2020, in our initial climate risk scoping exercise we undertook analysis on the UK residential mortgage portfolio which makes up 28% of group lending. Working with Landmark, an EnviroTech innovator with access to detailed property information, we identified and analysed the main physical and transition risks specific to our UK mortgage portfolio.

See table below for a summary of the scenarios used to examine this physical risk.

As this capability is established and further

developed, the assessment will be run on

an ongoing basis to inform scenario

planning and monitoring of the portfolio

The assessment focused on identifying and analysing the key physical risks and transition risks at a property level. Key physical risks identified and analysed were the risk that certain properties could reduce in value due to frequent flooding, coastal erosion, or subsidence, with the geographic data accurate to a five metre radius around an individual property.

composition to ensure no undue

concentrations.

During 2021, we plan to further develop

our property capabilities to undertake

similar risk assessments for Commercial

Real Estate and our RoI Mortgage portfolio

The key transition risk identified was the potential loss in value of certain properties due to lagging energy efficiency or owners required to retrofit, incurring large costs. Portfolio impacts from physical risks and energy efficiency deficiencies were identified as two potential key risk measurement metrics.

as data availability in these lending sectors

develops.

An indicative aggregate portfolio impact of this transition risk was estimated, using an assumed cost to upgrade all properties to a future level of acceptable energy-efficiency. This was translated from a property specific impact on Loan to Value (LTV). Portfolio impacts from the physical risk drivers was also assessed under four scenarios and the likelihood of individual properties being uninhabitable or uninsurable.

Increase in
#	RCP1	Emissions scenario illustration	temp by 2100
1	RCP2.6	Signiﬁcant global reduction	1.4 - 3.2°C
2	RCP4.0	All countries implement Paris Accord	2.1 - 4.2°C
3	RCP6.0	All signatories implement Paris Accord	2.5 - 4.7°C
4	RCP8.5	Business as usual	3.4 - 6.2°C

Priorities for disclosure in 2021

Provide ongoing updates on the:

• integration of climate risk into key risk management processes;
• development of our climate risk mitigation activities and disclose these alongside our identified risks; and
• development of our scenario analysis capabilities to further inform our risk management, strategic planning and opportunity identification.

Representative Concentration Pathways (RCP) for greenhouse gas concentration trajectories adopted by the IPCC (Intergovernmental Panel on Climate Change). The pathways describe different climate futures, all of which are considered possible depending on the volume of greenhouse gases (GHG) emitted in the years to come.

TCFD report (continued)

Metrics and targets

Climate-related metrics and targets across our portfolios

The Group has committed to aligning our lending portfolios

on a pathway to the Paris Agreement and reducing the carbon emissions that we finance.

This portfolio alignment will additionally build resilience against climate-related risks as we progressively embed climate-related considerations into our lending strategies.

In 2020, we established indicative baseline emissions for our total loan portfolio based on the Partnership for Carbon Accounting Financials (PCAF) methodology, and in 2021 we will refine these baseline figures to more accurately assess our wider impact across our sub-portfolios.

Informed by our initial impact assessments in 2020 based on developing UNEP FI methodologies, the Group identified activities and assets exposed toclimate-related risks and has begun to develop measures of potential financial risk impacts. Informed by these analyses, the Group loan book breakdown table on page 39 shows the current composition of our loan portfolio and the percentage of lending to sectors the Group considers most sensitive to climate change. In terms of portfolio mix, the Group has minimal direct exposure to fossil fuels in energy and extraction, and as a predominantly retail lending bank, c.70% of our customer lending is in residential and commercial property and car finance. This sees the key risk mitigation strategy relating to supporting our customers' transition to the green economy with sustainable financing to improve the energy efficiency of their properties, vehicles and business operations and adapting to climate change through, for example, flood protection measures at a property or community level.

A key element of the Group's RSB commitments is the publication andachievement of targets. In 2021, we will begin to integrate climate KPIs into our RSB strategic planning framework with a view to making achievement of the strategy measurable. In line with the Science Based Targets Initiative, for key portfolios, respective targets, and time horizons will be set and progress tracked and monitored against interim targets. These activities form the foundation of future risk analysis and target setting activities, leading to mitigating activities to help reduce risks to the Group in the future, as well as to improve the Group's impact on the external environment. An initial set of metrics for climate-related risks is in development to support the setting of relevant targets and controls to track progress against our strategy and to allow for related disclosure. All metrics and targets will be developed in line with the Science Based Targets methodology to ensure consistency, accountability and achievability, and will be cascaded down to the Business Units.

CEO review (page 8)

Our strategy (page 13)

With c.70% of customer lending to mortgages, property lending and car finance, the Group has negligible direct lending exposure to fossil fuels and limited exposure to high carbon-intensive industries.

Climate-related metrics and targets in our operations

In May 2018, we signed up to

Business in the Community Ireland's (BITCI) Low Carbon Pledge and committed to reducing our carbon emissions intensity (Scope 1 and 2) by 50% by 2030. We have now met this target having achieved a 77% reduction in carbon emissions intensity (on a 2011 baseline), using m2 as intensity metric (in absolute terms we have achieved an 82% carbon emissions reduction) asillustrated in the graph below. As part of our new action plan, we have now committed to making our own operations Net Zero by 2030.

We recognise that the climate impact of our operations goes beyond carbon emissions from fuel consumption and electricity purchased. Therefore, we have measured our Scope 3 emissions from our own operations in 2020, which is laid out in the table below.

Priorities for disclosure in 2021

• Develop a suite of metrics and KPIs to further inform our climate strategy.
• Accurately capture our baseline emissions across our portfolios.
• Update on our progress towards setting SBTs, which we plan to set by no later than the end of 2022.
• Begin to assess our performance against the targets that we set.

TCO2/M2 Reduction 77%

Bank of Ireland 2011 - 2020

0.1289 0.1349

0.1280

0.1086

0.1026

0.0923 0.0876

0.0787 0.0785

0.0265

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Metric Unit	2020	2019
Scope 1 Fuel consumption tCO2e	5,579	6,100
Scope 2 Purchased electricity (market based)tCO2e	659	12,429
Scope 3 (material for own operations as set out below) tCO2e	2,203	5,056
- Business Travel tCO2e	1,954	4,818
- Waste tCO2e	32	52
- Purchased Goods & Services tCO2e	217	186
% of electricity renewably sourced %	93	-

Culture

The Group has a multi-year Culture Transformation Plan in place which has at its heart our purpose and values. Progress against this plan is measured on an ongoing basis through our Culture Embedding Index and Engagement Index in our Open View colleague surveys. In addition, a specific set of other metrics associated with each of our values are tracked in a Culture Transformation Dashboard reported up to Board level (see page 14 for more detail).

Business ethics

The Code of Conduct sets out the high standard that we set ourselves when we deal with others, both within and outside the Bank of Ireland Group, and in our personal financial dealings. It also includes details of what actions should be taken if people have concerns about behaviours and practices that are in conflict with our culture and values. The code is supported by other policies such as our Speak Up Policy and our Anti-bribery and corruption policy. All colleagues complete annual mandatory training and assessment on all of these aspects.

Financial crime

Protecting the financial system from financial crime risks including money laundering, terrorist financing, and bribery and corruption is of intrinsic importance to the Group. The Group Anti-Money Laundering Policy, Group Sanctions and CFT policy and the Group Anti-bribery and corruption policy among others all support this objective. All colleagues complete annual mandatory training and assessment in relation to key areas.

Sourcing responsibly

Bank of Ireland has a Code of Supplier Responsibility that applies to all of our suppliers and builds on our internal values of accountability, customer focus, agility and teamwork, and sets out the key social, ethical and environmental standards that we want our suppliers toachieve. This Code is supported by our Group Procurement Policy and ongoing supplier due diligence activity which assesses supplier behaviours and capabilities across a wide range of sustainable business measures.

Community investment

We aligned many of the Group's philanthropic activities under one umbrella - Begin Together, a three-year, €4 million investment programme designed to provide investment for Community-focused initiatives across the island of Ireland, and for causes that matter to our colleagues across the Group. February saw the launch of the flagship Community Fund, working with the Community Foundation for Ireland, and in August we awarded grants to 116 inspiring projects helping financial, mental and physical wellbeing. Our colleagues nominated support charities and community groups where they live and work, and over 600 groups received donations from the Fund for Colleagues. The Begin Together Awards recognised Ireland's most enterprising towns, with a virtual celebration for those who worked so hard to protect their communities from the impact of COVID-19. The Begin Together Arts Fund launched in September, and 36 arts projects from all genres were funded, enabling artists to create in ways that help their communities deal with the effects of COVID-19.

Health and safety

The Group's Health and Safety Policy guides our approach in this area ensuring the safety of our colleagues and customers by carefully planning our operations, identifying potential hazards and managing the associated risks at every stage. Group-wide risk assessments, auditing, as well as mandatory training supported this. The Group maintains an existing OHSAS 18001 accreditation covering elements of the business and is working towards extending this scope and migrating to the new ISO 45001 Standard.

Human rights

A number of policies and initiatives guide our approach in this area including our Code of Supplier Responsibility, our Modern Slavery Statement and our VCU (see page 27 for more details). We are also active in identifying possible activity linked to human trafficking through our Financial Crime Compliance unit. We have put in place Human Trafficking Risk Awareness training and are members of the Traffik Analysis Hub, a global data hub for intelligence on human trafficking across all industries and sectors.

Cyber security

The Group invests in and implements a range of organisational and technological safeguards to enable a strong and resilient organisation focused on protecting our customers. The Group Information Security function is led by the Chief Information Security Officer and a three-year Board-approved cyber strategy is in place to deliver an industry leading approach. External audits of cyber security infrastructure are also carried out. The strategy is supported by Group-wide Information Security Policies (aligned to the National Institute of Standards and Technology) and security awareness training is mandatory for all colleagues.

The 'Security Zone' page on our website supports customer security awareness including fraud alerts and information on how to report suspicious online activity, emails or phone calls. In 2020, this was supported by a specific fraud awareness campaign as part our Financial Wellbeing strategy (page 26).

Data Protection

We are fully committed to keeping customer and colleague information private. Our Data Privacy Notices explains how we hold and use personal information and explains people's rights in relation to the collection of personal information and how they can exercise those rights.

Non-financial information statement

We comply with the European Union (disclosure of non-financial and diversity information by certain large undertakings and groups) Regulations 2017.

CEO review (page 8)

Our strategy (page 13)

Risk management (page 34)

The purpose of this table is to assist stakeholders in understanding our policies and management of key non-financial matters.

Environmental matters

Policies

• Group environment policy (ISO 14001)1
• Group energy policy (ISO 50001)1

Risks & management

• Environment and Energy (page 28)

Non-ﬁnancial key performance indicators

• Key highlights (page 3)

Business model

Risks & management

• Divisional review (page 58)

Diversity report

Policies

• Board diversity policy1

Risks & management

• Corporate Governance statement (page 72)

Bribery and corruption

Policies

Risks & management

• Code of conduct (page 40)
• Anti-bribery and corruption (page 40)
• Group anti-money laundering (page 40)
• Conduct risk (page 178)

Policies followed, due diligence and outcome

Risks & management

• Risk management framework

•	Group code of conduct1	•	Inclusion and diversity policy
•	Speak up policy	•	Group code of conduct1
•	Group anti-money laundering policy	•	Equal opportunities policy
•	Group anti-bribery and corruption	•	Group health and safety policy
policy	•	Employee data privacy
•	Group vulnerable Customers policy
•	Group learning policy

Description of principal risks and impact of business activity

Risks & management

• Key risk types (page 46)
• Principal risks and uncertainties (page 135)

Social and employee matters

Policies

Risks & management

• Vulnerable customers (page 27)
• Inclusion and diversity (page 25)

• Learning (page 24)
• Wellbeing (page 25)
• Communities (page 40)
• People risk (page 136)

Respect for human rights

Policies

• Modern slavery and human trafficking statement1
• Group procurement policy
• Group data protection and privacy policy

Risks & management

• Information security (page 40)
• Operational risk (page 46)
• Human traﬃcking (page 40)

These policies are available on the Group's website. All other policies listed are not published externally.

Governance in action

Leadership and company purpose

Through a year of significant challenge in the face of a global pandemic, the role of corporate governance in ensuring effective decision-making has been of paramount importance.

The Board and the Group Executive Committee (GEC) responded to the pandemic with a clear focus on the Group's purpose, to enable our customers, colleagues and communities to thrive and it remained at the forefront of all of our actions. In the Report's Governance Section on page 72 our Chairman reports on the key areas of Board focus during 2020 in response to the pandemic.

The Group's Purpose and its values are the cornerstone of its culture, providing the Board and GEC with a clear foundation upon which key decisions are taken. The importance of listening to and understanding the perspectives of our stakeholders is greater now than ever and, during 2020, the Board has enhanced the ways in which it has engaged with the Group's stakeholders in order to further inform its decisions. Information on some of the ways in which the Group approaches stakeholder engagement can be found on page 88.

The Board is collectively responsible for the long-term sustainable success of the Group and ensuring there is a strong corporate structure in place. It provides leadership of the Group, setting strategic aims, within the boundaries of the risk appetite and a framework of prudent and effective controls. The CEO is supported by GEC which is composed of the Executive Directors and other senior executives who assist the CEO in leading the Group's day to day operations and in the execution of the Board-approved Group Strategy in line with the Group's Purpose. Details of the GEC can be found on page 75.

The Board is responsible for corporate governance, encompassing leadership, direction and control of the Group. The Group's corporate governance standards are implemented by way of a comprehensive and coherent suite of frameworks, policies, procedures and standards covering corporate governance as well as business and financial reporting, and risk management activities. These are supported by a strong tone from the top on expected culture and values.

The Board is supported by a number of committees:

Nomination, Governance and Responsible Business Committee

Patrick Kennedy (Chair)

Responsible for leading the process for Board, Executive and key subsidiary Board appointments, renewals and succession planning. It is also responsible for corporate governance policies and practice, providing oversight of the Group's RSB Strategy and monitoring the Group's implementation of the UN Principles for Responsible Banking.

Group Remuneration Committee Steve Pateman (Chair)

Responsible for setting policy on the remuneration of the Chairman and senior management (including Executive Directors) and approving specific remuneration packages for the Chairman, each of the Executive Directors, the Group Secretary, and those Senior Executives who report directly to the Group CEO.

Group Audit Committee Evelyn Bourke (Chair)

Responsible for monitoring the quality and integrity of accounting policies, the effectiveness of the Group's internal control framework and financial reporting systems, and the independence and performance of the internal and external auditors.

Board Risk Committee Richard Goulding (Chair)

Responsible for monitoring risk governance and assisting the Board in discharging its responsibilities by ensuring that risks are properly identified, reported, assessed, and properly controlled; and that strategy is informed by and aligned with the Group's risk appetite.

Group Transformation Oversight Committee

Ian Buchanan (Chair)

Responsible for overseeing, supporting, and challenging the actions being taken by Management in relation to the execution of the Group's strategic transformation, focused on technology related change.

Governance in action (continued)

The Board is committed to upholding high standards and seeking continual enhancements and its corporate governance standards are overseen by the Nomination, Governance and Responsible Business Committee (NGRB), which reports regularly to the Board. The variedcorporate governance requirements that apply to the Group are detailed on page 72.

As a company listed on both the London and Euronext Dublin stock exchanges, the Group is required to report toshareholders on how it applies the main principles of the UK Corporate Governance Code (UK Code). The table below outlines where you can find the relevant disclosures throughout this Report.

Board Leadership and Company Purpose

A successful company is led by an eﬀective and entrepreneurial Board, whose role is to promote the long-term sustainable success of the company, generating value for shareholders and contributing to wider society.

• Board composition and succession (page 82)
• Strategic Report (page 3)The Board should establish the company's purpose, values and strategy, and satisfy itself that these and its culture are aligned. All directors must act with integrity, lead by example and promote the desired culture.

• Chairman's introduction (page 72)
• Strategic Report - Chairman's review (page 4)
• Governance in action (page 42)
• Assessing the eﬀectiveness of the Board (page 84)The Board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them. The board should also establish a framework of prudent and eﬀective controls, which enable risk to be assessed and managed.

• Board's oversight of risk management and internal control systems (page 90)
• Report of the Group Audit Committee (page 103)

• Report of the Board Risk Committee (page 110)In order for the company to meet its responsibilities to shareholders and stakeholders, the board should ensure eﬀective engagement with, and encourage participation from, these parties.

• Stakeholder engagement (page 88)
• Strategic Report (enabling customers, colleagues and communities to thrive) (page 20)
The Board should ensure that workforce policies and practices are consistent with the company's values and support its long-term sustainable success. The workforce should be able to raise any matters of concern.
• Stakeholder engagement - colleagues (page 89)

• Strategic Report (business ethics, enabling customers, colleagues to thrive) (page 40)
• Report of the Nomination, Governance and Responsible Business Committee (page 95)

Division of Responsibilities

UK Code Principles

Section

The Chairman leads the Board and is responsible for its overall eﬀectiveness in directing the company. They should demonstrate objective judgement throughout their tenure and promote a culture of openness and debate. In addition, the chair facilitates constructive Board relations and the eﬀective contribution of all Non-Executive Directors (NEDs), and ensures that directors receive accurate, timely and clear information.

• Roles and responsibilities (page 87)
• Chairman's tenure (page 81)
• Board committees (pages 82)
• Chairman (page 85)
• Individual Directors (page 85)The Board should include an appropriate combination of Executive and Non-Executive (and, in particular, Independent Non-Executive) Directors, such that no one individual or small group of individuals dominates the Board's decision-making. There should be a clear division of responsibilities between the leadership of the Board and the executive leadership of the company's business.

• Board composition and succession (page 82)
• Roles and responsibilities (page 87)NEDs should have suﬃcient time to meet their board responsibilities. They should provide constructive challenge, strategic guidance, oﬀer specialist advice and hold management to account.

• Assessing the eﬀectiveness of the Board (page 84)
• Roles and responsibilities (page 87)
• Time commitment (page 91)The Board, supported by the company secretary, should ensure that it has the policies, processes, information, time and resources it needs in order to function eﬀectively and eﬃciently.

• Roles and Responsibilities (page 87)
• Role of the Board (page 87)
• Report of the Nomination, Governance and Responsible Business Committee (page 95)

UK Code Principles

Section

Governance in action (continued)

Composition, Succession and Evaluation

Appointments to the Board should be subject to a formal, rigorous and transparent procedure, and an eﬀective succession plan should be maintained for Board and senior management. Both appointments and succession plans should be based on merit and objective criteria and, within this context, should promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.

• Board changes in 2020 (page 73)
• External support (page 83)
• Diversity (page 83)
• Board composition and succession (page 82)

• Report of the Nomination, Governance and
Responsible Business Committee (page 95)The Board and its committees should have a combination of skills, experience and knowledge. Consideration should be given to the length of service of the Board as a whole and membership regularly refreshed.

• Your Board (Directors' Bios) (page 77)
• Chairman's introduction (page 72)
• Chairman's tenure (page 81)
• Board composition and succession (page 82)

• Report of the Nomination, Governance and
Responsible Business Committee (page 95)
• Diversity (page 83)Annual evaluation of the Board should consider its composition, diversity and how eﬀectively members work together to achieve objectives. Individual evaluation should demonstrate whether each director continues to contribute eﬀectively.

• Assessing the eﬀectiveness of the Board (page 84)

Audit, Risk & Internal Control

The Board should establish formal and transparent policies and procedures to ensure the independence and eﬀectiveness of internal and external audit functions and satisfy itself on the integrity of ﬁnancial and narrative statements.

• Board oversight of risk management and internal control systems (page 90)
• Report of the Group Audit Committee (page 103)The Board should present a fair, balanced and understandable assessment of the company's position and prospects.
• Chairman's review, Strategic Report (page 3)

• Role of the Board (page 87)
• Board oversight of risk management and internal control systems (page 90)

The Board should establish procedures to manage risk, oversee the internal control framework, and determine the nature and extent of the principal risks the company is willing to take in order to achieve its long-term strategic objectives.

• Board oversight of risk management and internal control systems (page 90)
• Report of the Board Risk Committee (page 110)

Remuneration1

UK Code Principles

Section

Remuneration policies and practices should be designed to support strategy and promote long-term sustainable success. Executive remuneration should be aligned to company purpose and values and be clearly linked to the successful delivery of the company's long-term strategy.

• Report of the Group Remuneration Committee (page 100)
• Remuneration Report (page 121)A formal and transparent procedure for developing policy on Executive remuneration and determining director and senior management remuneration should be established. No Director should be involved in deciding their own remuneration outcome.

• Report of the Group Remuneration Committee (page 100)
• Remuneration Report (page 121)Directors should exercise independent judgement and discretion when authorising remuneration outcomes, taking account of company and individual performance, and wider circumstances.

• Report of the Group Remuneration Committee (page 100)
• Remuneration Report (page 121)

UK Code Principles

Section

UK Code Principles

Section

Some of the Remuneration provisions of the Code (including provisions 36 and 37) are not currently applicable to the Group, as the Group does not operate variable incentive arrangements, other than a small number of limited commission schemes.

Risk review

We believe great risk management leads to great customer outcomes. We follow an integrated approach to risk management. This means that all material classes of risk are considered. Most importantly our overall business strategy and remuneration practices are aligned to our risk and capital management strategies.

The environment within which the Group operates continues to be subject to considerable change, most notably as a result of COVID-19. The Group continues to monitor impacts on the risk profile.

A strong risk culture is promoted throughout the Group which encompasses the general awareness, attitude and behaviour of everyone in the Group.

Risk appetite defines the amount and type of risk we are prepared to accept in pursuit of our financial objectives. It forms a boundary condition to strategy by clarifying what is and is not acceptable. Based on the risk appetite approved by the Board, we set out an approach to risk in order to:

(i) protect the long-term Group franchise;
(ii) ensure financial stability; and
(iii) maintain capital levels.

Our risk principles mean that risks may be accepted at transaction, portfolio and Group level if:

• they are aligned with our defined risk appetite and risk identity;
• the risks represent an attractive investment from a risk-return perspective;
• we have the resources and skills to analyse and manage the risks;
• appropriate risk assessment, governance and procedures have been observed; and
• stress and scenario tests around the risks exist, where appropriate, and are satisfactory.

Group risk management framework - key components

The Group risk management framework is aimed at all key decision makers who are involved in risk taking, capital management, finance or strategy, including business units and Group functions. It ensures that risks are managed and reported in a consistent manner throughout the Group. It outlines our formal governance process for risk,our framework for setting risk appetite and our approach to risk identification, assessment, measurement, management and reporting and is underpinned by strong risk governance and a robust risk culture.

The Board of Directors is responsible for ensuring that an appropriate system of internal control is maintained. This is achieved through a risk governance structure designed to facilitate the reporting and escalation of risk concerns from business units and risk functions upwards to the Board and its appointed committees and sub-committees, and conveying approved risk management policies and decisions to business units. Individual responsibility is a key tenet of risk management in the Group and we are all accountable for our actions.

Principal risks and uncertainties

Principal risks and uncertainties could impact on our ability to deliver our strategic plans and ambitions. We consider risks that arise from the impact of external market shocks, geopolitical event risks or other emerging risks as well as key risk types which could have a material impact on earnings, capital adequacy and / or on our ability to trade in the future.

Risk review (continued)

Operational

Risk Management Process

Risk strategy and appetite

Risk culture

Key risk types

Business and strategic risk

This risk includes all risks that might impact our current business model and sustainability of our future strategy. It includes; the threat from ﬁntechs, digital / technological changes, Brexit, macroeconomic and regional geopolitical uncertainty, transformation, climate and people risks.

institutions, institutions.

sovereigns,andstate

Funding and liquidity risk

The risk that we have insuﬃcient ﬁnancial resources to meet commitments when they fall due.

with business continuity, data quality and reliability, fraud, information security and cyber risk, insurable, legal & contractual, model, payments, sourcing, unauthorised trading and business processes.

Pension risk

Life insurance risk

Conduct risk

The risk that we behave in a negligent or inappropriate manner that leads to adverse outcomes for customers, for example selling a customer a product that does not meet their needs, or failing to respond to a customer complaint promptly or eﬀectively.

The risk of unexpected variations in the amount and timing of insurance claims due to, for example, changing customer mortality, life expectancy, health, and behaviour characteristics.

The risk that assets in principal deﬁned beneﬁt pension schemes are inadequate or fail to generate returns suﬃcient to meet the schemes' liabilities.

Regulatory risk

Market risk

The risk of loss arising from movements in interest rates, foreign exchange (FX) rates or other market prices.

The risk that we fail to meet new / existing regulatory / legislative requirements and deadlines or if we fail to embed regulatory requirements into our processes.

Credit risk

Reputation risk

The risk of loss resulting from a counterparty failing to meet their contractual obligations to us arising in respect of loans or other ﬁnancial transactions. The risk arises from loans and advances to customers, in addition to our transactions with other ﬁnancial

Operational risk

The risk of loss resulting from inadequate or failed internal processes, people and systems or from external events which can lead to disruption of services to customers, ﬁnancial loss, and damage to our reputation. Included are risks associated

The risk to earnings or the value of our franchise value arising from adverse perception of our image on the part of customers, suppliers, counterparties, shareholders, investors, staﬀ, legislators, regulators or partners.

Business and strategic

Conduct

Credit

Funding and liquidity

Life insurance

Market

Pension

Regulatory

Reputation

Risk identiﬁcation and materiality assessment

Risk analysis and measurement

Risk monitoring and reporting

Risk governance

Capital adequacy

Capital adequacy is having a suﬃcient level or composition of capital to support normal business activities and to meet regulatory capital requirements both under normal operating environments or stressed conditions. Capital adequacy is not a risk type in itself but owing to the nature of capital as a critical risk mitigant is a key determinant of the overall Group risk appetite.

Financial Review

2020 financial results

The Group made an underlying loss before tax of €374 million in 2020 (2019: €758 million underlying profit before tax). Underlying losses are driven primarily by lower operating income of €2,620 million and higher net credit losses of €1,133 million.

Summary consolidated income statement on an underlying basis

These financial results are presented on an Underlying basis. Underlying excludes non-core items which are those items that the Group believes obscure the underlying performance trends in the business (page 52).

Loss before tax of €760 million was reported by the Group for 2020 (2019: €645 million profit before tax).

Operating proﬁt before net impairment losses on ﬁnancial instruments for 2020 of €763 million is €171 million lower than 2019 reflecting a reduction in operating income of €216 million, partially offset by a reduction in operating expenses (before levies and regulatory charges and impairment of intangible assets and goodwill) of €65 million.

Net impairment losses on financial instruments for 2020 of €1,133 million are €918 million higher than 2019. Lower operating income and the increased net impairment losses are the key drivers of the underlying loss before tax for the year of €374 million compared to an underlying profit before tax of €758 million in 2019.

Operating income (net of insurance claims) has decreased by €216 million compared to 2019 primarily due to:

• net interest income of €2,115 million for 2020 is €52 million lower than 2019, primarily reflecting the lower interest rate environment, reduced yields on liquid assets and structural hedges partially offset by the benefit of reduced liability costs.

• a reduction in net other income of €164 million due to lower business income resulting from reduced economic activity as well as the negative impact of volatile equity markets and interest rates on other valuation items.

Table	2020 €m	Restated1 2019 €m
Net interest income 1	2,115	2,167
Net other income 2	505	669
Operating income (net of insurance claims)	2,620	2,836
Operating expenses (before levies and regulatory charges and impairment of intangible assets and goodwill) 3	(1,720)	(1,785)
Levies and regulatory charges 3	(125)	(117)
Impairment of intangible assets and goodwill 3	(12)	-
Operating proﬁt before net impairment losses on ﬁnancial instruments	763	934
Net impairment losses on ﬁnancial instruments 4	(1,133)	(215)
Share of results of associates and joint ventures (after tax)	(4)	39
Underlying (loss) / proﬁt before tax	(374)	758
Non-core items 5	(386)	(113)
(Loss) / proﬁt before tax	(760)	645
Tax credit / (charge)	53	(197)
(Loss) / proﬁt for the year	(707)	448

Operating expenses before levies and regulatory charges and impairment of intangible assets and goodwill of €1,720 are €65 million or 4% lower than 2019 as the Group continued to focus on reducing its operational costs while maintaining its investment in regulatory compliance, technology and business growth.

Comparative figures have been restated to reflect the impact of the voluntary change in the Group's accounting policy for interest income and expense (see note 64 for further information) which on an underlying basis has resulted in an increase of €17 million in net interest income and a reduction of €17 million in net other income for 2019. There is no change to 2019 underlying operating income (net of insurance claims) or the 2019 underlying profit before tax arising from the restatement. In addition, the restatement has not resulted in any change to the 2019 net interest margin but has resulted in a two basis point increase to the gross yield on liquid assets and on a one basis point increase to the 2019 average cost of funds.

The Group has incurred incremental expenditure of €25 million in managing its response to the COVID-19 pandemic.

A further €410 million (2019: €263 million) was invested in the Group's transformation investment programme in 2020, of which €117 million is capitalised on the balance sheet (2019: €100 million), €56 million (2019: €108 million) charged to operating expenses on the income statement and €237 million (2019: €55 million) recognised as non-core costs on the income statement.

Net impairment losses on ﬁnancial instruments of €1,133 million for 2020 is €918 million higher than 2019. Consistent with the recognition of expected credit loss under IFRS 9, c.60% of the impairment loss was recognised on performing assets (i.e. not credit-impaired).

The credit loss in the year reflects impairments recognised arising from: impairment model updates, including the

Net interest income

change in the macroeconomic outlook due to the COVID-19 pandemic (€0.5 billion); loss emergence primarily from a number of commercial exposures in Corporate and Treasury and Retail UK (€0.4 billion), including losses on legacy property exposures (€0.3 billion); and the application of Group management adjustments which primarily reflect the potential risk that longer-term credit supports may be required for customers affected by COVID-19 (€0.2 billion).

Income from associates and joint ventures includes income from First Rate Exchange Services Limited (FRES), the Group's FX joint venture with the Post Office. The reduction of €43 million in income for 2020 is primarily due to the impact of economic uncertainty and extensive travel restrictions on the UK travel and FX markets.

Non-core charges increased by €273 million to €386 million in 2020. The year on year increase is primarily driven by costof restructuring charge of €245 million (includes €189 million for the Group-wide voluntary redundancy scheme) and the impairment of internally generated computer software of €136 million.

The taxation credit was €53 million with an effective statutory taxation rate of 7% (2019: taxation charge of €197 million and taxation rate of 31%). The effective tax rate is influenced by changes in the jurisdictional mix of profits and losses and the reassessment of the tax value of the tax losses carried forward.

On an underlying basis and excluding the impact of the re-assessment of the tax value of the tax losses carried forward the effective taxation rate in 2020 was 8% (2019: 17%). For further details on the Group's re-assessment of tax losses carried forward see note 2 on pages 229 and 230.

Table: 1

Net interest income / net interest margin

Net interest income

Average interest earning assets (€bn)2

Loans and advances to customers Other interest earning assets

Total average interest earning assets

Net interest margin

Gross yield - customer lending3 Gross yield - liquid assets3

Average cost of funds - interest bearing liabilities and current accounts3

Restated1
2020	2019	Change
€m	€m	%
2,115	2,167	(2%)
78	78	-
28	23	22%
106	101	5%
2.00%	2.14%
3.13%	3.25%
0.04%	0.29%
(0.32%)	(0.48%)

Net interest income of €2,115 million for 2020 is €52 million lower than 2019, primarily reflecting the lower interest rate environment, reduced yields on liquid assets and structural hedges partially offset by the benefit of reduced liability costs.

The gross customer yield has decreased by 12 basis points in 2020, reflecting a lower interest rate environment and lower RoI volumes partially offset by the benefit of higher corporate lending volumes.

The Group's average NIM has decreased to 2.00% from 2.14% in 2019, reflecting the growth of liquid asset volumes and the lower structural hedge income partially offset by a positive impact from new lending margins and strong commercial pricing.

Deposit volumes with negative rates applied to them have increased by c.€5.8 billion from €2.7 billion in December 2019 to €8.5 billion in December 2020.

Average interest earning assets for 2020 have increased by €5 billion compared to 2019, primarily due to increased liquid assets arising from higher customer deposits. For further information on loans and advances to customers see note 27.

1 As noted in note 64, the comparative net interest income figure for 2019 has been restated and increased by €17 million to reflect the Group's voluntary change in accounting policy for interest income and expense. In prior periods, net interest income and net other income were affected by certain 'IFRS classifications'. These IFRS classifications arose in prior periods as the total fair value movement on assets and liabilities held at fair value through profit or loss, including interest income or expense, was recognised in net other income (except for interest income or expense on derivatives in a hedge accounting relationship where the interest is recognised in 'net interest income'). To enable a better understanding of underlying business trends the impact of these IFRS classifications was included in net interest income to report net interest income after IFRS classifications. With the change in accounting policy IFRS classifications no longer arise; 2019 net interest margin has not been affected. There was a two basis point increase to the 2019 gross yield on liquid assets and a one basis point increase to the 2019 average cost of funds.
2 Average interest earning assets includes €325 million (2019: €411 million) of interest bearing assets carried at fair value through profit or loss.
3 Average cost of funds and gross yield represent the interest income or expense recognised on interest bearing items net of interest on derivatives which are in a hedge relationship with the relevant asset or liability. See pages 373 and 374 respectively for further information.

Summary consolidated income statement on an underlying basis (continued)

Net other income

Table: 2	Restated1
2020	2019	Change
Net other income	€m	€m	%
Net other income	505	669	(25%)
Analysed as:
Business income
Retail Ireland	209	254	(18%)
Wealth and Insurance	214	277	(23%)
Retail UK	6	(18)	n/m
Corporate and Treasury	139	154	(10%)
Group Centre and other	(7)	(1)	n/m
Total business income	561	666	(16%)
Other gains
Transfers from debt instruments at fair value through other comprehensive income reserve	7	-	n/m
Net gain on disposal and revaluation of investments	(3)	4	n/m
Gain on disposal and revaluation of investment properties	1	1	-
Total other gains	5	5	-
Other valuation items
Wealth and Insurance	(36)	35	n/m
- Interest rate movements	(22)	5	n/m
- Unit-linked investment variance	(14)	30	n/m
Financial instrument valuation adjustments (CVA, DVA, FVA)2 and other	(25)	(37)	32%
Total other valuation items	(61)	(2)	n/m
Net other income	505	669	(25%)

Business income of €561 million for 2020 has decreased by €105 million or 16% compared to 2019. The impact of COVID-19 has seen reduced business activity resulting in lower current account, card fee and FX income in Retail Ireland and lower new business performance and reduced benefit of assumption changes in Wealth and Insurance.

Net other income for 2020 is €505 million, a decrease of €164 million or 25% lower compared to 2019.

Corporate experiencedandTreasury has also lower equity and

commitment / current account fee income year on year. This is partially offset by higher income in Retail UK attributed to lower UK Post Office commissions.

Other gains of €5 million are in line with 2019.

Other valuation items are a loss of €61 million for 2020, an increased loss of €59 million compared to €2 million loss in

2019, which largely reflects the lower investment returns as a result of the COVID-19 pandemic. These market movements have resulted in adverse fund and investment assets performance in Wealth and Insurance.

1 As outlined in note 64, the comparative figures net other income figure for 2019 has been restated and reduced by €17 million to reflect the impact of the voluntary change in the Group's accounting policy for interest income and expense.
2 Credit Valuation Adjustment; Debit Valuation Adjustment; Funding Valuation Adjustment.

Summary consolidated income statement on an underlying basis (continued)

Operating expenses

2020	2019	Change
Operating expenses	€m	€m	%
Staﬀ costs (excluding pension costs)	725	710	2%
Pension costs	101	134	(25%)
- Retirement beneﬁt costs (deﬁned beneﬁt plans)	66	103	(36%)
- Retirement beneﬁt costs (deﬁned contribution plans)	35	31	13%
Depreciation and amortisation	253	289	(12%)
Other costs	585	544	8%
Operating expenses (before transformation investment, levies and
regulatory charges and impairment of intangible assets and goodwill)	1,664	1,677	(1%)
Transformation Investment charge	56	108	(48%)
Operating expenses (before levies and regulatory charge
and impairment of intangible assets and goodwill)	1,720	1,785	(4%)
Levies and regulatory charges	125	117	7%
Impairment of intangible assets and goodwill	12	-	n/m
Operating expenses	1,857	1,902	(2%)
Change

Staﬀ numbers at year end

9,782

10,440

(6%)

Average staﬀ numbers during the year

10,303

10,424

(1%)

The Group has incurred incremental expenditure of €25 million in managing its response to the pandemic. Excluding these costs the Group's operating expenses (before levies and regulatory charges and impairment of intangible assets and goodwill) would be €90 million or 5% lower than 2019 reflecting the Group's continuing progress in generating cost savings through strategic sourcing and efficiencies across its businesses whilst investing in strategic initiatives, technology and regulatory compliance.

Operating expenses (before levies and regulatory charges and impairment of intangible assets and goodwill) are €65 million or 4% lower than 2019 as the Group continued to focus on reducing its operational costs while maintaining its investment in regulatory compliance, technology and business growth.

COVID-19

Staﬀ costs (excluding pension costs) of €725 million are €15 million higher compared to 2019 primarily reflecting salary increases averaging 2.6%, which were effective from 1 January 2020.

Average staff numbers employed by the Group in 2020 of 10,303 were 1% lower compared to 10,424 in 2019.

At 31 December 2020, the number of staff (full time equivalents) was 9,782 (2019: 10,440) which reflects employees who exited the Group under the voluntary redundancy scheme up to and including 31 December 2020. This scheme has led to a reduction in staff numbers of 438 or 4% since September 2020.

Pension costs of €101 million for 2020 were €33 million or 25% lower than 2019. The decrease in defined benefit (DB) costs of €37 million is due to a gain of €26 million in respect of a change in allowance for future pension increases in the NIAC pension scheme. New joiners are added to the Group's defined contribution plans. The cost of defined contribution plans increased by €4 million.

Depreciation and amortisation of €253 million for 2020 is €36 million or 12% lower than 2019. The decrease is a result of legacy technology investments reaching the end of their useful lives.

Other costs including technology, property, outsourced services and other non-staff costs are €41 million higher than 2019. This reflects €18 million net incremental non-staff costs related to the COVID-19 response, together with application and infrastructure costs of €14 million associated with the roll out of our new mobile app to customers in May 2020 (included as part of transformation investment charge in prior years).

Transformation Investment charge Our transformation programme continues to make progress with the completion of phase one of the enhanced mobile app and digital wallets, providing additional functionality, greater security and faster operating speeds. The new mobile app was launched to customers by Retail Ireland in Q2 followed by the launch of the Google Pay and Apple Pay digital wallet in Q3.

A further €410 million (2019: €263 million) was invested in this programme in 2020, of which €117 million is capitalised on the balance sheet (2019: €100 million), €56 million (2019: €108 million) charged to

Summary consolidated income statement on an underlying basis (continued)

Operating expenses (continued)

operating expenses on the income statement, being €52 million lower than 2019 due to lower levels of investment spend and €237 million (2019: €55 million) recognised as non-core costs on the income statement, of which €189 million relate to the voluntary redundancy scheme.

Levies and regulatory charges

The Group has incurred levies and regulatory charges of €125 million in 2020 (2019: €117 million). The higher charge is driven by increases in certain levies including the Single Resolution Fund (SRF) and the Deposit Guarantee Scheme (DGS) levies.

Impairment of intangible assets and goodwill

Impairment of goodwill relates to a write down of €9 million against the Group's commercial leasing and fleet management company Marshall Leasing Limited (MLL) in the UK and a €3 million write down on intangible assets.

Net impairment losses on financial instruments
Table: 4
2020	2019	Change
Net impairment losses on ﬁnancial instruments	€m	€m	%
Net impairment losses on loans and advances to
customers at amortised cost
Residential mortgages	(53)	(52)	2%
- Retail Ireland	(23)	(60)	(62%)
- Retail UK	(30)	8	n/m
Non-property SME and corporate	(512)	(76)	n/m
- Republic of Ireland SME	(217)	(18)	n/m
- UK SME	(29)	9	n/m
- Corporate	(266)	(67)	n/m
Property and construction	(388)	(24)	n/m
- Investment	(372)	(30)	n/m
- Development1	(16)	6	n/m
Consumer	(108)	(58)	86%
Total net impairment losses on loans and advances
to customers at amortised cost	(1,061)	(210)	n/m
Net impairment losses on other ﬁnancial instruments (excluding
loans and advances to customers at amortised cost)2	(72)	(5)	n/m
Total net impairment losses on ﬁnancial instruments	(1,133)	(215)	n/m
Net impairment losses on loans and advances to customers (bps)	(134)	(26)	n/m

The Group recognised a net impairment loss of €1,133 million, of which €1,061 million is on loans and advances to customers at amortised cost, of which c.60% of the impairment loss was recognised on performing assets (i.e. not credit-impaired), consistent with the recognition of expected credit loss under IFRS 9. The net impairment loss is €918 million higher than the net loss of €215 million in 2019.

The credit loss in 2020 reflects impairments arising from: impairment model updates incorporating the changein the macroeconomic outlook due to the COVID-19 pandemic (€0.5 billion); loss emergence primarily from a number of commercial exposures in Corporate and Treasury and Retail UK (€0.4 billion), including losses on legacy property exposures (€0.3 billion); and the application of Group management adjustments which primarily reflect the potential risk that longer-term credit supports may be required for customers affected by COVID-19 (€0.2 billion).

A net impairment loss on the Retail Ireland mortgage portfolio of €23 million during

2020, including a net impairment gain of €10 million on Stage 3 (i.e. credit-impaired) assets, is €37 million lower than the loss of €60 million in 2019. A net impairment loss on the Retail UK mortgage portfolio of €30 million during 2020, including a net impairment loss of €6 million loss on Stage 3 assets, is €38 million adverse to the gain of €8 million in 2019.

The loss in the Residential mortgages portfolio in 2020 reflects the change in the macroeconomic outlook and the potential risk that longer term credit supports, beyond payment breaks, may be required

1 Formerly land and development.
2 At 31 December 2020, net impairment (losses) / gains on other financial instruments (excluding loans and advances to customers at amortised cost) included €65 million (2019: €5 million) on loan commitments, €4 million (2019: €nil) on guarantees and irrevocable letters of credit, and €2 million (2019: €nil) on debt securities at amortised cost and €1 million (€2019: nil) on cash and balances at central banks.

Summary consolidated income statement on an underlying basis (continued)

Net impairment losses on financial instruments (continued)

for customers impacted by COVID-19 partially offset by resilience in the credit quality of customers not directly impacted by COVID-19, and other impairment model parameter updates (including refreshed cure rates, sales ratio, etc.). Model parameter updates in 2020 included the application of enhanced data in the sales ratio factor within the RoI mortgages impairment model, resulting in a decrease in impairment loss allowance of c.€59 million on implementation.

A net impairment loss of €512 million on the non-property SME and corporate loan portfolio for 2020, including a net impairment loss of €119 million on Stage 3 assets, is €436 million higher than the €76 million loss in 2019. The loss in the year reflects impairments recognised for the change in the macroeconomic outlook, case specific loss emergence primarily on a number of defaulted cases in the Corporate portfolio, and the potential risk

Non-core items

that longer term credit supports may be required for SME customers in sectors most directly impacted by COVID-19 and/ or Brexit.

A net impairment loss of €388 million on the Property and construction loan portfolio for 2020, including net impairment loss of €277 million on Stage 3 assets, is €364 million higher than the loss of €24 million in 2019. The loss primarily reflects case specific loss emergence on a small number of defaulted cases in the Corporate and Retail UK investment portfolios and impairments recognised arising from the change in the macroeconomic outlook, and case specific loss emergence on a small number of defaulted cases in the Corporate and Retail UK Investment portfolios. These defaulted cases relate to large legacy exposures, which have risk characteristics not reflective of the wider portfolio, with loss emergence in 2020 dueto ongoing weakness in the retail property sector, compounded, in two Corporate Banking cases, by tenant dependency on a UK retail group that entered administration.

A net impairment loss of €108 million on the Consumer loans portfolio for 2020, including a net impairment loss on Stage 3 assets of €32 million, is €50 million higher than the loss of €58 million in 2019. The net impairment loss on Consumer loans included a €13 million loss on the Retail Ireland consumer portfolio and a €95 million loss on the Retail UK consumer portfolio. The total loss on Consumer loans in the year reflects the change in the macroeconomic outlook, the potential risk that longer term credit supports, beyond payment breaks, may be required for customers impacted by COVID-19, and impairment model parameter updates.

Table: 5

Non-core items

Cost of restructuring programme - Transformation Investment costs

- Other restructuring charges

Impairment of internally generated computer software Customer redress charges

Gain / (loss) on disposal / liquidation of business activities Investment return on treasury shares held for policyholders Gross-up for policyholder tax in the Wealth and Insurance business Portfolio divestments

- Operating income
- Operating expenses1
- Impairment gains on other ﬁnancial instruments

Total non-core items

Underlying performance excludes non-core items which are those items that the Group believes obscure the underlying performance trends in the business. The Group has treated the following items as non-core:

Cost of restructuring programme During 2020, the Group recognised a restructuring charge of €245 million (2019:

€59 million) of which €237 million (2019: €55 million) related to the Group's Transformation Investment programme and €8 million (2019: €4 million) for other restructuring costs.

The 2020 transformation investment costs of €237 million predominantly relate to the Group-wide voluntary redundancy scheme (the 'Scheme') which was open toemployees between August and September 2020. The €189 million voluntary redundancy costs reflects costs for employees that had exited the Group by 31 December 2020 and employees for which the Group has exit plans in place and made appropriate communications as at 31 December 2020.

Includes staff costs of €10 million (2019: €11 million).

Summary consolidated income statement on an underlying basis (continued)

Non-core items (continued)

The Group is taking a phased approach to employee departures, which began in 2020 and will progress into 2022 to ensure that Group operations continue smoothly. The Scheme will result in c.1,700 staff exits by the time it concludes in 2022.

In addition, Transformation Investment costs included programme management costs of €22 million (2019: €17 million), costs of €16 million related to the planning and scoping of the strategic review of the Group's Northern Ireland and UK operations, costs related to the implementation of the Group's property strategy of €6 million (2019: €4 million) and additional costs associated with reduction in staff numbers of €4 million (2019: €34 million), which preceeded the voluntary redundancy scheme.

Other restructuring costs of €8 million (2019: €4 million) includes €3 million related to the impairment of property, plant and equipment and other related costs of €5 million.

Impairment of internally generated computer software

During 2020, the Group reviewed its intangible software assets for indicators of impairment, including internal indicators such as obsolescence and external indicators such as the evolution of emerging technologies. The Group concluded that certain aspects of the transformation investment asset product set capability had not matured sufficiently, and that technology and approaches to systems transformation have evolved.

The Group formed the judgement that certain software assets were impaired, as they were no longer expected to provide future economic benefits. Accordingly, an impairment charge of €136 million has been recognised in the year, of which €127 million was charged to the transformation investment asset and €9 million was charged to other internally generated computer software. There was no similar charge for 2019.

Customer redress charges

The Group has set aside a further €14 million (2019: €67 million) provision to cover the additional redress and compensation costs for a small number of additional customers, operational costs associated with the length and nature of the review and estimated costs of closing out the Tracker Mortgage Examination review.

In 2011, the Group's Irish Business Banking business introduced a new Bank Cost of Funds interest rate to certain business customers. The implementation was limited to larger business customers and personal consumers were excluded. In 2013, the Group's Irish Private Banking business introduced a similar Private Banking cost of funds interest rate.

During 2020 a review of the implementation of these interest rates was carried out by the Group. The review identified that a cohort of customers incorrectly had these interest rates applied to their accounts. The Group made a total remediation provision of €25 million in order to cover the identified remediation and related costs.

Gain / loss on disposal / liquidation of business activities

In 2019, the Group incurred a net loss of €21 million on disposal of its consumer credit card portfolio which included a provision relating to the cost of migration and other costs associated with the disposal. In October 2020, the migration concluded and consequently management have adjusted the provision to reflect the actual costs and timing of the migration. This has resulted in a release of €8 million from the provision during 2020 which is reflected as an adjustment to the loss on disposal during the year.

In addition, a gain of €5 million (2019: €4 million loss) was recognised relating to the recycling of cumulative unrealised FX gains and losses through the income statement following the liquidation of foreign denominated subsidiaries. These losses were previously held in the FX reserve.

Investment return on treasury shares held for policyholders

Under International Financial Reporting Standards (IFRS), the Group income statement excludes the impact of the change in value of Bank of Ireland Group plc ('BOIG plc') shares held by Wealth and Insurance for policyholders. In 2020, there was a gain of €9 million (2019: €2 million loss).

The year on year movement reflects a change in valuation during the year. At 31 December 2020, there were 5.1 million shares (31 December 2019: 5.0 million shares) held for the benefit of policyholders.

Gross-up for policyholder tax in the Wealth and Insurance business

IFRS requires that the income statement be grossed up in respect of the total tax payable by Wealth and Insurance, comprising both policyholder and shareholder tax. The tax gross-up relating to policyholder tax is included within non-core items.

During 2020, the Group recognised a credit of €7 million (2019: €35 million). The year on year movement is mainly due to lower investment returns in 2020 compared to 2019.

Portfolio divestments

Where the Group has made a strategic decision to exit an area of a business, the related income and expenses are treated as non-core.

During 2020, the Group made the decision to exit its Irish non-branch ATM business. As a result, operating income of €1 million and costs of €5 million associated with this business have been recognised as non-core in the current year.

During 2019, the Group disposed of the UK credit card portfolio and entered into a servicing contract with the purchaser to service the portfolio during the migration period. The fee income earned for servicing the portfolio and the associated migration and servicing costs are included as non-core. The migration was completed in October 2020.

Following a strategic review carried out in 2018, the Group commenced the exit of its UK Post Office ATM business in 2019. An agreement for the sale of the business concluded during 2020 and the disposal of devices will commence in 2021 and is expected to be completed by early 2022. As a result, the associated income and costs have been treated as non-core in 2019 and 2020.

As a result of the disposal of the UK credit card portfolio and the exit from the UK Post Office ATM business, €34 million of operating income and €25 million of operating costs arising from these business have been recognised as non-core (2019: €51 million of operating income, €40 million of operating costs and €1 million of impairment gains).

Summary consolidated balance sheet

Table

Summary consolidated balance sheet Table	2020 €bn	2019 €bn
Assets (after impairment loss allowances)
Loans and advances to customers1 6	77	79
Liquid assets 7	31	27
Wealth and Insurance assets	20	20
Other assets 8	6	6
Total assets	134	132
Liabilities
Customer deposits 9	89	84
Wholesale funding 10	9	11
Wealth and Insurance liabilities	20	20
Other liabilities 8	5	4
Subordinated liabilities	1	2
Total liabilities	124	121
Shareholders' equity	9	10
Other equity instruments - Additional tier 1	1	-
Non-controlling interests - Other equity instruments	-	1
Total liabilities and shareholders' equity	134	132
Liquidity Coverage Ratio2	153%	138%
Net Stable Funding Ratio3	138%	131%
Loan to Deposit Ratio	86%	95%
Gross new lending volumes (€bn)	14.1	16.5
Average interest earning assets	106	101
Return on Tangible Equity4 (%)	(4.9%)	6.6%
Return on Tangible Equity4 (adjusted) (%)	(4.4%)	6.8%
Common equity tier 1 ratio - fully loaded	13.4%	13.8%
Common equity tier 1 ratio - regulatory	14.9%	15.0%
Total capital ratio - regulatory	19.2%	18.6%

€bn	€bn
153%	138%
138%	131%

The Group's loans and advances to customers (after impairment loss allowances) reduced to €76.6 billion from €79.5 billion at 31 December 2019. This is primarily due to adverse FX movements of €2.0 billion and increased net impairment of €1.1 billion. The COVID-19 pandemic, combined with ongoing Brexit uncertainty has generated muted demand for credit.

The Group's asset quality has been negatively impacted by the uncertain market environment and a number of case specific events arising from Corporate and investment property portfolios. Non-performing exposures (NPEs) increased by €1.0 billion to €4.5 billion during 2020, and represented 5.7% of gross loans at 31 December 2020. Implementation of a revised definition of default during 2020 resulted in an increase in NPEs of c.€0.6 billion.

At December 2020, overall Group customer deposit volumes of €88.6 billion are €4.6 billion higher than 31 December 2019. Deposit growth in Retail Ireland of €7.1 billion was primarily driven by higher household and SME savings rates, whilst deposit volumes in Corporate and Treasury marginally decreased by €0.3 billion. Deposit volumes in Retail UK decreased by £0.8 billion to £18.3 billion. However due to sterling weakening against the euro, Retail UK balances decreased on a headline basis by €1.9 billion from €22.4 billion to €20.5 billion. The Loan to Deposit Ratio (LDR) at 31 December 2020 is 86% (2019: 95%).

Wholesale funding balances of €8.8 billion are €2.2 billion lower than 31 December 2019 primarily due to term funding maturities (asset covered securities of €1.3 billion, the calling of theBrunel Residential Mortgage Securitisation No. 1 plc of €0.5 billion, senior securities of €0.3 billion and Credit Linked Note maturity of €0.2 billion), partially offset by a net increase in Bank of England Monetary Authority Funding of €0.2 billion. Total Monetary Authority borrowings at 31 December 2020 are €1.9 billion compared to €1.7 billion at 31 December 2019.

The net pension position is a deficit of €0.1 billion at 31 December 2020 (31 December 2019: €0.1 billion). The primary drivers of the movement in the pension deficit were positive asset returns, experience gains and employer contributions offset by the negative impact of assumption changes in 2020.

The Group's fully loaded Common Equity Tier 1 (CET1) ratio decreased by c.40 basis points during 2020 to 13.4% and the regulatory CET1 ratio decreased by c.10 basis points during 2020 to 14.9%. The fully loaded ratio decrease of c.40 basis points is primarily due to pre-impairment organic capital generation (c.125 basis points), the benefit from implementation of SME support factor and software asset rules (c.75 basis points) and the withdrawal of the 2019 dividend (c.40 basis points), offset by the impact of credit quality deterioration (c.- 110 basis points), RWA growth (c.-20 basis points), the impact of regulatory change (c.-65 basis points), investment in the Group's transformation programmes (c.-75 basis points) and other net movements, including movements in the Group's defined benefit pension schemes (c.-10 basis points).

For further information on capital see Capital Management on pages 185 to 189 of the Risk Management Report.

Further information on measures referred to in the 2020 ﬁnancial results, including gross new lending, NPEs, wholesale funding and organic capital is found in Alternative performance measures on page 373.

1 Includes €0.4 billion of loans and advances to customers at 31 December 2020 (2019: €0.3 billion) that are measured at fair value through profit or loss and are therefore not subject to impairment under IFRS 9.
2 The Group's Liquidity Coverage Ratio is calculated based on the Commission Delegated Regulation (EU) 2015/61 which came into force on 1 October 2015.
3 The Group's Net Stable Funding Ratio is calculated based on the Group's interpretation of the Basel Committee on Banking Supervision October 2014 document.
4 For basis of calculation of Return on Tangible Equity, see page 377.

Summary consolidated balance sheet (continued)

Loans and advances to customers

Table: 6

Loans and advances to customers - Composition1

Residential mortgages

- Retail Ireland

- Retail UK

Non-property SME and corporate

- Republic of Ireland SME
- UK SME
- Corporate

Property and construction

- Investment

- Development Consumer

Total loans and advances to customers at amortised cost Less impairment loss allowance on loans and advances to customers at amortised cost

Net loans and advances to customers at amortised cost

Loans and advances to customers at FVTPL

Total loans and advances to customers

Credit-impaired loans

NPEs

NPE ratio

The Group's loans and advances to customers (after impairment loss allowances) of €76.6 billion are €2.9 billion lower than 31 December 2019. Thisis primarily due to adverse FX movements of €2.0 billion and increased net impairment of €1.1 billion.

The COVID-19 pandemic, combined with ongoing Brexit uncertainty has generated muted demand for credit. New lending performance (excluding revolving credit facilities) of €13.3 billion, is a 19% decrease compared to 2019 and is reflected across all businesses. In RoI, mortgages and BIF new lending has been impacted in particular by disruption to the property and new car markets in 2020. While the decrease in the UK is reflecting not only the impact of the pandemic on our customers, but also our focus on delivering improved returns by focusing on certain segments where our product propositions are already well developed. Redemptions and repayments of €14.0 billion are €0.5 billion or 3% lower than 2019, the primary driver of the reduction is the Corporate Property portfolio where there was a number of high value redemptions in 2019 not repeated in 2020.

Loan book reduction of €2.9bn

Group loan book movement

€13.3bn

€0.7bn

(€14.0bn)

(€1.1bn)

(€2.0bn)

€0.2bn

€79.5bn

€76.6bn

Dec 2019

New lending

Revolving

Credit Facilities Activity

Redemptions

In addition, 2020 redemptions have also been lower than normal across a number of business banking / corporate books due to reduced liquidity in the market as a result of the pandemic.

As detailed in note 2 Critical accounting estimates and judgements on page 225, the emergence of the COVID-19 pandemic (and associated social restrictions) during 2020 means that the macroeconomic outlook for the Group's core RoI and UK markets is more negative than the outlook as at 31 December 2019.

ImpairmentForeign ExchangeOther

Dec 2020

COVID-19 has also impacted the Group's IFRS 9 stage profile, whereby the application of updated forward looking information (FLI), and a Group management adjustment for certain business banking assets, as well as individually assessed risk ratings has resulted in a material migration of loans from Stage 1 to Stage 2 (i.e. identified as having experienced a significant increase in credit risk).

As a result, during 2020, the stock of impairment loss allowances on loans and

Includes €0.4 billion of loans and advances to customers at 31 December 2020 (2019: €0.3 billion) that are measured at fair value through profit or loss and are therefore not subject to impairment under IFRS 9.

Summary consolidated balance sheet (continued)

Loans and advances to customers

advances to customers increased by €0.9 billion to €2.2 billion primarily due to the impairment charge of €1.1 billion, partly offset by impairment loss allowance utilisation of €0.2 billion.

Group NPEs increased by €1.0 billion or 28% to €4.5 billion at 31 December 2020 and represent 5.7% of gross loans to customers. Implementation of a revised definition of default during 2020 resultedin an increase in NPEs of c.€0.6 billion. Further detail on NPEs and impairment loss allowances are provided in the Asset Quality section 157 to 161).

Liquid assets (after impairment loss allowance)
Table: 7	2020	2019
Liquid assets (after impairment loss allowance)	€bn	€bn
Cash at banks	2	3
Cash and balances at central banks	11	8
- Bank of England	3	3
- Central Bank of Ireland	8	5
Government bonds	12	11
- Financial assets at FVOCI	6	6
- Debt securities at amortised cost	6	5
Covered bonds	4	3
Senior bank bonds and other	2	2
31	27

The Group's portfolio of liquid assets at 31 December 2020 of €30.7 billion has increased by €3.6 billion since 31 December 2019 primarily due to an increase in cash and balances at central banks and sovereign bonds predominantly arising from lower lending and higher Group deposits, partially offset by lower wholesale funding. The Group continues to optimise cash balances with central banks to take advantage of the ECB deposit rate tiering structure.

Other assets and other liabilities

Table: 8

Other assets and other liabilities

Other assets

- Derivative ﬁnancial instruments
- Deferred tax asset
- Other assets

Other liabilities

- Derivative ﬁnancial instruments
- Notes in circulation
- Lease liabilities
- Pension deﬁcit (net)
- Other liabilities

The movement in the value of derivative assets and derivative liabilities is due to changes in fair values caused by the impact of the movements in equity markets, interest rates and FX rates during the year ended 31 December 2020, as well

as the maturity of transactions during the year.

The net pension position is a deficit of €0.1 billion at 31 December 2020 (31 December 2019: €0.1 billion). The primary drivers ofthe movement in the pension deficit were positive asset returns, experience gains and employer contributions offset by the negative impact of assumption changes in 2020.

Summary consolidated balance sheet (continued)

Other assets and other liabilities (continued)

Total asset values at 31 December 2020 have increased from 31 December 2019 mainly due to the increase in Liability Driven Investments assets, hedging interest rate and inflation rate movements, and have largely offset an increase in liabilities, driven by the

Customer deposits

decrease in the interest rate elements of the discount rates and inflation movements.

The Group's deferred tax asset has increased by €0.1 billion from €1.1 billion in 2019. Further consideration withrespect to the Group's net deferred tax asset can be found in note 2 critical accounting estimates and judgements on page 229.

Table: 9

Customer deposits

Retail Ireland

- Deposits

- Current account credit balances Retail UK

Retail UK (Stg£bn equivalent)

- UK Post Oﬃce

- Other Retail UK Corporate and Treasury Total customer deposits

At 31 December 2020, Group customer deposits (including current accounts with credit balances) have increased by €4.6 billion to €88.6 billion since 31 December 2019. Deposit growth in Retail Ireland of €7.1 billion was primarily driven by higher

Wholesale funding

household and SME savings rates, whilst deposit volumes in Corporate and Treasury marginally decreased by €0.3 billion. Deposit volumes in Retail UK decreased by £0.8 billion to £18.3 billion. However due to sterling weakening against the Euro, RetailUK balances decreased on a headline basis by €1.9 billion from €22.4 billion to €20.5 billion. For further information on customer deposits see page 171 of the Risk Management Report.

Table: 10

Wholesale funding

Secured funding

- Monetary Authority
- Covered bonds
- Securitisations

Unsecured funding

- Senior debt

Total wholesale funding

Wholesale market funding < 1 year to maturity Wholesale market funding > 1 year to maturity

Monetary Authority funding < 1 year to maturity Monetary Authority funding > 1 year to maturity

Wholesale funding decreased by €2.2 billion to €8.8 billion, primarily due to term funding maturities (asset covered securities of €1.3 billion, the calling of the Brunel Residential Mortgage Securitisation No. 1 plc of €0.5 billion, senior securitiesof €0.3 billion and Credit Linked Note maturity of €0.2 billion), partially offset by a net increase in Bank of England Monetary Authority Funding of €0.2 billion. Total Monetary Authority borrowings at 31 December 2020 are €1.9

billion compared to €1.7 billion at 31 December 2019.

For further information on wholesale funding sources see page 171 of the Risk Management Report.

Divisional review

Our business model

Bank of Ireland Group is one of the largest financial services groups in Ireland and provides a broad range of banking and other financial services. The Group is organised into four trading segments and one support division to effectively serve our customers.

Retail Ireland

Operating as one of Ireland's largest lenders with gross lending of €5.3 billion lent to the Irish economy in 2020, including targeted supports for businesses impacted by the difficult trading conditions. Serving 2 million consumer and business customers across a broad range of segments and sectors, while offering them the choice to engage through digital, branch and phone banking channels. Promoting their financial wellbeing by delivering a full range of financial products, services and propositions tailored to meet their needs, manage their current finances and to plan for the future.

Wealth and Insurance

A leading provider of life, pensions, general insurance, investment and savings products in the Irish market. The Group is the only bancassurer in Ireland operating through New Ireland, and encompasses Wealth Distribution and Bank of Ireland Insurance Services. The Group, through New Ireland sells a broad range of protection, investment and pension products to individual and corporate customers in the Republic of Ireland. Its liabilities are predominantly unit linked and it has a multi-channel distribution strategy, selling products through the Bank's branch network, the independent broker market and a tied agent channel (financial advisors).

Retail UK

Distributes consumer products via own brand and partnerships with trusted brands (Post Office and the Automobile Association (AA) and operates a full service retail bank in Northern Ireland (NI) as well as strong niche businesses in attractive segments, which include asset finance under the Northridge Finance and Marshall Leasing Limited (MLL) brands and FX via FRES.

Corporate and Treasury

Ireland's number one Corporate Bank1 and customer treasury service provider incorporating the Group's corporate banking, wholesale financial markets, specialised acquisition finance and large transaction property lending business across Ireland, UK and internationally with offices in the US, Germany, France and Spain. Holds market leading positions in chosen sectors, including corporate banking, commercial real estate, foreign direct investment and treasury solutions.

Group Centre

Group Centre comprises the Group's central control functions, which establish governance and oversee policies, and which provide and manage processes and delivery platforms for the trading divisions.

Based on corporate lending information sourced from publicly available annual reports for 2018 and 2019 for all Irish banks, Bank of Ireland's analysis of its banking relationships with the top 500 companies from the 2020 Irish Times Top 1,000 companies list and Bank of Ireland's analysis of its banking relationships with companies on the published listing of international companies setting up operations in the Republic of Ireland 2020.

Divisional review (continued)

Retail Ireland

Retail Ireland serves consumer and business customers across a broad range of segments and sectors with financial products, services and propositions tailored to meet their needs.

Transform the Bank

• The new mobile app was rolled out to over 800,000 customers in 2020, with a 50% increase in mobile functionality enhancing the c.6 million digital customer engagements per month on the new app.
• Google and Apple digital wallets were enabled for all users, with digital card usage peaking at 1.8 million transactions per day in the month of December.
• Over 70% of our day-to-day banking products application journeys are now fully digital, including current accounts, deposits, credit cards and personal loans.
• Small business and agri lending applications are also now fully digital, as part of our commitment to supporting our business customers.
• Our agile operating model allowed us to quickly respond and adapt to the challenges of COVID-19, the evolving customer needs and areas of highest demand such as mortgage and small business payment break applications.
• Fully digital third-level proposition launched to c.230,000 students, including Ireland's first bio debit card made from 82% corn.

Serve customers brilliantly

• We mobilised a comprehensive response to COVID-19, to support and protect the financial wellbeing of customers, including:
- payment breaks for personal and business customers;

- dedicated banking services for health care workers; and
- special support services for over 65's, carers and those cocooning.

• Further Financial Wellbeing initiatives were delivered, including financial literacy programmes for first and second level students, unique over 75's financial advisory model, customer communication platform, 'The Chat' and virtual financial wellbeing webinars to employees at our Bank at Work sites.
• Our Customer Effort Score (CES), which measures the customer service experience combined across branch, phone, mobile app and website channels increased by 10% from +49 to +54 in 2020.
• An additional €1 billion in funding was added to the Bank of Ireland Sustainable Finance Fund in 2020, which funds Green mortgages, Green home improvement loans and Green business loans.
• Donated €3 million in much needed funding through our Begin Together Fund for charities, the arts, colleague nominated causes and the Begin Together Awards, with Kinsale, Co. Cork winning the award of the most enterprising town in Ireland for 2020.
• Advice and support for businesses across a number of sectors with our dedicated team of Sector Specialists.
• c.€300 million in lending was provided through the Strategic Banking Corporation of Ireland funding support schemes.

Grow sustainable proﬁts

• Underlying contribution of €116 million is €352 million lower than 2019 primarily due to a reduction in operating contribution before net impairment losses of €80 million and a €264 million increase in impairments compared to 2019.
• Both net interest income of €937 million and net other income of €205 million are behind 2019 by 7% and 19% respectively, mainly due to lower levels of activity arising from the impact of COVID-19.
• Operating expenses of €709 million are down 5% compared to 2019 due to continued emphasis on cost control.
• Net impairment losses of €314 million have increased by €264 million compared to 2019, primarily due to the challenging economic environment arising from the pandemic.
• Loans and advances to customers (after impairment loss allowances) of €33.0 billion were €0.8 billion lower than at 31 December 2019.
• Customer deposits of €59.0 billion were €7.1 billion higher than 31 December 2019, reflecting lower customer sentiment and increased propensity to save.

Divisional review (continued)

Wealth and Insurance

Wealth and Insurance is a market leading life, pensions, investments and general insurance provider in Ireland. The Group is the only Irish owned bancassurer in the Irish market.

Transform the Bank

• Developed and launched our broker portal, it provides a secure access point for external and internal advisors and customers to access self-service options and policy information, including digital connection to brokers and their customer relationship management systems.
• Launched a new Group Pension platform 'mypension365' providing customers with a modern, digital and customer-friendly experience and a significantly faster onboarding process.

Serve customers brilliantly

• Proactive response to COVID-19, to protect the Financial Wellbeing of customers, including decreasing minimum premiums on savings and pensions products and six months mortgage protection premium waiver for customers who have been granted a mortgage payment break by their lender.

.•

Phased roll-out of Wealth and insurance digital advice platform and general insurance wallet, delivering end-to-end digital fulfilment capability and enhanced digital experience to customers.

Grow sustainable proﬁts

• Underlying contribution was €56 million in 2020 (2019: €169 million). The decrease year on year reﬂects the impact of lower beneﬁt of assumption changes allied with lower investment returns.
• Operating income of €207 million in 2020 was €62 million lower than 2019 mainly reﬂecting lower new business and impact of assumption changes compared to 2019.
• Annual Premium Equivalent (APE) new business sales were €313 million in 2020, a decrease of €49 million or 14% lower than 2019, driven by general market conditions.
• Operating expenses of €115 million in 2020 were €20 million lower than 2019 mainly due to a pension credit.

• Operating contribution of €92 million for the year ended 31 December 2020 was €42 million or 31% lower than 2019.
• Unit-linked fund price growth was lower than expected during 2020, as fund returns were impacted by market volatility. The adverse variance relative to assumed growth led to a negative investment return of €14 million (2019: positive investment variance of €30 million).
• The impact of lower investment returns on non linked and shareholder funds resulted in a €22 million loss for 2020 (2019: €5 million gain).

Divisional review (continued)

Retail UK

Retail UK provides consumer banking in the UK and incorporates Northridge Finance, Marshall Leasing, the financial services partnerships with the UK Post Office, The AA and First Rate Exchange Services1 (FRES).

Transform the Bank

• Completed a review of Retail UK and embarked on a multi-year restructuring program to implement a refreshed UK strategy.
• Reviewed our service proposition in Northern Ireland, with the number of our NI branches to be reduced during 2021, and increased levels of digital investment.
• Continued to grow our 'bespoke' mortgages proposition in 2020, repositioning towards higher margin business. Distribution expanded from London and the South East of England region in 2019 to nearly 200 firms across the UK in 2020.
• Extended our partnership with the AA to at least 2028.
• Agreed the sale of c.1,400 ATMs to the Post Office, with migration of devices due to complete by 2022.
• Completed the migration of the UK credit card portfolio to JaJa Finance following the portfolio's sale in 2019.
• Bank of Ireland UK recognised as Best Large Employer for Equality and Diversity in NI, at the NI Equality and Diversity Awards.

Serve customers brilliantly

• In supporting our customers during COVID-19 we approved over 70,000 payment breaks across our lending portfolio, primarily via online applications. In addition, through the UK Government-backed Coronavirus Business Interruption Loan and Bounce Back Loan Schemes the Group

provided business customers with £295 million of support.

• Online processes for customers were further enhanced across all product lines in 2020. Mortgage applications are now fully digital and we also enabled families to inform us of a bereavement through online channels.
• We created a range of online forms and 'how to' videos which assist customers in servicing their own accounts swiftly.
• We received the Fairer Finance Gold Ribbon Award for our AA Personal Loans customer experience.
• In the last quarter of 2020 Bank of Ireland UK won the Best Large Loan Lender award at the virtual Mortgage Strategy Awards.

Grow sustainable proﬁts

• Negative underlying contribution of £15 million in 2020 (2019: £152 million positive) primarily due to a higher impairment charge in the year and lower earnings from FRES.
• Net impairment losses of £238 million have increased by £167 million compared to 2019 reflecting the challenging economic environment and outlook due to the effects of COVID-19.
• Net interest income of £497 million has increased by £3 million, primarily due to changes in lending mix coupled with improved margins on new business against the backdrop of the ongoing low interest rate environment.

• Operating expenses2 of £263 million are 9% or £25 million lower as a result of the continued focus on cost management while investing in transformation.
• Impairment of £8 million arose on the Marshall Leasing goodwill asset.
• Income from associates and joint ventures includes income from FRES. The loss of £1 million in 2020 reflects the impact of economic uncertainty and extensive travel restrictions on the UK travel and foreign exchange market.
• Loans and advances to customers (after impairment loss allowances) at 31 December 2020 of £24.5 billion were £0.3 billion lower than 31 December 2019. This reflects a focus on value rather than volume, with a reduction in net volumes across mortgages, Northridge and commercial lending, partially offset by an increase in personal lending volumes.
• Customer deposits of £18.3 billion at 31 December 2020 were £0.8 billion lower than 31 December 2019, while other funding sources increased by £0.8 billion reflecting further optimisation of the balance sheet and funding positions during the year.

1 FRES is a joint venture between Bank of Ireland UK and the UK Post Office.
2 Operating expenses before impairment of goodwill

Divisional review (continued)

Corporate and Treasury

Provides a range of lending and operating products to the Group's corporate customers. Management of the Group's balance sheet, capital and liquidity, provision of treasury services to customers.

Transform the Bank

• Leveraging investment in colleagues, systems and agile ways of working, enabling the smooth and safe operation of the Corporate and Treasury division during the pandemic.
• Ongoing focus on the digitalisation of our customer relationship services, our FX product line, provision of treasury solutions and supporting customers in a remote working environment.
• Supporting the strong capital position of the Group by successfully completing two AT1 transactions, totalling €975 million.
• Establishment of a Green Bond Framework, which allows the Group to issue capital, senior and covered bonds to fund sustainable projects.

Serve customers brilliantly

• Retained our position as Ireland's number one corporate bank1 and continued to bank two out of every three new foreign direct investments in Ireland2.
• Continuing to support our customers in a challenging environment (COVID-19 and Brexit) with customers valuing our support and approach as evidenced by strong customer effort and customer survey scores.

• In 2020, Corporate Banking's relationship net promoter score rose to +54 (+11 on previous score from 2018) and corporate customer satisfaction with treasury products and services provided by Bank of Ireland rose to 98% (+13 percentage points on previous score from 2018).
• Supporting the Group to be the National Champion bank in house building. Corporate and Treasury has approvals totalling €814 million in RoI residential development funding which, over the coming years, we expect to deliver c.6,300 units comprising c.3,320 new homes for sale, c.2,200 private rented sector units and c.760 social housing units across c.50 sites in RoI together with c.2,300 student beds.

Grow sustainable proﬁts

• Underlying contribution of €29 million in 2020 (2019: €455 million), a decrease of €426 million compared to 2019, driven by higher net impairment losses on financial instruments.
• Net interest income and business income of €770 million is €12 million higher than 2019, predominately driven by increased lending activity.
• Financial instruments valuation adjustments are a charge of €16 million (2019: charge of €27 million).

• Net impairment losses on financial instruments of €549 million are €467 million higher than 2019 due to the uncertain market environment and a number of case specific losses arising from impacted sectors / companies.
• Loans and advances to customers at 31 December 2020 of €16.4 billion are in line with 2019, with net new lending in the year offset by currency translation and higher impairment loss allowances.
• Customer deposits decreased by €0.3 billion to €9.3 billion at 31 December 2020.
• The Euro Liquid Asset Bond Portfolio has increased by €1.4 billion to €15.4 billion at 31 December 2020, due to an increase in Group customer deposit volumes.

1 Based on corporate lending information sourced from publicly available annual reports for 2018 and 2019 for all Irish banks, Bank of Ireland's analysis of its banking relationships with the top 500 companies from the 2020 Irish Times Top 1,000 companies list and Bank of Ireland's analysis of its banking relationships with companies on the published listing of international companies setting up operations in the Republic of Ireland 2020.
2 Based on Bank of Ireland's analysis of its banking relationships with international companies who set up operations in the Republic of Ireland in 2020, (international company data sourced from the IDA Ireland year end annual statement 2020).

Divisional review (continued)

Group Centre

Group Centre incorporates the Group's central control functions1, which establish and oversee policies, and which provide and manage processes and delivery platforms for the trading divisions.

Serve customers brilliantly

• Group Centre business units formed an integral part of the Group's response to the COVID-19 pandemic, protecting and supporting Customers, Colleagues and Communities. The measures included:
- - enhanced customer digital services and vulnerable customer supports;
- - modifying branches and administration buildings and procedures to provide appropriate protection in accordance with Government guidelines across all jurisdictions;
- - a €1 million COVID-19 specific Community Fund working with The Community Foundation for Ireland;
- - extensive Group-wide working from home supports;
- - remote contact centre enablement;
- - comprehensive wellbeing supports across mind, body and financial on an individual and Group basis; and
- - accelerated payment terms for SME partners.
• The Begin Together programme was launched, which is a three year, €4 million investment programme supporting community initiatives across the island of Ireland.
• Under the umbrella of Financial Awareness, a multi-platform Fraud Awareness campaign was delivered in H2.

Transform the Bank

• Our transformation programme continues to make progress with the launch to customers by Retail Ireland of the new mobile app in Q2, followed by the launch of Google Pay and Apple Pay digital wallets in Q3. The upgrades provide customers with additional functionality, greater security and faster operating speeds.
• Further progress has been made on our culture transformation journey with the launch of the Group's RSB strategy and continuing investment in dedicated programmes such as 'RISE', which builds gender-balanced talent and accelerates new female leaders of the future.
• A voluntary redundancy scheme was launched in Q3 and will bring projected staff numbers below 9,000 in the medium term.
• A further €173 million (2019: €208 million) was invested in our transformation programme during 2020, of which €117 million is capitalised on the balance sheet (2019: €100 million) and €56 million (2019: €108 million) is charged to operating expenses on the income statement.

Grow sustainable proﬁts

• Group Centre's income and costs comprise income from capital and other management activities, unallocated Group support costs and the costs associated with the Irish Bank levy along with contributions tothe Single Resolution Fund (SRF), the Deposit Guarantee Scheme (DGS) and other levies.

• Negative net operating income has increased by €7 million to €12 million in 2020, primarily due to valuation and fair value adjustments.
• Operating expenses (before transformation investment and levies and regulatory charges) of €368 million in 2020 were €87 million higher than 2019. The increase is reflective of increased investment costs in strategic initiatives, along with costs associated with compliance and meeting regulatory expectations, partially offset by reduced pension costs and reorganisation and rationalisation of business activities.
• Group Centre levies and regulatory charges were €119 million in 2020 compared with €111 million in 2019, an increase of €8 million.

1 Group Centre comprises Group Technology and Customer Solutions, Group Finance, Group Risk, Group Marketing, People Services, Group Strategy & Development and Group Internal Audit.
2 Operating expenses before transformation charge and levies and regulatory charges.

Divisional financial results

The tables below and on the following pages, provide further information on the ﬁnancial performance of the Group's divisions during 2020 as well as some key performance metrics. Information on the ﬁnancial performance of the Group as a whole can be found on page 3 of the Strategic report.

Basis of presentation

Underlying divisional contribution reflects the underlying financial contribution of each division towards the consolidated Group underlying profit or loss, before tax, excluding non-core items which obscure the underlying performance of the business.

The Group has decided to apply the term 'underlying divisional contribution' to divisional results to more clearly reflect the fact that certain unallocated costs are presented in Group Centre, and are not reflected in the results of the other divisions. Comparative amounts for 2019 have not been restated, as themeasurement of divisional results is unchanged, with 'underlying divisional contribution' measured on the same basis as the previously presented 'underlying profit or loss by division'.

Percentages presented throughout the Financial Review are calculated on the absolute underlying figures and so may differ from the percentage variances calculated on the rounded numbers presented, where the percentages are not measured this is indicated by n/m.

Principal rates of exchange used in the preparation of the Financial Statements are set out on page 207.

References to 'the State' throughout this document should be taken to refer to the Republic of Ireland, its Government and, where and if relevant, Government departments, agencies and local Government bodies.

2020	2019
€m	€m
Underlying1 divisional contribution
Retail Ireland	116	468
Wealth and Insurance	56	169
Retail UK	(17)	171
Corporate and Treasury	29	455
Group Centre	(557)	(506)
Other reconciling items2	(1)	1
Group underlying (loss) / proﬁt before tax	(374)	758
Non-core items	(386)	(113)
Group (loss) / proﬁt before tax	(760)	645
Per ordinary share
Basic earnings per share3 (€ cent)	(72.4)	35.9
Underlying earnings per share3 (€ cent)	(38.6)	52.4
Tangible Net Asset Value per share4 (€ cent)	732	821
Statutory cost income ratio5 (%)	86%	71%
Underlying cost income ratio5 (%)	64%	63%
Return on assets6 (bps)	(53)	34

1 These financial results are presented on an underlying basis. Underlying excludes non-core items which are those items that the Group believes obscure the underlying performance trends in the business. See page 52 for further information.
2 Other reconciling items represent inter segment transactions which are eliminated upon consolidation and the application of hedge accounting at Group level.
3 For basis of calculation of basic earnings per share see note 20. Underlying earnings per share excludes non-core items, for further information see page 379.
4 The basis of calculation of the tangible net asset value per share is set out on page 378.
5 The basis of calculation of the statutory cost income ratio is set out on page 378. Underlying cost income ratio is calculated on an underlying basis, for further information see page 379.
6 The basis of calculation of the return on assets is set out on page 377.

Divisional financial results (continued)

Retail Ireland

Restated1

Retail Ireland	2020	2019	Change
Income statement	€m	€m	%
Net interest income	937	1,005	(7%)
Net other income	205	253	(19%)
Operating income	1,142	1,258	(9%)
Operating expenses	(709)	(745)	(5%)
Operating contribution before net impairment losses on ﬁnancial instruments	433	513	(16%)
Net impairment losses on ﬁnancial instruments	(314)	(50)	n/m
Share of results of associates and joint ventures (after tax)	(3)	5	n/m
Underlying contribution	116	468	(75%)
Net impairment losses on ﬁnancial instruments
Loans and advances to customers at amortised cost	(300)	(50)	n/m
- Residential mortgages	(23)	(60)	(62%)
- Non-property SME and corporate	(217)	(18)	n/m
- Property and construction	(47)	30	n/m
- Consumer	(13)	(2)	n/m
Other ﬁnancial instruments (excluding loans and advances to customers at amortised cost)2	(14)	-	n/m
Net impairment losses on ﬁnancial instruments	(314)	(50)	n/m
Loans and advances to customers (net) (€bn)
At 31 December	33.0	33.8	(2%)
Average in year	33.2	34.1	(3%)
Customer deposits (€bn)
At 31 December	59.0	51.9	14%
Average in year	54.5	48.3	13%

Further information in

relation to the ﬁnancial

performance of Retail

Ireland can be found on

page 59.

1 Comparative figures have been restated to reflect the impact of the voluntary change in the Group's accounting policy for interest income and expense (see note 64 for further information)
which on an underlying basis has resulted in an increase of €15 million in net interest income and a reduction of €15 million in net other income for 2019. There is no change to 2019 underlying operating income or the 2019 underlying profit before tax arising from the restatement.
2 Net impairment losses on other financial instruments (excluding loans and advances to customers at amortised cost) were €14 million for 2020 (31 December 2019: €nil) on loan commitments.

Divisional financial results (continued)

Wealth and Insurance

Wealth and Insurance Income statement	2020 €m	2019 €mChange %
Net interest expense	(7)	(8) (13%)
Net other income	214	277 (23%)
Operating income	207	269 (23%)
Operating expenses	(115)	(135) (15%)
Operating contribution	92	134 (31%)
Interest rate movement	(22)	5 n/m
Unit-linked investment variance	(14)	30 n/m
Underlying contribution	56	169 (67%)

Wealth and Insurance

Income statement (Market Consistent Embedded Value performance)

New business proﬁts

Existing business proﬁts

- Expected return
- Experience variance
- Assumption changes

Interest payments Operating proﬁt

Unit-linked investment variance Interest rate movements Embedded value proﬁt before tax

Embedded value

The table above outlines the Market Consistent Embedded Value (MCEV) performance using market consistent assumptions. The MCEV principles are closely aligned to the Solvency II principles and are consistent with the approach used for insurance contracts on an IFRS basis.

Operating profit of €86 million for 2020 was €53 million or 38% lower than 2019, primarily due to lower new business volumes and a lower benefit of assumption changes when compared to 2019.

Embedded value profit before tax of €33 million (2019: €190 million) was €157 lower than 2019 due to the impact of investment market movements on unit-linked fund performance (€26 million loss) and the impact of lower investment returns on non-linked and shareholder funds (€27 million loss).

The table below summarises the overall balance sheet of Wealth and Insurance on an MCEV basis at 31 December 2020 compared to the value at 31 December 2019. The Value of in Force (ViF) asset represents the after tax value of future income from the existing book.

Wealth and Insurance Summary balance sheet (MCEV)	2020 €m	2019 €m
Net assets	500	481
ViF	679	710
Less Tier 2 subordinated capital / debt	(162)	(162)
Less pension scheme deﬁcit	(115)	(126)
Total embedded value	902	903

Divisional financial results (continued)

Retail UK

Retail UK	2020	2019	Change
Income statement	£m	£m	%
Net interest income	497	494	1%
Net other income	(2)	(13)	(85%)
Operating income	495	481	3%
Operating expenses (before impairment of goodwill)	(263)	(288)	(9%)
Impairment of goodwill	(8)	-	n/m
Operating contribution before impairment losses on ﬁnancial instruments	224	193	16%
Net impairment losses on ﬁnancial instruments	(238)	(71)	n/m
Share of results of associates and joint ventures (after tax)	(1)	30	n/m
Underlying contribution	(15)	152	n/m
Underlying contribution (€m equivalent)	(17)	171	n/m
Net impairment losses on ﬁnancial instruments
Loans and advances to customers at amortised cost	(236)	(71)	n/m
- Residential mortgages	(26)	6	n/m
- Non-property SME and corporate	(26)	7	n/m
- Property and construction	(101)	(37)	n/m
- Consumer	(83)	(47)	n/m
Other ﬁnancial instruments (excluding loans and advances to customers at amortised cost)1	(2)	-	n/m
Net impairment losses on financial instruments	(238)	(71)	n/m
Loans and advances to customers (net) (£bn)
At 31 December	24.5	24.8	(1%)
Average in year	25.1	23.9	5%
Customer deposits (£bn)
At 31 December	18.3	19.1	(4%)
Average in year	19.3	18.8	3%

Net impairment losses on other financial instruments (excluding loans and advances to customers at amortised cost) were £2 million for 2020 (31 December 2019: £nil) on loan commitments.

Divisional financial results (continued)

Corporate and Treasury

Corporate and Treasury Income statement

Net interest income Net other income Operating income

- Net interest income and business income
- Financial Instruments valuation adjustments
- Other debt instruments at FVOCI gains

Operating expenses

Operating contribution before impairment losses on ﬁnancial instruments Net impairment losses on ﬁnancial instruments

Underlying contribution

Net impairment losses on ﬁnancial instruments Loans and advances to customers at amortised cost

- Non-property SME and corporate

- Property and construction

Other ﬁnancial instruments (excluding loans and advances to customers at amortised cost)

Net impairment losses on financial instruments

Loans and advances to customers (net) (€bn)

At 31 December

Average in year

Customer deposits (€bn)

At 31 December

Average in year

Euro liquid asset bond portfolio (€bn)

At 31 December

Average in year

Group Centre

Group Centre Income statement	2020 €m	2019 €mChange %
Net operating expense	(12)	(5) n/m
Operating expenses (before transformation investment and levies and regulatory charges)	(368)	(281) 31%
Transformation Investment charge	(56)	(108) (48%)
Levies and regulatory charges	(119)	(111) 7%
Net impairment losses on ﬁnancial instruments	(2)	(1) 100%
Underlying contribution	(557)	(506) 10%

Divisionalfinancialresults (continued)

Income statement - operating segments

2020

Divisional underlying contribution1 RetailIreland2

WealthandInsurance RetailUK CorporateandTreasury GroupCentre Otherreconcilingitems Group-underlying1

Totalnon-coreitems Costofrestructuringprogramme Impairmentofinternallygenerated computersoftware Customerredresscharges Gainonliquidationofbusinessactivities Investmentreturnontreasurystock heldforpolicyholders Gross-upforpolicyholdertaxinthe WealthandInsurancebusiness Portfoliodivestments Grouptotal

1 Underlying performance excludes the impact of non-core items (page 52).
2 Included in underlying profit before tax of Retail Ireland in 2019 is an underlying loss before tax of €1.2 million, comprising operating income of €2.5 million, and operating expenses of €3.7 million relating to its Irish non-branch ATM business from which the Group has made a strategic decision to exit. For 2020, income and expense from the Irish non-branch ATM business has been excluded from underlying profit before tax of Retail Ireland and presented within non-core items on the table above as 'Portfolio divestments'.

Proﬁt /(loss) before taxation €m

Losson disposal/ liquidation ofbusiness activitiesand property €m

Shareof resultsof associates andjoint ventures (aftertax)

€mNet impairment losses onﬁnancial instruments €m

(50) 5 - 468

- - - 169

(82) 34 - 171

(82) - - 455

(1) - - (506)

- - - 1

(215) 39 - 758

Operating proﬁt/(loss)

beforenet impairment losses onﬁnancial instruments €m

513

169

219

537

(505)

1 934

(59) - - - (59)

-(74) - - - (74)

(25) (25)

-(2) - - - (2)

35 - - - 35

11 1 - - 12

(25) 645

(214)

845

Total operating income netof insurance Operating

expenses €m

(745)

(135)

(329)

(195)

(500)

claims €m

1,258

304

548

732

(5)

(1)

2,836 (1,902)

(59)

- (64)

- (40)

- (10)

(2)

35 51

2,910 (2,065)Insurance contract liabilities andclaims paid €m

- (2,642)

- - (5) - (2,647)

- - - - - - - (2,647)

Total

Other operating income/ income/ (expense) (expense)

€m

1,258

2,946

548

732 -

(1)

€m

253

1,433

(15)

129

(5)

(7)

1,798 5,483

- (10)

(2)

35 51 5,557

- - - -

(2)

35 36 1,867

Divisionalfinancialresults (continued)

Income statement - operating segments

Net insurance premium income €m

Net interest income/ (expense)

€m

1,005

(8) 1,521

- - (3) - 1,518

- - - - - - - 1,518

563 603

(2)

6 2,167

- (10)

- - - 15 2,172

Restated1 2019

Divisional underlying contribution2 RetailIreland

WealthandInsurance RetailUK CorporateandTreasury GroupCentre Otherreconcilingitems Group-underlying2

Totalnon-coreitems Costofrestructuringprogramme Impairmentofinternallygenerated computersoftware Customerredresscharges Lossonliquidationofbusinessactivities Investmentreturnontreasurystock heldforpolicyholders Gross-upforpolicyholdertaxinthe WealthandInsurancebusiness Portfoliodivestments Grouptotal

1 As outlined in note 64, comparative figures have been restated to reflect the impact of the voluntary change in the Group's accounting policy for interest income and expense.
2 Underlying performance excludes the impact of non-core items (page 52).

Bank of Ireland Annual Report 2020
Governance
Contents
Corporate Governance Statement
Chairman's introduction	72
Your Board	75
Report of the Nomination, Governance and Responsible Business Committee	95
Report of the Group Remuneration Committee	100
Report of the Group Audit Committee	103
Report of the Board Risk Committee	110
Attendance table	114
Report of the Directors	115
Schedule to the Report of the Directors	118
Remuneration report	121

Corporate Governance Statement Chairman's Introduction

Patrick Kennedy Chairman

Dear Shareholders,

I am pleased to present our Corporate Governance Report for 2020. The Report explains how corporate governance standards are applied across the Group and how they are overseen by the Board, how the Board operates, and how the Board evaluated its effectiveness during 2020. It includes reports from the four mandatory Board committees which further illustrate how the principles of good governance are

embedded.

The Board is cognisant of its role in creating sustainable, long term value for our shareholders and in contributing to wider society. The Group's role in wider society and our Purpose of enabling our customers, colleagues and communities to thrive was at the top of all of our minds as we faced the many challenges brought about by the Coronavirus pandemic. The Group's ability to respond at pace was supported strongly by the Group's robust corporate governance framework which the Board continually seeks to enhance through regular reviews and challenge.

The Board is committed to achieving high standards of governance designed to protect the long-term interests of shareholders and all other stakeholders, while promoting the highest standards of integrity, transparency and accountability.

The Board is accountable to shareholders for the overall direction and control of the Group. The established governance framework provides for systems of checks and controls required to drive accountability and effective decision making across the Group, with appropriate policies and practices in place to ensure that the Board and its Committees operate effectively.

A key objective of the Group's governance framework is to ensure compliance with applicable corporate governance requirements. During 2020, the Group complied fully with the following corporate governance requirements:

• Central Bank of Ireland Corporate Governance Requirements for Credit Institutions 2015 ('Irish Code').
• Irish Corporate Government Annex.
• S.I. No. 158/2014 & No. 159/2014 - EU (Capital Requirements) Regulations 2014.
• European Banking Authority (EBA) Guidelines on internal governance under Directive 2013/36/EU.
• Joint European Securities and Markets Authority (ESMA) and EBA Guidelines on the assessment of the suitability of members of the management body and key function holders under Directive 2013/36/EU and Directive 2014/65/EU1.

The Group is also subject to the 2018 UK Corporate Governance Code published by the Financial Reporting Council in the UK ('UK Code') and the Irish Corporate Governance Annex to the Listing Rules of the Irish Stock Exchange, t/a Euronext Dublin. During 2020, the Group applied the main principles and complied with all provisions of the Code other than in instances related to Section 5: Remuneration, in particular principle R and provisions 32, 36 and 37. The rationale and explanation for noncompliance with these principles are set out below:

• due to certain agreements in place with the Irish State, the Group Remuneration Committee and the Board are restricted in their ability to fully comply with Principle R and associated provisions;
• under such agreements, the implementation of variable remuneration structures is not permitted, the Board's discretion is limited and, as such, the Board cannot be in compliance with the recommendation to exercise independent judgement;
• should variable remuneration be introduced, the Group notes and will fully adhere to these principles and provisions in the design, implementation and operation of any future variable remuneration structures; and
• the current status of pension arrangements is considered to be fair in light of the remuneration restrictions. The pension contribution rates for executive directors, where provided, are aligned with those available to the workforce.

Coronavirus pandemic (COVID-19)

As COVID-19 became a reality in early March 2020, the Board focused on ensuring the health and safety of our colleagues and customers, the continuity of the Group's operations and the availability and reliability of service to our customers. The provision of financial services was determined by the Government to be an essential service during the pandemic. Our technology colleagues enabled a significant increase in the number of colleagues working remotely, while others ensured the safety of those physically required at the Bank's locations where continuity of service and support to, and the safety of, customers visiting our premises was a priority.

The Board met 31 times during 2020, working with the GEC to ensure the continued health and safety of colleagues and customers and the availability of reliable services. Alongside these important matters, the Board focused on:

• supports required by customers facing financial distress and uncertainty in the wake of COVID-19. Risk management and customer outcomes were key lenses through which important decisions were taken across the Group;

All Codes, Regulations, Directives, Statutory Instruments and Acts are publicly available on the respective organisations' websites.

Chairman's Introduction (continued)

• the potential financial and capital impact of the pandemic on the Group's performance during 2020 and beyond, with transparent market disclosures ensured;
• the role of the Group and the banking industry generally in supporting the Irish economy; and
• advancing the Group's Strategy, maintaining strong momentum on key priorities and accelerating certain initiatives in response to changing customer behaviours, needs and expectations.

The Board and the GEC have been strongly supported throughout the pandemic by effective risk management and business continuity management practices and processes, which are key aspects of the Group's governance framework.

The Board has operated remotely since early March 2020 and a review of the Board's operations was conducted in August 2020 to ensure its continued effectiveness in a remote environment. I led the review, which was conducted in addition to the formal annual evaluation of the effectiveness of the full Board, its Committees and individual Directors. Following meetings with individual Directors, I provided a summary of the Directors' observations to the Board. The review found that the Board continued to operate effectively and that the agenda and areas of focus remained appropriate. Following Director feedback, dedicated Board sessions to provide the opportunity to observe more directly customer experiences in the contact centres were put in place to compensate for the absence of site visits.

The appointment of Eileen Fitzpatrick as our Workforce Engagement Director during 2020 proved a positive additional point of connection with the workforce. Later in the Report we share some of the activities undertaken by Eileen during 2020. Eileen's activities coupled with the Board's direct engagement with senior colleagues during 'visibility sessions' (held in the absence of the CEO, CFO and wider Executive team) complemented the pre-existing mechanisms through which the Board gains valuable insights into how colleagues were experiencing the pandemic and, importantly, the leadership and culture of the Group.

People and culture

Our people remain at the very core of what we do, and I continue to be impressed by the commitment shown by all of our colleagues during this global pandemic. The Board appreciates that the pandemic has led to personal and professional challenges for all of us and the way in which the Group's workforce has worked to support one another and our customers has been notable.

The Board has worked with the Executive team to ensure a continued focus on the Group's culture during 2020. The Board is satisfied that the Group's Purpose is fully aligned with the Group's culture, values and strategic priorities.

I am pleased to report further improvement during 2020 in our engagement and cultural embedding scores, assessed through staff surveys with very high participation rates. The scores achieved were above the reported global average for financial services. The improvement experienced during what was a challenging year is reflective of the pride colleagues feel in the demonstration of our commitment to the Group's Purpose, inthe support they themselves have provided to our customers and in the huge effort made across the Group to support colleague mental health and wellbeing during the pandemic.

An important aspect of our culture is embedding diversity and inclusion throughout the organisation. Gender diversity has been an area of focus for the Group at both workforce and Board level. Currently, the representation of females on our Board is at 45%.

The Group signed up to the UK Race Charter during 2020 and has committed to meeting, and in certain cases exceeding, the standards set out in that Charter, which is composed of five principal calls to action for leaders and organisations to ensure their workplaces are tackling barriers that ethnic minorities face in recruitment and progression. Supporting equality in the workplace is the responsibility of all leaders and the Board has pledged its commitment to zero tolerance for any form of racial harassment, bullying or inappropriate behaviours from any source, be it management, colleagues, customers or contractors.

The Board's Diversity Policy sets out the approach to diversity on the Board and is available on the Group website athttps://www.bankofireland.com/about-bank-of-ireland/ corporate-governance/#tabpanel_2

Board changes in 2020

The NGRB is responsible for reviewing the composition of the Board and its Committees and assessing whether the balance of skills, experience, knowledge and independence is appropriate to enable them to operate effectively. The composition of the Board remains under continuous review and the NGRB maintains a constant focus on succession planning, to ensure the continuation of a strong and diverse Board and the orderly succession of Board members, which is appropriate to the Group's Purpose and the industry within which it operates.

Giles Andrews joined the Board in November 2020, bringing extensive experience in financial technology, investment and lending as well as strong management experience to the Board. Giles is a highly respected FinTech pioneer and the Board will benefit in particular from his technology transformation background and innovative mindset. On appointment, Giles joined the Board's Risk Committee, Remuneration Committee and the Group Transformation Oversight Committee.

Patrick Haren and Patrick Mulvihill retired from the Board on 31 December 2020 having each served nine years. Individually they made a significant contribution to the Group and we remain grateful for the considerable experience and sound judgement they brought to the Board's deliberations during their respective tenures. In preparation for their retirements, the following Board changes took place:

• Richard Goulding succeeded Patrick Haren as the Senior Independent Director (SID) and Deputy Chairman on 1 January 2021. Richard stood down from the Remuneration Committee, joined the NGRB and became a Trustee of the Bank of Ireland Staff Pension Fund (BSPF). Richard remains a member of the Group Transformation Oversight and Audit Committees, and continues in his role as the Chair of the Risk Committee.

Chairman's Introduction (continued)

• Evelyn Bourke succeeded Patrick Mulvihill as the Chair of the Board Audit Committee on 1 January 2021. Evelyn also joined the Board Risk Committee (BRC) and stood down from the NGRB.

Other Committee changes

• Eileen Fitzpatrick joined the NGRB and also became a Trustee of the BSPF. Both positions are considered to be aligned with her position as the Group's Workforce Engagement Director.
• Fiona Muldoon joined the Group Audit Committee and Group Remuneration Committee (GRC) during 2020. Fiona stood down from the Risk Committee on 1 January 2021 having served as a member for five years.

Board and individual eﬀectiveness evaluation

During 2020, the Board conducted the annual evaluation of its effectiveness. Having successfully concluded a comprehensive external evaluation in 2019, the 2020 process was internal and consisted of the completion of questionnaires by each Director and individual one to one meetings between myself, as Chairman, and the individual Directors.

In addition, Committee Chairs met with Committee Members to consider the effectiveness of their respective Board Committees and, led by the SID, the Directors completed questionnaires and held meetings to discuss my performance as Chairman.

In summary, the evaluation reaffirmed the conclusions of the 2019 external evaluation regarding the continued effectiveness of the Board. The evaluation of individual Directors concluded that individual Directors continue to demonstrate commitmentto their roles, with such commitment evidenced further during 2020 given the heightened activity levels arising from the pandemic. All Directors are considered to be experienced and provide an objective perspective. The Board considers the effective contribution of each of the individual Directors and the Board as a whole to be important to the long-term sustainable success of the Group.

On pages 81 and 84 respectively, you will find detail on the outcome of the evaluation of the Chairman's effectiveness as well as that of the wider Board. As part of the process we identified some areas for enhancement, details of which can be found later in the Report, Such enhancements are always welcomed and I look forward to reporting on progress on those areas in the next report.

Updates on the areas for enhancement identified in the 2019 external evaluation are reported on page 85.

Looking ahead

The Board will continue to work effectively with the Executive team in 2021 to ensure continued challenge to and delivery of the Group's strategy in order to create sustainable long-term value for our shareholders. The Group's governance framework will be subject to continuous review to ensure it remains robust and facilitates effective decision making and appropriate Board oversight.

The health and safety of our colleagues and customers and the Bank's wider role in the community will remain a top priority as we work together to combat the COVID-19 pandemic.

Patrick Kennedy Chairman

26 February 2021

Nomination, Governance and Responsible Business Committee

Strategic Report	Financial Review
Your Board
Group Audit	Group Risk
Committee	Committee
Evelyn Bourke (Chair)	Richard Goulding
Eileen Fitzpatrick	(Chair)
Richard Goulding	Giles Andrews
Fiona Muldoon	Evelyn Bourke
Steve Pateman	Ian Buchanan
Michele Greene
Steve Pateman

Group Executive Committee

Patrick Kennedy (Chair)

Eileen Fitzpatrick Richard Goulding Fiona Muldoon

Group Transformation Oversight Committee

Ian Buchanan (Chair)

Giles Andrews Richard Goulding Michele Greene Patrick Kennedy

Francesca McDonagh Group Chief Executive Officer Myles O'Grady Group Chief Financial Officer Henry Dummer Chief Marketing Officer Matt Elliott Chief People Officer

Ian McLaughlin Chief Executive, Retail UK

Sarah McLaughlin Group Secretary and Head of Corporate Governance Vincent Mulvey Group Chief Risk Officer

Tom Hayes Chief Executive, Corporate Banking Gavin Kelly Chief Executive, Retail Ireland

Jackie Noakes Chief Operating Officer Mark Spain Chief Strategy Officer

Oliver Wall Chief of Staff & Head of Corporate Affairs

Your Board (continued)

GTOC NGRB

Patrick Kennedy

BRC GTOC RC

Giles

AndrewsEileen Fitzpatrick

ACNGRBRC

Myles O'Grady

Steve Pateman

ACBRCRC

Richard GouldingIan Buchanan

Michele Greene

Note:

Patrick Haren and Patrick Mulvihill retired on 31 December 2020.

ACBRC

GTOC NGRB

BRC

Francesca McDonagh

GTOC

BRCGTOC

Evelyn Bourke

AC NGRB RC

Fiona Muldoon

Abbreviations

AC	Audit Committee
BRC	Board Risk Committee
GTOC	Group Transformation Oversight Committee
NGRB	Nomination, Governance and Responsible
Business Committee
RC	Remuneration Committee

ACBRC

Your Board (continued)

Patrick Kennedy

Independent (on appointment)

Richard Goulding

Independent

Francesca McDonagh

Non-Independent

Role

Non-Executive Director (July 2010). Chairman (August 2018, Deputy Chairman April 2015). Chair, Nomination, Governance and Responsible Business Committee (August 2018, Member from September 2014).

Member, Risk Committee from January 2011 and Chair July 2016 to July 2018. Member, Remuneration Committee from January 2011 to July 2016. Member of the Audit Committee from July 2016 to July 2018. Member of Group Transformation Oversight Committee (August 2018).

Particular Skills

Strong leadership qualities. Deep knowledge of the Group with exceptional commercial acumen. In-depth knowledge of international business, management, finance, corporate transactions, strategic development and risk management gained from a highly successful career in national and international business.

External Appointments

Chairman of Cartrawler. Honorary Treasurer of the Irish Rugby Football Union.

Experience

Patrick was chief executive of Paddy Power plc from 2006 to 2014, prior to which he served as an executive director from 2005 and non-executive director from 2004. Prior to joining Paddy Power plc, Patrick worked at Greencore Group plc for seven years where he was CFO and also held a number of senior strategic and corporate development roles. He previously worked with KPMG Corporate Finance in Ireland and the Netherlands, with McKinsey & Company. in London, Dublin and Amsterdam, and as a non-executive director of Elan Corporation plc.

Qualiﬁcations

Fellow of Chartered Accountants Ireland.

Role

Non-Executive Director (July 2017). Deputy Chairman and SID (January 2021). Chair, Risk Committee (Aug 2018, Member, July 2017). Member, Remuneration Committee (December 2020). Member, Audit Committee (August 2018). Member, Nomination, Governance and Responsible Business Committee (January 2021). Member of Group Transformation Oversight Committee (August 2018).

Particular Skills

Extensive risk management and executive experience in a number of banks with an international profile, and brings a strong understanding of banking and banking risks, with a deep knowledge of operational risk.

External Appointments

Non-executive director of Zopa Bank Limited, where he is chair of the risk committee and a member of the audit, nomination and remuneration committees.

Experience

Richard held the role of group chief risk officer (2006 to 2015) and director (2013 to 2015) at Standard Chartered Bank, where he was a member of the group executive committee, prior to which he held the role of chief operating officer, Wholesale Banking Division. Before joining Standard Chartered in 2002, he held senior executive positions with Old Mutual Financial Services in the U.S., UBS Warburg / SBC Warburg, London and Switzerland, Astra Holding plc, Bankers Trust Company and the Midland Bank Group, London. Richard is a former director of Citigroup Global Markets Limited where he served as chair of its risk committee and a member of its audit, remuneration and nomination committees.

Qualiﬁcations

Qualified Chartered Accountant (South Africa), Bachelor of Commerce degree and a postgraduate degree in finance from the University of Natal, South Africa.

Role

Group CEO and Executive Director (October 2017).

Particular Skills

A skilled global banker, renowned for strategic thinking and a proven track record in successfully executing strategy. A history of delivering strong financial performance coupled with leadership of transformation to drive future results. Experience in a range of senior banking roles, and in a range of countries and operating structures. She brings to the Board a leadership style characterised by strong commercial results orientation, a clear strategic vision and significant customer focus.

External Appointments

Director of IBEC Company Limited by Guarantee. Member of the Prudential Regulation Authority (PRA) Practitioner Panel.

Experience

Francesca joined the Group from HSBC Group, where she held a number of senior management roles over a twenty year period including Group General Manager and Regional Head of Retail Banking and Wealth Management, UK and Europe, Regional Head of Retail Banking and Wealth Management, Middle East and North Africa, and Head of Personal Financial Services, Hong Kong. She has previously served on the board of the British Bankers' Association, where she was Deputy Chair, and on the board of the National Centre for Universities and Business in the UK.

Qualiﬁcations

Bachelor of Arts Degree in Politics, Philosophy and Economics from Oxford University. Awarded an Order of the British Empire in 2017 for services to banking. Fellow of the Institute of Banking (Ireland).

Your Board (continued)

Giles Andrews

Independent

Ian Buchanan

Independent

Evelyn Bourke

Independent

Role

Non-Executive Director (November 2020). Member, Risk Committee, Remuneration Committee and Group Transformation Oversight Committee (November 2020).

Particular Skills

Extensive experience in financial technology, investment and lending as well as strong management experience.

External Appointments

Non-executive Director of Zopa Group Limited. Chairman of Bethnal Green Ventures. Non-executive Chairman of Market Finance Limited. Non-executive Chairman of Carwow Limited. Advisory role to Northzone Ventures.

Experience

In 2004, Giles co-founded Zopa, initially the first ever online peer-to-peer lending marketplace. In 2020, Zopa also launched as a Digital Bank. He was CEO of Zopa from 2007 to 2015, Chairman from 2015 until 2019 and remains a member of the Zopa Group Board. Giles is Chairman of Bethnal Green Ventures, a leading early-stage venture capital firm which focuses on using technology to tackle large-scale social and environmental problems, and is on the boards of Carwow Limited, a platform for buying new cars from franchised dealers, and Market Finance Limited, a FinTech platform that provides working capital finance to small businesses in the UK.

Qualiﬁcations

Master's degree in Experimental Psychology from Christ Church at Oxford University. MBA from INSEAD. Awarded an OBE in 2015 for services to financial services. Named FinTech leader of the year in the 2016 FinTech innovation awards.

Role

Non-Executive Director (May 2018). Member, Risk Committee (May 2018). Director, Bank of Ireland (UK) plc (September 2018) and a member of its Risk Committee (October 2019). Chair of Group Transformation Oversight Committee (August 2018).

Particular Skills

Extensive technology, digital, business transformation and customer operations experience gained through his work in a number of international retail, commercial and investment banks.

External Appointments

None.

Experience

Ian was group chief information officer for Barclays plc and chief operating officer for Barclaycard until 2016. Before joining Barclays in 2011, Ian was chief information officer for Société Générale Corporate & Investment Banking (2009 to 2011), a member of the public board and group manufacturing director of Alliance & Leicester plc (2005 to 2008) and a member of the executive committee and chief operations and technology officer of Nomura International (1994 to 2005). Ian's earlier career was spent at Credit Suisse, Guinness, and BP. Ian is a former non-executive director of Openwork Holding Limited.

Qualiﬁcations

Bachelor of Science degree in Physics from the University of Durham.

Role

Non-Executive Director (May 2018). Chair, Audit Committee (January 2021, Member May 2018). Member, Risk Committee (January 2021). Member of the Nomination, Governance and Responsible Business Committee from May 2018 to December 2020.

Particular Skills

Strong track record in global executive management and extensive experience in financial services, risk and capital management, and mergers and acquisitions.

External Appointments

Non-executive director of Marks & Spencer Group plc and member of its Audit and Nomination Committees.

Experience

Evelyn retired from Bupa, the international health insurance and health care group, as at 31st December 2020, having served as Group CEO since April 2016, initially on an acting basis from April to July 2016. She joined Bupa as CFO in September 2012 from Friends Life Group, where she had been the CEO of the Heritage Division. Evelyn joined Friends Provident plc (renamed Friends Life Group) in May 2009 as CFO. Evelyn's earlier career was spent, in the UK, at Standard Life plc, Chase de Vere Financial Solutions, St James's Place plc, Nascent Group and Tillinghast Towers Perrin. Prior that she worked with Lifetime Assurance and New Ireland Assurance in Dublin.

She was a non-executive director with IFG plc, Dublin, from 2011 to 2016, where she chaired the Risk Committee.

Qualiﬁcations

Fellow of Institute and Faculty of Actuaries. MBA from London Business School.

Your Board (continued)

Eileen Fitzpatrick

Independent

Michele Greene

Non-Independent

Fiona Muldoon

Independent

Role

Non-Executive Director (May 2019), Member, Audit and Remuneration Committees (May 2019). Workforce Engagement Director (January 2020).

Particular Skills

Eileen has extensive capital markets and public sector experience, and has held a number of senior roles in both the asset management and stockbroking industries.

External Appointments

Chairman of the Outside Appointments Board, Department of Public Expenditure and Reform. Non-Executive Director of a number of KKR investment management firms in Ireland. Non-Executive Director of Urbeo Residential Limited and Respond Housing Association.

Experience

Eileen joined the National Treasury Management Agency (NTMA) in 2006 as a director, where she oversaw the Alternative Assets Investment Programme, for the National Pensions Reserve Fund. Eileen was subsequently appointed as head of NewERA at the NTMA, a position she held from November 2011 to January 2019. Prior to her appointment at the NTMA Eileen was chief executive officer at AIB Investment Managers from 2000 to 2006. From 1987 to 2000 Eileen held a number of senior investment and stockbroking positions, including with AIB Investment Managers, Goodbody Stockbrokers, National City Brokers and Montgomery Govett.

Eileen has served in a number of non-executive positions including as chairman of the Irish Association of Investment Managers, as a board member of the Chartered Accountants Regulatory Board, as a member of the Government's Top Level Appointments Committee, and as a member of the Governing Body of University College Dublin.

Qualiﬁcations

PhD in Science from University College Dublin.

Role

Non-Executive Director (December 2019). Member, Risk Committee and Group Transformation Oversight Committee (December 2019).

Particular Skills

Extensive experience of financial services and retail banking, particularly in the areas of payments, transformational and digital innovation.

External Appointments

Director of Mololo Limited an advisory firm specialising in the use of advanced technologies for performance management.

Experience

Michele held the role of managing director of Virgin Money's Digital Bank until July 2018, prior to which she was director of strategic development, responsible for the bank's future development. Michele joined Virgin Money initially as director of banking, with responsibility for building the bank's new credit card business. Before joining Virgin Money, she was CFO of MBNA Europe where she held executive positions on the boards of MBNA Europe Ltd and Premium Credit Finance Limited.

Michele's earlier career was spent at Goldman Sachs, Credit Lyonnais and KPMG.

Qualiﬁcations

Master's Degree from Trinity College Dublin and Fellow of Chartered Accountants Ireland.

Role

Non-Executive Director (June 2015). Member, Risk Committee (November 2015 to December 2020). Member, Nomination, Governance and Responsible Business Committee (January 2019). Audit Committee (May 2020) and Remuneration Committee (October 2020).

Particular Skills

Significant experience in governance, regulatory compliance and financial oversight and is an experienced financial services professional. Significant previous experience within a financial institution with an international focus.

External Appointments

None.

Experience

From 2015 to 2020, Fiona was group chief executive of FBD Holdings plc and FBD Insurance plc, one of Ireland's largest general insurers. She served from 2011 to 2014 with the Central Bank of Ireland (CBI) including as director, Credit Institutions and Insurance Supervision. Fiona spent 17 years of her career with XL Group in Dublin, London and Bermuda, where she worked in various management positions including general insurance responsibilities, corporate treasury and strategic activities including capital management, rating agency engagement and corporate development.

Qualiﬁcations

Bachelor of Arts Degree from University College Dublin, Fellow Chartered Accountants Ireland.

Your Board (continued)

Myles O'Grady

Non-Independent

Steve Pateman

Independent

Role

Group CFO, Executive Director (January 2020).

Particular Skills

Significant expertise working with international and domestic regulators, government and state authorities, investors, market analysts and international investment banks. Experienced across strategy development, business restructuring and recovery, Finance function transformation, investor relations and Initial Public Offerings (IPOs).

External Appointments

None.

Experience

Myles has 30 years' experience as a finance professional with over 25 years in financial services. Prior to joining the Group he was CFO at D|Res Properties, an Irish homebuilding and property development company. Previously, he was group director of finance and investor relations at AIB, an Irish financial services group operating predominantly in Ireland and the UK.

Myles' earlier career was spent at Citibank and Dresdner Kleinwort Benson.

Qualiﬁcations

Fellow of the Chartered Association of Certified Accounts, an INSEAD certified board director and member of the Institute of Directors Ireland.

Role

Non-Executive Director (September 2018). Chair, Remuneration Committee (January 2020, Member September 2018). Member, Audit and Risk Committees (September 2018).

Particular Skills

Brings to the Board the strategic insights of a CEO of a UK Bank and a strong lending and credit background with deep commercial experience including the operational challenges facing lending institutions.

External Appointments Consultant to the Arora Group.

Experience

Steve acts as an Advisor to the Arora Group, where he was the CEO from April 2020 to August 2020. Prior to this, Steve held roles as the CEO of Hodge Group from January 2019 to March 2020 and Shawbrook Bank Limited from October 2015 to December 2018. He joined Shawbrook from Santander UK, where he was Executive Director and Head of UK Banking and was responsible for the bank's corporate, commercial, business and retail banking operations as well as wealth management. He also held a number of senior positions at Santander UK, Royal Bank of Scotland and NatWest. Steve was appointed vice president of the Chartered Bankers Institute in June 2017. He was a director of The Mortgage Lender Limited from May 2018 to January 2019.

Qualiﬁcations

Steve became a Senior Vice President of the Chartered Banker Institute in June 2020. He was awarded an Honorary Doctorate from the University of Kent for services to banking.

Your Board (continued)

Chairman's tenure

Patrick Kennedy was appointed Chairman in August 2018. He was independent under the UK Code at the time of his appointment. As an existing NED, he registered service of nine years on the Board in July 2019.

In the 2019 Annual Report, the Board's consideration of Patrick's continued strength of leadership was outlined against the backdrop of the UK Code recommendations. The UK Code and the supporting Guidance on Board Effectiveness identify service on the Board for more than nine years from the date of first appointment as a specific consideration in the evaluation of the independence of NEDs. The Chairman is not subject to the UK Code's independence test other than on appointment. However, the UK Code recommends that the Chairman is subject to similar length of service considerations and should not remain in post longer than nine years. The UK Code provides for extension of the Chairman's tenure to facilitate succession planning and the development of a diverse Board, particularly in those cases where the Chairman was an existing NED on appointment.

The principles and provisions of the UK Code in this area are not rigid rules but instead offer flexibility through the application of its 'comply or explain' provisions and the supporting Guidance; they are considered to support maintenance of the right combination of skills, experience and knowledge on the board, supported by formal processes of appointment and annual evaluation of performance.

The 2019 Annual Report outlined the Board's rationale for Patrick's continuation as Chairman for a further period and the Board's recommendation of his re-election at the 2020 Annual General Meeting (AGM), which was subsequently approved by the Company's shareholders with greater than 99% of votes cast in favour of his re-election. The Company committed to consulting with shareholders on the matter of tenure during the second half of 2020.

Patrick Haren, as the departing SID, and Richard Goulding, as his successor, led the shareholder consultation between September and December 2020, during which they consulted with shareholders representing c.50% of the Company's issued share capital and the Department of Finance which represents a further 14%. The consultation was positive, with shareholders confirming their understanding of and support for the Board's considerations.

An overview of the Board's assessment of the key considerations on the Chairman's tenure, which was shared during the consultation, is outlined below.

The Board's assessment of the key considerations on the continuation of the Chairman's tenure

Patrick Kennedy's appointment as Chairman in August 2018 was governed by a rigorous process led by the SID with external benchmarking by Egon Zehnder which rated him as an exceptional candidate for the role. His performance in the role in the two years since his appointment - from his refocussing of the Board agenda, the innovation he has brought to the Board's engagement with customers and staff, his structured approach to engagement with institutional shareholders and regulators, through to his leadership during the COVID-19 pandemic - has confirmed his exceptional qualities as Chairman.

Patrick's positioning as an internal candidate for the Chairman arose out of a planned process of succession. As part of that succession planning, he had the opportunity to serve on each major Board Committee, including Chair of the Risk Committee and Deputy Chairman until July and August 2018 respectively. His years of experience of Bank of Ireland prior to his appointment as Chairman, which are calculated in the assessment of tenure, are precisely what provided him with the detailed understanding of the business which, in the view of the Board, underpins his current success in the role.

With seven out of eleven Board directors at January 2021 having been appointed within the last three years, the factors which were regarded as relevant to Patrick's original selection as Chairman continue to be key Board considerations. These include: the significant level of change in Board membership which underlines a need for continuity on strategic issues and integration of new Board members into a coherent and effective team; and Patrick's deep rooted knowledge and experience of the Irish environment, embracing all stakeholders including Customers, Regulators and the Government, which complements the previously UK based CEO.

The background of a political landscape which underwent significant change in the 2020 Irish general election, a relatively newly formed Government responding to a global pandemic and preparing for a post-COVID-19 recovery, the ill-defined parameters of the post-COVID-19 world, and Brexit and its impact on the Irish economy and its trading relationships with Britain and Northern Ireland, are all factors which accentuate the continuing value in the medium-term of a Chairman who is rooted in the Irish business community.

Patrick is young at 51 and has served just two years as Chairman. He has deliberately restricted his other commitments to ensure that the Group remains his primary focus and brings very strong leadership to the Board. As the business embraces continuing significant internal change, including the ongoing transformation of its culture and a multi-year programme of investment in systems, and against a background of substantial change at Board level and within the executive team, his very detailed understanding of the business provides continuity of institutional knowledge and his continuing tenure provides desirable stability in the direction of the business.

In relation to the senior management team, having regard to the relatively recent appointment of the two Executive Directors (a formerly UK-based CEO in October 2017 and the Group CFO in January 2020), the Board is satisfied that there is no issue of significant concurrent service arising as a governance concern.

Patrick is considered to combine a detailed understanding of the Group with exceptional commercial acumen gained from a highly successful career in national and international business. He continues to demonstrate clear independence of mind and objective judgement. He has focused on strong succession at Board level with appointments of directors with experience of banking, technology, transformation and government policy. He has promoted diversity and constructive challenge amongst Board members and has reinforced relationships with the Group's stakeholders. An independent review of his role conducted by Praesta during 2019 assessed him as a first-class Chairman, rated very highly by all Board members; this view was

Your Board (continued)

reinforced in the more recent 2020 internal effectiveness evaluation. Patrick's strength of leadership of the Board and his adaptability has been further demonstrated through the COVID-19 pandemic.

Recommendation to shareholders

At the time of his appointment in 2018, the Board's expectation was that Patrick would serve two three-year terms, in line with the tenure of previous Chairmen and the Board's views on succession planning and the need for retention of corporate memory as other long-standing directors depart the Board. The Board has considered carefully the implications of the UK Code and is of the view that Patrick's tenure should be extended for up to a further three years to 2024 to allow his services to be retained in the best interests of the company and its shareholders, and subject always to annual performance assessments and the annual re-election by shareholders at the Company's AGM.

The Board has considered carefully its succession plan over the short to medium term and has given due consideration to the process through which an appropriate successor to Patrick would be identified and the timeframe thereof. It is intended that the process to select an external third-party firm to work with the SID and the wider NGRB on the search would commence in the second half of 2022. The Board will keep shareholders informed on the matter of the Chairman's performance and his tenure in future Annual Reports.

The Board believes Patrick provides valuable knowledge and experience of the customer, regulatory and political environment and necessary continuity during a period of significant change and challenge in the wake of COVID-19. As such, the Board considers it appropriate for Patrick to remain in role for a further period and will be recommending his re-election at the 2021 AGM. The Company will continue to consult shareholders on the matter of tenure as appropriate.

Board committees

The Board is assisted in the discharge of its duties by a number of Board Committees, whose purpose it is to consider, in greater depth than would be practicable at Board meetings, matters for which the Board retains responsibility. Each Committee operates under terms of reference approved by the Board. Appropriate cross-membership of key Board Committees, including between the Audit and Risk Committees and Remuneration and Risk Committees, is ensured. The NGRB formally reviews the composition and purpose of the Board Committees annually on behalf of the Board.

The minutes of all meetings of Board Committees are circulated to all Directors for information and are formally noted by the Board. Papers for all Board Committee meetings are also made available to all Directors, irrespective of membership. Such circulation of minutes and papers are restricted should there be a conflict of interest or issues of personal confidentiality.

The terms of reference of the Group Audit Committees (GAC), the BRC, the NGRB and the Group Remuneration Committee (GRC) are available on the Group's website atwww.bankofireland.com/about-bank-of-ireland/corporate-governance. In addition to the aforementioned Committees, theBoard has in place a Committee, the Group Transformation Oversight Committee (GTOC), which has a mandate to support the Board in overseeing, supporting, and challenging the actions being taken by Management in relation to the execution of the Group's strategic transformation, focused on technology related change. As the Group pivots towards a more customer-focused, digital banking model, with greater levels of customer digital engagement and automation of servicing and processes, the Committee oversees the step change required in the Group's business and technology practices alongside changes required to optimise digital skills, organisational models and ways of working in order to deliver the right customer experience, systems, and processes to deliver the desired outcomes.

In carrying out their duties, Board Committees are entitled to take independent professional advice, at the Group's expense, where deemed necessary or desirable by the Committee Members.

Reports from the GAC, the BRC, the NGRB and the GRC are presented on pages 95 to 113.

Board composition and succession

The Board comprises eleven Directors: two Executive Directors, the Chairman, who was independent on appointment, seven independent NEDs and a Director nominated by the Minister for Finance, who is deemed to be a non-independent NED. The biographical details of each of the Directors, along with each of their individual dates of appointment, are set out on pages 77 to 80.

The Board considers that a board size of ten to twelve Directors allows for a good balance between having the full range of skills necessary on the Board and to populate its committees and retaining a sense of accountability by each Director for Board decisions. The Board acknowledges that this number may go below ten or beyond twelve for a short term as may be required to accommodate succession planning activities and to ensure the timely induction and development of new Directors.

The NGRB ensures a formal, rigorous and transparent procedure when considering candidates for appointment to the Board and maintains continuous oversight of the Board's composition to ensure it remains appropriate and has regard for its purpose, culture, major business lines, geographies, risk profile and governance requirements.

Both on an individual and a collective basis, the Directors are considered to have the range of skills, understanding, experience and expertise necessary to ensure the effective leadership of the Group and that high corporate governance standards are maintained. The NGRB leads the process for appointments to the Board and ensures plans are in place for orderly succession to both the Board and Executive positions.

The process has regard for the impact of expected retirements of Directors and the Group's desired culture and its strategic direction. As part of the process, the NGRB approves a detailed role profile, based on its analysis of the skills and experiences needed and selects, where appropriate, an external search firm to facilitate the process. The NGRB ensures that a comprehensive due diligence process is undertaken, which

Your Board (continued)

includes the candidate's self-certification of probity and financial soundness, external references and external checks. The due diligence process facilitates the NGRB in satisfying itself as to the candidate's independence, fitness and probity, and capacity to devote sufficient time to the role before making a formal recommendation to the Board. Regulatory assessment and formal approval is required and received for all Board appointments.

A Board-approved Policy for the Assessment of Directors, which outlines the Board appointment process, is in place, and is in accordance with applicable joint guidelines issued by ESMA and the EBA.

External support

The Chairman's introduction set out the key Board changes that took place in 2020. The search process leading to the appointment of Giles Andrews was facilitated externally by MWM Consulting, an external executive and non-executive search and board advisory firm. MWM Consulting was used for Board searches but has no other connection with the Group or individual Directors.

Diversity

The Board is fully committed to diversity in all forms and truly believes that diversity is an essential ingredient of sound decision-making. As of 1 January 2021, the Board comprises 45% female representation. The Board's approach to diversity in all its forms is set out in the Board Diversity Policy, which has retained the specific gender target of maintaining a minimum of 33% female representation on the Board, with a medium term aspiration of achieving broadly equal gender representation on the Board. The following provides an overview of the current Board profile.

IT Professional

Tailored Induction Programmes delivered in 2020

Michele Greene: Following her appointment in December 2019, Michele undertook the comprehensive and wide-ranging NED induction plan over a six month period, with speciﬁc focus on the Group's transformation programme and risk framework, in support of her roles on the Board Committees with oversight of those two key areas.

Myles O'Grady: Having joined the Group in June 2019 and taken on the role of interim Group CFO in October 2019, Myles' induction plan focused on matters pertinent to the role of the Group CFO and Executive Director.

Giles Andrews: Giles has undertaken the comprehensive and wide-ranging NED induction plan, with speciﬁc focus on matters pertinent to his Board Committee roles and with additional deep dives on areas related to the Irish market and the Irish consumer protection framework.

International experience shows Directors with experience in more than one geographical location.

Your Board (continued)

Education and Development Sessions delivered in 2020

The following development and education sessions were facilitated remotely during the year:

• Culture.
• Cyber Security.
Prior to COVID-19, the Board visited the Bank's Galway operations during which the Board received a management presentation on the local market and participated in customer call observation and engagement sessions.
• Anti-Money Laundering.
• Risk appetite: Deﬁnitions of non-ﬁnancial risks and articulation of appetite.
• Internal Capital Adequacy Assessment Process (ICAAP).
• IFRS 9 and accounting policy.
• Customer listening sessions.

In addition to collective education and development programmes in 2020, individual Directors actively engaged in one to one focus sessions with Management on topics such as the End to End Customer Journey, cyber defences and strategy, the Life Assurance business, internal audit processes and procedures, regulatory requirements for a listed entity, Corporate Banking and Leveraged Acquisition Finance, the Irish mortgage market, technology transformation, governance and the Irish economy.

The Board's Professional Development and Continuous Education Programme

• Formal Induction Programme: A suite of induction documentation is furnished to all incoming Directors to facilitate their understanding of how the Group operates and the key issues that it faces. A series of meetings with senior management are arranged on matters such as Group and Divisional strategy, the Group's Risk Appetite and Group Risk Framework, the regulatory environment, people strategies, technology and operations, capital and liquidity management and the Group's financial position. The induction programme is supplemented with an additional bespoke programme, developed in conjunction with the incoming Director to address any specific requirements.
• Continuous Education Programme: The continuous development requirements of the Board and individual Directors is informed by the outcome of annual effectiveness reviews, the annual review of the collective skillset of the Board, emerging external developments and areas the Board has identified for further focus. The Continuous Education Programme is delivered through varying means and facilitated by internal and external experts where appropriate. The approach to Directors' induction and continuous development is set out in a Board-approved Director Induction, Training and Development Policy which is reviewed annually by the NGRB.
• Site visits across the Group including meetings with colleagues and customers.

Assessing the eﬀectiveness of the Board

The Board seeks to continually enhance its operations and, each year, conducts a formal effectiveness evaluation of the Board, Board Committees and individual Directors. In addition to reviewing the Board's operations, composition and overall effectiveness, the evaluation reviews past performance with the aim of identifying possible opportunities for improvement, determines whether the Board and its Committees are as a whole effective in discharging their responsibilities and, in the case of individual Directors, determines whether each Director continues to contribute effectively and to demonstrate commitment to their role. The Board is required to have an external evaluation conducted once every three years. The Group had an external evaluation conducted by Praesta Ireland, in 2019 which concluded positively regarding the effectiveness of the Board, the Committees and individual Directors. A report on progress against opportunities identified for improvement in 2019 is set out on page 85. In 2020, an internal evaluation was conducted, details of which are set out below.

Your Board (continued)

The internal evaluation comprised:

The scope of the internal evaluation included:

• an online survey of Directors which sought their views on a range of topics across the Board and Board Committees:
- • consideration of the Board Composition and Competence;
• one to one meetings between the individual Directors and the Chairman;
- • assessment of the Board Strategy and the Board's approach to risk taking during 2020;
- • evaluation of the Board's Culture and Behaviour;
• one to one meetings between Committee Members and the Committee Chairs;
- • appraisal of Board engagement and its discharge of its responsibilities;
• an online survey of Directors which sought their views on the performance of the Chairman;
- • consideration of the Board's response to COVID-19.
• a meeting of the Board in the absence of the Chairman to discuss the Directors' views on the performance of the Chairman;
- • an overall assessment of the Board's effectiveness during 2020;
- • a summary of the Board's expected priorities for the coming year; and
• a meeting of the Non-Executive Directors only to discuss their views on the performance of the CEO; and
• consideration of the final Review Reports at the Board and Board Committees and agreement on actions to ensure continued enhancement.

• an appraisal of how each Board Committee discharged its responsibilities under various, Committee-specific headings during 2020.

Chairman

Each Director completed an online survey which sought their views on the performance of the Chairman. Led by the SID, the Board then met to discuss the outcome of the survey in the absence of the Chairman. The SID subsequently provided an update on the positive outcome of the review to the Chairman. Patrick Kennedy is considered to be a highly effective Chairman and provides very strong leadership to the Board. The Board confirmed its continued support for Patrick Kennedy and his continuation in office, including his proposal for re-election at the 2021 Annual General Meeting (AGM). Further details on the Chairman's tenure can be found on page 81.

Individual Directors

The Chairman met with Directors on a one to one basis to discuss their individual performance, taking account of their feedback submitted in advance of the meetings on a number of topics including ,their individual contributions and performance at the Board. The Chairman assessed each Director as being fully effective, with all Directors demonstrating strong commitment to their role, noting that in 2020 they were each required to go above and beyond their normal required time commitment to the role, and their contributions continuing to be important to the company's long-term sustainable success.

2020 Conclusion

The findings of the Board and Board Committee evaluations were reviewed by the Group Secretary. The summary findings were then shared and discussed with the Chairman and feedback on each of the Committees was shared with the individual Committee chairs. Feedback on individual Directors was shared directly by the Chairman. The results culminated in a consolidated report on the findings of the full evaluation process being presented to the Board in January 2021.

The outcome of the evaluation was positive, and built further on the ad hoc evaluation conducted by the Chairman during the summer in the context of remote working during COVID-19.

Overall the effectiveness of the Board and its Committees continued to be enhanced year on year. The key themes identified through the Board evaluation as having contributed to the Board's effectiveness in 2020 included the Board's flexibility, dedication, skills and experience accompanied by a strong senior management and good information flows complemented by a strong Chairman. The Board evaluation also identified areas for enhancement: greater focus on the Group's RSB agenda and its integration in the Group's wider strategy and further improvements to the quality and consistency of the Board papers.

Progress against the 2019 external Board Effectiveness Evaluation

A summary of the Board's progress against the actions arising from the 2019 external effectiveness review are set out below:

• Board Papers - Brevity and Clarity: While observations on the volume of papers did appear again during the 2020 effectiveness review, improvements in the quality and consistency of papers were acknowledged. These improvements were driven by enhancements led by the CEO and wider executive team. An ongoing drive to enhance the succinctness of Board papers has seen positive results albeit continuous improvement is still required;
• Board Schedule of Topics: The Board plan for 2021 was developed to ensure appropriate focus was placed on strategic and other priority matters whilst maintaining agility to respond to issues that may arise and require priority attention;
• Board Training and Development: The Director Induction, Training and Development Policy was reviewed to ensure greater alignment with the assessment of the collective suitability of the Board to ensure all areas requiring collective or individual focus were identified and appropriately addressed; and
• Focus on non-financial risk management: Non-financial risk management was a regular area of focus for the GRC during 2020, with the related programme further strengthened by the appointment of an experienced individual to the newly established senior role of Head of Non-Financial Risk.

Your Board (continued)

Board Focus in 2020

The Board held thirty one meetings during the year ended 31 December 2020. Further details on the number of Board and Committee meetings and attendance by individual Directors are set out on page 114.

While not intended to be exhaustive, below is a high level overview of a number of matters considered by the Board and Board Committees during 2020:

Regular updates

Strategy

• Chairman's activities.
- • Digital Relationship Bank.
• CEO activities and key areas of focus.
- • Transformation programme.
• Business and financial performance.
- • BoI in a post COVID-19 Environment.
• Organisational Balanced Scorecard: Performance relative to strategic, financial and non-financial key performance indicators (KPIs)
- • Progress implementing the Group's 2018-2021 strategy.
- • The approach to a strategy refresh 2021-2024.
- • Future environment and business model in the UK.
• Cost and Efficiency.
- • Irish Retail Mortgage Market.
• Risk Management.
• Board Committee activities.

Governance

• Key Board governance policies and documents.
Financial
• Corporate governance frameworks.
- • 2019 full year results.
- • 2020 half-year results and interim management statement.
• Board, Committee and Individual Directors Effectiveness Evaluation.
- • Impairments.
- • Funding and Liquidity Policy.
• Endorsement of Material Risk Takers (MRTs) and Key Function Holders.
- • Internal Capital Adequacy Assessment.
• Subsidiary oversight.
- • Internal Liquidity Adequacy Assessment.
• Tracking of agreed actions.

Environment

Culture and values

• Investor relations.
- • Group Culture Programme.
• Economic environment.
• Stakeholder engagements.

• Colleague engagement and culture survey outcomes, including a Pulse Survey conducted with specific focus on COVID-19.
Risk management
• Talent updates.
- • Risk reports in the context of COVID-19
• Policy for supporting COVID-19 payment break customers.
- • Group Risk Appetite Statement.
• Customer call listening.

• Risk Policies and Frameworks.
• Group's Remuneration Policy.
• Group Recovery Plan.
• Regulatory interactions.
• General material risks, including those related to Brexit and the wider macro economy.
• Non-financial risk.
• AML and combating of financing of terrorism updates.

Your Board (continued)

Roles and Responsibilities

Role of the Board

The Group is led by an effective and committed Board of Directors, who are collectively responsible for the long-term success of the Group. The Board's role is to provide leadership of the Group within the boundaries of risk appetite and a framework of prudent and effective controls which enable risk to be identified, assessed, measured and controlled.

The Board sets the Group's strategic aims and risk appetite to support the strategy, ensuring that the necessary financial and human resources are in place for the Group to meet its objectives. The Board ensures that the Group's purpose, values, strategy and culture are all aligned and reviews management performance in that regard.

The Board is responsible for endorsing the appointment of individuals who may have a material impact on the risk profile of the Group and monitoring on an ongoing basis their appropriateness for the role. The removal from office of the head of a 'control function', as defined in the Irish Code, is also subject to Board approval.

The respective roles of the Chairman and the Group CEO, which are separate, are set out in writing and have been agreed by the Board. The Board has a schedule of matters specifically reserved for its decision which is reviewed and updated regularly.

The Board approves the Group Risk Framework on an annual basis and receives regular updates on the Group's risk environment and exposure to the Group's material risk types. Further information on risk management and the Board's role in the risk governance of the Group is set out in the Risk Management Report on pages 146 to 148.

The work of the Board follows an agreed schedule of topics which evolves based on business needs and is formally reviewed annually by the Board.

Role of the Chairman

The Chairman oversees the operation and effectiveness of the Board, including ensuring that agendas cover the key strategic items confronting the Group and encouraging all Directors to participate fully in the discussions and activities of the Board. He also ensures that there is effective communication with shareholders and promotes compliance with corporate governance standards. The Chairman commits a substantial amount of time to the Group and his role has priority over any other business commitment.

Role of the Deputy Chairman and Senior Independent Director The Deputy Chairman adopts the role of SID and deputises for the Chairman as required and is a Trustee of the Bank Staff Pensions Scheme. The SID provides a sounding board for the Chairman and serves as an intermediary for the other directors and shareholders if they have concerns that contact through the normal channels of Chairman, Group CEO or other Executive Directors has failed to resolve or for which such contact is inappropriate. As appropriate and when required, the SID meets a range of major shareholders in order to develop a balanced understanding of their views. The SID leads the evaluation of the Chairman in conjunction with the other Directors and would normally take responsibility for an orderly succession process for the Chairman, working closely with the NGRB.

Role of the Independent Non-Executive Director

While arrangements have been made by the Directors for the delegation of the management, organisation and administration of the Group's affairs, certain matters are reserved specifically for decision by the Board. The schedule of matters reserved for the Board is reviewed at least annually to ensure that it remains relevant and to reflect any enhancements required under evolving corporate governance requirements and industry best practice.

The Group has in place Directors' and Officers' liability insurance in respect of legal actions against its Directors.

The Directors have access to the advice and services of the Group Secretary, who advises the Board on matters relating to governance, ensuring good information flows and comprehensive practical support for Directors.

The Group Secretary provides dedicated support for Directors on any matter relevant to the business on which they require advice separately from or additional to that available in the normal board process.

The NEDs (including the Chairman and the Deputy Chairman) bring independent challenge and judgement to the deliberations of the Board through their character, objectivity and integrity. As reported, Michele Greene has been designated as non-independent by virtue of her nomination by the Minister for Finance; however, the Board believes, based on her performance to date, that she too brings independent challenge and judgement to the deliberations of the Board. During the year, the Chairman and NEDs met without the Executive Directors present, to discuss a range of business matters.

Executive Directors

The Directors also have access to the advice of the Group Legal Adviser and to independent professional advice, at the Group's expense, if and when required.

Committees of the Board have similar access and are provided with sufficient resources to undertake their duties.

Role of the Group CEO

The Group CEO is responsible for execution of approved strategy, holds delegated authority from the Board for the day to day management of the business and has ultimate executive responsibility for the Group's operations, compliance and performance. Procedures are in place to review the Group CEO's contract at least every five years.

Executive Directors have executive functions in the Group in addition to their Board duties. The role of Executive Directors, led by the Group CEO, is to propose strategies to the Board and, following challenging Board scrutiny, to execute the agreed strategies to the highest possible standards.

Matters Reserved for the Board

She maintains the Group's Corporate Governance Framework and communicates with shareholders as appropriate, ensuring due regard is paid to their interests.

Both the appointment and removal of the Group Secretary is a matter for the Board as a whole.

Your Board (continued)

Stakeholder Engagement

Board understanding of views of major shareholders

To facilitate the Board's understanding of the views of major shareholders, Directors receive an investor relations update from management at all scheduled Board meetings. The content of this update is varied, based on recent investor activities, but typically includes market updates, details of recent equity and debt investor interactions, share price and valuation analysis, analyst updates, and share register analysis. All Directors are facilitated to ensure that they are informed of the views of investors and analysts. The Chairman met with a number of major shareholders to discuss governance matters and delivery of strategic priorities and progress in delivering transformation. During 2020, the SID consulted with a significant number of major shareholders on the matter of the Chairman's tenure, details of which are reported on page 81. The Board was updated on the outcome of the Chairman's discussions and the SID shareholder consultation. The Chairman and / or the SID are available to all shareholders if they have concerns that cannot be resolved through the normal channels.

Institutional equity investors and analysts

Communication with shareholders is given high priority. One of the responsibilities of the Chairman is to ensure effective communication with shareholders and to ensure that Directors develop an understanding of the views of major investors. Group Investor Relations has primary responsibility for managing and developing the Group's external relationships with existing and potential institutional equity investors and analysts. The Group has an active and well-developed Investor Relations programme, which involves regular meetings by Executive Directors, selected Senior Executives and the Director of Group Investor Relations and other authorised officers with the Group's principal institutional shareholders, other investors, financial analysts and brokers. During 2020, c.400 such meetings and presentations were held. All meetings with shareholders are conducted in such a way as to ensure that price sensitive information is not divulged. A dedicated Debt Investor section of the Group website provides access to relevant information, including presentations, publications and bond tables.

Retail shareholders

The Group Secretary's team, supported by the Group's Registrar, Computershare Investor Services (Ireland) Limited ('Computershare'), maintains the Group's share register, engages with retail shareholders and delivers the Group's AGM and EGMs as required. With the assistance of Computershare, the Group addresses shareholder queries and, through its online facilities, enables shareholders to view their portfolio and amend their information securely.

Annual and Extraordinary General Meeting

The AGM provides an opportunity for shareholders to hear directly from the Board on the Group's performance and strategic direction. The general aim of the Board is to make constructive use of the AGM and shareholders are encouraged to participate in the proceedings.

The EGM was held in similar circumstances to the 2020 AGM as the COVID-9 pandemic and related Government restrictions were heightened across Ireland and the UK.

At the 2020 AGM and the 2021 EGM, separate resolutions were proposed on each substantially separate issue and voting was conducted by way of poll. The results of every general meeting, including details of votes cast for, against and withheld on each resolution, are posted on the Group's website and released to the Irish and London Stock Exchanges. As soon as the results of the 2020 AGM and 2021 EGM were calculated and verified, they were released to applicable exchanges, as set out above, and were made available on the Group's website. At both the 2020 AGM and 2021 EGM all resolutions passed, with no resolution receiving less than 94% approval.

The Company's Extraordinary General Meeting (EGM) was held on 19 January 2021 to facilitate the migration of the Company's Participating Securities (as defined in the Migration of Participating Securities Act 2019) from the CREST system to the settlement system operated by Euroclear Bank SA/NV in order to ensure, post-Brexit, that the Company's Shares can continue to be settled electronically when they are traded on Euronext Dublin and the London Stock Exchange, and remain eligible for continued admission to trading and listing on those exchanges.

The 2020 AGM was held on 19 May 2020 in Baggot Plaza, 27 - 33

Upper Baggot Street, Dublin 4.

Due to the Government restrictions in place to combat COVID-19 at the time, and in order to ensure the health and safety of the Group's colleagues, shareholders and service providers, the 2020 AGM was held remotely. In order to facilitate shareholder engagement, questions were invited from shareholders in advance of the AGM, which were each responded to directly. An overview of shareholder questions received and the responses provided was shared at the AGM for the benefit of all shareholders.

In line with the Group's policy to issue notice of the AGM 20 working days before the meeting, notice of the 2020 AGM was circulated to shareholders on 15 April 2020. The EGM Notice was circulated to shareholders 20 working days in advance, on 17 December 2020. It is usual for all Directors at the time of the AGM and any EGM to attend. All members of the Board attended the 2020 AGM and 2021 EGM remotely, albeit the opportunity for them to respond directly to shareholder questions was unavailable at that time, due to the COVID-19 restrictions.

The 2021 AGM is scheduled to be held on 25 May 2021. The means through which the AGM will be held will be solely dependent on the COVID-19 situation in Ireland and the related Government guidelines.

Your Board (continued)

Stakeholder Engagement (continued)

Customers

The Group's aim is to serve customers brilliantly by being the number one bank for service and having the best brand in our target markets including supporting our partnerships in the UK. The Board consistently reviews the strategy, receives updates on implementation and reviews progress as part of the governance process.

The Group's approach to customer engagement and progress against customer metrics through which the experience of customers when dealing with the Bank is assessed, is a key focus for the GEC. Customer outcomes is a key focus area required of all formal governance across the Group. The Board receives regular updates on progress against customer metrics and reports from the Group CEO, the Chief Marketing Officer and the respective business CEOs. In addition, its understanding of customers' perspectives is informed by deep dives on customer themes and customer complaints, and in the absence of visits by Directors to customer call centres due to COVID-19, other tools to enable the Board to hear customer voices at first hand.

In January 2020, prior to the emergence of COVID-19, Directors met with customers directly reflecting the importance of 'serving customers brilliantly' in our strategy. A key focus area for the Board during 2020 was in reviewing, challenging and receiving regular updates on the operational plan in place to support Customers who were experiencing difficulties in the face of COVID-19, through payment breaks and other means.

Colleagues

The Board receives regular updates on the progress of the Group Culture Programme and reviews the outputs from the Group's Open View staff surveys and receives updates on progress in implementing actions in response to staff feedback. The Board pays particular attention to the Group Code of Conduct and Speak Up Policy, and the NGRB reviews their effectiveness annually. The Board strives to create an environment in which staff are encouraged to speak up where they have any concerns. Fiona Muldoon, on behalf of the Board, actively sponsors the Group Code of Conduct and Speak Up Policy.

During 2020, the Board met virtually with senior managers from across the Group in 'Visibility Sessions', which form part of the annual Board programme of work which is considered and approved each year.

Due to the global pandemic, Directors were unable to conduct site visits and engage directly with colleagues on the ground other than a visit to a branch location in Galway in January 2020. The 2021 Board programme of work is designed to further enhance engagement with colleagues and plans for opportunities both on a virtual basis or physically via site visits which will be implemented dependant on the COVID-19 situation.

We reported in the 2019 Report on the positive step taken when the Board designated Eileen Fitzpatrick as the Workforce Engagement NED, the objective of which is to enhance the Group's existing engagement mechanisms between the Board and the workforce and to strengthen the 'employee voice' at the Board table and when making decisions. Aformal terms of reference for this designated role was agreed during 2020. The role supplements what the Board is already hearing about culture and behaviour across the Group through various other mechanisms and regular reports to the Board.

Begin Together was launched in February 2020. The Fund provides valuable investment for community initiatives making a difference in towns and villages across the island of Ireland. In 2020 the Fund, working with the Community Foundation for Ireland, granted between €3,000 and €5,000 to 116 projects encompassing financial, mental and physical wellbeing - projects included financial skills for young people, suicide prevention and physical exercise for the elderly. In March 2020 as Covid restrictions were announced, the Group donated €1 million in emergency funding to the CFI COVID-19 Emergency Fund, aimed at the immediate needs of vulnerable members of the community severely impacted by the pandemic, with 14 organisations receiving immediate funding focused on the elderly, people with respiratory illnesses or cancer, those at risk of domestic

• a listening session on 'Speak Up' themes and insights, deep dives on the Open View and Ways of Working colleague survey results;
During 2020, Eileen undertook a number of valuable activities which provided great insights for the Board and facilitated further consideration of the workforce in Board decisions. These activities included, but are not limited to:
• consultation with the GEC;
• consultation with a Group of 30 of the Group's most senior leaders below the GEC;
• a deep dive on industrial relations; and
The Group supports the wider community through its community investment programme, Begin Together, its support of local enterprise and through its financial wellbeing programmes as well as playing an active role in society.
The Chairman and members of the Board regularly meet with representatives from the regulators and government bodies, including the Joint Supervisory Team (JST), the CBI, BoE, Financial Conduct Authority (FCA), PRA, ECB and the Department of Finance. Core themes discussed at these meetings include regulation and supervision, risk governance and oversight, challenges facing the banking industry, strategic challenges and rebuilding trust and culture. The Chairman and Group CEO update the Board on their meetings with regulators and government representatives at each Board meeting. Management provide regular briefings to the Board on regulatory engagement and correspondence which ensures that the Board remains aware of regulatory expectations and areas of focus.
• 'Open Door' sessions with a number of colleagues across Retail Ireland, New Ireland Assurance and Group Finance, and separate focused sessions with graduates and the colleague Multicultural Network.

Regulators and Government

The Group's communities are those where it has a physical presence, where colleagues live and work, as well as other local and global groups and partners.

Communities

Your Board (continued)

Stakeholder Engagement (continued)

abuse, isolated vulnerable people and families, particularly those living in rural areas, children and support for mental health. In July the Begin Together Awards supported towns and villages looking to recover and rebound. In September working with Business to Arts the Group announced a €1 million Begin Together Arts Fund to support the Arts Community with grants for arts projects responding to or adapting from Covid-19. Throughout the year colleagues were supported in making donations to the causes they care about, in

their communities where they live and work, with €350,000 of donations made by the Group.

The financial support of the Group is very much aimed at helping local community groups and non-profit organisations continue to serve their communities through the COVID-19 pandemic.

The Group is conscious of and acknowledges the importance of its role in wider society.

Board's oversight of risk management and internal control systems

Accountability and audit

The Report of the Directors, including a going concern statement and a viability statement, is set out on pages 107 to 108. This Corporate Governance Statement forms part of the Report of the Directors.

Board Responsibility

The Board is responsible for overseeing the Group's risk management and internal control systems, which are designed to facilitate effective and efficient operations and to ensure the quality of internal and external reporting and compliance with applicable laws and regulations, and to review the effectiveness of same.

In establishing and reviewing the risk management and internal control systems, the Directors carried out a robust assessment of the principal risks facing the Group including those that would threaten its business model, future performance, solvency or liquidity, the likelihood of a risk event occurring and the costs of control. The process for identification, evaluation and management of the principal risks faced by the Group is integrated into the Group's overall framework for risk governance. The Group is forward-looking in its risk identification processes to ensure emerging risks are identified. The risk identification, evaluation and management process also identifies whether the controls in place result in an acceptable level of risk. At Group level, a consolidated risk report and risk appetite dashboard is reviewed and regularly debated by the BRC and the Board to ensure satisfaction with the overall risk profile, risk accountabilities and mitigating actions.

The report and dashboard provide a monthly view of the Group's overall risk profile, key risks and management actions, together with performance against risk appetite and an assessment of emerging risks which could affect the Group's performance over the life of the operating plan.

Information regarding the main features of the internal control and risk management systems is provided within the risk management report on pages 149 to 153. The Board concluded that the Group's risk management arrangements are adequate to provide assurance that the risk management systems put in place are suitable with regard to the Group's profile and strategy.

Control systems

The Group's overall control systems include:

• a clearly defined organisation structure with defined authority limits and reporting mechanisms;
• three lines of defence approach to the management of risk across the Group: line management in individual businesses and relevant Group functions, central risk management functions, and Group Internal Audit (GIA);
• Board and Management Committees with responsibility for core policy areas;
• a set of policies and processes relating to key risks;
• reconciliation of data consolidated into the Group's financial statements to the underlying financial systems. A review of the consolidated data is undertaken by management to ensure that the financial position and results of the Group are appropriately reflected, through compliance with approved accounting policies and the appropriate accounting for non-routine transactions;
• Codes of Conduct setting out the standards expected of all Directors, officers and employees in driving an appropriate, transparent risk culture;
• a Risk Control Self-Assessment framework, where risks are logged, managed and mitigated across the first-line, with clear reporting, escalation and second-line oversight. Action plans are developed and implemented to address any control deficiencies;
• a comprehensive set of accounting policies; and
• a compliance framework incorporating the design and testing of specific controls over key financial processes.

The Group operates a comprehensive internal control framework over financial reporting with documented procedures and guidelines to support the preparation of the consolidated financial statements.

The main features are as follows:

• a comprehensive set of accounting policies relating to the preparation of the annual and interim financial statements in line with IFRS as adopted by the EU;
• an independent internal audit function with responsibility for providing independent, reasonable assurance to key internal (Board, Group and Subsidiary Audit and Risk committees and Senior Management) and external (Regulators and external auditor) stakeholders on the effectiveness of the Group's risk management and internal control framework;

Your Board (continued)

• a compliance framework incorporating the design and testing of specific controls over key financial processes to confirm that the Group's key controls are appropriate to mitigate the financial reporting risks;
• a robust control process is followed as part of interim and annual financial statements preparation, involving the appropriate level of management review and attestation of the significant account line items, and where judgements and estimates are made, they are independently reviewed to ensure that they are reasonable and appropriate. This ensures that the consolidated financial information required for the interim and annual financial statements is presented fairly and disclosed appropriately;
• the Annual Report and Interim Report are also subject to detailed review and approval through a structured governance process involving Senior and Executive finance personnel;
• summary and detailed papers are prepared for review and approval by the GAC covering all significant judgemental and technical accounting issues, together with any significant presentation and disclosure matters; and
• user access to the financial reporting system is restricted to those individuals that require it for their assigned roles and responsibilities.

Reviews by the Board

The effectiveness of the risk management and internal control systems is reviewed regularly by the Board, the GAC and the BRC, which also receive reports of reviews undertaken by Group Risk and GIA. The GAC receives reports from the Group's external auditor (which include details of significant internal control matters that they have identified), and has separate discussions with the external and internal auditors at least once a year without Executives present, to ensure that there are no unresolved issues of concern.

The Group's risk management and internal control systems are regularly reviewed by the Board and are consistent with the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued by the Financial Reporting Council and compliant with the requirements of Capital Requirements Directive (CRD) IV. They have been in place for the year under review and up to the date of the approval of the annual report. The Group has determined a pathway to compliance with the Basel Committee on Banking Supervision (BCBS) 239 risk data aggregation and risk reporting requirements and continues to actively manage enhancements.

Continuous improvement

The Group's controls frameworks are continuously improved and enhanced, addressing known issues and keeping pace with the dynamic environment. Progress continues to be made in operational (including IT and Information Security), regulatory and conduct risks. The 2020 internal control assessment provides reasonable assurance that the Group's controls are effective, or that, where control weaknesses are identified, they are subject to management oversight and action plans. The GAC, in conjunction with the BRC, following an assessment of whether the significant challenges facing the Group are understood and are being addressed, concluded that the assessment process was effective and made a positive recommendation to the board in that regard.

Board Governance

Conflicts of interest

The Board has an approved Conflicts of Interest Policy which sets out how actual, potential or perceived conflicts of interest are to be identified, reported and managed to ensure that Directors act at all times in the best interests of the Group. This policy is reviewed on an annual basis.

The Group Code of Conduct, which applies to all employees and Directors of the Group, clarifies the duty on all employees to avoid conflicts of interests. The Code of Conduct is reviewed on an annual basis and communicated throughout the Group.

Time commitment

The Group ensures that individual Board Directors have sufficient time to dedicate to their duties, having regard to applicable regulatory limits on the number of directorships which may be held by any individual Director. The Company and the Bank have each been classified as 'significant institutions' under CRD IV. During the year ended 31 December 2020, all Directors were within the directorship limits set out for significant institutions under CRD IV.

All newly-appointed Directors are provided with a comprehensive letter of appointment detailing their responsibilities as Directors, the terms of their appointment and the expected time commitment for the role. A copy of the standard terms and conditions of appointment of NEDs can be inspected during normal business hours by contacting the Group Secretary. Directors are required to devote adequate time to the business of the Group, which includes attendance at regular meetings and briefings, preparation time for meetings and visits to business units. In addition, NEDs are normally required to sit on at least one Board Committee, which involves the commitment of additional time. Certain NEDs, such as the Deputy Chairman, SID and Committee Chairs, are required to allocate additional time in fulfilling those roles.

Before being appointed, Directors disclose details of their other significant commitments along with a broad indication of the time absorbed by such commitments. Before accepting any additional external commitments, including other directorships that might impact on the time available to devote to their role, the agreement of the Chairman and the Group Secretary, or, depending on the nature of the proposed commitment, the full Board, must be sought. In certain cases, advanced CBI approval must also be sought.

Proposed new external commitments are assessed against conflicts of interest, over boarding and time commitment considerations. Any new external commitments proposed by the Chairman require SID and Group Secretary approval in the first instance and depending on the nature of the proposed commitment, the Board and CBI approval in advance.

During 2020, all Directors complied with the Board-approved process and sought approval in advance where required. The Group has an obligation to report the reasons for permitting significant appointments. Ms. Evelyn Bourke sought approval in advance for a non-executive directorship role on the Board of Marks & Spencer Group plc which as a listed entity would be

Your Board (continued)

considered significant in terms of an additional external appointment. In considering whether to approve this external role, the NGRB and the Board gave due and careful consideration to actual, potential or perceived conflicts of interest, the risk of 'over boarding', whether the additional role would impact Ms Bourke's ability to commit the requisite time to her Group duties, and CRD directorship limitations. The Board was satisfied that there was no issue of concern that should impede Ms Bourke from proceeding and that it could be managed in accordance with the Board-approved policy. All Directors are reminded of their obligations under the Board's Conflicts of Interest Policy when approved for any external roles and such roles remain under regular review. In accordance with the Group's listing obligations, an RNS was issued to the market to advise of Ms Bourke's appointment to Marks & Spencer Group plc.

Balance and Independence

The Board determined that ten of the eleven Non-Executive Directors in office at 31 December 2020 were independent in character and judgement and free from any business or other relationships with the Group which could affect their judgement. Michele Greene has been deemed non-independent by virtue of her nomination by the Minister for Finance. However, having regard for the nature of the individual and her contribution to the Board during 2020, the Board is satisfied that in carrying out of her duties as a Director, Michele is able to exercise independent and objective judgement without external influence.

Term of Appointment and Re-election of Directors

NEDs are normally appointed for an initial three-year term, with an expectation of a further term of three years, assuming satisfactory performance and subject to the needs of the business, shareholder re-election and continuing fitness and probity. Any continuation in term beyond two three-year terms is considered on an annual basis and will have regard for a number of factors including performance, independence, the Board's succession planning needs over the medium to long term, and the best interests of the shareholders.

A NED's term of office will generally not extend beyond nine years in total unless the Board, on the recommendation of the NGRB, concludes that such extension is necessary due to exceptional circumstances. In such a situation the Board will document its rationale for any continuance and so advise the CBI in writing as required under the Irish Code.

In respect of Executive Directors, no service contract exists between the Company and any Director which provides for a notice period from the Group of greater than one year. None of the NEDs have a contract of service with the Group.

It is Group practice that, following evaluation, all Board Directors are subject to annual re-election by shareholders. All Directors retired at the AGM held on 19 May 2020. The following Directors, being eligible, offered themselves for election and were elected at the AGM in 2020:

• Ian Buchanan.
• Evelyn Bourke.
• Eileen Fitzpatrick.
• Richard Goulding.
• Michele Greene.
• Patrick Haren.
• Patrick Kennedy.

• Francesca McDonagh.
• Fiona Muldoon.
• Patrick Mulvihill.
• Myles O'Grady.
• Steve Pateman.

The names of Directors submitted for election or re-election are accompanied by sufficient biographical details and any other relevant information in the AGM documentation to enable shareholders to take an informed decision on their election. Giles Andrews was appointed in November 2020. Patrick Haren and Patrick Mulvihill retired on 31 December 2020. The 2021 AGM is scheduled for 25 May 2021 and, in line with previous AGMs, all directors will retire from office at the date of the AGM and may choose to offer themselves for election.

Organisational structure

The Group believes it has robust governance arrangements, which include a clear organisational structure with well defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks to which it is or might be exposed, and appropriate internal control mechanisms, including sound administrative and accounting procedures, IT systems and controls. The system of governance is subject to regular internal review. These governance arrangements provide systems of checks and controls to ensure accountability and drive better decision-making, and also include policies and practices which ensure that the Board and its Committees operate effectively.

The Group's overall control systems include a clearly defined organisation structure with defined authority limits and reporting mechanisms to higher levels of management and to the Board, which support the maintenance of a strong control environment. Corporate and capital structure is a matter requiring Board approval. In accordance with section 225(2) of the Companies Act 2014, the Directors acknowledge that appropriate structures that are, in the Directors' opinion, designed to secure material compliance with the relevant obligations (as defined in section 225(1)) have been put in place. The Board reviews annually the corporate legal structure of the Group and any changes to the structure of the Group effected since the Board's previous review.

Group Executive Committee

During 2020, the Group undertook a review and challenge process to streamline the existing executive governance structure. The objective of the review was to ensure the structure was not only fit for its current purpose but positioned the Group for the future and was sufficiently clear and robust in preparation for the Senior Executive Accountability Regime (SEAR) that will soon apply in Ireland. A refreshed structure was introduced with effect from 1 January 2021 and will be reported on in greater detail in the 2021 Report. The structure underwent a rigorous process of review and challenge, informed by internal and external experts and governance best practices. The maintenance of a strong control environment - with risk management and customer outcomes at the forefront of all decisions - has been and remains a key governance consideration.

The most senior executive committee in the Group, the GEC, acts in an advisory capacity to the CEO and assists the CEO in the management and leadership of the Group on a day-to-day basis, making decisions on matters affecting the operations and

Your Board (continued)

performance of the Group's business and the delivery of the Board approved strategy. It is supported by a number of senior executive committees, encompassing:

(i) Group Risk Policy Committee, which supports the GEC and Board in inter alia overseeing the material risks of the Group, taking a holistic approach to overseeing the effective management of risk (financial & non- financial) and monitoring the overall risk profile of the Group, as well as compliance with risk appetite and other approved policy limits;
(ii) Group Asset and Liability Committee, which oversees the strategic direction of the Group's assets and liabilities and the profit and loss implications of balance sheet management actions and considers the appropriate allocation of capital, funding and liquidity and market risk resources;
(iii) Group Transformation Oversight Committee, which monitors progress on the Group's strategic transformation agenda, encompassing culture, systems and business model initiatives, ensuring they are fully aligned with the Group's Strategy, Purpose and Values and that all strategic transformation initiatives have clearly defined business and customer outcomes, along with appropriate mechanisms to track and report progress;
(iv) Group Data Management Board, which oversees the development of standards, metrics and tolerances for data quality with the application of an adequate data control environment to support effective management within the Group's risk appetite; and
(v) Announcements Committee, which, oversees compliance with the Group's Market Abuse Regulation obligations.

Summary biographical details on each of the GEC members are set out below.

Group Executive Committee

The Committee's purpose is to assist the CEO in leading the Group's day to day operations and developing and leading the execution of the Group's Strategy in line with the Group's Purpose to enable its customers, colleagues and communities to thrive. The CEO and CFO, both executive directors of the Board, are members of the GEC.

In addition to the two Executive Directors, Francesca McDonagh, CEO, and Myles O'Grady, CFO, whose bios can be found on pages 77 and 80, the GEC is currently composed of the following Members:

Henry Dummer Chief Marketing Officer

Henry was appointed to the role of Chief Marketing Officer for the Group in June 2018. Prior to this Henry held the position of Group Marketing Director for Consumer and Business at eir, delivering an impactful rebrand for the company.

He previously held the roles of Marketing Director at Tesco Ireland, and Customer Marketing Director at Diageo Ireland.

Matt Elliott

Chief People Officer

Matt Elliott was appointed to the role of Chief People Officer for the Group in February 2019. He is responsible for transforming the culture of the Bank and developing a company where colleagues thrive.

Prior to that he was Group People Director with Virgin Money. Under Matt's leadership, Virgin Money successfully acquired and integrated Northern Rock. Matt was part of the executive team who successfully listed the company on the London Stock Exchange, and created a company widely acknowledged to be a cultural leader in the UK.

A passionate advocate for inclusion and diversity, Matt appeared as a leading ally in the 2018 Financial Times lists for gender, ethnicity and LGBT+, the only leader to appear in all three lists.

Tom Hayes

Chief Executive Officer, Corporate Banking

Tom joined the Bank of Ireland Group in 1979 and held various roles in Retail Banking before joining Corporate Banking in 1989. Tom was appointed Head of Leveraged Acquisition Finance in 2000 and Chief Executive, Corporate Banking, in January 2006. Under his leadership, Corporate Banking has consolidated its leading position as the No. 1 corporate bank in Ireland.

Gavin Kelly

Chief Executive Officer, Retail Ireland

Gavin was appointed Retail Ireland CEO in March 2018. He oversees the provision of banking products and related financial services to personal, business and wealth management customers and the New Ireland Assurance Company.

Gavin joined Bank of Ireland in 2007 and has held a number of senior management positions. He was President of the Banking and Payments Federation, Ireland (BPFI) from January 2019 to December 2020.

Ian McLaughlin

Chief Executive Officer, Bank of Ireland (UK)

Ian was appointed CEO of Bank of Ireland (UK) plc and Retail UK Division in December 2019. Ian has over 25 years' financial services experience, joining Bank of Ireland from Royal Bank of Scotland. Prior to this, he held a number of senior management roles at Lloyds Banking Group and Zurich Financial Services.

Sarah McLaughlin

Group Secretary & Head of Corporate Governance

Sarah joined Bank of Ireland as Group Secretary & Head of Corporate Governance in September 2019. Sarah is responsible for assisting the Chairman in establishing the policies and processes the board needs in order to function properly, in ensuring that these are complied with and advising the board on all governance matters. Sarah previously held the role of Group Secretary & Head of Corporate Governance at AIB Group plc, having held a variety of roles across corporate governance, finance and private banking.

Vincent Mulvey

Group Chief Risk Officer

Appointed to the Group Executive in 2009 and as Chief Risk Officer in 2017, Vincent leads Group Risk in overseeing risk strategy and management. He previously worked in Retail Ireland and Corporate Banking. Vincent is a Director of the Irish Banking Culture Board, an FCCA, Fellow of the Institute of Banking and a serving member of the RMA Journal editorial board.

Your Board (continued)

Jackie Noakes

Group Chief Operating Officer

Jackie was appointed as Chief Operating Officer in August 2018. In her role as Chief Operating Officer she oversees a range of services across technology, infrastructure and operations. Jackie is also a Group NED of Bank of Ireland (UK) plc.

Jackie has held a number of senior positions in the financial services sector, most recently at Legal & General (UK) as CEO of Mature Savings.

Mark Spain

Chief Strategy Officer

Mark was appointed Chief Strategy Officer in April 2019 and to the Group Executive Committee in July 2019. He previously held a number of senior management positions in the Group including Director of Group Investor Relations, Director of Group Finance and most recently UK Commercial Director. Mark is also a Group NED of Bank of Ireland (UK) plc. Mark has more than 30 years' experience in financial and accounting roles.

Oliver Wall

Group Chief of Staff & Head of Corporate Affairs

Oliver joined Bank of Ireland as Group Chief of Staff in 2017, taking on additional responsibility as Head of Corporate Affairs in 2019. He joined the Bank from HSBC, where he was Head of External Affairs UK and Europe. Oliver previously held a range of roles in both the public and private sectors, including working in the Department of The Taoiseach.

Subsidiary governance

The interaction between the Group Board and the boards of our strategically significant subsidiaries is closely monitored. The Chairman meets regularly with the Chairmen of these subsidiaries in order to ensure good communication and alignment and attends a number of subsidiary board meetings during the year. The Group Board receives reports conducted on the effectiveness of these significant subsidiaries. Ian Buchanan is also a NED of Bank of Ireland (UK) plc and a member of its Risk Committee.

The Chairs of Group Board Committees attend the equivalent committees of the strategically significant subsidiaries once a year. Similarly, the respective subsidiary Board Committee Chairs attend and present at the Group Board Committees annually to provide an account of the subsidiary Board Committees activities.

In 2020, the Board reviewed the Group Subsidiary Governance Policy including the New Subsidiary / Entity process document, which sets out the required procedure should any party in the Group wish to set up a new Group subsidiary or entity in which the Group will have a controlling interest. This is reviewed annually.

The Group's corporate simplification programme, designed to remove a number of subsidiaries from the Group, made considerable progress in 2020 with the dissolution of 11 companies. The purpose of this programme is to simplify the corporate structure of the Group with a view to generating efficiencies and cost savings and reducing risk.

Report of the Nomination, Governance and Responsible Business Committee

Patrick Kennedy Chairman

Dear Shareholders,

Membership and meetings

At close of business on 31 December 2020, the Group Nomination, Governance and Responsible Business Committee (the 'Committee' or the 'NGRB') comprised Patrick Kennedy, Patrick Haren, Evelyn Bourke and Fiona Muldoon. Having served nine years with the Group, Patrick Haren retired and was succeeded in his role as SID and Deputy Chairmanand on the Committee by Richard Goulding, with effect from 1 January 2021. Evelyn Bourke also stood down from the NGRB on her appointment to the role of Audit Committee Chair and Eileen Fitzpatrick joined the NGRB in her place. Eileen's membership of the NGRB is considered to be positively aligned with her role as the Group's Workforce Engagement Director. I would like to thank Patrick and Evelyn for their contributions to the Committee during their respective tenures on the Committee.

Biographical details, including each member's background and experience, are set out on pages 77 to 80.

The Committee met eight times during 2020, five of which were scheduled meetings. The Chair and Members of the Committee, together with their attendance at meetings, are set out below. The Group CEO, Chief People Officer and other members of management are invited to attend meetings where the agenda item is relevant to them and their attendance is requested by the Committee. The Committee meets annually with no management present.

Role and responsibilities

The key responsibilities of the Committee are set out in its terms of reference (which are available onwww.bankofireland.com) and include:

• leading the process for appointments and renewals for Board and Board Committees as appropriate, and making recommendations in this regard to the Board, for its approval;
• considering and making recommendations to the Board in respect of the appointment of Key Function Holders;
• ensuring plans are in place for orderly succession to both the Board and senior management positions, and oversee the development of a diverse pipeline for succession;
• keeping Board governance arrangements under review and making appropriate recommendations to the Board to ensure the Bank's corporate governance practices are consistent with Irish and international best practice corporate governance standards;
• overseeing subsidiary governance to ensure that appropriate and proportionate governance arrangements are in place for Group subsidiaries; and

• providing oversight of the Group's RSB Strategy and monitoring the Group's implementation of the UN Principles for Responsible Banking.

Matters considered by the Committee

The principal matters considered, and actions taken by the Committee during the year are described on pages 97 to 99.

Eligible

Committee meetings	to attend	Attended
Patrick Kennedy	8	8
Patrick Haren	8	8
Evelyn Bourke	8	8
Fiona Muldoon	8	8

Board composition, succession and diversity The Committee continued to keep the structure, size and composition of the Board and its Committees under review in 2020.

Having identified the need, in 2019, to appoint a NED with technology transformation experience and engaged MWM Consulting to support the search, the NGRB led a robust search which resulted in the successful appointment of Giles Andrews to the Board in November 2020. Other than in connection with the Board searches, MWM Consulting has no connection with the Group.

We reported last year on the selection of Eileen Fitzpatrick as the Group's Workforce Engagement Director in January 2020 and on page 89 we share detail of the activities undertaken by Eileen during the year, which were reported on regularly to the Board.

During 2020, the Committee again devoted considerable time to succession planning and recruitment, having regard to the tenure of a number of Board Directors to ensure readiness and appropriate and timely succession activities.

During the early stages of the COVID-19 pandemic, the NGRB agreed contingency arrangements for key Board roles, including the Executive Directors, the Chairman, the SID and Deputy Chairman, and the Chairs of each of the Committees in the event that of any of these role-holders were directly impacted by COVID-19.

Detailed wider succession considerations, having regard to the tenure of current Directors, the diversity profile of the Board and the Group's strategy, among other factors, also took place during 2020. The purpose of this exercise was to ensure the orderly succession of the Board over the short to medium term as Directors retire and to ensure the Board's composition and profile remains appropriate to the needs of the Group and the

Report of the Nomination, Governance and Responsible Business Committee (continued)

industry within which it operates. These plans are reviewed and challenged regularly by the NGRB.

Key near term outcomes from 2020 succession planning considerations led to the following actions:

• Evelyn Bourke appointed as the Audit Committee Chair to succeed Patrick Mulvihill, who also retried on 31 December 2020 after nine years with the Group;
• Richard Goulding appointed as the SID and Deputy Chairman to succeed Patrick Haren, as previously reported, and related Committee membership changes.

Further details on key Committee changes recommended for approval by the Board are set out on page 97.

As part of the process of succession planning and determining the appropriate range and mix of skills required to maintain an effective Board, each member of the Board is requested to self-assess against the requisite skills set out in Joint ESMA and EBA Guidelines. This assessment provided the Committee with valuable analysis of the skills and experience of Board members relative to required and desirable Board competencies, and facilitates us in ensuring that the Board continues to have an appropriate range and depth of skills and experience.

While potential candidates for appointment to the Board are assessed against developed candidate specifications for particular identified roles and skill sets, potential candidates are also required to be of sufficient calibre and suitable for appointment to the Board and to enhance the Board's overall effectiveness, facilitating the Board by acting with integrity, leading by example and promoting the desired customer-focused culture.

The Group recognises the benefits of having a diverse Board and workforce, creating a work environment where everyone has an opportunity to fully participate in creating business success, and where each person is valued for their distinctive skills, experiences and perspectives. In reviewing Board composition and identifying suitable candidates, the Committee considers the benefits of all aspects of diversity including the skills identified as relevant to the business of the Group, regional and industry experience, social and ethnic backgrounds, gender, age and other relevant cognitive and personal qualities in order to maintain an appropriate range and balance of skills, experience and background on the Board. All Board appointments are made on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole is required to have to be effective.

Report of the Nomination, Governance and

Responsible Business Committee (continued)

Matters considered and action taken by the Committee in 2020

Key issue

Committee considerations

Committee conclusion

Board Composition, renewal, succession and eﬀectiveness

• Board skills assessment, composition, diversity, size, tenure, succession planning.
• Committee composition and succession planning.
• Contingency planning in the context of COVID-19.
• NED recruitment and appointments, including Fitness and Probity assessments.
• Eﬀectiveness Reviews of the Board, Board Committees, the Chairman and individual Directors.

Board and Committee changes during the year were made to ensure the continued enhancement and refreshment of the composition and skills proﬁle of the Board and Committees.

Having regard to the requisite skillsets of each Board Committee and members' tenures, the NGRB recommended the appointment of:

• Evelyn Bourke as Chair of the GAC and as a member of the BRC to replace Patrick Mulvihill who retired on 31 December 2020;
• Eileen Fitzpatrick as the Group's Workforce Engagement Director, member of the NGRB and as a trustee on the BSPF (both roles were considered to be aligned with the position of Workforce Engagement Director);
• Richard Goulding as the Deputy Chairman and SID replacing Patrick Haren and, consequently as a member of the NGRB and Trustee of the BSPF.
• Giles Andrews to the Board and as a member of the BRC, GRC and GTOC.
• Fiona Muldoon to the GAC and GRC. Fiona stood down from the BRC, having served on that Committee for 5 years.

The Committee engaged extensively on the Chairman's tenure and supported the shareholder consultation led by the SID in H2 2020.

A medium term succession plan was agreed by the Committee in 2020 and will remain under regular review and challenge.

The 2019 external and 2020 internal eﬀectiveness reviews of the Board and its Committees were each positive in relation to eﬀectiveness and the appropriateness of their respective compositions.

Executive

• GEC and Senior Management appointments, including Fitness and Probity assessments, and succession planning.
• Assessment of Suitability of Key Function Holders and Material Risk Takers.

• Gender diversity of leaders and senior managers.
• Ethnic diversity data and related considerations across the wider Group.

The Committee supported a number of appointments at executive and senior management level in the Group during 2020 including the appointment of the Chief Internal Auditor.

The Committee considered the process to determine the appropriateness of individuals being appointed to or holding Material Risk Taker (MRT) and Key Function roles across the Group, and made recommendations to the Board in that regard.

The Committee noted reports on progress in relation to data collation and analysis of gender and ethnicity diversity data across the Group to better understand the Group and to ensure progress towards improving diversity within the Group.

Report of the Nomination, Governance and Responsible Business Committee (continued)

Matters considered and action taken by the Committee in 2020 (continued)

Key issue

Committee considerations

Committee conclusion

Governance and corporate responsibility

• Annual Corporate Governance Statement.
• Corporate Governance Compliance Updates and annual statements of compliance.

• Updates on Corporate Governance Developments.
• Governance Disclosures.
• Code of Conduct and reports on eﬀectiveness.
• Group Speak Up Policy and reports on eﬀectiveness.
• Group Conﬂicts of Interest Policy and reports on eﬀectiveness.
• Modern Slavery Statement.
• Race at Work Charter.
• Group Fitness and Probity Assessment Policy.

andSuitability

The Committee approved changes to internal policies to ensure continued compliance with all applicable corporate governance requirements and best practice.

The Group's Modern Slavery Statement, Conﬂicts of Interest Policy, Code of Conduct and Speak Up Policy were each considered and changes agreed to ensure they remained appropriate.

The external communication of the Group's corporate governance standards through disclosures and the annual report was approved.

The approach for improving ethnic and cultural diversity in the Group was reviewed alongside the proposed actions which are required to improve ethnic minority representation. The Committee supported the Group as a signatory to the UK Race at Work Charter which included updates to the Board Diversity Policy to reﬂect the Group's commitment to zero tolerance of harassment and bullying.

Responsible and Sustainable Business

• Group's RSB strategy.
• UN Principles for Responsible Banking.

The Committee received updates to ensure the Group is well positioned to meet its commitments regarding RSB, particularly those designed to align with the

UN Principles for Responsible Banking.

The Group's RSB strategy was reviewed and challenged by the NGRB. Enhanced Committee focus is planned on RSB matters in 2021.

Board Policies and Frameworks

• Matters Reserved for the Board.
• Board Terms of Reference.
• Board Conﬂicts of Interest Policy.
• Director Assessment Policy.
• Board Diversity Policy.
• Board Training Development and Induction Policy.

The Committee approved proposed amendments to the policies to ensure that the key board policies remained appropriate and eﬀective.

Subsidiary Governance

Appointments to boards of substantial regulated subsidiaries:

• Subsidiary Governance Policy and Guidelines.
• Review of composition and succession plans of key subsidiary Boards.
• Review of eﬀectiveness evaluations conducted by substantial subsidiary Boards.
• Pension Scheme trustee appointments.

The Committee ensured that the boards of subsidiaries were properly composed with suitable directors and have sound governance structures, and that Group oversight of subsidiaries remained appropriate.

The Committee supported the process to identify a successor to the role of Bank of Ireland UK plc Board Chairman and reviewed and recommended proposed appointments to other Board roles across the Group's substantial subsidiaries.

Report of the Nomination, Governance and Responsible Business Committee (continued)

Matters considered and action taken by the Committee in 2020 (continued)

Key issue

Committee considerations

Committee Governance

• Committee Eﬀectiveness Evaluation Report.
• Committee Terms of Reference.
• Committee Schedule of Topics for 2021.
• Report on the eﬀective discharge by the Committee of its duties during 2020.

The Committee recommended minor amendments to its terms of reference to ensure continued compliance with evolving corporate governance requirements and to greater reﬂect the work of the Committee.

The Committee considered the outcome of evaluations of its eﬀectiveness. A positive outcome with regard to the Committee's continued eﬀectiveness was reported in both the 2019 and 2020 evaluations.

During 2020 the Committee reviewed the Board Diversity Policy (the latest version of which is available on the Group's website) and the measurable gender-specific objectives set out thereunder. As at 1 January 2021 there was 45% female representation on the Board. The Board Diversity Policy maintains the target of ensuring a minimum of 33% female representation on the Board, with a medium-term aspiration to have broadly equal gender representation.

In 2020, the Group made further progress in addressing diversity in the Group's workforce through its Inclusion & Diversity programme and signing up to the UK Race at Work Charter. The Group has a target of 50:50 gender balance for management and leadership appointments in 2021.

For further details please see page 25 of the Strategic Report.

While considering Senior Executive succession planning, the Committee and the Board ensures that diversity in its widest sense is at the forefront of related considerations.

Responsible and Sustainable Business matters

Having been delegated responsibility for oversight of the Group's RSB policy in early 2020, the Committee received updates on the approach to the Group's RSB strategy and recommended approval of the proposed strategy to the Board. Details of the strategy can be found on pages 20 to 22.

Patrick Kennedy

Committee conclusion

Governance matters

The Committee keeps under regular review, updates to corporate governance regulations and requirements and briefs the Board on their effective implementation. Updates on evolution in corporate governance requirements are presented by the Group Secretary to ensure the Group's practices continue to be appropriate and robust.

Eﬀectiveness reviews

The Committee oversaw the 2019 external review by Praesta Ireland of the effectiveness of the Board, its Committees and individual Directors, which concluded in January 2020, and the 2020 internal effectiveness evaluation which concluded in January 2021. For further details, see page 84.

The Chair reports to the Board after each meeting to ensure all members are fully informed of its committee's activities and decisions.

Chair of the Nomination, Governance and Responsible Business Committee

26 February 2021

Report of the Group Remuneration Committee

Steve Pateman Chair

Dear Shareholders,

Membership and meetings

At close of business on 31 December 2020, the Group Remuneration Committee (the 'Committee' or the 'GRC') comprised five independent NEDs from diverse backgrounds to provide a balanced and independent view on remuneration matters. Its composition is compliant with the requirements of the Irish Code and CRD IV, and with the

recommendations of the 2018 UK Code.

I was appointed Chair of the Committee in January 2020, having served as a member since September 2018, succeeding Patrick Haren who had served as Chair since May 2015. I would like to take this opportunity to thank Patrick, who retired as a NED on 31 December 2020, for his service to the Committee over the period of his tenure. Richard Goulding stepped down from the Committee on 31 December 2020 on being appointed Deputy Chairman and Senior Independent Director. I would also like to thank Richard for his contribution to the Committee over the period of his tenure. Fiona Muldoon joined the Committee in October 2020 and Giles Andrews joined the Committee upon his appointment as a NED in November 2020.

In order to ensure that remuneration policies and procedures are consistent with effective risk management, there is common membership between the GRC and the BRC. Richard Goulding and I were members of both Committees in 2020, as were Fiona Muldoon and Giles Andrews during their tenures on these committees in 2020. Ms. Muldoon ceased to be a member of the Risk Committee on 31 December 2020, in line with Group requirements regarding tenure of committee memberships, having served as a member for 5 years. Biographical details, including each member's background and experience, are set out on pages 77 to 80.

The GRC met ten times in 2020. The Members of the GRC, together with their attendance at meetings, are shown below. The Chairman, the Group CEO, Chief People Officer, Group Chief Risk Officer (CRO), and the Head of Reward are invited to attend meetings as appropriate.

Role and responsibilities

The GRC holds delegated responsibility from the Board of Directors for the oversight of Group-wide remuneration policy with specific reference to the Chairman, Directors and senior management, heads of and senior officers in independent control functions, and those employees whose activities have a material impact on the Group's risk profile.

The GRC is responsible for overseeing the annual review of the Group Remuneration Policy with input from the BRC and relevant risk management functions.

The remuneration of NEDs is determined by a Board Committee of the Chairman and the Executive Directors, within the boundaries of the Company's constitution. No Director is involved in decisions regarding their own remuneration. The remuneration of the Chairman is a matter for the Committee.

The Group is currently operating under a number of remuneration restrictions which cover all Directors, senior management, employees and certain service providers across the Group. For further information, please see page 123 of the Remuneration Report.

During 2020, independent advice was received by the Group from external advisers, Willis Towers Watson, Deloitte LLP, and Price Waterhouse Coopers (PwC) on a range of issues relating to remuneration including:

• remuneration benchmarking for the GEC and senior management;
• variable pay structures, including annual and long-term incentive schemes;
• evolving pay regulations and market pay practices; and
• other remuneration structures.

The Committee is of the view that these advisers provided independent remuneration advice to the Committee and they do not have any connections with the Group that may impair their independence. During the year, the Group Remuneration Committee appointed PwC as independent advisors to the Committee.

Matters considered by the Group Remuneration Committee

The matters considered and action taken by the GRC during the year are set out on the following page. The Committee reviews and challenges information provided by management and takes advice from external advisors, as appropriate. The Committee ensures at all times to exercise independent judgment and makes informed decisions.

The Chair of the GRC reported to the Board after each meeting to ensure all Directors were fully informed of the GRC's activities.

Eligible

Committee meetings1	to attend	Attended
Steve Pateman (Chair)	10	10
Eileen Fitzpatrick	10	10
Richard Goulding	10	10
Fiona Muldoon	2	2
Giles Andrews	2	2

Fiona Muldoon joined the Group Remuneration Committee on 22 October 2020. Giles Andrews joined the Group Remuneration Committee on 17

November 2020.

100

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Bank of Ireland Group plc published this content on 01 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2021 08:51:08 UTC.

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