Bank of Ireland Group plc (BIRG) Earnings Call Transcript & Summary

Thank you very much, Mr. Collins.

Thanks very much, Mr. Collins. Just to add to that, we're very pleased to support the 4 provinces in Ireland. Anyway, we are there on Saturday as well. And indeed, the previous weeks, we had a different outcome as well. We will continue to support Irish rugby. Just to add as well is a very level which everyone sees, but also on a community basis and indeed, women's rugby as well is important to us. So thank you very much.

Number 5 here. Thank you.

Mr. Sean Quinn. I'm not satisfied with what you have said about interest rates. You've referred to this 1.5%, which you're putting across is a great interest rate. I haven't accounted to Bank of Ireland myself. I have no idea what interest I'm getting. I'm sure it's below 0.5%. But the position is that I can go on to raising bank, and I can get an interest rate of 3.5%. I have been dealing with the Bank of Ireland for over 50 years. And why is it that we've got to go outside of Ireland to get half decent interest rates at that point? The second point is with respect to mortgages, one is this, that there's no long-term fixed mortgages. In other words, a mortgage for 25 years or perhaps a fixed rate of 2.5%. Why is it that people, every time interest rates go up and down, put in a position which happened an increase? So those 2 points interest rates are not realistic and the mortgage situation, that's not realistic, either. There should be long-term.

Thank you, Mr. Quinn. Myles?

Yes. Thank you very much. Mr. Quinn, in response to your 2 questions. On the interest rate question, I fully understand why deposit holders would want to be rewarded as much as they possibly can. That's a perfectly reasonable position to hold. I do want to make the point that the very sharp increase in interest rates from a long period of either way it's been flat or negative, now at 3.75%, and that is in response to very significant inflationary concerns across many jurisdictions in the world. So our role is to make sure we strike the right balance between how much we increase mortgage rates and how much we increase deposit rates. And it's a balancing act, and we're very mindful that we don't want to push mortgage customers into an affordability issue. And equally, we want to make sure we are rewarding deposit holders as well. So we will continue to look at that. I'm not going to give any future guidance today, but it is important that we get that balance right. In relation to mortgage products, just to confirm that 68% of our book is fixed. We're very pleased with that because that's protecting customers in the current rate environment. Typically, right now, most customers are opting for a fixed rate of between 3, 4, 5 years. We do offer products as to 10 years as well. They are available. I think the challenge from you in relation to what we go beyond that is a fair challenge, we'll certainly get back consideration. But most customers today are opting for a fixed period of between 3 to 5 years.

Number 1. Sorry, [indiscernible].

Hello. My name is Mark Scally. I'm a shareholder, I remember since -- joined in 1957, [indiscernible] Bank. And I've seen a lot of things as has happened over the years. And I'm glad to see there's some changes coming now because there was a bit of a lack of control for years, governance and different things happened, and different banks and people and companies were able to bury and offer their money with nothing to back it up. And then certainly, the bottom was to fall on a lot of things. And I think a lot of people forgot the simple things, as I said before, the 2 and 1 makes 3 [indiscernible] no matter what way you post this, we have auditors coming along, and I've seen it for years and I read the slide. I have my books right from 1957, books that was by people. And they knew everybody, the trust of the people. And they're saying about it, was only to be would pay back. It's no [indiscernible] to be paid back or just a conglomeration of people and solicitors were involved and lawyers, and it's changed from one place to another. So I think that goes down to many places. I think they should have kept more of them opened. And then they would know like when you went in with your book, the people knew they could trust you and they knew they will trust that man. And that man in turn was an honest man. Most -- 99% of them are honest people. They would not owe to anybody or not people, but the people now talks in millions and billions. And yet, if you asked them, some of them make up the price to go up, it's [indiscernible]. They couldn't do without the calculator. So it's time I think that people -- and there's so many things now. I know somebody last -- a month ago has lost something like EUR 20 million on Bitcom. Now the Bitcom -- I don't think was even sound. It was [indiscernible]. So this is what we're up against today. We've take tack. We have all these things. And like people, [indiscernible] very honest. And in my time, you work hard for your money and you save your money and you got paid for your money. So that's all I have to say. I'm glad to see that the spend results coming up. and that all these was lack of governance, or the lack of honesty, even among a lot of the directors that we had. And also with the people who made up the books and all. Somebody was hiding things all the time. So that -- so I hope the times have changed for good. And I compliment to all of you there for doing a good job. I think it is turning for the right reasons, and people will be able to trust again people.

Thank you very much, Mr. Scally. Thank you, Mr. Scally. We have made progress, and we have a clear strategy, clear plan as to how we're going to continue to advance that. Thank you for your comments. Sorry, #4, apologies.

[indiscernible] I was very happy again I know up here now. Gentleman spoke nicely. And last year, the last speaker also nicely of the bank, I can't imagine why. He suggested that my GBP 20 BFI share has now become GBP 0.20, and I should be happy. I'll tell you, I wasn't happy. The bank opened to us, I understand, in 1883. It has branches since 1864 and they paid interest. I think for the first time, if my Google is right, then bought College Green in 1908, but it's everything. And it's a business to continue on that range. Now the BFI is a mess, as you can see from the building in the middle of lines. It's a fine binding, and it stays on biggest building -- most lovely buildings you had. Now it's an nice saw at best. This is a long, in fact. It's falling down, and there's no place on a high street. It doesn't do the rest of the business, and the business people any good. It was year 2020. That's a long time that all of those people here now be starting today for the last, whatever, 15 years or so, on the other hand, or received payment which isn't recorded in the mind. What shares is everybody here have. It's not record. We don't know. You might be having it all. I don't believe myself it should be paid in money. It should pay in shares as [indiscernible] trying to make a better effort to one company. The Bank of Ireland and the AIB expected to run healthcare. I would have asked to do better try to run the bank. I don't know how healthcare do. But if you're going to run this, God help us. All this is impact on the agenda as BFI made local Davy. Are you going to buy Davy. Not that I care. But the point is that it says that if you do buy Davy, then the norm for these people would have to happen. And that reinsured bonus. I couldn't believe that. We don't get a penny. Have we got, God knows when. And the first thing the bank wants to do is start paying bonuses, I would say that so far down the line we haven't received. What the hell would you get a bonus for? For buying point company [indiscernible] and see very wisely, you would see you at the time. Why do you want it? Anybody would love to live, a nice and a number, 1 million a year, no questions answered, and no questions asked. To leave [indiscernible], has been a disaster company, bank for years. And then obviously went brankrupt. And our esteemed member of the Board left 1 million a year to go to Credit Suisse. For once, we don't know with no record into stage probably there quite well. The BFI has no trouble paying people quite well, millions, everybody works for [indiscernible]. We never got a penny. And we were totally ignored. And now people want as a bonus. What a lovely thought. Google says that Credit Suisse about years. I'd say, in recent years, they have lost billions and have been hit for fines and penalties and [indiscernible] on the 100 million year to work for Credit Suisse. I don't say much for us that you would leave us. We're so bad. And so without any future that's related to leave BFI a million year and go work for Credit Suisse which is now bankrupt, which is probably going practice to work for Credit Suisse to work for us and very nicely bankrupt. [indiscernible] and ask her to say you could find words for BFI. How could you, Mr. O'Grady said lots of fine words, all the right words. Every word is perfect. But the bank overheard to any of the words he uses. How could you say anything [indiscernible] for years and then bankrupt [indiscernible] unpaid the dividend. And that was on the very way for all the hardship years that we suffered in Ireland or torturous, and they still survived. Then we came with happy days when we're full on money [indiscernible] and pay the dividend. I think you should say to tell us shares everybody there on the Board has. And I suggest that the future may not be given money, but that given shares. The Board really blushed with embarrassment and what they offer us. All the words, all the words and nothing. Once not a penny. But you can find them 1 million you wouldn't mind. I don't know, I can't remember. I remember the day when some owner of the bank announced that you have a man and they were going to have -- they want to pay GBP 1 million. But the people on the floor, obviously, objected. But of course, [indiscernible]. Yes. So people here, some [indiscernible] to move with you. I want to establish. I'm certainly not content. And certainly, we have the Board. And the last thing we want is for you to start worrying about healthcare, try to run the bank. [indiscernible] to run the bank.

Mr. [indiscernible], thank you, and thank you for your contribution and your questions. You've given me a lot there to respond to. Let me give it a go. And in relation to director shareholding, I am conscious of the annual report is 347 pages. There's a lot in there, and that's for a variety of reasons. But the shareholdings of all the directors are in there. And based on feedback from this forum in recent years, we have changed our policy. We had a minimum shareholding requirement going back many years. We significantly increased that in the last 12 months. So directors now have a minimum shareholding requirement of 4,000 shares. That at current share prices equates to more than 1 year's fee -- more than 1 year's basic fee after tax. So -- and you know it is detailed in the Board that 3 directors Board shares last year, 4 directors Board shares the previous year and all directors have now met or exceed that minimum requirement of 1-year speed. In relation to the branches, we have announced a -- you talked about College Green. You talked about mines. In relation to College Green, we've actually announced a EUR 36 million investment to completely upgrade College Green to -- there'll be some of that spent on the exterior to your challenge, but also very substantially in the interior. And indeed, we've a EUR 12 million investment program this year alone for the refurbishments of all of our branches in addition to College Green. In relation to the dividend, we did pay a dividend last year. Total distributions of EUR 104 million. And we have announced distributions this year of EUR 350 million. We'll be both on the cash component of that later on this morning, this afternoon. And we have a proposal as part of our strategy, which I mentioned earlier, to get to a 40% payout by next year of the -- in terms of dividend. And on top of that, of the surplus capital to consider the return of surplus capital on top of that of the year via a buyback. In relation to bonuses being back in agenda, we have completed the acquisition of Davy and maintain the same market standard of remuneration practice they had before we acquired them. And those are market practice, and they are subject to regulatory guidelines. I know you talked then more broadly about how those -- how bonuses would be reintroduced into the bank. And I understand there's a range of views on this. I understand this is quite an emotive issue in relation to remuneration in the banking sector and in particular, variable remuneration [indiscernible]. The role of the board, the objective for the Board is to attract and retain the right talent and to execute the strategy that Myles laid out earlier on. And we have to do that for our colleagues, for customers, for society and for you, our shareholders. And to do that, there's a number of -- there are a number of strands to how we approach doing that. One is to have what I think is a market-leading hybrid working model. Another is to have very progressive, and I think we now have very progressive people policies. But the third is to have competitive remuneration. And when we think about that remuneration, we have a number of principles in mind. And we do want to make sure we do ensure that all our remuneration is benchmarked across alternatives and industry and financial and nonfinancial sectors. And we do ensure that variable paid to the degree that it's introduced and it has been introduced to a cap is available and offer to all colleagues in the organization. But finally, the key focus that we have when we think about remuneration is to try as best we can within the constraints that we still operate in to align it with the interest of you, our shareholders. And just finally, you're overriding key in the bus, and this is an area we're just going to have to agree to disagree on. But as to whether you can say anything good about Bank of Ireland, I mean, just to -- I think the business has been doing well. I think we've just announced, as part of our results in the annual report that we put today, underlying profitability of EUR 1.2 billion. That's up pre-impairment 15% year-on-year. We've delivered against the returns target that I mentioned. We completed the Davy acquisition. We have since completed the KBC acquisition. We grew our mortgage, grew lending last year by 64%. We grew our business. We had the first year and last year of Business Bank, net lending in Ireland for 10 years. We reduced our costs. We reduced our nonperforming exposures. The base is down by another 40% last year. And I think we have -- as I mentioned in my opening comments, reduced -- improved the customer experience. We've reduced complaints by 50% since 2017. And the culmination when you put all that into the hopper for the shareholders, is that our share price last year was up by 79%. And that made us, as I mentioned at the outset, the top-performing European -- large European bank stock last year. So I think there is something good to be said about. But there's a lot there, and hopefully, Mr. [indiscernible] I have given you a different perspective on some of your views. Thank you for them. Number 1 sorry.

Mr. Chairman, I want to compliment the bank on tiering the debt. It was created during the bailout. Well done, and well done with the share price. Didn't intend to ask you a question, but I want to make a comment. The gentleman down the floor very respectfully thanked you for your support for rugby, which Mr. O'Grady reiterated. I would support a different organization with 3 letters. And I seek very little support from the bank for that. I do remember the time you were the main supporter of GAA. I would like to see moving back in that direction, if you don't mind me making the comment.

Sorry, I didn't catch your name, sir?

Thomas [indiscernible].

Thank you very much, Thomas. And thank you for your kind words. Myles, in relation to our sponsorships?

So we look at all sorts of opportunities in relation to sponsorship. And to reiterate, we are very pleased to continue supporting rugby. It doesn't mean we have any philosophical reason why we will look to support other sports. But of course, opportunities to support come along at different times. And right now, the opportunity is in rugby. It doesn't mean we wouldn't consider other sports in due course.

Okay. Any more? Yes, please.

Josephine Burn. I came here today because I had a complaint. The only way I could deal with the complaint was coming to talk to somebody. I have spoken to somebody outside, and I think this matter will be dealt with. But on your website, it is very difficult to find out who do I address the complaint to. I made many, many attempts and failed. Hence, I'm here today. Your website is not very easy to follow regarding complaints. I made numerous phone calls, numerous attempts of trying to speak to somebody and failed. I think you talk about complaints. My complaint is going on since October. I don't think it was good. It will be dealt with today, on a positive note, and I hope it will be looked after in a good fashion.

Thank you very much, Ms. Burn. I just -- I'm sorry you didn't have a bit good experience. As part of the strategy, we've laid out a number of real principles for us, and being customer first is the first of them. I did say at the start when I said that complaints were down, which is positive. I also said we clearly know we have more to do and you experienced is evidence. Again, my apologies.

Okay. In the absence of any more questions, I'm going to move to the business of the meeting. The company is presenting its statutory financial statements for the financial year ended December 31, 2022, which were published on the 7th of March this year. And copies of the statutory financial statements, which were approved by the Board, the directors report and the auditor's report may be found on the company's website. The affairs of the company since that page are summarized in the quarter 1 interim management statement, which was published on the May 3, 2023, and is also available on our group website. The full text of each resolution is set out in the Notice of the Meeting. I now formally propose that each of the resolutions as set out in the Notice is posted to the meeting. As mentioned earlier, for each resolution today, I'm declaring a poll, and the following resolutions are proposed to the meeting. Resolution 1 of the financial statements, the report of the directors and the report of the auditor for the year ended March 31, 2022, submitted to this meeting be considered and received. Resolution 2 is to declare a final dividend of EUR 0.21 per ordinary share for the year ended December 31, 2022. Resolutions 3a to k are for the election and reelection of the directors. They're each proposed as a separate resolution. So please bear with me. Resolution 3a is at Myles already, we elected a Director of the company. Resolution 3b the is that Giles Andrews be reelected a Director of the company. Resolution 3c is that Evelyn Bourke be reelected a Director of the company; Resolution 3d is Ian Buchanan be reelected a Director of the company. Resolution 3e that Eileen Fitzpatrick be reelected a Director of the company. Resolution 3f that Richard Goulding be reelected a Director of the company. Resolution 3g, that Michele Greene be reelected a Director of the company. As Resolution 3h relates to me, I will hand over to Richard Goulding, our Deputy Chair.

I now propose that Patrick Kennedy be reelected a Director of the company.

Thanks, Richard. Resolution 3i, that Fiona Muldoon be reelected a Director of the company. Resolution 3j that Steve Pateman be reelected a Director of the company. And resolution 3k that Mark Spain be reelected a Director of the company. Resolution 4 is that the appointment of KPMG as the company's auditor be continued until the conclusion of the next AGM of the company. Resolution 5, that the remuneration of the auditor be fixed by the Board of Directors for the 2023 financial year. Resolution 6 that an extraordinary general meeting -- other than an extraordinary general meeting called for the passing of a special resolution may be caused by not less than 14 clear days notice in writing in accordance with Article 50b of the company's Articles Association. I now move to the items of special business to be covered today. Again, the full text of each resolution is set out in the Notice. Resolution 7, to receive and consider the directors' remuneration report for the year ended December 31, 2022. Resolution 8, to receive and consider the 2022 directors' remuneration policy. Resolution 9. Resolution 9 has been proposed as a special resolution and seeks to authorize the company or any of its subsidiaries to make market purchases of up to approximately 10% of its issued ordinary shares at the date of passing of the resolution. And that authority will expire on the earlier at the AGM to be held in 2024 or the August 23, 2024. Resolution 10. Resolution 10 as an ordinary resolution to authorize the directors to issue new ordinary shares up to a maximum of 353,320,779 shares, representing approximately 33% of the issued share capital of the company as of April 17, 2023, subject to statutory preemption rights. Resolution 11. Resolution 11, which will be proposed as a spatial resolution is to authorize the directors to allot ordinary shares for cash without offering them first to the other ordinary shareholders. The authority in Resolution 11 is limited to an allotment pursuant to a rights issue authorized under Resolution 10 and up to 53,455,432 ordinary shares. Otherwise, then in connection with an offer to ordinary shareholders in accordance with their preemption rights. Resolution 12, which will be proposed as a special resolution, is to authorize the directors to allot ordinary shares for cash without offering them first to other ordinary shareholders. Resolution 12 authorizes the disapplication of preemption rights in respect of an additional 53,455,432 ordinary shares for the purposes of an acquisition or specified capital investment. The authorities which have been sought in resolutions 10, 11 and 12, if granted, will remain enforced until the date of the AGM in 2024 or the August 23, 2024, whichever is the earlier. There are currently no plans to issue any ordinary shares on report of this authorization. I will move to Resolutions 13 and 14 and take these resolutions together. Here, the directors are seeking a general authority to issue additional Tier 1 contingent equity conversion notes, or AT1s, and to allot ordinary shares issued upon conversion or exchange of AT1s without first offering them to existing shareholders. Resolution 13 is proposed as an ordinary resolution. Resolution 14 is proposed as a special resolution as set out in the notice. Again, to vote on the resolutions proposed, you're asked to put your polling card into one of the polling boxes at the back of the hall or at the exit doors as you leave the meeting. And as Gabrielle mentioned to the outset, details of the poll results will be published on the group's website and released to the stock exchanges later today. So ladies and gentlemen, that concludes the business of today's meeting. On behalf of the Board, I'd like to thank all colleagues for their continued hard work and dedication to the bank, along with everyone who made today's AGM work so well. And I'd like to thank all of you for your attendance today, and we'd be delighted if you would join us for refreshments in the conservatory just over here to my right-hand side. But thank you very much.