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

Good morning, everybody, and welcome to the Bank of Ireland's AGM. I'm Sarah McLaughlin, I'm the Group Secretary. Before we start, may I please ask you to take note of the nearest exit here. If you hear the alarm, you exit the building to your nearest exit -- via the nearest exit. Please also check that your mobile phone has switched off or set to silent to avoid any disruption to the meeting. We have made this meeting accessible to many shareholders as possible by providing an audio cast, which will allow shareholders to listen live to the proceeding. The slides to the AGM will also be available on the group's website after the meeting. So on to today's business. We will start with presentations from our Chairman, Patrick Kennedy, and our Chief Executive, Myles O'Grady. This will be followed by an opportunity to raise questions that shareholders may have on the resolutions that are put before the meeting today. We will then proceed to voting on the resolutions. When the meeting concludes, tea, coffee and light refreshments will be available at the rear of the hall. So I will now hand over to our Chairman, Patrick Kennedy.

Thank you, Sarah. And I would also like to welcome you all to today's Annual General Meeting. This meeting offers the opportunity to take stock of the strong progress that the bank has been making in terms of business outcomes and strategic execution and for us to hear from you, our shareholders. I'm joined on the platform by our Chief Executive, Myles O'Grady; our Chief Financial Officer, Mark Spain; our Group Secretary, Sarah McLaughlin, who just opened the meeting; our General Counsel, Gabrielle Ryan; and my Non-Executive Director colleagues. We're also joined by Patricia Carroll from KPMG. Pleasure, you are very welcome. The focus of our meeting is the financial performance of the group for the year ended 31st of December 2023. We will also consider the resolutions set out in the notice of the meeting. That notice has been with shareholders since the 19th of April has been available on the bank's website since that date and as such, may I take the notice and the auditor's report as read. Thank you very much. Under Article 51 of the company's constitution, the quorum for the AGM requires the attendance of 2 persons entitled to vote upon the business to be transacted, each being a member or a proxy for a member. A quorum is present, and I declare therefore the meeting duly constituted. I would like to start by highlighting some of the group's important achievements last year. Bank of Ireland performed strongly, both financially and strategically. Financially, underlying profit before tax increased by 75% to just over EUR 2 billion. That's the highest level of profitability in the group's history. This financial performance reflects commercial delivery across all of our business lines, supported by a more favorable interest rate environment. It also reflects the positive outcomes from a series of important decisions that we have taken in recent years, and these include our transformative acquisitions of Davy in 2022 and last year's purchase of the KBC Ireland portfolios, which brought 150,000 new customers to the group. These also include the delivery of our successful value over volume strategy in the United Kingdom, evidenced by underlying profit before tax in the U.K. growing by close to 60%. And since 2019, while strategically reducing our net lending by 30% in the same period. This positions us well in what is the world's sixth largest economy on our doorstep and where we have had a presence for 200 years. The group's overall performance also reflects the significant progress made in delivering on the refreshed strategy, which we communicated in March of last year. And that strategy is built on 3 pillars: stronger relationships, a simpler business and a more sustainable company, and Myles will talk about these 3 pillars later on. Turning to our capital position and distributions. Supported by our profitability, we delivered strong net organic capital generation and this level of capital generation enables acquisitions, enables a meaningful step-up in distributions and enables growth in organic net lending in Ireland. Through continued engagement with shareholders, your Board understands the importance of distributions. And in respect of 2023 performance, we have announced a proposed $0.60 per share dividend. That equates to a 40% ordinary dividend payout ratio and reaching that payout ratio level a year earlier than originally targeted. We have also announced a EUR 520 million share buyback, with 2024 being the third successive year in which the group has completed a buyback. And when you take into account these 2 items, the ordinary dividend proposed and the buyback, it equates to a distribution of EUR 1.15 billion, and that's a material step change of more than 3x what we announced last year, which in turn was more than 3x what we announced in 2022. And that combined figure, the distribution and the buyback of EUR 1.15 billion equates to 13% of our end of 2023 market valuation. Our capital position is strong as evidenced by our fully loaded common equity Tier 1 ratio, our CET1 ratio, which was 14.3% at the end of 2023. And finally, in an update to the group's policy, we are going to recommence capital distributions on a semiannual basis, interim dividends this year. Moving to purpose. In March of last year, we sharpened our purpose, which is to help colleagues, customers, shareholders and society to thrive. And this purpose underpins our performance. And our focus on is, combined with our investment in the culture of the group as a whole is delivering positive results for all of our stakeholders. For you, our shareholders, I've already set out the step change in distributions, which we have been able to deliver. For colleagues, our Cultural Embedding Index increased to 80%. That's 5 points above the global financial services benchmark, it's 26 points higher than our first score, when we first measured this in 2018. And colleague engagement has also reached all-time highs. And these are important developments because we know that an engaged workforce with the right culture leads to better customer outcomes. And to that point on customer outcomes, our customer relationship promoter score, which is an important way for us of measuring customer satisfaction is now at its highest level since tracking commenced 6 years ago in 2018. And within the same time frame, complaints in Retail Ireland have halved. And the final stakeholder for wider society, our positive impact includes supporting the construction of approximately 21,000 homes in Ireland today, where we're also the leading provider of green mortgages. At last year's AGM, I spoke to you about the Irish government's lifting of a number of crisis era area restrictions on Bank of Ireland relating to remuneration. And these changes were important to us for a number of reasons, including that they removed a number of restrictions on the group, which seriously hampered our ability to compete with other corporates, both banking corporates and nonbanking corporates. We have responded to these changes in a careful and a considered manner with a focus on better linking remuneration to the achievement of our long-term strategic and commercial goals and delivery for our customers. As a matter of general principle, public policy should foster a level playing field for all companies. This is important in every sector and financial services is no different. And we will continue to engage with all stakeholders on the future development of the sector, including on the remaining remuneration restrictions and other policy developments, which created an even playing field with other corporates and with competitors. Let me now pass to our Chief Executive to Myles for an overview of the group's performance and our strategy, before Sarah takes us through the procedure of the meeting. Thank you. Myles?

Thank you, Patrick. We are now more than 1/3 of the way through the 3-year strategy we announced last year, which we are executing well. This is evidenced by the step change in the performance of the group: loans, customer numbers, and assets under management have grown, translating to a strong financial performance, delivering a return on tangible equity or RoTE of 17.3% last year, well above our target. This outcome is supported by the breadth of our businesses in our home market. Ireland is an attractive market. 3/4 of our profits come from here. It has experienced the strongest headline economic growth in the EU over recent years. This momentum is reflected in record total employment, while households and businesses have healthy balance sheet. Housing completions reached a 15-year high last year with more growth expected. And while we are always mindful of the risks presented by the external environment, this positive backdrop is important. And Bank of Ireland is well positioned to create value here. This all helps drive our Irish performance. In Irish mortgages, last year, we increased our share of a growing market to 41%, with organic net book growth of 8%, and we did this while maintaining our pricing discipline. Irish customer balances grew EUR 2.5 billion last year to EUR 80 billion, while customer fee income grew 11%. Our wealth and insurance assets under management increased by 18% to EUR 46 billion, and we see scope for further growth in the years ahead very much supported by Ireland's favorable demographics. Our other businesses also performed well. We grew new lending in our Irish corporate and SME books. And we maintained a disciplined approach to property and international corporate, with lending down by 10% over the last year. And in the U.K. our approach of generating stronger returns through a niche strategy in Great Britain, while maintaining the full-service bank in Northern Ireland has transformed its performance. As Patrick said, our strategy is to build stronger relationships, a simpler business and a more sustainable company. In terms of stronger relationships, last year, we helped our customers to buy 14,000 new homes, and we continue to invest in our mortgage offering and have recently launched a highly innovative new mortgage product, the EcoSaver Mortgage offering a better mortgage rate for a more energy-efficient home. In respect of simpler business strategy, our work to improve customer experience is having a positive impact on customer satisfaction. We want and we know that we can do more. This work continues. Since the start of '24, we have announced investments totaling close to EUR 150 million to improve customer relationship management, upgrade branches, renew our ATM fleet and enhance fraud prevention. In addition, our ongoing focus on efficiency supported a significant reduction in our underlying cost-to-income ratio to 42%. And turning now to sustainability. Our green lending increased by 35% to EUR 11.1 billion last year. And we're on track to meet our targets of EUR 15 billion of sustainability related finance by 2025, and then growing this to EUR 30 billion by 2030. We are working to help sectors of the economy transition, including agriculture, property, transport and energy. And we have more customers to buy sustainable homes with green mortgages accounting for over half of our new Irish mortgage drawdowns. We've also made significant progress on our social commitments. Protecting our customers and colleagues' financial wellbeing is a key focus. We hold the #1 position as the bank for financial wellbeing in Ireland. We also continue to make progress towards our 50-50 gender balance target for management and leadership appointments. With female senior appointments reaching 46% last year, and we strengthened our ESG reporting disclosures recently launching our sustainable finance framework, which provides further transparency around what we categorize as sustainable and social finance. I'd like to also reflect on the unique opportunity that the group has as Ireland's National Champion Bank. We are able to serve our customers' financial needs at every stage of their lives. In addition to the Bank of Ireland banking franchise, we are the #1 well provider through our Davy business and Ireland's only bank assurer, to New Ireland. The ability to offer banking, wealth and insurance propositions all from within the group, means we have an unrivaled position in the Irish market. Through our Davy and New Ireland businesses, we serve around 650,000 wealth and insurance customers in Ireland with strong future growth expected over the coming years. From an investor perspective, our strategy is producing great commercial outcomes, translating to the financial performance we have set out today and supporting sustainable capital generation and increased distributions. Over the next 4 years, Bank of Ireland will invest in the region of EUR 2 billion future proofing our business. The focus of our investment will be securing long-term operational resilience, accelerating our capability online and heightening operational excellence and efficiency. All of which is designed to ensure we meet the fast-evolving expectations of our more than 4 million customers. Before concluding my remarks, please let me take a few moments to acknowledge that this is Patrick's last year as Chairman of Bank of Ireland, and a successor will be announced in due course. By any measure, Patrick has made an outstanding contribution, having served for 14 years on the Board with 6 as Chairman. His term as Chairman has spanned 2 strategy refreshes that have helped to reshape the group, delivering tangible benefits for all of our stakeholders. For shareholders, greater efficiency and higher returns have led to growing distributions. And in addition, we completed the transformative acquisitions of Davy and KBC Ireland portfolios. And the group has been returned to full private ownership. These, of course, are just some of the examples from a long list. On behalf of all of us in Bank of Ireland, thank you for your immense contribution, and we wish you every success in the future. I will now hand over to our Group Secretary to deal with the procedure for the meeting. Sarah?

Thank you, Myles. As set out and explained in the notice of the meeting, which is being taken as read, there are a total of 24 resolutions toto today's meeting via 13 resolutions. I'd also like to draw your attention to slight typographical amendments in the wording of Resolution 2, 12 and 13. In relation to Resolution 2, in March, we announced the proposed final dividend for 2023. It will be paid on the 11th of June to shareholders on the register on the 10th of May. Unfortunately, the notice we issued for today's AGM included a typographical error in respect of these dates, which threw them out by 2 days. We apologize for this error. Therefore, earlier this month, we issued an RNS to announced our intention to correct this at today's AGM. Resolution proposes to do that today. And if approved, it will align the date of the dividend payment back to those we originally announced. In relation to resolutions 12 and 13, the resolutions referenced that the authorities proposed today will expire in 2024 as opposed to 2025. There are no other changes proposed today. As such, the Chairman will propose amendments to the dates set out in Resolution 2 and the year that referenced in Resolution 12 and 13. For these amendments, as we formally propose the resolutions later in the meeting, the Chairman will be seeking a show of hands to confirm approval. And we ask that you raise your hands and your white polling card at that time. It's really important that you raise your card in favor of these resolutions as they will be needed to pay the dividend that is proposed before you today for approval. Thank you in advance. As there are many resolutions before you today, in the interest of time, it is proposed that rather than read out the full resolution, the main thrust of the resolution is being put to the meeting in summary form. For each of the remaining resolutions today, the Chairman is declaring a poll save for the procedural points I referenced in relation to Resolutions 2, 12 and 13. Our registrar, Computershare investor services, has already provided the details of the proxies received from shareholders, including those proxies, which instruct the Chairman how to vote on behalf of the relevant shareholders in his capacity as the Chair of the meeting. So to vote today, you each have an attendance card with you. On the reverse of that card, you will see the 13 resolutions and 3 boxes on each resolution. That's your polling card. Before you leave, we will ask you to tick the relevant box to indicate your vote on each resolution. And please ensure that you sign the polling card as the absence of a signature will invalidate your vote. As you leave, please put your polling card into one of the poll boxes that are situated throughout the hall or at the exit doors and a registrar or colleagues are in the room and they will assist you as you leave. The registrar will count the results of your votes immediately after the meeting, and will add these to the proxies received in advance of the meeting. Details of the results will be published on the group's website and released to the stock exchanges after the meeting. And to note, while I vote withheld is not a vote for the purpose of today's poll, details of any votes that are withheld will also be provided. Moving to shareholders' questions. Similar to last year's AGM, we invited questions in advance of the meeting. We received a small number of questions, and we have responded to each of them. The questions and our responses are available on the group website. Any questions that have not been made available on the website relate to individual accounts and administration matters. In terms of the questions that we receiver, when shareholders submitted questions on interest earned on surplus cash deposited with the ECB, costs and operating expenses and nonperforming exposure levels. In response, we directed that shareholder to the full year 2023 results presentation and the more recent Q1 interim management statement released on the 30th of April, and both of those documents are located on our website. Another shareholder submitted questions in relation to sustainability and how we can seek to add value to the broader stakeholder set in terms of our environment, customers and the Irish society. In responding, we reiterated that the bank's purpose is to help customers, colleagues, shareholders and society to drive. Also sustainability is fully embedded as one of the group's core strategic pillars and we continue to deliver practical solutions, sustainable solutions that make a difference. So again, the responses provided to the questions can be found on the Investor Relations section of the group website. So the Chairman is now inviting your questions on any aspect of the resolution before the meeting. If you would like to ask a question, please raise your hand and wait until we get a microphone to you. Any questions raised should relate to the business of this meeting. If you have any queries in relation to your own banking business, we have a number of colleagues that are here today to answer your queries directly. Each of the microphones is numbered. So the Chairman will call the number of a microphone that's nearest to the person from whom he will take a question. And finally, if you could please give your name when asking the question. Thank you. I'll now hand back to Patrick to take your questions.

Thanks very much, Sarah. So happy to take any questions that shareholders might have. Number two, please.

My name is Jerry Cotland. I have 3 questions here, but concern want to copy this you want to give it up to the [indiscernible]. As the report mentions the Bank of Ireland bolt-on on the line net credit impairment charge of EUR 403 million or 49 basis points of gross customer loans, which rose in 2023 compared to a charge of EUR 187 million in 2022, which is up around 15%. Central Bank has highlighted that the sale, the price collection now on 50 billion commercial real estate now. According to a report by our [indiscernible] investment in various property Americas sort just over EUR 2 billion last year, down from EUR 4.7 million. The question is, does the Board expect further static in the train and the value of commercial property assets over the next 2 years as America correction continues to hold on the sector, adjust to higher interest rates, rising vacancy levels and a collapse in demand. The second question is the question relating to the ATM general scheme with access to cash build. This is sort of legislation, which stems from the recommendation made by the retail banking review published in November of 2022. It will require compliance with regional criteria that set the maximum number of ATMs per 100,000 and proportion within 10 kilometers of an ATM and cash service points. And a different predicting ATM a bit as important as ATMs are properly maintained and out of service experience by our customers is minimized. Costa Central Bank has empowered access to local ATM deficiencies regions, which is to get difficult in excess -- to excess cash. The question is with the Bank of Ireland be fully compliant with the planned access to cash bill legislation that's currently drafted by the Minister of Finance? The third and final question is regarding the EUR 500 million home energy upgrade low scheme for retrofitting homes. The question is that the Bank of Ireland finalize the approval process and legal requirements so that homeowners can avail retrofitting loans ranging from EUR 5,000 to EUR 75,000 pursuant to the retrofit scheme, making energy upgrades and more accessible and affordable to homeowners. Of course, the [indiscernible] bank of -- Chairman [indiscernible] come to first financial institutional business scheme to offer these retrofit loans, which ranging from 3.55% annual equipment growth, where I expect with more of lenders coming on the Americas, I expect interest rates will be significant lower than those currently in America because of the combination of European Bank group loan guarantee on the government funded interest rate subsidy. And I understand it's your last AGM, I like to wish you have the success in the future endeavors.

Thank you very much, Mr. Cotland, and let me start by thanking you for your kind wishes. Thank you personally very much appreciate them. Let me try and answer each of the 3 questions. I might pass the third question, Myles, to you. Your first question is a very important question, Mr. Cotland because it goes to, frankly, what is the biggest risk for any bank, which is credit risk. And in relation to the commercial real estate book, which you've asked about, I would say we reduced the size of this book by at around EUR 1 billion in the last 12 months, around 12%. And that reflects both the prudent approach and proactive management of the book. We are satisfied with the quality of the portfolio today. It has remained resilient to date. And I think an important point of context in considering the CRE book is comparing it to the last time we had significant difficulties with our CRE book, which obviously was in 2008. And there are very, very significant differences between 2008 and today in relation to our CRE book. And let me just summarize because I think it's important to get to the number of your questions quite a bit. In 2008, CRE lending in Bank of Ireland was about EUR 37 million, EUR 38 million. Today, it's EUR 7 billion. In 2008, the CRE lending was about 25% of our book. Today, it's less than 10% of our book. The nature of the CRE financing that we were engaging in 2008 is also very different. There was more -- there was speculative land development financing in. There was none of that today. And probably most importantly, the overall credit management approach, credit governance approach, risk frameworks, risk oversight and regulatory oversight and management information. Right across the piece is very, very different. And to that which we experienced when the were last difficulties here. So it's an area that we monitor very closely because it is our most important, most substantial risk, credit risk, but it's a portfolio that has remained resilient to date. On your second question in relation to access for cash and the access to cash bill. We are as an institution, we're very supportive for the cash landscape, we recognize the importance of the cash landscape to the payment system. Myles talked in his earlier comments about some of the investments we've made already this year. The larger of those investments is a EUR 60 million investment in our branch network and in our ATM fleet. So we have 665 ATMs around the country we're going to be upgrading every one of them because we recognize the importance of access to cash. And very specifically around the legislation. We in the need the wider banking industry is -- we're engaging on an ongoing level with the development of plans around the development of that legislation. But we will absolutely to your specific question, we will absolutely adhere to that legislation in the form that it comes through in. And Myles, in relation to the third question.

Yes. Thanks, Patrick, and Mr. Cotland. Sustainable finance, sustainable lending is integral to our strategy, and it's a very important part of what we want to do, particularly in our Irish home market over the next number of years. I referenced earlier that more than half of our mortgage book now, our loans that have been written to support green homes. That's been very important to us. And we're building on that. We recently announced the introduction of our EcoSaver Mortgage that's designed to help our customers decarbonize, improve their energy efficiency in their home. Essentially, the more energy efficient your home is, whether you're an existing or a new customer the more attractive will be the mortgage rate. And in addition to that, to your point, we also want to very much support retrofitting, and that will be most definitely is part of our product offering and we're very happy to be supportive in that regard. We'll be supporting our customers to retrofit their homes. And of course, we will always seek to offer value in relation to those loans.

[indiscernible] private shareholder.

I'm sorry I missed the name. Sorry.

Please correct me if I'm wrong, but my reading of the balance sheet and particularly Page 160 is that we hold over GBP 14 billion of sterling mortgages. GBP 14 billion of sterling mortgages. My reading of what's going on in the U.K. would lead me a little bit concerned about those mortgages. So first of all, perhaps your comment if I'm incorrect or otherwise would be valuable. But my suggestion is you immediately strengthen your U.K. sterling credit review team. That is my background in my career and keep a very close eye on that aspect of the balance sheet.

I'm sorry, I missed your name.

David Mikhail.

Mr. Mikhail. In relation to the U.K. The U.K. is an important part of the overall footprint of the bank. And it provides scale. It provides synergies. It provides diversification of risk, diversification of strategy, diversification funding risk and we've had a presence in Northern Ireland, it wasn't Northern Ireland at the time. We've had a presence in Northern Ireland since 1925. We've had a presence in Great Britain since 1971 and very substantially built out our presence in Great Britain through the Bristol & West acquisition mid-1990. It brought very significant credit risk expertise and to your specific question, Mr. Mikhail. Over the last 6 years, we've transformed the performance, the financial returns out of the U.K. business. We have -- we moved from a business that was making a return on equity of low- to mid-single digits to a business that is now the -- that last year was the top performing mid-tier bank in the United Kingdom. And we did that by focusing very selectively in a very disciplined fashion in the areas that we felt we had higher margins and a real strong franchise. And some of that -- and the biggest individual line indeed in that is around mortgages. But we have pivoted even within the mortgage portfolio to different business lines away from volume playing against the top 5, top 6 players right across the spectrum to more -- as Myles said in his comments at the outset, to more niche segments where there are better returns and where the credit risk that we have and have built on from the Bristol & West acquisition in the mid-90s that can play that part. And to put that in context, as a consequence over the last 6 years to the returns, we have reduced the book by about 30% and by being much more selective about the risk that we take. And at the same time, we've increased returns, increased profitability by close to 300%. So -- but the overall point that you make, and it goes back to -- and the question that Mr. Cotland asked around credit risk is one that we completely agree with, and we will be -- we are -- we monitor credit risk across all of our portfolios very carefully on an ongoing basis. And I think we have the expertise to do that. But thank you for the question. I'm going to take number one, please.

So Oliver Daily. Yes, I just wondered if you would consider having a not lot share purchase. Particularly, this would be a benefit for -- a new people who have small shareholdings, who have uneconomic shareholdings. Other companies have did this like [indiscernible] and AIB recently did that. So I was wondering if you might consider that as well. Because I think people who have very small shareholdings is an economic for them to sell it, but if you do not offer, they don't bear any sales commission like brokerage stuff and thing -- that's okay.

Thank you for the question. It's very topical, as you say, AIB have operated. They have a more fragmented shareholder base. [indiscernible] also have a more fragmented shareholder base than we do. But the point is still well made, and it's one that we will take under consideration. Number four, please.

My name is [indiscernible]. You made the point earlier regarding fraud and I'm aware of the bank's efforts to inform and advise customers around fraud and welcome those initiatives and encourage you to maintain them. Individual instances of fraud, and I am not a victim happily, and our personal disaster. And even if one considers oneself to be reasonably financially sophisticated. It's surprising the case as one reads about of where people have falling to all of this. So this is an issue of company reputation, personal disaster and it links back to your own efforts to advise us all. So please encourage that. It also links back to what was mentioned about your own staff in the branches and there need to be competent, friendly and approachable. I believe if we're all encouraged with good experiences in individual branches, if we are targeted on any of these messages, and we're encouraged, talk to your bank, your friendly local bank that may help to overcome some of these issues. Further suggestion for your consideration is younger people should learn about this. So younger people, I mean leaving that level or at university level. And might the bank consider a program of informing such younger people about these risks for their own sake and also for the feedback that they can provide within their families.

Thank you very much, indeed. This is a key topic we did refer to it, but you've made the point very well. And to your 2 suggestions, we would absolutely maintain a focus on fraud, and we're investing more and more. Last year, it was one of the key enhancements to the app that we released was around fraud and fraud monitoring. And this year, to Myle's comments at the outset, we've already announced an investment of an additional EUR 50 million in the first month of this year fraud prevention, fraud protection. But your points on that are very well made. And the role of our team, the role of our staff in the branches, I completely agree with you. Myles in relation to the second suggestion around programs for younger people.

Yes, indeed, and thank you for the question. It's a very prevalent point right now. And certainly Bank of Ireland, we feel we're quite appropriately taking a leadership position in the market on fraud to help protect our customers as best we can that references the investment earlier. And of course, we have a dedicated team that are available 24 hours a day, 7 days a week to work with customers who are the victims of fraud and also, we're running fraud awareness campaigns throughout the country. And part of that, of course, is talking to all different cohorts for customers. And I think that the recommendation on working with some of our younger customers in schools, it's a very good idea indeed, and we'll certainly take that by the way to consider. And I would like to say as well, you referenced our colleagues in my experience about 2,800 colleagues across the network and branches. They are the best representatives of our customers and looking after their interest, and it's good to hear that experience.

Number three, please.

My name is [indiscernible], and I'm a pensioner in Bank of Ireland. I worked in Bank of Ireland for 43 years and then retired in 2014. My question relates to the account specifically to how retired workers are treated financially by an organization that has just reported profits of EUR 2 billion, a very strong performance indeed. However, I'd noticed that my pension has been significantly affected by inflation at least, historically. In 2010 and again in 2013, when the pension fund was in alleged existential difficulties. I and my colleagues agreed to accept certain somatoconian measures. On the clear understanding, received in writing from the bank that there would be adjustments if and when the scheme recovered. Despite the rising cost of living, the employers current pension policy, this allows a substantial portion of my due increase and just some specifics. For the first 3 years, a pensioner received no increase at all. And then since 2013, pension increases, which are although are tied to the consumer price index are always capped at a maximum of 4%. However, even if you're entitled to this modest 4%, the first 1% of the increase has been in disallowed effectively a pension deduction. An example, this means that if annual inflation is, say, 6%, which has been the case, I would only get a 3% increase in my pension. After say this contrasts with how executive management and directors are remunerated on top of very generous salaries, which are fine. The 7 senior executives got nonperformance share awards worth 240,000 between Chief Financial Officer got the 125,000, which will rise to 250,000 next year. And the Chief Executive got 250,000, which will rise to 0.5 million next year. Could someone please explain the rationale behind this reward policy, how in contrast pensioners continue to be treated as if there is still an existential situation, and what steps are being taken to address the challenges faced by pensioners like myself? Where is the evidence of sharpening of purpose.

Thank you, Mr. [indiscernible]. And I know this is -- I hear that this is something you feel strongly about and let me give some context to everybody in the room on this topic. As Mr. [indiscernible] points out in 2010 and 2013, there were reviews of our pension funds and most particularly the Bank of Ireland Staff Pension Fund. And as part of that review and as part of the agreement that was reached, there were changes in terms of what would qualify for pensions going forward. There are changes in terms of rules and pensions and payment going forward. And at the same time, the bank agreed in addition to the normal contributions to accelerate additional funding of EUR 1 billion into the fund, which it did. We have had -- over the last 16 years, the fund has been in deficit for 13 of those 16 years. Thankfully, the fund is in surplus today. And the Bank of Ireland Staff Pension Fund had a funding level of 102% at the end of the year, which is a welcome development. It's now down 40% to 101%. But to have more assets and liabilities is where we wanted to be 101% is not as big a surplus as big an advantage as we would want. And therefore, there is still room for considerable volatility. And as the trustees have considered the surplus that is there at the moment. And the commitment that was indeed made as Mr. [indiscernible] points out, if there was a surface in future years to consider how to use that. The trustees have decided in the first instance that their priority should be to derisk the scheme and the trustees as I understand which are using a significant proportion of the current funding surplus and to do that. Stepping back, I serve as a trustee for 3 years. And I know that the priorities of the trustees of the Bank of Ireland Staff Pension Fund are to provide security and stability for all 17,000 members of the fund. And that's important to protect benefits now and benefits in the future for current scheme members and indeed, obviously, for future generations of ventures. And I also know the trustees aim to be fair and equitable and try to get the balance right and be fair to all members. And in that regard, there was an increase in pensions and payments of 3% last month. There was an increase in April '23, up 3% under the formula that you refer to Mr. [indiscernible]. And there has been, I know, a very substantial assessment that's taken place. It has involved actuarial advisers involved legal advisers, it has involved a very significant investment of time, but I do appreciate your comments. I do also say at the outset I appreciate the depth of feeling that you have in this issue. I'll pass your comments on to the Group Head of Pensions and to the Pension Steering Committee. And I also know that -- I understand at least that there's been an offer made to pensioner representatives to meet with Mark Spain, our Chief Financial Officer. And I hope that offers taken up, and you're very welcome to join that meeting, Mr. [indiscernible] and make sure that your perspectives are fully heard because those perspectives are important. Thank you for your contribution. I'm going to take question number two.

Yes, sure. [indiscernible] Garner. I have a question somewhat related to what already been said. But initially, I want to wish you well as you head towards retirement from the bank Board, you've given 14 years of service and as Chief Executive -- said 6 as Chairman, a significant contribution in any professional career. And I really do wish you well as you proceed in your career. In your Chairman's review in '21, you highlighted the uneven playing field because of remuneration restrictions, which hampered and created a clear competitive disadvantage for the bank relative to banking and nonbanking corporates. In your review of '22 last year in the annual report, you reported that in November 2022, the government announced the removal of a number of crisis area restrictions related to remuneration. And you said these changes were important and what helped the bank compete again in a more level playing field. And this year, again, you used the phrase, and you call on the government that the remaining remuneration restrictions be removed. So I've written to you a number of times over the past couple of years, 3 times, in fact, asking you to address and remove the crisis era restrictions, which the previous speaker talked about. And particularly for those on low pensions, which I mentioned in all my letters, in particular, the 1% levy and the 4% cap. You declined to meet me. You didn't take up my offer to meet or to meet a selection of pensioners. And I ask that you established a forum, you didn't do that, our pensioners could put their case to the Board. And I really ask you how is it consistent to ask the Irish stays to establish a level playing field when you and the Board refused up to now to discuss establishing a level playing field for pensioners. As the previous speaker said, the directors, shareholders, no other group actually suffer this particularly difficult 1% levy on pension and on their salary increases. And I would liken the governor to the bank having pensioners in a state of captive disposition. The long-term impact of the restrictions has significantly reduced pensioner's effective income and over a normal lifetime in retirement, a pensioner who retired pre-2010 could expect a 30% or 40% diminution in the purchasing power of their pension in their retired lifetime. That is a very, very significant penalty. The need for a level playing field is obvious governor. And you have been on the board through all the period of the crisis from 2010 through to to date. And I'd ask you as you move towards stepping down from the Board, where you have given terrific service. I would ask you to please prioritize and deal with this issue in the months you have left as part of the Board. Now to my question. Manner's reserved for the board are no longer disclosed in the annual report. You do explain how you deal with manner reserve for the Board. But I would ask you staff and pensioner remuneration is still a matter of reserved for the Board? And secondly, if you might, why put the bank's future service contributions into an escrow account rather than straight into the staff pension fund. There is now EUR 60 million in the escrow account as at -- as mentioned in 32 to the accounts as at the end of 2023.

Thank you very much, Mr. Neil, and there's a lot in that question and not in your comments. Let me start the outset by thanking you for your kind wishes towards me. I would also add that it is you and I go back a long way in bar, and it is regrettable. And to me, both you and Mr. [indiscernible] and others who have contributed so much to Bank of Ireland are so frustrated that is unfortunate. I know that the trustees try to get the balance right on this, and I don't want to repeat everything that I said to Mr. [indiscernible], but we'll try to be fair to all numbers. 1/3 of the members today are pensioners 2/3 of the members today are either still in the Bank of Ireland or workforce or our Board members. Context, just to add a bit more context on this, this is one of a small number of defined benefit schemes in Ireland, which have successfully managed to remain open. And in 2010, when the commitment was made, many other defined benefit schemes were closed, round up or have material benefit reductions. Many schemes don't provide pension increases, some reduced pension of retirement by State Pension Bank of Ireland Pension Fund is in either of those things. And to your point in bar around the high levels of inflation, and I completely take that point. This agreement of the increase that will be paid to pensions in payment does not protect fully against the recent high levels of inflation. But nor indeed, our pensioners and pensions reduced in periods of inflation is negative, which has been in 3 of the last 10 years. In relation to communication, we have stepped up the communication and the information has been shared both in terms of written communication and indeed individual meetings that have been offered with the Chief Financial Officer. And I know that Mark has a number of meetings arranged, I'm not sure if one of them is with yourself. And -- but that's just some context in relation to the point that you made, but my overriding sentiment here is that it is regrettable that you have the frustrations that you have because we are trying -- pension trustees are trying to get the balance right here and be equitable to all members of the scheme and to derisk the scheme for all members going forward, and that's how they are employing the surface as it exists at the moment. And Myles in relation to the 7 questions, I'm going pass it to Myles.

Do you want to take the escrow, please?

And just maybe specifically on the escrow, so just again for the benefit of the broader room. The escrow account was set up as part of the series of measures during the last triennial valuation, which is completed on the 1st of January 2022. And as part of that, the bank supported the trustees derisking measures displace what Patrick said earlier. And just again for context, the pension scheme, the last payment out of the pension scheme would be probably 60 years from now. So that's how the trustees are thinking about and avoiding that volatility over that period. So those derisking measures as part of that agreement, both parties, the trustees and the bank agreed to put the 2023 to '25 contributions into escrow as part of that agreement. The trustees took independent of the legal actuarial advice in relation to that. I'd note that the contributions related to service of ongoing staff assisting from funding on the deficit in relation to pensioners, which I think is important. But there are a series of triggers in place to ensure, but the scheme is protected. So the actuarial surplus, for example, falls below 100%, the escrow gets released back into the scheme.