Banking Investment Update

October 2015

5.5

5.5

13.3

1.6

1.6

0

5

10

15

20

25

30

2009-2011 2012 2013 2014 Oct 2015

Fees and Income (accumulated) Disposals (accumulated) AIB Valuations (at year-end)

BOI Valuations (at 6 Oct 2015) PTSB Valuations (at 6 Oct 2015)

2

State Banking Investments – “Living” Banks

€bn

€29.4bn – total invested in the “living” banks

(1) AIB: Valuation at year-end 2014 includes equity and preference shares valued by the ISIF and CoCos valued at par.(2) BOI: 2014 year-end valuation was €1.4bn. Valuation as at 8th October 2015 was €1.6bn.(3) PTSB: As part of the capital raise, the State sold 22m shares to enable PTSB meet the minimum 25% free float requirement. The State received €97m, shares were

sold at €4.50 each.(4) PTSB: The CoCo was repurchased at market value, the State received nominal €400m, €11m premium and €31m accrued interest.(5) PTSB: The State’s remaining equity stake in PTSB is valued at €1.6bn at 8th October 2015

€2bn

€14.3bn

€17.7bn

€23.1bn

€25.5bn

€27.4bnPTSB – 75%

BOI - 14%

AIB – 99.8%Equity/Preference Shares €11.7bn &Contingent Capital €1.6bn

Disposals

Fees and Income

State Exit

Regulatory Capital

Requirements

Valuation

Irish economy

Global economy &

markets Debt/GDP

level

Budgetary Considerations

Financial Performance

3

Influences & drivers impacting our exit strategy

-2.7

-12.1

-5.1

-3.7

-1.7

1.1 1.2

2009 2010 2011 2012 2013 2014 1H15

4

AIB - Significantly strengthened and is well positioned for further growth

Net Interest Margin1 Loan Loss Provisions (€bn) Profit Before Tax (€bn)

ProfitabilityImproved Risk ProfileEnhanced Revenue Drivers

State’s investments were made between 2009 and July 2011

State’s investments were made between 2009 and July 2011

State’s investments were made between 2009 and July 2011

For six month period

For six month period

-5.2

-6.0

-7.9

-2.4

-1.9

0.20.5

2009 2010 2011 2012 2013 2014 1H15

1. NIM excluding ELG fees but includes NAMA bonds

1.84%

1.52%

1.40%

1.22%

1.37%

1.69%

1.92%

2009 2010 2011 2012 2013 2014 1H15

AIB – ISIF valuation increasing

6,119 6,402

10,032

11,679

2011 2012 2013 2014

The State’s shareholdings in AIB and Bank of Ireland are held by the ISIF at the direction of the

Minister for Finance.

The NTMA engages an external firm annually to provide an independent fair market valuation of

the ISIF’s directed investment in AIB in line with generally accepted accounting principles.

Following this exercise the AIB ordinary and preference shares held within the ISIF’s Directed

Portfolio have been valued at €11.7 billion at the end of 2014, up from €10bn at end 2013 and

€6.4bn in 2012.

NPRF / ISIF Valuations

5

Strong progress also across our other investments

Net Interest Margin1 Loan Loss Provisions (EURbn)2 Profit Before Tax (EURbn)2

Increased ProfitabilityImproved Risk ProfileEnhanced Revenue Drivers

1. NIM’s shown are exclusive of ELG fees but not adjusted for NAMA bond interest. As at 30 June 2015, AIB held EUR7.5bn of NAMA Senior bonds. AIB’s NIM excluding ELG fees and NAMA senior bond interest was 2.08% in 1H2015 and 1.89% in 2014 . Bank of Ireland held EUR1.9bn of NAMA senior bonds at 30 June 2015 and Permanent TSB held EUR1.0bn at 30 June 20152. H1 2015 data is as reported (not annualised) Includes exceptional items.

1.59%1.46%

1.33% 1.25%

1.84%

2.11% 2.21%

2009 2010 2011 2012 2013 2014 1H15

(2.4)

(1.9) (1.9)(1.7) (1.7)

(0.5)(0.2)

2009 2010 2011 2012 2013 2014 1H15

(1.8)

(1.0)

(0.2)

(2.2)

(0.5)

0.9 0.7

2009 2010 2011 2012 2013 2014 1H15

(0.3) (0.4)(0.5)

(0.9)

(0.7)

(0.0)

(0.4)

2009 2010 2011 2012 2013 2014 1H15

0.83% 0.86%0.92%

0.72%0.82%

0.90%1.00%

2009 2010 2011 2012 2013 2014 1H15

(0.4) (0.4)

(1.4)

(0.9) (0.9)

0.0

(0.0)

2009 2010 2011 2012 2013 2014 1H15

13.9%

74.9%

6

7

Significant Milestones Achieved To Date

Resolution of the IBRC Promissory Notes and liquidation of IBRC – disposals in

excess of €21bn to date

Continued improvement in bank profitability & resolution of legacy issues on-going

Sale of Irish Life for €1.3bn

Sale of BOI CoCos (€1bn) and Preference Shares (€2bn)

NAMA to repay all senior debt by 2018 (80% by 2016); sub debt by March 2018;

and generate €1.75bn upper range terminal surplus

AIB, BOI and PTSB restructuring plans approved by European Commission

PTSB raised capital to address CA shortfall, State received €550m and has 75%

stake.

Work underway to look at AIB’s capital structure and configure the return of capital

to the State

8

NAMA - Senior Bond Redemption

0

5

10

15

20

25

30

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

2011 2012 2013 2014 Sep-15 YTD Oct-Dec-15 2016 2017/2018

Actual Redemptions(LHS Axis)

Forecast Remaining 2015Redemptions(In line with NAMA 2015Budget)(LHS Axis)

Cummulative PlannedRedemptions to end 2016(In line with 2014 strategy)(RHS Axis)

Cummulative ResidualPlanned Redemptions(Post 2016)(RHS Axis)

€bn€bn

1.25

3.5

2.75

2.75

2.75

9.10

70%of NAMA’s

Senior Debt repaid.

€9.1bnpaid in 2014 – more than

the previous 4 years

combined – €7.5bn.

2 yearsahead of schedule

€1.75m redeemed in

September 2015.

Well on the way towards

meeting next major

milestone – the redemption

of a cumulative 80%

of Senior Bonds by end-

2016.

Ireland’s contingent liability

arising from NAMA and

IBRC liabilities has been

reduced from €40bn at

the start of 2013 to

€9bn today.

€8bnThe contingent liability

could be €8bn at end-

2015.

9

NAMA - Success built on strong cash generation - €29bn

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

€m

Disposal Receipts

Non Disposal Income (mainly rentals)

Cumulative Cash Generation (RHS Axis)

Cash generation

= disposal receipts

+ non-disposal income

€29bn€29bn in cash collected

from loans to date

€23.5bn€23.5bn in cash collected

from disposal receipts

€5.5bn€5.5bn in cash from

non-disposal receipts

– mainly rental income

10

IBRC liquidation update

A special liquidation progress update report was published in March 2015 giving a comprehensive overview of the work completed to date. It is available on the Department of Finance website www.finance.gov.ie

Outcome to date has significantly exceeded expectations.

Loans with a par value of €21.7bn have been prepared, brought to the market and sold.

To 6 February 2015 (the two year anniversary of the IBRC liquidation), the liquidation had generated €16.5bn of cash inflows. This has allowed for the payment of €14.7bn to IBRC’s creditors and costs to date, which included the full repayment of the debt owed to NAMA. This has resulted in a cash balance of c. €1.85bn which will ultimately be available for distribution to creditors.

Creditors in the UK and Ireland had until 31 March 2015 to submit their claims and those creditors in the US had until 31 May 2015.

There remains a number of other key tasks left in the liquidation of IBRC including the on-going management of over 700 legal cases to which IBRC (in special liquidation) remains party.

While this is not expected to prolong the liquidation, a Commission of Investigation has been established to investigate certain matters of significant public concern regarding certain decisions, transactions and activities entered into by IBRC (pre-liquidation) between the period 21 January 2009 and 7 February 2013.

€bn

375

7554

20 10

169

102

29

183

268 5 5

Source: Central Bank of Ireland

11

Crisis support – Government guarantee now almost eliminated

Department of Finance

Government Buildings

Upper Merrion Street

Dublin 2, D02 R583

Ireland

www.finance.gov.ie

@IRLDeptFinance

This presentation is for informational purposes only.

No person should place reliance on the accuracy of the data and should not act solely on the basis of the presentation itself.

The Department of Finance does not guarantee the accuracy or completeness of information which is contained in this document

and which is stated to have been obtained from or is based upon trade and statistical services or other third party sources. Any

data on past performance contained herein is no indication as to future performance.

No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any

modelling, scenario analysis or back-testing.

All opinions and estimates are given as of the date hereof and are subject to change.

The information in this document is not intended to predict actual results and no assurances are given with respect thereto.