Mr. Richie Boucher:

I thank the Chairman for introducing my colleagues. I will be brief but on occasion I might ask my colleagues to speak on a couple of the items. I propose to give an update on the group's strategy and financial performance, reflecting among other things that taxpayers have a 14% shareholding in this large pillar bank. I will make a Powerpoint presentation, one component of which will concentrate on matters that were particularly pertinent in the questions, that is mortgage interest rates and the group's management of challenged mortgages.

In slide 5, we give the key highlights of our financial performance for the year ended December 2014. We have achieved a significant turnaround in the group's trading performance, approximately a €1.5 billion turnaround. What is particularly gratifying for us and I hope our customers, is the significant increase in new lending. We did €10 billion of new lending in 2014, which was drawn down last year. We are the largest lender to the Irish economy. Our UK mortgage business also contributes to the growth in new lending. Primarily due to a reduction in the cost of money to the bank, reflecting a strategy the bank has pursued, our net interest margin improved during the course of 2014 to 2.11% for the year as a whole and the exit margin, that is the margin in the last quarter of 2014 was 2.22%. We made further progress on our strategy of reducing defaulted loans and they came down by €2.8 billion, that is 22% below their peak, but nevertheless it is still at a significant level of €14.3 billion.

During the past few years, but in particular with the coming of the Single Supervisory Mechanism, SSM, there has been a big focus on the bank's capital. The bank's core equity tier 1 capital ratio improved significantly during 2014 to 14.8%. We passed all the ECB stress tests with significant capital buffers and the intrinsic value of the group, that is the tangible net asset value per share increased by 13%.

On slide 6, we demonstrate that Bank of Ireland is a leading bank in the Irish economy. We hold the No. 1 or No. 2 positions in all of our principal product lines. In the 12 months to the end of December 2014, we provided one in three home mortgages in the Irish market.

We have 27% of the cash savings market. We are the only bancassurer in the market. We have 24% of the life assurance market. We are Ireland's number one business bank based on Central Bank of Ireland verified statistics, where we did greater than 50% of new business lending and agri-lending, and we are the number one corporate bank.

Slightly differentiated from some of our competitor banks, we have retained a significant presence outside of Ireland, which is focused on Great Britain. We have a partnership with the UK Post Office which has substantial market presence. In Northern Ireland, which we view as part of our Irish-type operations but it is obviously in sterling, we have a universal bank offering. We have an acquisition finance business, which operates internationally and primarily out of the United States.

I touch on the contribution to the economy on slide 7. We lent €5.7 billion into the economy in 2014. I advised the committee at our last meeting that our ambition was to lend and to have drawn down €33 billion in new lending into the Irish economy between 2013 and 2017. The 2014 figures show we are on track to meet this target. I will not continue with the advertorial in respect of the rest of the statistics.

Our view is that the economy is picking up. This is depicted on slides 9 to 10. We are trying to demonstrate in slide 9 that there is a classic investment-led recovery path coming from the export sector. We have seen a pick up in consumer confidence and consumer spending money in the economy in 2014, which is particularly relevant to our business. That has fed through into other confidence levels and an increase in the total number of people employed. Slide 11 explains the same thing in a slightly different way.

Slide 13 is a brief summary of the breakdown of the financial performance. Our income level and our net interest margin grew. Our costs were broadly flat. They were slightly up, which primarily reflects investments we are making in our businesses, in particular in our branch network in Ireland and our IT and digital banking infrastructure.

Reflecting the reduced level of defaulted loans, the restructures we put in place for customers, which are sticking, and a general improvement in collateral values, our provisions, that is, the loan loss charges we took, had a significant improvement in the year 2014. That flowed through on the profit and loss to our accounts.

It might be useful to pause on slide 14, which focuses on the bank's net interest margin. I draw the attention of the members of the committee to both graphs, but in particular the graph which is in the bottom left hand corner. This graph shows the progression in customer pay rates, that is, our customer charge rate and the pay rate. The lightish blue line is the pay rate we pay for funds and the dark blue line is the charge rate. The improvement in our net interest margin has come primarily from a reduction in the cost of money to us rather than a change in charge rates. We anticipate that, as we put on new lending at slightly higher margins and the tracker element of our book reduces as a proportion of the overall book, net interest margin growth will be primarily on the asset side.

Slide 15 gives a little more information on the mix of new business and the mix of new lending that we are doing, broken down between Republic of Ireland mortgages, Republic of Ireland business banking, Republic of Ireland corporate banking, our UK mortgage business and our acquisition finance business. That table shows that in each of our main business lines we have seen good growth in customer demand and our ability to satisfy it.

Given the time, I will skip slides 16 and 17. Slide 18 is a reminder that the taxpayers have been repaid and are in a substantial profitvis-à-vistheir investment in Bank of Ireland. Slide 19 gives a very quick pictorial overview of our market shares and our presences in the Irish economy. Slide 20 is a pictorial representation of our UK businesses.

In summary, the group has continued to deliver on the strategy we set when we recapitalised from the private market in 2011. Our strategy has been focused on an Irish business and our ability to lend money in that Irish business. We do not make money until we lend it and the growth in lending has been a particular stand out feature along with the reduction in the impairment charges, which came into the bank's capital. Our overseas businesses are self-funded. The group provides them with capital but they fund themselves. These businesses are performing in line with our expectations and that has been reflected in our share price and the share price available to taxpayers.

I will ask my colleagues to address the committee on the mortgage issue.