Mr. Liam McLoughlin:

I will cover briefly the situation in relation to mortgage pricing and will focus on presentation slides 51, 52 and 53. We keep pricing of all our products under ongoing and active review. Products, including our mortgages, are priced to reflect the cost of funds to the group, operating costs, including regulatory costs, and the estimated potential loan losses from the portfolio as well as capital and liquidity costs. These are all factors the bank as a responsible lender must consider. The structure and liquidity risk the bank takes against mortgages is a significant factor. We must remember that the bank is providing a 25 to 35 year commitment of money to the customer and we cannot fund for that duration. In accordance with commercial realities and Central Bank and Single Supervisory Mechanism, SSM, macroprudential policy decisions, pricing is risk based using the the loan to value, LTV, band as a proxy.

As recently as January of this year, we announced a suite of attractive fixed rates ranging, depending on risk or loan to value, from 3.7%. These fixed rates are available to both new customers and, importantly, existing variable rate and standard variable rate, SVR, customers. Our costs of funds, as Mr. Boucher noted when dealing with slide 14, reduced by 23 basis points during the course of 2014. This reduction is more than reflected in our revised fixed rate pricings announced in January. In addition, while not a feature across the Irish market, we also give customers, from February of this year, the option to move to a lower LTV band and thus a lower fixed rate pricing on the provision of an up-to-date home valuation. This feature is available to existing variable rate and SVR customers.

The decision to take a fixed rate mortgage, which is always the customer's decision, gives certainty to the customer and the bank for periods of up to ten years, which is the longest term for which we will provide a fixed rate, at a time when fixed rates are at the bottom of an interest rate cycle. At the end of 2014, fixed rate mortgages account for 9% of outstanding mortgage balances. During the first quarter of 2015, circa 50% of new mortgage customers chose a fixed rate draw down. In the month of March 2015 alone, more than 55% of new first time buyers chose a fixed rate. Mortgage markets differ very significantly in structure and features across all EU member states and this prevents an accurate and transparent comparison.

Slide 52 shows that the average SVR we charge in both Ireland and the UK are similar. Our analysis shows that both our fixed rates and variable rates would result in mortgage repayments being less than rental costs. Using publicly available data on www.daft.ie,we will look at a typical three bedroom semi-detached property in, say, Lucan in Dublin or Douglas in Cork. We calculate annual savings for customers of more than €2,000 per year against rental costs.

I will pass over to Mr. Stephen Mason who will cover briefly the mortgage challenge portfolio.