Mr. Liam McLoughlin:

I thank the committee for the invitation to attend this meeting today. I will first introduce the delegation from Bank of Ireland. I am the chief executive of the Retail Ireland division of Bank of Ireland Group. Joining me today are Mr. Stephen Mason, head of group customer operations at Bank of Ireland, and Mr. Pat Farrell, head of group communications and government relations. A presentation has been circulated in advance to members of the committee and I do not propose to go through every slide in detail in these opening remarks, rather I will reference a number of slides and during our discussion this morning and may refer to additional information contained within the presentation. We have also returned to the committee the answers to a range of questions sent to the bank in advance.

I would like to briefly reference the requirements that Bank of Ireland must observe as a public company, quoted on the Dublin and London Stock Exchanges. Bank of Ireland makes extensive disclosures to all shareholders annually through our financial statements and associated presentations and other material statements during our financial year. All statements made and information provided in this public forum are considered to be market information which is disclosed to all stakeholders at the same time. We are obliged to note that any comment we make regarding the potential future performance of the bank should not be considered forward guidance and does not represent a solicitation to purchase stock in the bank.

Turning to our presentation, the executive summary from slide 4 to slide 7 sets out the key highlights of the Bank of Ireland Group's performance for the first six months of 2017. Slide 4sets out that Bank of Ireland is the largest lender to the Irish economy, lending €3.4 billion in that six month period, with growing market shares in business banking and residential mortgages. This slide also sets out that we continue to see positive trends regarding asset quality. We provide more granular detail on this in section 7 on mortgage arrears. Slides 5 and 6shows the scale and scope of Bank of Ireland's operations in Ireland, the UK and internationally. On slide 5, members will see that Bank of Ireland has a comprehensive multichannel distribution platform, including Ireland's largest branch network. In Ireland, the bank has market leading positions across the consumer banking, wealth management, business banking and corporate banking markets. On slide 6, members will see some detail on our international businesses, including partnerships in the United Kingdom with Post Office and the AA, two of the leading consumer brands in the provision of financial services in that market. We have also detailed on slide 7 the work under way to transform how we meet the evolving needs of our customers, including delivering digital capability to meet changing customer behaviour and preferences.

Turning to our recent interim results for the first six months of 2017, slide 9 sets out that Bank of Ireland delivered an underlying profit of €480 million during this time period, with group new lending of €6.6 billion. As members will see on slide 10, some 70% of total income is drawn from Ireland, with the remaining 30% coming from United Kingdom and international operations. Slides 11 to 15set out more detail and further information on our recent interim results. Slide 15details that Bank of Ireland received an investment of €4.8 billion from the taxpayer. The bank has repaid that in full, returning in excess of €6 billion to the taxpayer. The State does not have any exposure to Bank of Ireland under the ELG scheme.

Slides 17 to 24detail the bank’s role in communities and our support for enterprise and innovation nationwide. Bank of Ireland is the largest lender to the economy and has maintained a strong country-wide presence with 250 branches nationally. In addition to this community presence, the bank has an extremely active enterprise development programme which is delivered through our retail bank branch network. Twice a year, in May and November, Bank of Ireland organises a national enterprise week during which a range of activities focused on supporting SMEs and start-ups takes place. Most of these events take place in local branches where small businesses are invited to showcase their business, advertise their product or service and meet new and existing customers. In addition, Bank of Ireland will host more than 130 enterprise-town events nationally in 2017 alone. Enterprise-town events usually take place over two days and see local businesses and sports, social and charitable organisations hosting a major community event which is open to the public. The events allow each town to showcase all it has to offer, support the local economy, connect businesses and raise the visibility of what is happening locally and the potential opportunities for business development. In the first six months of this year, 5,000 exhibitors took part in Bank of Ireland enterprise events.

Bank of Ireland has also pioneered the use of our branches to support start-up companies and entrepreneurs by offering free working space called "workbenches". As set out on slide 20, Bank of Ireland now offers workbench space in Dublin, Cork, Limerick and Galway with partner spaces in Wexford, Waterford, Cork, Kerry and Dublin. Bank of Ireland has also developed Startlab, a start-up incubator based in Dublin and Galway. Startlab is designed to incubate high-potential tech start-ups to help them scale rapidly. We also offer space to Irish companies that want to break into the American market from our offices in New York. I note also the work we do with customers and members of the public to support them in their use of new technology, whether that be computers, the Internet, or smart phones. Bank of Ireland has a team of advisers, called "digital arrows", whose role is to bring digital training, support and knowledge to community groups and customers across Ireland. Our digital arrows engage with active retirement groups, transition year students, business customers, farmers, and community groups to offer practical guidance on how to use new technology in a range of ways from communicating with relatives abroad to shopping online and using digital channels for banking. In 2016, our digital arrows provided training to more than 30,000 members of the public.

Slides 29 to 32set out detail in respect of Bank of Ireland's mortgage book, market share, approach to pricing and the fixed rate offers available to all new and existing owner-occupier customers. As detailed on slide 31, the bank keeps the pricing of all of its products under active review. Products, including mortgages, are priced to reflect the cost of funds to the group, the estimated potential loan losses from the portfolio, recovering our costs including our staff and infrastructure costs, the capital required to support the products, the provision of incentives to customers to reduce risk for themselves and the bank, and to ensure that we are competitive in the market place. The bank offers attractive fixed-rate mortgages which mitigate risk for both the customer and the bank. At each LTV band, there is an attractive fixed rate available to both new and existing customers. Over the past two years we have seen a significant shift towards fixed rates. Of total new lending volumes of €800 million in the first six months of this year, fixed rate products account for 88% of the total. This is up from 75% in 2016 and 30% in 2015. Our fixed-rate mortgage strategy provides value certainty and stability to our customers and to the group and we consequently see this strategy delivering a considerable benefit to both.

From slide 34 to 42, we have provided an update on asset quality and mortgage arrears. Slide 33 sets out that nine out of ten owner-occupier customers are fully up to date on their mortgage; nine out of ten owner-occupier customers who requested forbearance, and through an SFS demonstrated they were in financial difficulty, were offered a sustainable solution; and nine out of ten owner-occupier customers are meeting the terms of their forbearance arrangement. All our activities in our approach to mortgage arrears recognise the fundamental importance of the family home.

Significant progress continues to be made. Slide 35 details that at June 2017 owner-occupier accounts in arrears had reduced by 60% from peak levels in May 2013. At June 2017 2.5% of Bank of Ireland owner-occupier accounts were greater than 90 days in arrears compared to a rest of industry average of 8.3%. Bank of Ireland mortgages greater than 720 days in arrears have also continued to reduce, falling to 1.4% in quarter two 2017 compared to the rest of industry average of 5.2%.

On slide 42 we highlight that we provided 26% of the new owner-occupier mortgage loans in the country in H1 this year. We had 22% of the stock of mortgages in the country, up from 18% of the stock in 2008, but only 8% of the stock of mortgages in arrears and 6% of the owner-occupier mortgages greater than two years in arrears.

To conclude these opening remarks, Bank of Ireland is Ireland’s largest lender, and the number one bank for Irish businesses. It operates the largest branch network of any bank in Ireland, with 250 branches nationwide, and is increasingly using this branch footprint to support start-up companies and entrepreneurs. It is responding strongly to the changes in how our customers are choosing to bank, and their demand for 24 hours per day, seven days a week services. It has the most comprehensive banking enterprise programme in Ireland, with national enterprise weeks and enterprise town programmes designed to help companies grow and succeed.

Thank you for your attention this morning. My colleagues and I look forward to members' questions.