Mr. Richie Boucher:

Hopefully the members of the committee will have received our presentation in advance of the meeting. I would like to spend a few minutes giving an update on where the bank is. That is pertinent, reflecting why the SME sector is important to us and why we have the capability and there is the necessity to support that. With the Chairman's permission, Mr. Liam McLoughlin, who is head of our retail Ireland business, will focus in particular on the SME sector.

I draw members' attention to page three of our presentation. From Bank of Ireland's perspective, we are the Irish bank which has an EU restructuring plan agreed, having received State aid, and our restructuring plan confirms that we have a very significant presence in Ireland. We have very substantial businesses in Ireland and businesses outside Ireland. Also as part of our restructuring plan, we managed to negotiate that we retained our New Ireland business and, as a punishment measure in substitution for that, we have exited certain business banking activities in Great Britain.

During 2013 we were able to continue our progress in repaying the State aid and, in particular, towards the end of the year in December we raised equity and we sold on preference shares owned by the State in the market. A total of €1.8 billion worth of preference shares were dealt with from the Government's perspective. That means, from the European Commission's point of view, that all the State aid we received has been repaid.

It is important also to reflect that in 2013 the bank, and the system as a whole, came off the ELG scheme, that scheme having expired. That obviously removed a significant burden from the taxpayers and had economic benefits for the bank. Again, it is important to reflect on the fact that we were able to come off that scheme while safely funding ourselves, so liquidity is not an issue for the bank.

From Bank of Ireland's perspective, we received State aid. The total quantum of State aid that we received was €4.8 billion and we have returned €6 billion in cash to the taxpayers over that period and the State still owns a valuable 14% shareholding in the bank, which is worth somewhere in excess of €1 billion as of today.

Our progress during 2013 was also reflected in our profits. We achieved a net interest margin of 2%, notwithstanding a very low interest rate environment. Over the past five years we have reduced our costs by over €500 million while we have been investing very heavily in our businesses, in particular in our core businesses, including our branch network in Ireland and our payments and our infrastructure in Ireland.

We have had significant access to the funding markets - funding is not an issue. Our customer loans are funded by capital and customer deposits - our liquid assets - are funded in the wholesale markets, and we have termed out the funding in those wholesale markets.

Last year was also an important milestone year in that the level of defaulted loans - customers who were defaulting - reduced for the first time since 2009 and the absolute level of defaulted loans has reduced. Pertinent to the work of this committee is that defaults in commercial real estate, consumer mortgages and SME lending in Ireland came down.

During the second half of 2013, as Ireland was exiting from the troika programme, on behalf of the troika, the Central Bank of Ireland did a balance sheet and capital assessment of Bank of Ireland working to requirements set by the troika, and we came through that. There were certain observations regarding risk-weighted assets and provisioning and we addressed those at the year end. As a public company, we set out very clearly, in comprehensive detail, in December when the results came out what the findings were and we addressed those at the year end.

We have had a deficit in our pension schemes and our staff have agreed for the second time in three years to have further reductions in their pension benefits and that has been reflected in our cost base and also in the capital. We are strongly capitalised. We have a robust capital ratio of 12.3% under Basel III, which are the new capital rules for the banking system, therefore, we have the capital available. It is important, as I talk about this, to point out that we have the core franchises, our cost base has been addressed, we are funding ourselves safely, we have repaid the State aid - the taxpayers are in profit - and we have the capital that is being provided to us by the private sector by people who believe in the recovery of the Irish economy and believe that Bank of Ireland can play a significant part in that.

Our key issue is the generation of revenue and the generation of revenue means supporting our customers. All of that having come together, we had a significant improvement in our financial performance in the second half of 2013, as is reflected in the slides. As I address the committee today, Bank of Ireland is generating profits and is generating capital.

The capital we generate is available to support our growth ambitions.

I have gone through my presentation relatively quickly because I am very conscious that members are under some time pressures. Mr. McLoughlin will go through our Irish franchise.