Permanent TSB Group Holdings plc

Good morning and welcome to our 2020 year end results presentation. I'm going to give you a short presentation of the progress that the bank has made during 2020. And then our interim CFO, Paul McCann, will provide a more detailed review of the financial performance. And then Paul and I will be happy to take questions at the end. So if we just turn to slide four of the presentation, you'll see that 2020, and we all understand this, has been an unprecedented year but where customers and colleague experience have changed so profoundly. But I'm pleased to say that business performance in 2020 has been resilient and in particular in mortgage lending. And if we look down along the various items, if we look at customers, you can see that our total new lending was 1.4 billion for the year. And this was a reduction of 15% year on year. And you might recall in the earlier part of the year, we were saying that our lending could be as low as 30% or 40% lower, but indeed we had a significant recovery in the second half, which I'll deal with. Our new mortgage lending was 1.3 billion. And the reality there is we took action on mortgage pricing and our service proposition around June, July, which actually helped us turbo boost our mortgage lending activity into the second half of the year and indeed into 2021. And we continue to develop partnerships For our customers, so recently we've developed, we've obviously established strong partnerships with intermediary and brokers. It's a very strong part of our business. And also more recently we've developed a partnership with Bibi Financial Services in order to provide invoice discounting and invoice finance. And there'll be more to come in due course. If we move toward the transformation that we're going through, If we look at our costs, our costs have reduced by 2% year-on-year, and indeed achieving cost savings in the current environment is certainly challenging. However, existing initiatives and programmes, which we'd already established within the bank, continue to deliver savings over the last 12 months. This is also a time when we made good progress on our digital transformation program, where we met key milestones, and I'll discuss these later in the presentation. Costs continue to be a key focus of the bank, and we launched a bank-wide enterprise transformation programme, which was, again, I'll get into the detail in another slide, but part of that was around launching a voluntary severance scheme, and we anticipated that we would have about 300 colleagues who would decide to take that voluntary severance, and indeed, that is the case, and we'll be reporting on the finalisation of that scheme in due course. The bank made a loss before tax of 166 million, and this compares to a profit before tax for 2019 of 42 million. And that loss is primarily driven by an impairment charge of 155 million, where we've taken a prudent and conservative approach to the current macroeconomic environment. And obviously we should note here that the country continues to be in lockdown until the 5th of April, and maybe it'll be extended past that date. So we've taken a very prudent and conservative view by way of permit. Our operating profit for 2020 was 52 million, and this compares to an operating profit of 84 million in the prior year, with net interest income reducing by 4%. Our net interest margin came in at 173 basis points, which shows a seven basis points decrease since last year. And this is as a result of lower for longer interest rates and indeed the increase in liquidity towards the end of the year as a result of the sale of our Glenbay 2 portfolio. NPL's increased by 80 million to 1.1 billion, bringing the NPL ratio to 7.6%. That's an increase of 120 basis points, but it's actually primarily driven by the fact that performing assets, performing loans are 9% lower, again, as a result of the Glenbay 2 sale. If we move on to capital, our capital position remains in excess of management and regulatory minimum, actually to a high degree. And it came in at 15.1% by way of the fully loaded, correctly tier one capital. And that's a 10 basis points increase. And it also reflects that we are recording a loss for the year. So we believe that's a very strong performance and puts us in a good position from a capital point of view moving forward. The successful deleveraging of the 1.4 billion of the buy to let performing portfolio in September added 150 basis points and indeed it was a very good capital management measure when it happened and obviously has assisted us by way of how we manage our capital position. We've received regulatory approval to call an existing AT1 instrument that was issued in 2015. And I should also note that we had a very successful issuance of a new AT1 issuance in November, which we issued at a much lower coupon and indeed with a significant increase in investor demand. And lastly, with regard to COVID payment breaks, 99% of COVID payment breaks have expired. We had a total of 1.6 billion of payment breaks, of mortgage payment breaks, which represented 10% of our gross loans. 4% of those require additional forbearance measures, and that equates to about 70 million. And about another 6% are likely to require additional forbearance in due course. So in total, around 180 million of mortgage payment breaks will require additional forbearance. So if I just move on to slide five and deal with the pandemic-related disruption, to the domestic economy. And we can see here that it naturally, and we are aware of this, that it caused a very sudden and severe contraction in economic activity across the world. And indeed, if we take in Ireland, the consumer spending has reduced by 8% year on year. And it reduced by 40% through the first lockdown period. So a significant shock to the system. And indeed, I think we all remember the first lockdown and the shock we all had as how we dealt with it. But what we've seen on the other side of the equation is that household savings have increased and to an excess of 20%. And indeed, they actually peaked at 35% in quarter two. So the unwinding of these elevated deposits in due course will, we believe, support strong consumption growth in the medium term. And it's a case of when we exit the lockdown period and also when we actually roll out the vaccination programme. In terms of the labour market, on the right-hand side, job losses came in waves, which is aligned to the increasing levels of public health restrictions. But there were signs of recovery in the second half of last year and through the summer months as most sectors became operational. However, the third lockdown has seen the numbers of recipients of state assistance rising again, and this is likely to remain the case for the next number of months as restrictions are gradually eased. The labour force is expected to be smaller over the forecast horizon, with unemployment estimated to be around 15% at the end of this year, and it is expected to return to pre-pandemic levels by 2022. But this will be dependent on the successful rollout of the vaccine programme and indeed key sectors who have been impacted return to work in a more fulsome way. If we just turn to the housing market, which is a key benchmark for us given the fact that 97% of our exposure, our loans are actually secured by residential housing and indeed we have a strong position in that market. The new mortgage market, having reduced from 9.6 billion in 2019 to 8 billion in 2020, is expected to grow by about 13% to 9 billion in 2021. And indeed in 2022 is expected to grow to 10.2 billion. So what we're looking at there is something in the region of a 27% growth versus last year in the next two years. So that's something that is actually quite positive. Demand for credit declined in March 2020, and that followed the initial containment measures with a significant low reported in mid-April. But mortgage approvals and drawdowns recovered well in the second half, with an extremely positive fourth quarter helping to offset the earlier subdued activity levels. Housing supply, which was already insufficient to meet demand, was curtailed by the restrictions. And estimates before the crisis was that total housing completions in 2020 would be between 24 and 26,000. As it turns out, they've come in around 19,400, which is 8% lower versus last year. And with demand expected to be in excess of 35,000 units per annum, we believe this will lead to a continued upward pressure on house prices. But overall, the house price index has performed well from what was expected earlier in the year with a 0.9% growth in 2020. And this is around consumers choosing to use their savings to look to invest in housing and to buy homes. But also I'd suggest a very changing social environment which makes house purchases more affordable outside key urban areas. And we're seeing that by way of our mortgage. lending as well in our mortgage pipeline, that there is an increased demand in non-urban and regional locations. So if we just move on to our actual performance then, and particularly I want to focus on our performance in the second half of the year. Our mortgage market share, as I mentioned before, our new mortgage lending was 1.3 billion. That was a reduction of 14% year-on-year, but that reflects the market movements by way of lower mortgage markets. So we're basically in line with the market. If you look at it on the top left hand side, if you look at the graph there, you'll see that our mortgage drawdowns increased by 40% in the second half of the year versus the first half. And you can see that our market share basically stayed the same, but a significant increase in performance in that time. And then if you look, move to the right hand side, you'll see an even more positive picture in that our mortgage applications in the second half were 70% higher than in the first half. Now we put that down to, obviously, the recovering market. We also put it down to the actions we took in pricing, the actions we took in how we market our product, and indeed the actions, particularly we took in our proposition that we would provide a 72-hour turnaround for an approval by a customer. And almost 100% of applications are turned around within that 72 hours. And that's something that customers really appreciate. And even if they get a fast no, it's better than a slow no, if you understand. So in that regard, it's been quite successful for us, and we can see it in our numbers. And if we even look at our drawdowns up to the end of February, they're actually in excess of last year. And last year, the first two months were non-COVID months. So there is a momentum in the mortgage market, which we should be aware of, and we can see it in our numbers. The other thing I'd say with regard to this slide is you'll see that we have a better conversion ratio. So if you take our mortgage applications for 2019, we had 14.4% share of the market, but that converted to 15.5% of drawdowns. Indeed, we had 14.5% of 2020 drawdowns, applications, and that became 15.3% of drawdowns. So what you can see is when we get an application in, we can convert it at a better rate. And indeed, if you look at our market share in the second half of the year at 16.2%, we would expect to be achieving at least that by way of drawdown market. And indeed, if you take our previous experience over the last number of years, we should convert drawdowns at a higher rate. So there has to be something positive in that from our point of view. and our track record shows it. If I just move to personal term lending, obviously the consumer credit market has taken a hit because of the lockdown, less holidays, less car purchases, et cetera, less discretionary spend. And you can see that our own personal term lending is 31% lower versus 2019. You can also see we've had a higher proportion of direct activity, which highlights the straight through process we have there on person term lending. And we'll just keep an eye on that. It's a product area that is actually very linked to the lockdown situation. And with regard to SME lending, we have great ambitions in SME, It's an area that we want to develop. It's an area that we want to compete in. You can see that we actually marginally grew our SME lending this year, which is probably unusual given the year that's in it. But we have intentions to grow that even further, and I'll talk about that later in the presentation. So if I just move to now to slide eight. I want to just talk about our strong ambition, our purpose, and our priorities. You know, I personally have huge ambition for permanent TSB. And despite these unprecedented times, I believe that we have all the ingredients to become a clear number three player in the market. Further building trust with customers will be at the heart of what we do. And as I took on my new role as CEO in July of last year, I set out a new purpose for the organization, which is centered on building trust with customers and connecting with the bank's community heritage. And that heritage is over 200 years operating in the Irish market and across the country in key communities. And just to go through this and that, our purpose is to work hard every day to build trust with our customers and to ensure that we live up to our promise of being a community of people in this bank that serves the community of customers that we have. And indeed, we want to welcome new customers in that regard. We will do this by building a sustainable organisation that is transparent and fair with customers. And indeed an example of this is where we reduced our rates, our SVR and MVR rates in July of last year. And indeed we want to do more action in those areas. Our ambition is to be Ireland's best personal and small business bank. It's quite straightforward. But best for us doesn't mean the biggest. We don't have to be the most profitable. We don't have to be the biggest by way of volume. But it does mean being the best at what we do for both personal and business customers. And to achieve this ambition, we focused on a number of key priorities, and they include for our customers, increasing the trust, advocacy and loyalty of our customers. If we talk about our digital capability, it's about continually enhancing those capabilities. Indeed, this year, we have made progress. I mean, in 2020, we have made progress on our digital capability, and I'll talk about that shortly, and we'll continue that focus. If we talk about our culture, so our culture is about embedding an open, inclusive, risk-aware and growth culture. a culture that's focused on customers, a culture that questions itself by way of how it operates internally and externally, and a culture that is progressive and positive. We also want to simplify how we do our business. We want to simplify the interaction with our customers. We want to make that interaction easier, and that is a key focus. And I believe by focusing on those four things, customers, digital capabilities, the internal culture and the way we operate as an organisation, the simplifying our business. I believe by focusing on all of those, we will drive a successful and profitable bank that we can all be proud of. And indeed, we have to remember that 75% of the bank is owned by the Irish state. So it's something that all citizens can also enjoy if we become more profitable and we become more sustainable and we become more competitive and our position grows. So to achieve these priorities, we need to focus on building trust and loyalty with our customers. And I can't under emphasize the word trust and what that means and how it's tied into the way we operate. And we have to work on transforming some of the key elements of the bank to build a sustainable future for the bank. So let me move to slide nine. And I just want to talk about the COVID-19 response and as mentioned at the outset the bank is and has been fully committed to supporting our customers, colleagues and communities through this pandemic and I believe we've shown operational resilience and strength through what was a challenging year. Proactive measures were undertaken from early February 2020 and that was around protecting the health and welfare of our customers and indeed our colleagues. And our colleague response to the pandemic is a reflection of the positive customer focus culture that the bank has and that we kept all our 76 branches open and we had specific hours for elderly and vulnerable customers. All our contact centres were fully operational and we opened four new regional centres to cater for not only social distancing, but also to cater for the requirements of our staff who have to travel from different parts of the country. We also were able to move 1,200 of our colleagues, about 50% of our colleagues off-site into working from home within a very, very short space of time. In that respect, we definitely stood up to the challenge of the pandemic. We showed up, we kept every branch open, and that was important. When we talk about key customer supports, we approved 10,650 new mortgage payment breaks, which equated to 1.6 billion. We had 800 approved personal loan repayment breaks for up to three to six months. We increased the contactless payment increase to 50 euros and that's been very popular indeed. There's also a demand now to increase that even further. And also we provided one million of cash back rewards to explore customer accounts. And I mentioned already about the payment breaks in that there's about 100 customers, about 1% who still remain on payment break. There's about 10% of the original applications that require further support and assistance. And we continue to discuss individual requirements on a case by case basis. And indeed, we understand the need to provide in some cases, additional payment breaks, which provides customers the time in which for their sector or the industry that they're working in to come back to open again and for them to actually start earning salary and wages so they can start supporting their mortgage. And indeed, we are absolutely focused on ensuring that that support is given and the time is given for the... the lockdown to cease and for some more normality to come back. If I just move to the next slide, slide 10, I wanna talk about customers. Customers are at the heart of what we do. Personal service is at the heart of everything and how we operate. However, as both customers and colleagues experience have changed, digital is playing an ever more increasing role in our service offering and our future ways of working. And we are competing very strongly, bringing real innovation to the market, introducing great new customer offerings and winning new customers. An example of this is that over 40% of our mortgage customers last year were new to the bank. And that's fantastic. We love to welcome new customers to the bank and we love to serve them in a way that suits their needs. And if I just look at a couple of key things on the slide, on the top left is around what we're delivering on our priorities. When I talk about enhancing customer journeys, leveraging the digital capabilities and repositioning our brand, our MPS is plus 12. So we're top two in the market and we're up eight points year on year. And in that, the key aspects are around the service quality that we have and the service experience. And there's things we're very proud of and we need to develop them. And they all play into our purpose, which is around trust. The 72 hour mortgage approval has been very, very popular. It's something we absolutely measure and we operate under, but it's been quite popular. I mentioned about the 40% new to the bank customers. If you look at our digital activity, it's been quite impressive. in that we've had over 100 million logins on our digital channels, and that's a 20% increase year-on-year. We've more than 400,000 customers who are active on our app, and we improved our app this year by changing the security login and things of that nature we saw. an immediate increase in activity in our app, but the activity is up 15%. We've 92 million contactless payments made by customers through the year, and that was an increase of 40%. So again, you can see the move away from cash into plastic. We've now 72% of our customers who are choosing to use the bank online. And not only that, our term loan, our credit card, and our overdraft offer are all digitally available online now. So a customer can operate these from their own home in order to open these products. They can obviously also go to the branch as well, because as I mentioned, we kept them all open, all 72 of them. So that's very, very important. If I just talk about partnerships, so partnerships for us is very important. It's about giving customer choice. It's about filling out our product offering to ensure that we can meet the needs of customers. It's accepting the fact that we can't do everything. that there are other parties out there, other partners who can do things slightly better than us and we can plug them in and link them into our product offering. If we talk about the key partnerships we have, we have a very, very strong relationship with intermediaries. It's a relationship that goes back years and it's a relationship where we provide our intermediary and our brokers with a very successful mortgage broker portal, which allows them to operate with the customers that they're interacting with in a very positive way. And we have 25% of the broker market and it's something that we care for and it's something that we manage by way of that broker interaction. We also have our new partnership with the SBCI, the Strategic Banking Corporation of Ireland, and that was around us accessing, for the first time, a £50 million line for the future growth loan scheme for SMEs. And to date, we're two times oversubscribed. We've nearly £100 million of demand for that scheme, and we will look to... for customers to draw down on that scheme in quarter two, but it really demonstrates our commitment and our support for SME customers and really that we want to provide something different to customers in this area, a different relationship a different competition, a new competition. And as I said earlier, and I'll say it again, and I'll keep saying it, we invite business customers to come and talk to us about their needs and how we can fulfil them. We also recently entered into a strategic partnership with Bibby Financial Services, and that's to provide customers, business customers, with an invoice financing product and service. Bibi are leaders in this area, in both the UK and Ireland, and we see the benefit of actually linking with them. And there will be more partnerships which we will enter into, which will provide, particularly on the business side, which will allow us complete and fulfil and fill out our offering when it comes to business customers. So if I just move to slide 11, and I want to talk about transformation. and transformation apologies, one sec, transformation for us is about how we develop our digital offering, how we think about our business model and simplifying that, and then how we embed our values and we live and behave our values every day. And we've embarked on a three-year journey to deliver a digital transformation program. And we're investing more than 100 million in that transformation. And we're about halfway through. So we've a lot done, but we've more to do. to enhance that offering. But a couple of things we've delivered. We delivered Apple Pay, which was extremely successful. Well, way ahead of what we expected by way of customer take up. And shortly in the coming months, we will deliver Android or Google Pay. We also have brought in digital documentation upload which allows us to progress our online mortgage journey. We have a direct mortgage journey at this moment and we've already received applications through that direct mortgage journey but it's something we want to increase and progress and really show that we can offer such an ancillary and a complementary a channel for customers that isn't just branch focused, but also has a direct aspect to it. We've launched video banking, which is the first of its kind in Ireland, and that will allow us to interact with customers in a remote way, but yet in a personal and connected way, so it's really, really important. We're working very hard on what we call our customer correspondence management tool, which is a key enable for how we migrate our correspondence from paper to digital. So it's a really important project for us and we're making some progress in that way. We're also looking at artificial intelligence technology with a chatbot pilot on the way and we'll see how that goes. But again, it shows you the direction of travel. If I talk about the branch, the branch, and I keep saying about our 76 branches, but they're core to us. And what we're equipping branches with is iPads, et cetera, and technology to allow them to deal digitally with customers. We've also upgraded across all our network, our ATM and SSBM technology. And then lastly, With regard to the SBCI funding, the 50 million line that we had, we implemented a digital portal allowing customers to apply digitally and online to apply for that particular funding. We were the first in Ireland to do it. We did it with a partnership with a fintech and we had that up and running within a matter of weeks. So really, really important. It shows where our priorities are and it shows a significant development. that we're making. And if I look at 2021, the focus is around a digital current account, which we will launch in the coming weeks. It'll involve about a six minute opening time for a current account. We will also be further implementing payment strategy around improving that payments experience. I mentioned already Google and Android Pay, and also our digital mortgage and SME proposition by way of bringing that fully online and having a service journey that is actually more efficient and more direct for customers. But all that will do will complement what we're doing in branches already. So we just have to be aware of that. On the right hand side of the slide, this is about the people, how we're transferring, how we're transforming our culture, how we're transforming the organization, how we're transforming how we operate. And it's around effective organisation design and we're involved in detailed organisational structure review. And this is as a result of launching a voluntary severance scheme in November of 2020. We already mentioned that we were seeking around 300 FT reduction. In fact, we had about 400 applications for voluntary severance and we believe we will reach the 300 FT reduction. And that's about providing optionality for our colleagues. It's about allowing them to take decisions with regard to their future life, their future career and how they want to operate themselves personally. And I think it's a win-win. It allows us to carry out some organisation redesign and indeed allows colleagues who have been with us for an extended period of time in some cases to actually to move on with their life and their working life. We're also looking at smarter and new digital ways of working, and that's around how we think about our colleagues working from home, working in the office, how we enable that work in a way that makes sense. If I move to the sustainable workplace solutions, and this is around our office footprint. So as I mentioned earlier, 50% of colleagues are currently working from home and want to continue that for at least some days of every week and we want to facilitate that because we believe that is the right way to go. It actually assists colleagues in how they manage their personal life but also we've seen firsthand that the effort and commitment that colleagues have given us through the pandemic, that we can trust them, we can work with them when we can see that the output that we're getting as an organization is increasing. And it also links to the fact that we can utilize our workspace in a more, in a better manner. And as part of that, we decided to exit our Park Place office. We rented offices there for a number of years. We've decided to cease that lease and that will cease in April, 2021. So again, it was part of the reduction in our cost base, but also how we're moving from a more physical presence to having colleagues working remote. If we look at operational excellence and information security and then how resilient we are, there's no doubt that the pandemic was a significant test around operational resilience. I believe we stood up to operational resilience. We didn't have any issues with our IT platforms. We didn't have any outages that caused any difficulties. We kept all our call centres and our operation centres and our branches up and running and going from that perspective. So these were all very positive things. So if I just move to the next slide, which is around how we're playing a part by being a responsible business and indeed by being a sustainable business and how we are thinking about doing business in a more responsible way. And this slide, I'll just bring you through it. So if you look at the top left, we've actually strengthened our community partnerships. You know, in July of last year, we launched a partnership with the O'Coolan Co-Housing Alliance where we're providing them with financial support over the next three years. to build affordable housing, 1800 affordable houses across the country. And actually that slowed down a little bit because of the pandemic, but the reality is there's a significant demand among society for affordable housing, and we want to play our part in supporting that. We also provided 700,000 euro in financial contributions to Irish community organisations, and that was by way of staff volunteering and by way of staff charity activity. But a significant amount of funds will be provided and they make a real difference for the communities in where we operate. By way of supporting our colleagues, our culture index is up 7% to 72%. Our new engagement index registered 71, which compares very favourably against industry standards. We have a significant programme ongoing internally in the organisation called Living as Leaders, where we've partnered with Lift Ireland around developing personal leadership qualities, behaviours and the way we act every day. And to date, over 600 colleagues have participated in that. And by the end of this year, all colleagues will have participated in that. If we think about diversity and inclusion, We've been heavily involved in the Work Equal campaign, which is a three-year partnership promoting gender equality in the workplace. And if you look at our gender balance in PTSB, 47% of the staff are female, 53% of the staff are male. If we look at Cedar leadership, 37% are female leaders within the organisation. And that's a 7% increase in female leadership year and year. And indeed, we have ambition to increase that even further. For the first time this year, we've announced our gender pay gap. We're at 14.9% for 2020. The national average is 14.4%. And while this compares favourably, say, to the UK financial services sector, which is around 31.9%, so it's arguable they have a lot of work to do in that area, we also have work in order to improve our gender pay gap. from the level we are at. And we are absolutely committed to doing that. And it is linked, obviously, to the senior leadership, female senior leadership development that we have within the organisation. And lastly, I want to mention that, you know, we achieved the mark. And what is the mark? It's an accreditation by the Best in Class Responsible Business Programmes. And it's assigned by the Business and the Community Ireland Initiative. And we're very, very pleased to get it. It took us a number of years to actually get that accreditation. And it really shows the progress we've been making. And if you take our carbon emission intensity, it's reduced by 10% in 2020. It's reduced by 55% since 2009. Today, 100% of our electricity supply is renewable. We're looking at a 10%. As I mentioned, a 10% reduction already in our scope one and two carbon emissions, and we're moving on to scope three. We've signed up to a lower carbon pledge with the business and community Ireland, and there's a significant focus internally on sustainability. As an organisation who's been around over 200 years, we understand what sustainability means. It's in our DNA by way of our positioning and the way we've operated over that period of time. And we want to play our part in lowering the carbon footprint of PTSD over the coming years. So with that, I'll hand you over to Paul McCann, our interim CFO. He'll go through the financial performance and then I'll come back and talk about the outlook in due course. So thank you.

Thanks, Eamonn. I'm pleased to present the financial statements of Permanent TSB Bank for the financial year 2020. The first thing to say is there's no question that 2020 was a challenging year in terms of the COVID-19 pandemic. What is true to say is it's the same for banks across Ireland, Europe and indeed the world. But I'm pleased to say that we have beaten guidance for 2020, and we remain on a good sound financial position for 2021. So just as our customers have been resilient, our bank colleagues have been resilient, and you'll see resilience in the financial statements for 2020. So to discuss the numbers, The bank made a loss before tax of 166 million. And the moving parts in relation to that is an operating profit of 52 million, which is down 32 million from the financial year 19 from 84. Our operating income is down 9% to 375 million. I'll discuss in more detail in a moment our net interest income. Our fees and commissions are down 9 million, and that's mainly as a result of reduced transactional activity in the market, the inability of people to spend money from last year. And I'll also discuss our other income in a moment. Our regulatory charges are up 2 million, which brings our operating profit to 52. We have an impairment charge of 155 million for the year, which I'll discuss in a moment. And we have exceptional items of 63 million, which relate to restructuring costs of 31 million. A large part of that is a provision for our voluntary severance scheme. Deleveraging costs of 26 million and exceptional COVID-19 costs of five. So to discuss the net lending income. The net lending income was 332 million in the financial year 2020, which has increased by 4% year on year, as new lending mortgage volumes yielding an average of 2.8% exceeded outflows at a yield of 2.5%. There was a decrease in our other interest income, which has decreased to 9 million from 37 million. And this is largely due to our treasury income reducing by 18 million due to the continued maturity of legacy high yielding treasury assets. These assets have now matured and we're now in a low interest rate, lower yield environment. We also have lower income from our non-performing loan books, which we sold in FY19. And that has resulted in a negative charge of 6 million. So what does that mean for our net interest margin? Our net interest margin has declined from 1.8% to 1.73%, primarily due to an increase in excess liquidity and lower investment yields on treasury assets. We are guiding NIM of less than 1.7% in 2021 before increasing again in 2022. Our asset yield is 1.95%, which is 15 basis points lower year on year, mainly as a result of the continued maturity of high yielding legacy treasury assets, the cost of excess liquidity together with some pricing adjustments which the bank made in 2020. On a positive note, the bank continued to actively manage our cost of funds and that has reduced seven basis points year on year. To look now at our performing home loan book, it's remained stable at 11.7 billion in 2020, which is the same as our FY19 figure. Our home loan mortgage book has grown 4% since 2018. There's a good new business performance considering the year that it was, as Eamonn has mentioned, with 95% of inflows or 1.3 billion to fixed interest products. And you can see from the graph, the change in the mix of our performing home loan book. As our fixed interest percentage increases, our variable rate decreases and our tracker rate decreases and will continue to do so. 92% of new business to customers are availing of the three and five year fixed interest rate and the average yield on those not new business is 2.8%. Our new business equaled our outflows in 2020 with 38% of the outflows from Tracker products yielding a lower 1.3%. So our Tracker mortgage book is now circa 40% of our total book. What does that mean for our home loan yield? The stock has decreased to 2.49%, which is a reduction of nine basis points year on year. However, our flow is at a much higher, 32 basis points higher, 2.81%. A significant transaction that happened during the year was the sale of our Glenbay 2, performing by Tillett book, which has significantly transformed that part of the book. The gross figure has gone from 3.2 billion to 1.5 billion. Our buy to let book is 85% tracker with 14% variable and 1% fixed. 47% of that book is interest only. After the sale of Glenbay 2, our average yield has increased 22 basis points to 1.64% from 1.42% before the loan sale. The loan sale was 1.4 billion, which has resulted in a 40% reduction in the performing buy to loan book. It was a transformational transaction. And the average yield on that book was 1.08%. Moving on to costs and the bank and everyone in the bank has maintained really good cost discipline throughout the year. Our total costs have gone to 323 million down 7% or 7 million year on year. Our regulatory charges has gone up 2 million resulting in total operating expenses of 274 million down 9 million on the previous year. After charging depreciation and amortization, our total addressable costs are 237 million, which is down 13 million from 250 in the previous year. So our cost income ratio has gone up to 73%, but as you can see, that's nothing to do with our cost line and more to do with our income line. And we see that lowering in coming years. Our average staff numbers have increased during the year by 43. And again, all the initiatives that Eamonn was discussing earlier, a lot of our work colleagues are working on those initiatives and have been busy with that during the year. I think that the cost discipline is best described in the graph on the right-hand side of the page. And just to draw your attention to the 15 million decrease in non-payroll savings. And this is a huge amount of effort, not just by finance, but everyone in the bank to have a cost discipline and to be ensuring value for money in everything that we procure. And there was significant savings during the year on management consultancy, legal fees, IT and telecoms, professional services, marketing. And there was a lot of work around contract renewals and optimising those contract renewals for the benefit of the bank. And just in terms of the costs, it's not a one year wonder story. This reflects a number of years of cost discipline and cost control. In the last four years, there's been a 13% reduction in addressable costs. And it is the firm intention of the bank to continue this cost discipline over the coming years with an estimated 11% reduction in addressable costs. And how was this achieved? It was achieved through a rigorous approach, through the management of the third-party costs. It's also been achieved through the Enterprise Transformation Program, which was launched in November, 2020. which is looking for a reduction in headcount, mainly in the management side of things, of 300 FTE, and also smarter ways of working so that our colleagues can work in a better way for them. And also customer behaviour is driving how we will distribute our products into the future. But we don't wanna just be top of the class for costs. It's not for cost's sake. We're focused on cost because we are looking to invest in our key priorities, a lot of the priorities that were outlined earlier in the presentation. Just to give you some numbers around this, between 2018 and 2020, we spent an average of 48 million per year, and 27 million of that relates to commercial and technology spend. After investing a lot of money in our core platforms and core base, we will spend less in the coming years, reducing to 33%, but I would like to single out today that our depreciation from that capex spend will begin to take effect over the coming years. Of course, we will try to offset that by further cost savings as we go. So over the coming years, we intend to spend money on the digital current account, the launch of Android Pay, developing the digital mortgage and digitizing the SME customer journeys, and having a digital service for all routine transactions. The demands on a bank will continue, and we will also have to invest in regulatory and mandatory spend, including cybersecurity, data centers to ensure we have enough data storage for our customers, and anti-money laundering. Over the last three years, we have invested over 100 million in technology and digital programs, over 30 million in branch refurbishment and modernization, along with other business programmes around people and culture to make the bank a better place for our people and our customers. In terms of the impairment charge for the year, we have booked a further 80 million in H2 for 2020, resulting in a total charge for the year of 155 million. And this charge reflects the changes in forward-looking macroeconomic scenarios. Largely driven by the COVID-19 pandemic We have included post-model adjustments of 110 million in that 155 million, with the remainder being mainly P&L items. We're very comfortable with this prudent approach to impairment. We believe the economy will take a few twists and turns as the epidemic draws to a close, and we want to make sure the bank is in a well-provided and stable position launching into the challenges in 2021 and beyond. We would also say that we do not see the charge for 2021, we would see that being significantly lower than our 2020 provision. Looking at our provision coverage, there are 10.6 billion at stage one, 3.2 billion at stage two and 1.1 billion at stage three. Our non-performing loan work increased by 80 million to 1.1 billion. but the bank remains committed to mid single digit NPL ratio. We estimate that 40% of our NPLs are going to cure organically or technically over the next 12 to 18 months. And the balance will be assessed using all alternative options as the months progress. In terms of our provisions by stage, there's 0.1 billion at stage one, 0.3 billion at stage two, and 0.4 billion at stage three. Our stage one and stage two coverage remains flat at circa 2.5%, but we've increased our stage three NPL percentage by 2.1 percentage points to 34.3. And again, this emphasizes our prudent approach to making sure the bank is in a stable position, financial position for the future. In terms of funding and liquidity, we are in a strong funding and liquidity position. We remain a bank that is largely funded by our customers and the customers that trust us with their money. Our retail deposits increased to 10.5 billion during the year, which has increased. In line with other trends across the market, the bank has also increased our current account position by 23% year on year to 5.8 billion. Our loan to deposit ratio is now 79%, which is a reduction of 12 percentage points year on year. And this reflects the overall higher level of deposits in the market and also the result of our performing loan sale. So our liquidity ratio is 276%, which is significantly higher than our European bank peers. That reflects the higher deposit levels from our COVID-19 lockdowns as people save money, and also the proceeds from our loan sale. The bank's current MREL target becomes binding on the 30th of June in 2021, and the bank expects to be compliant in advance of this date The bank awaits confirmation of a new MRL target based on the bank resolution and recovery directive two framework. As of 31st of December, 2020, the excess liquidity held with the Central Bank of Ireland was 1.7 billion, which attracted a rate of minus 50 basis points. Our CET1 ratio in relation to capital, it remains strong. Our CET1 ratio increased by 10 basis points. There would not be too many banks that have increased their CET1 ratio during 2020. It increased from 15% to 15.1%. In response to the COVID-19 pandemic, the Central Bank of Ireland introduced measures to support the sustainable provision of credit to the economy, specifically the removal of the counter-cyclical buffer of 1% and the early introduction of the CRD4 regulatory amendment. In November 2020, we issued an AT1 issuance of 125 million, which added 130 basis points to total capital. That issuance was oversubscribed and there was a lot of interest in the market in where the bank was going. Our pro forma December 2020 total capital transitional reflects the impact of the de-recognition of the 2015 AT1 issuance following central bank approval in February of this year. So our CET1 remains above our regulatory requirements of 8.94%. The moving parts in relation to our capital during the year was the Glenbay 2 sale on one hand and obviously the credit impairment on the other. We had capital generated from operating profit and that was offset by some of the exceptionals that I outlined earlier. Our risk-weighted assets decreased significantly from 9.7 billion pro forma to 8.5 billion, and that was largely, again, driven by our sale of our Glenbay 2 portfolio. So management CET1 expectation over the long term is 13.5%. So to summarise the financial year for 2020, there was significant resilient lending during the year of 1.4 billion, despite the challenges that 2020 brought. Mortgage lending was 1.3 billion. Our mortgage market share was 15.3%. Our net interest margin was 1.73%. Our net fee income was circa 8% of our total income and customers trusted us with their money and our total retail deposits, including current accounts grew 9% year on year, strengthening our brand and our franchise. From an efficiency perspective, we reduced our addressable costs by 3% year on year. We now have a proven track record of managing costs over four years with a 13% reduction over four years. We have been conservative and prudent in our impairment charge of 103 basis points of total grossed loans. And we continue to take a prudent approach as we await the outcome of the economy in this pandemic. Our NPL ratio is 7.6%, but we remain committed to mid single digit percentages. And again, we have a proven track record in dealing with our NPL loans. In terms of returns, the bank generated an operating profit of 52 million. We're in a stable funding and capital position. We had a very successful transaction, again, not many billion euro transactions in 2020, and again, that improved our CET1 ratio for the year. We had a very successful AT1 issuance in November 2020, which added 130 basis points, and our leverage ratio remains strong. So the financial statements for 2020 are resilient and give the bank and the management team a good platform for the medium term. Just to talk about the medium term, I'll hand you back to Eamonn.

Thank you, Paul. So I'm just gonna talk about the medium term outlook for the next five years. So the period 2021 to 2025. This outlook is based on permanent TSB standalone. So naturally, when we get to the Q&A, you might have questions on Ulster Bank, but that obviously is not part of this. And indeed, when I talk about the numbers, they're actually prepared on the basis that Ulster Bank remains in the market and that only their decision to withdraw from the market or not West's decision to withdraw the market was only made on the 19th of February. So again, I'll talk about that when we get to the numbers. So really about on slide 27 here, we're talking about what's our ambition, what's our purpose, what's our priorities. And I cannot underestimate or understate our purpose and our ambition and how we think about it. And the fact as an organization, we are absolutely focused on achieving both of those aims. And how are we gonna do it? We're gonna do it by maintaining our physical footprint. We have been investing in our branches and we will continue to invest in our branches. And as I've mentioned earlier on, we've seen an increase in mortgage activity in branches, particularly outside urban centers this year. And we believe that is something that will continue We will be digitally led. We'll have an opti-channel approach, which digital capabilities across key sales and service journeys. And again, you'll see enhancements over the coming years and we're putting money behind that. You'll see the right products at the right price and a strong market share in our target segments. And our target segments are in the personal and small business area. That's where we want to play. That's where we can make a difference. That's where we want to attract and support and service customers. And by way of how we think about routine service transactions, there's aspects of our transactions today that are in branch, and we have to move them in a more fulsome way onto digital channels. And that's something that we will be doing. For example, we talk about the online current account, which we can open in six minutes. So these are examples of how we're moving things. If you think about where we're focused, I talked about partnerships and innovation. I talked about digital support and digital progress. I talked about the enhancing journeys. If you think about the mortgage journey as an area that we can enhance, we're on it already. Simplifying how we do business. And indeed, we have a history of increasing efficiency and reducing costs. And that's something which we will continue to manage. And I would suggest that is clearly in our DNA. We clearly have an ability to manage our cost base in a way that makes sense. not only for us, but for shareholders and all stakeholders. So if we look at what we believe is the medium-term outlook for the bank, we're looking at a mortgage market share between 16 and 18%, but I believe we can actually do something better than that. And indeed, that market share is with Ulster Bank still in the market, and we should get our fair share of Ulster Bank market share. By way of SME new lending, we're looking to grow from a very low position today, but they are green shoots, to having around 8% market share in the coming years. We're looking to double our consumer lending per annum. Again, we might exceed that, but at this moment that's a reasonable target. We're looking at bringing our net interest margin to 1.9%. And by the way, that is not on the basis of any interest rate increases. And we've talked here, not in recent years, but in prior years, we talked about... the very positive impact that an interest rate increase would have on our position, given our tracker book exposure, which has been reducing, but it's still a substantial part of our balance sheet. So that would be, an interest rate movement would be very beneficial to us by way of a return. And then our net fee income is currently around 9% of total income, and we're looking to move that above 10%. In fact, we have a target of around 15% if we can get there, but we're definitely looking above 10%. If we take efficiency, Paul's already talked about the outlook with regard to our cost base. We're looking to reduce our addressable cost by about 11%. That will bring us to about a 65% cost income ratio. That actually includes regulatory costs. If you took out regulatory costs, it's probably going to be in the 50s area. I just don't have that number to hand, but we're looking at a 65% cost income ratio overall. MPLs, Paul has touched on that, but we look to further reduce those. We have the lowest nominal amount in the market. We have a lot of track record here in ensuring that we do that in a way that protects capital. And that's something we, again, over the coming years, we will be looking to manage. And then a net impairment charge, 2020 was quite exceptional given the COVID impact, but we're looking at around a 30 basis points charge over the period. If you look at our experience pre-COVID, it was well below that, but I think it's reasonable that we should think about it at that level. Given that we are changing the mix, we want to have more unsecured lending, more SME lending. So we'll change the mix in our... in our impairment charge, but naturally also changes the mix in our interest income and our net interest margin, and that is positive in that regard. Paul has already mentioned that our target as a bank is around 13.5% fully loaded Correctory Tier 1, and we're in a very good position at this moment with regard to our capital position. And you will see over previous years that we mind our capital position like a baby. It's something we focus on. We manage. We actively manage it. And we ensure that we have enough capital as an organization to manage the risk profile we have, but also leave enough capacity to grow as a bank and to support customers and to support wider society. Our leverage ratio, around 7% over the period, the next four to five years. That is a leverage ratio which is very safe. If you compare it to an equivalent UK bank, we're about twice as safe as an equivalent mortgage lender. But it does highlight some of the more recent market information around the capital levels that are required for an Irish bank of our size. And then lastly, we're looking at a return on equity of in excess of 6%. That is more towards the back end of the outlook, given our growth trajectory, I should say. But I have to just emphasize again, this is on the basis that Ulster Bank are competing in the market with us and that we wouldn't pick up additional market share, whether it's an SME where we have great ambition or in the mortgage area. So there might be some additional pluses there. to offset any particular minuses we might have in other aspects. But the reality is we're looking at a 6% return on equity, which where we're coming from, I think is a respectable level. If we went back to last year's presentation, we were looking at that around 23, 24, But the reality is that the COVID pandemic has probably pushed it out a little bit. And as I say, the offset, the positive offset there is the fact that we should generate more business from the fact that Ulster Bank will not be present in the market over this medium term. So I just want to finish off by saying that the results show a high degree of resilience. They show a high degree of progress in lots of aspects of what we do. We have not been sitting idle during the pandemic. We've been doing an awful lot by way of how we think about the culture of the bank, how we think about the digital transformation, how we manage our capital, how we manage our risk, how we manage our balance sheet and how we transform the business. And indeed, I think you can see that this year, as in 2020 has been a changing year in that respect. And indeed the coming years will give you more of a flavor of how we're progressing and how we're proceeding. So on that basis, I'd like to say thank you for your time. Thank you for your attention. And we'll now move to questions and myself and Paul will be more than happy to talk to you and answer your questions. So thank you.