AGM 2020

May 19, 2020

Hey, very good day, and welcome to the Bank of Ireland Group Annual general meeting. During the presentation your lines will remain on listen only. I'd also like to advise all parties this conference is being recorded. And now I would like to hand over to your host for today, Sarah McLaughlin. Please go ahead. Thank you. Good morning, and welcome to the Annual General Meeting of Bank of Ireland's Group PLC. I will hand over to our Chairman, Patrick Kennedy, to convene the meeting. Thanks, Sarah. Good morning, everyone. I'm joined in the room, which has been adapted to adhere to social distancing measures by our CEO, Francesca McDonough, our CFO, Miles O'Grady, our group secretary, Sarah McLaughlin, our group legal adviser, Gabriel Rhine, and a number of other colleagues who are kindly facilitating the meeting today. We're also joined by Aviv Marshall, our lead order partner from KPMG, our OSHA. I would like to start by saying that I hope those of you who are joining us today are well during these extraordinary times. Ensuring the health and the well-being of the company's employees, shareholders and service providers is of paramount importance to us. At this time. And as such, in the context of the restrictions announced by the government to reduce the spread of COVID 19, We have arranged to proceed with the AGM under more constrained circumstances and will be ideal in normal times. And the last shareholders not to join the meeting physically. In order to facilitate shareholder engagement without the need for physical attendance, this conference facility has been made available to allow shareholders to to listen live to the AGM proceedings. And I'd like to just welcome those shareholders listening today and thank them for their understanding and their support in relation in writing in advance of the AGM to the group secretary, to submit the necessary proxy forms to ensure that vote was counted as it's not possible to vote using this facility. We have responded individually to all shareholders who have submitted questions And details of the questions raised in advance of the meeting and our responses are also available on the group's website, and the group secretary will refer to these later in the meeting. Under Article 51 of the company's constitution, the quorum for the AGM requires the attendance of 10 persons in touch to vote upon the business to be transacted. And I have been advised by the group secretary that the requisite 10 persons are represented at the meeting by proxy A quorum is therefore present and the meeting is duly constituted and can proceed. While we will focus primarily on the purpose of the meeting as set out in the AGM notice. I appreciate that you would want to hear from us regarding the market update that we issued last week. And how we are responding to COVID. And as such, I will invite our CEO for Chesapeake McDonough to say a few words. I will then invite the group secretary to outline the procedure for the remainder of the meeting. But let me turn now to Francesca. Thank you, Chairman. Good morning, and I hope everyone is safe and well. We're here today to receive the financial statements for the year ended 31st December of 2019. As we set out in our annual results 2019 update in February, the group continued to deliver on our strategic priorities throughout the year. For the 2nd successive year, we grew our loan book, expanded our Wealth and Insurance business, reduced our cost base and lowered our nonperforming exposures. We also grew our capital base during 2019, and reported an underlying profit before tax of €758,000,000 for the year. However, Since our results were published, the impact of COVID 19 has been felt around the world. Our focus during this time has been on supporting our customers, colleagues and community and responding as dynamically as possible to the unfolding crisis. We entered this period in a strong position with a diversified balance sheet with improved credit quality, the lowest NPE ratio of any Irish bank, and a proven track record of credit risk management. However, COVID has hit our market fast and hard Its scale and significance means the previous guidance we provided for 2020 no longer applies. We set this out in a statement we issued on 30th March, where we also announced the decision not to proceed with the proposed dividend in respect of the year ended 31st December, 2019. This decision was taken in response to the European Central Bank's recommendation on dividend distributions for significant institutions. The group will assess dividends at a future date the earliest of which in line with the ECB's recommendation would be 1st October 2020. Our purpose to enable our customer's colleagues and communities to thrive has never been more relevant or important than it is today. In line with this purpose, I'll set out a number of actions that we've taken since the start of the public health crisis. Starting with customer Since March, we've significantly increased our proactive engagement with customers across every one of our businesses and geographies. In Ireland and the UK, we've offered payment breaks and other flexible arrangements on mortgages and personal loans. And for business customers, in addition to payment breaks, we provided working capital support, trade finance, and FX solutions. Our systems transformation investments over the past number of years has enabled us to be innovative in our response to COVID, 2 thirds of mortgage payment rates in Ireland have been processed digitally. And systems improvement have provided operational resilience and stability during a period of huge change in customer demands. Across the island of Ireland, we introduce practical support for customers who are self isolating at home. This allows them, for example, to nominate a trusted family member or friend to bank on their behalf. And we put in place a range of special measures to help the elderly carers and health care workers with almost 4000 customers making use of these services so far. We've seen a 12 point increase in our island of Ireland's Net Promoter Score since the start of 2020, the best we've had on record. This reflects the hard work of our colleagues and, importantly, tells us that our customers are feeling the difference when they need it most. Turning from customers to colleagues. Our response to COVID has been made possible by the incredible work of our colleagues. I posted video conferences involving the majority of our 10,500 colleagues over the past few weeks to personally recognize how they've gone above and beyond the call of duty, and I want to take this opportunity to publicly thank them for their commitment and dedication. We've taken a number of actions to support our colleagues during COVID. 1 of these is scaling up of remote working. Before COVID, around 1 in 3 colleagues were working remotely some of the time. Today, more than 70% are working from home 4 times enabled by the agile ways of working, we've been rolling out since 2018. We temporarily closed our smallest branches within the lowest footfall. We did this to reallocate resources to the services most in demand right now and to protect colleagues and customers with social distancing. And we're helping colleagues stay well at this time with a dedicated support line, a COVID communication staff, and mental and physical well-being resources. We know that some colleagues have caring duties and we're supporting them, and we're providing a special allowance for those working on-site and in the in the frontline. And we just completed our regular survey with all colleagues to get their feedback on working at Bank of Ireland. Despite the challenges being faced, The results show a record high staff engagements and positive experience of our culture, up 8% and 11% points, respectively, in the past 6 months below. We continue to support our communities, and when I talk about community this includes all of our stakeholders, investors, governments, regulators, and the society we operate within. We've engaged constructively with the government in Ireland and the UK to implement support for the economy and especially SME. In Ireland, we took the lead in changing our standard payment terms for our own SME suppliers paying within 5 days rather than the contractual 30. This has provided a cash flow lifeline to small businesses across the islands of Ireland, many of whom are also our customers, and we donated €1,000,000 to support the immediate needs of some of the most vulnerable right now, including the victims of domestic violence, the elderly and the isolated. And we've maintained an active program of engagements with our shareholders throughout the crisis. And we've been proactive in agreeing the measures we've taken with our regulatory stakeholders. Will continue that engagement as we move through this crisis. Turning to our most recent announcement, shareholders would have seen the 1st quarter interim management statement, the group published last week. These results showed a good start to the year pre COVID with lending growth, the issuance of more than a quarter of all new mortgages in Ireland, reduced NPEs and continued progress in cost management. However, as we also set out in our statements, COVID will have a material impact on our financial performance during 2020 through lower lending and business activity and through higher impairments. We entered this crisis in a strong capital position with a CET1 ratio of 13.5% Our CET1 ratio will remain above previous regulatory capital requirements, and that's across the range of possible COVID scenarios. We have the capital and we have the liquidity to further support our customers in the times ahead. Turning to the future. We look at recovery in 3 phases: Horizon 1, 23. Our response to the initial nuts of this crisis, Horizon 1, with economies effectively in lockdown has been comprehensive, practical, and resilience. But we're also preparing for Horizon 2 as restrictions start to ease Enterising 3, the new normal, whatever that may be. We will continue to leverage our transformation program to respond an agile and increasingly digitized way. We will look at tactical and strategic solutions to further reduce our costs We will allocate our resources to ensure the group is best positioned and appropriately structured to compete in the post COVID environments, and we will remain focused on practical customer solutions that create fair and sustainable outcomes. Our commitment to delivering sustainable returns to our shareholders remains unchanged. I will now hand over to our group secretary to deal with the procedure for the meeting. Sarah? Thank you, Francesca. So there are 13 resolutions to be put to today's meeting. All of which are set out and explained in the notice of the meeting, which will be taken addressed. For each resolution today, the chairman is declaring a poll. Our registrar computer share has already provided the details of the proxy's feed from shareholders, including those proxies, which instruct the chairman how to vote on behalf of the relevant shareholders in its capacity of the chair of the meeting. Details of the call results will be made available at the end of the meeting, published on the group's website and released stock exchanges. While a vote withheld is not available for the purpose of today's call, details of any votes withheld will also be provided. As the chairman advised earlier, we invited shareholders to submit questions in advance of the meeting, and we responded to individual shareholders directly. Our response to questions we believe may be of interest to shareholders are available on our website, a question that has not been made available relate to individual account matters. I'll now provide a quick overview of the shareholder questions and the responses provided. One shareholder noted the likelihood of there being a new working norm in the context of COVID and asked about the bank's plans over the short, medium, and longer term and how employees might be affected. A response notice that the rollout of agile ways of working since 2018 supported nearly 3500 colleagues to work as efficiently from home as they could from our offices. As Francesca mentioned, this number has significantly increased to over 70% to the workforce due to the group's dynamic response to the crisis. Over the longer term, we plan to continue to be a leaner on a more agile business that is closer to the customer. Another question relates to the time frame for delivery of the new mobile app And in our response, we confirm that the new mobile app remains a key transformation deliverable in 2020. A colleague pilot went live in December with full rollout to all colleagues completed along with a friends and family pilot rollout to customers during Q1. The large scale roll out of the app to all the customers due to start in March this year. However, as mentioned earlier, the COVID pandemic were acquired resources to be diverse and support customers, believing that it was no longer the right time to roll out the As operations in response to COVID have normalized, the group is working and rescheduling the customer launch and hopes to launch the app later this month. The new app has increased functionality by 50% and has been redesigned to optimize and to simplify day to day bank's needs by supporting enhanced security control. The bank's investment into IT Transformation. Its measurements of success and the timeframe for investment realizations also raised. Our response noted that the transformation program is making continued progress. And delivering against key milestones. Spend is on budget and tangible benefits are being realized supporting growth, improving customer experience, and driving efficiency. A number of key milestones have been delivered. Including in July 2019 completion of the largest customer migration in the history of the bank, giving the bank and customers more stable for 100 of 1,000,000 of transactions each year. We've also modernized our payments infrastructure and automated over 100 process to improve customer experience. In fact, the progress made to date facilitated the group's dynamic response to COVID in support of customers and colleagues We received some detailed questions on cost and capital and responses to no questions are available on the website. Finally, a shareholder asked how the bank competes with New FinTech or Challenger Bank with the group's response notice that research supports the view that customers in Ireland continue to want an omnichannel experience. Both of Ireland intend to be where our customers need us. And the band's model has changed to enable Holly to meet customers at their place of work or in their homes. Again, the key questions raised on more detailed answers are available on the Investor Relations section of the group's website. So I'll hand back to our Chairman now for the business of the nation. Thank you, Sarah. The company is presenting its statutory financial statements for the financial year ended 31st December, 2019, which were published on 24th February 2020. Copies of these statutory financial statements, which were approved by the company's Board of Directors The director's report and the office report may be found on the company's website. The affairs of the company since that date, which Francesca referred to earlier in the meeting are summarized in the market update for the first quarter of 2020, which was published last week on 11th May and is available on the company's website. I will now move to the business of the meeting and the full text of each resolution is set out in the notice of the meeting. I now formally propose that each of the resolutions set out in the notice of the meeting is put to the meeting as follows. Resolution 1, that the company's affairs be reviewed and that the financial statements in the report of the directors and the report of the auditor for the year ended 31st December, 2019 submitted to this meeting, be considered and received. Resolutions to A to L are for the election and reelection of the directors, and are each proposed at a separate So please bear with me. Resolution 2A is that methionine Fitzpatrick, the elected, the director of the company. Resolution 2B that Ms. Michelle Green be elected, a Director of the company, Resolution 2C that Mr. Miles O' Brady, be elected, a Director of the company, Resolution 2 D that Ms. Evelyn Burke Be reelected a Director of the Company. Resolution 2E that Mr. Ian Buchanan Be reelected a Director company. Resolution 2S that Mr. Richard Boody will be re elected as Director of the company. Resolution 2G that Mr. Patrick Harrin we reelected a Director of the company. Resolution 2H that I be reelected a Director of the company. Resolution 2i, the Ms. Frances McDonough will be reelected a Director of the company. Resolution 2J, that Ms. Fionna Muldun will be reelected to the Director of the company. Resolution 2K, the Mr. Patrick Mulvehill, we reelected a Director of the company and Resolution 2L that Mr. Steve Paitman be re elected or director of the company. Resolution III is that the appointment of KPMG as the company's alter be continued for the 2020 financial year. Resolution 4, but the remuneration of the auditors be fixed by the Board of Directors for 2020 financial year. Resolution 5 does an extraordinary general meeting, other than an extraordinary general meeting call for the passing of a special resolution may be called by not less than 14 peer days notice in writing in accordance with Article 50b of the company's articles of association. I will now move to the items of special business to be covered today. Again, the full text of each resolution is set out in the notice of the meeting. Resolution 6 to receive and consider the group remuneration Committee report for the year ended 31st December, 2019, This is an advisory non binding resolution and it puts the members of the company as a matter of good corporate governance practice. Resolution 7 to receive and consider the Director's remuneration policy. In accordance with new legislation, implementing the amended EU shareholder rights directive, This resolution is being proposed as a non binding advisory resolution. Resolution H, this resolution relates to the amendment of the Articus Association of the company and is proposed as a special resolution. This resolution seeks to authorize the company to amend Article 74 of its articles association to reduce the minimum number of directors from 10 to 8. This is proposed to provide flexibility to support succession planning having regard for the extensive due diligence and approval process required to conclude before a director can be formally appointed to the board. Resolution 9, this resolution seeks to renew the authority of the company or any of its subsidiaries to make market purchases of up to approximately 10% of the company's issued ordinary shares and is proposed as a special resolution. The authority of granted will remain enforced until the close of business on the earlier of the date of the annual general meeting in 2021 or 19th August 2021. Resolution 10, This resolution seeks to renew the authority of the directors to issue ordinary shares, representing approximately 33% of the issued share capital of the company, and is proposed as a special resolution, the authority will expire at the close of business on the earlier of the date of the annual general meeting in 2021, or 19th August 2021. Resolution 11, this resolution seeks to renew the direct authority to allow ordinary shares for cash without offering them first to the other ordinary shareholders and is proposed as a special resolution. This authority is limited to an allotment pursuant to a rights issue authorized under Resolution 10 and up to a maximum number of ordinary shares representing approximately 5% of the issued share capital of the company. The authority will expire at the close of business on the earlier of the date of the Annual General Meeting 21 or 'nineteen August of 2021. The preemption disaggregation authority being sought is in line with the authority approved by shareholders previously. Resolution 12, this resolution seeks to renew the directors authority and to issue tier 1 contingent equity conversion notes. And to allot ordinary shares on the conversion of such notes. It is proposed as a special resolution. This resolution will authorize the directors to issue up to a maximum aggregate number of ordinary shares of each in the event of conversion of Tier 1 contingent equity conversion notes representing approximately 15% of the issued ordinary shares of the company at the latest and practicable days prior to the AGM. The authority will expire at the close of business on the earlier of the date of the Annual General Meeting 2021 or 19th August 2021. Resolution 13, this resolution will renew the director's authority to issue for cash on a non preemptive basis, tier 1 contingent equity conversion notes and ordinary shares on the conversion of such notes. It is proposed as a special resolution. This resolution will authorize the directors to issue up to a maximum aggregate number of ordinary shares of 1 euro each in the event of conversion of Tier 1 contingent equity conversion notes, representing approximately 15% of the issued ordinary shares company. The authority would expire at the close of business on the earlier of the date of the annual general meeting in 2021 or 19th August 2021. Following on from the above, we will now conduct the poll on the proposal that are before the meeting. Shareholders who have already submitted proxies do not need to take any further action today. I'd like to turn the polls to reach matter to be voted on at this meeting open. Thank you. I now declare the polls closed. On the basis of the proxy votes received in advance of the meeting, We are now ready to present the preliminary voting results. And the voting results show that all trial director nominees have been elected or reelected as opposed and proposals 1 through 13 have been voted for, and the related resolutions have been We now move on to any other business. I've been advised by the group secretary that no other items of business or other proposals were made property by any shareholder of the company that requires consideration at this time. So that concludes the business of today's meeting. And on behalf of the board, I would like to thank all of our colleagues, for their hard work and their dedication during this difficult time. And I would also again like to thank you, our shareholders, for your cooperation and your understanding regarding the restricted nature of today's meeting. Help you and your families remain healthy and stay safe and this now completes the business of our meeting. Thank you very much indeed. Thank you. That concludes your conference call for today. You may now all disconnect. Thank you for joining.