2014 EU-wide Stress Test Summary - The Governor and Company of the Bank of Ireland
Core Information
Institution: IE - The Governor and Company of the Bank of Ireland
LEI Code: Q2GQA2KF6XJ24W42G291
Test Period: 2014 - 2016
Stress Test Scenarios: Baseline and Adverse
Key Financial Metrics
Actual Figures as of 31 December 2013
Operating profit before impairments: 977 million EUR
Impairment losses on financial and non-financial assets in the banking book: 2,016 million EUR
Common Equity Tier 1 (CET1) capital: 6,549 million EUR
Total Risk Exposure: 55,390 million EUR
CET1 ratio: 11.8%
Outcome of Baseline Scenario as of 31 December 2016
3-year cumulative operating profit before impairments: 2,386 million EUR
3-year cumulative impairment losses on financial and non-financial assets in the banking book: 1,859 million EUR
3-year cumulative losses from the stress in the trading book: 88 million EUR
CET1 capital: 7,069 million EUR
Total Risk Exposure: 53,681 million EUR
CET1 ratio: 13.2%
Outcome of Adverse Scenario as of 31 December 2016
3-year cumulative operating profit before impairments: 1,937 million EUR
3-year cumulative impairment losses on financial and non-financial assets in the banking book: 4,289 million EUR
3-year cumulative losses from the stress in the trading book: 157 million EUR
Valuation losses due to sovereign shock after tax and prudential filters: -119 million EUR
CET1 capital: 5,063 million EUR
Total Risk Exposure: 54,367 million EUR
CET1 ratio: 9.3%
Memorandum Items
Common EU-wide CET1 Threshold
Baseline Scenario: 5.5% (Threshold: 2,990 million EUR)
Adverse Scenario: 5.5% (Threshold: 2,990 million EUR)
Mandatory Conversion of Instruments
Baseline Scenario: 0 million EUR
Adverse Scenario: 0 million EUR
Additional Tier 1 and Tier 2 Instruments Eligible for Regulatory Capital
Baseline Scenario: 917 million EUR (All eligible instruments have a trigger above CET1 capital ratio in the adverse scenario)
Adverse Scenario: 917 million EUR
Exposure Breakdown (as of 31 December 2013)
Exposure Values
Type
F-IRB (Non-defaulted)
F-IRB (Defaulted)
A-IRB (Non-defaulted)
A-IRB (Defaulted)
STA (Non-defaulted)
STA (Defaulted)
Central banks and central governments
0
0
0
0
18,440
0
Institutions
814
0
0
0
870
0
Corporates
9,741
3,965
0
0
3,107
1,766
Corporates - Of Which: SME
5,743
3,537
0
0
2,540
1,412
Retail
0
0
25,020
4,253
18,348
1,797
Retail - Secured on real estate property
0
0
21,800
3,672
5,565
2,132
Retail - Other Retail
0
0
1,766
507
1,297
213
Retail - Other Retail - Of Which: SME
0
0
1,369
369
768
181
Retail - Other Retail - Of Which: non-SME
0
0
397
137
529
32
Equity
0
0
0
0
0
0
Securitisation
0
0
0
0
0
0
Other non-credit obligation assets
0
0
0
0
3,227
0
TOTAL
10,554
3,965
23,485
0
10,150
2,920
Risk Exposure Amounts
Type
F-IRB (Non-defaulted)
F-IRB (Defaulted)
A-IRB (Non-defaulted)
A-IRB (Defaulted)
STA (Non-defaulted)
STA (Defaulted)
Central banks and central governments
0
0
0
0
0
26
Institutions
3,643
0
0
0
0
0
Corporates
7,928
2,694
7,763
0
3,273
676
Corporates - Of Which: SME
4,293
1,989
3,998
0
3,273
676
Retail
0
0
0
0
0
0
Retail - Secured on real estate property
0
0
0
0
0
0
Retail - Other Retail
0
0
0
0
0
0
Retail - Other Retail - Of Which: SME
0
0
0
0
0
0
Retail - Other Retail - Of Which: non-SME
0
0
0
0
0
0
Equity
0
0
0
0
0
0
Securitisation
233
0
226
0
0
0
Other non-credit obligation assets
0
0
0
0
0
0
TOTAL
11,804
2,694
9,129
0
3,273
864
Value Adjustments and Provisions
Type
F-IRB (Non-defaulted)
F-IRB (Defaulted)
A-IRB (Non-defaulted)
A-IRB (Defaulted)
STA (Non-defaulted)
STA (Defaulted)
Central banks and central governments
0
0
0
0
0
0
Institutions
0
0
0
0
0
0
Corporates
0
0
0
0
0
0
Corporates - Of Which: SME
0
0
0
0
0
0
Retail
0
0
0
0
0
0
Retail - Secured on real estate property
0
0
0
0
0
0
Retail - Other Retail
0
0
0
0
0
0
Retail - Other Retail - Of Which: SME
0
0
0
0
0
0
Retail - Other Retail - Of Which: non-SME
0
0
0
0
0
0
Equity
0
0
0
0
0
0
Securitisation
0
0
0
0
0
0
Other non-credit obligation assets
0
0
0
0
0
0
TOTAL
10,554
3,965
8,766
0
7,210
2,386
Impairment Rates and Provisions
Baseline Scenario
Year
Impairment Rate
Stock of Provisions
Coverage Ratio - Default Stock
2014
0.00%
0
-
2015
0.00%
0
0.00%
2016
0.00%
0
0.00%
Adverse Scenario
Year
Impairment Rate
Stock of Provisions
Coverage Ratio - Default Stock
2014
0.00%
16
0.00%
2015
0.00%
33
0.00%
2016
0.00%
49
0.00%
Summary of Key Findings
The Bank of Ireland's CET1 ratio decreased from 11.8% to 9.3% under the adverse scenario by 2016, indicating a significant capital erosion.
Under the baseline scenario, the CET1 ratio remained stable at 13.2% by 2016, showing resilience to standard economic conditions.
Impairment losses were significantly higher under the adverse scenario, reaching 4,289 million EUR by 2016, compared to 1,859 million EUR under the baseline.
Operating profit before impairments was lower under the adverse scenario (1,937 million EUR) than the baseline (2,386 million EUR), reflecting the impact of stress conditions.
The institution's exposure to non-defaulted and defaulted assets was high, especially in the corporate and retail sectors, with notable variations across different risk assessment models (F-IRB, A-IRB, STA).
There were no mandatory conversions of instruments during the 2014–2016 period, and securitisation positions were not deducted from capital in the adverse scenario.
