Ireland: Shutdown for April, beginning to re-open in May - May 2020 Ireland's economy and financial system was in its best shape for almost two ...
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Ireland: Shutdown for April, beginning to re-open in May Ireland’s economy and financial system was in its best shape for almost two decades pre-Covid 19 May 2020
Index
Page 3: Summary
Page 8: Macro
Page 16: Covid-19 fiscal response
Page 24: Fiscal & NTMA funding
Page 39: Long-term fundamentals
Page 48: Property
Page 54: Brexit
Page 61: Other Data
2
Summary Ireland hit hard like rest of Europe but better placed than most to weather Covid- 19 recession
Economy grew strongly before Covid-19; unemployment
shows large impact like other countries
Robust growth in run up to True unemployment rate Irish wage bill less impacted –
lockdown and timing of peak uncertain ICT and Pharma help
30
30% Latvia
28.2 Lithuania
25% France
25 Spain
Netherlands
20% UK
20 Malta
15% Cyprus
Sweden
16.0 Portugal
10% 15 Luxembourg
Denmark
5% Austria
10 EA 19
Finland
0% EU 27
Slovenia
-5% 5 Belgium
Greece 40% of wage
-10% 5.4 Italy bill in most
Ireland affected
0 Slovakia sectors
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
-15% Germany
2014
1996
1999
2002
2005
2008
2011
2017
30 35 40 45 50
Unemployment Compensation of Employee in most
GDP Underlying*
Covid-19 Adjusted Unemployment affected sectors (% of total)
Source: CSO
* Underlying series is modified final domestic demand (excludes inventories)
** The dotted line is CSO data. It can be considered an upper bound for unemployment in April.
4
There are definitional questions around whether those on government income supports are unemployed.
Some will have left the labour force, others are just temporarily furloughed.
Ireland used 2014-19 growth to create fiscal room and
improve debt sustainability; will be needed in years ahead
Six years of primary Improved debt position allows Debt fell to 99% of national
surplus; run to end in 2020 for fiscal policy to act income but will reverse
10 180%
€bns
5 Debt-to-GNI* 160%
(99% 2019f, from 166% peak) 140%
0
120%
-5
Debt-to-GG Revenue 100%
-10 (233% 2019, from 353%) 80%
60%
-15
Average interest rate 40%
-20
(2.2% 2019, from 5.1%) 20%
-25 0%
2019e
1998
1995
2001
2004
2007
2010
2013
2016
1995
1998
2001
2004
2007
2010
2013
2016
2019
Debt-to-GDP^
GG Balance Primary Balance
(59% 2019, from 120%) Debt to GNI* Debt to GDP
^ due to GDP distortions, Debt to GDP is not representative for Ireland, we suggest using other 5
measures listed.
Covid-19 and Ireland outlook
Recession Exposure Policy
Ireland is headed for recession. Ireland’s domestic economy Irish fiscal response currently
Key question is for how long? has been hit hard like others at 6.5% of GNI*, more could
but there are relative positives. follow if needed.
This is a black swan event. The
fan chart of outcomes is wide Our internationally traded ECB and Fed actions should cap
so forecasting is of little value. sectors (Pharma and ICT) will interest costs and allow
help weather the storm necessary fiscal room
6
NTMA already funded €11bn of revised funding plan of
€20-24bn for 2020; Ireland relatively well placed
Flexibility 10 years AA-
Ireland has large cash balances, One of the longest weighted Ireland has been upgraded to
the final 2020 redemption average maturities in Europe AA space by S&P
prefunded and a year free of
maturing bonds in 2021 The NTMA used ECB QE to On relative basis, hit to Ireland
extend debt maturities reduce may be less than other
Funding can come from several interest cost and repay the IMF. countries given multinationals,
sources. Bonds, Short Term Now the ECB has started to relatively smaller domestic
paper and the Rainy Day Fund. buy again without limits share of economy and tourism
sector
Ireland has large cash balances,
2020 redemptions prefunded,
minimal redemptions in 2021
7
Section 1: Macro Q2 numbers will be grim but structure of Ireland’s economy will help cushion impact
Labour market illustrated Ireland’s march to recovery and
full employment; now highlights the stark Covid-19 impact
April unemployment rate: Traditional CSO A million getting income supports - unclear
metric 5.4%; incl. Covid-19 impact 28.2%* how many would be considered unemployed
30 2.4
Millions
28.2
CSO has urged caution on
2.3
25 Covid-19 data given likelihood
of revisions 2.2
20
2.1
16.0 2.0
15
1.9
10
1.8
5 Note: CSO define
1.7
those on wage
5.4 1.6 subsidy scheme as
0 employed
2015
2017
1998
1999
2000
2001
2002
2003
2005
2006
2007
2008
2009
2010
2012
2013
2014
2016
2019
2020
1.5
2013
1998
1999
2000
2001
2003
2004
2005
2006
2008
2009
2010
2011
2014
2015
2016
2018
2019
Unemployment
Covid-19 Adjusted Unemployment Total Employment
Source: CSO, Department of Social Protection, NTMA calculations
* The dotted line is CSO data. It can be considered an upper bound for unemployment in April.
Note: There is no official data on how employment has been affected yet. The next labour market 9
survey may answer questions about what constitutes being employed and whether those losing jobs
will leave the labour market. Thus we give a range of outcomes, as we cannot be accurate now.
PMIs have tumbled like other countries but Ireland’s
contraction smaller at the margin
Ireland’s Composite PMI at 17.3 in April, Brief upswing after Brexit reprieve but PMIs
Manufacturing held up at 36.0 have fallen sharply on Covid-19 since
60 70
50 60
40 50
30
40 Manu
36.0
20
30
10
20 Comp
17.3
0
Services
10
13.9
0
January Composite PMI March April Services Manufacturing Composite
10
Source: BloombergDuring lockdown, Pharma and ICT will stabilise GVA;
domestic sectors in lockdown or have reduced capacity
Domestic Estimated
2019 data MNCs
GVA Wage Bill^ Owned % of normal
(€ Billions) Profits^^
Profits^^ Output*
Agri, Forest & Fish 3.1 0.7 2.4 0.0 >75%
Industry (incl. Pharma) 112.4 14.1 7.9 90.3 >75%
Construction 9.7 4.5 5.0 0.2 75%
Real Estate 20.9 0.7 20.1 0.0 75%
P Admin, Educ. & Health 33.7 28.3 5.5 0.1 >75%
Arts, Other 4.4 2.1 2.1 0.1On a relative basis Ireland could perform better than most
EU peers – thanks to big tech/ social media companies
The Irish wage bill is not going to be as ICT sector will be a bulwark in protecting
impacted as other countries incomes in Ireland
Latvia Ireland
Lithuania UK
France Latvia
Spain Sweden
Netherlands Finland
UK Luxembourg
Malta France
Cyprus Malta
Sweden Netherlands
Portugal
Luxembourg Germany
Denmark Denmark
Austria EU 27
EA 19 Cyprus
Finland EA 19
EU 27 Slovakia
Slovenia 40% of Lithuania
Belgium wage bill in Spain
Greece most Austria
Italy Belgium
Ireland affected Slovenia
Slovakia sectors Italy
Germany Portugal
Greece
30 35 40 45 50
0.0 2.0 4.0 6.0 8.0 10.0
Compensation of Employee in most affected
sectors (% of total) % of Compensation of Employee % of Employment
Source: Eurostat (2019)
Note: Most affected sectors include construction, wholesale and retail trade, transport, 12
accommodation and food service activities, real estate activities, professional, scientific and technical
activities; administrative and support service activities, arts, entertainment and recreationMost foreign-owned multinationals are shielded but
aircraft leasing is exposed (as are Irish-based airlines)
Timely CSO data on aircraft leasing in Covid-19 outlook – plummeting travel
Ireland show a small but valuable sector numbers will endanger leasing contracts
Estimated €250bn hit to global passenger revenues
2018
from Covid-19*
Assets (€ bn) 140 Impacts Ireland in two ways
Hit to Irish- based airlines – Ryanair (Europe’s
biggest airline) and Aer Lingus
Persons Employed 1,971
Will have a knock impact on multinational
aircraft leasing companies in Ireland.
Average Salary (€ 000s) 207.6
• The 2008 crisis led to a fall in aircraft values of
Total Compensation of 19% on average. Implies hit to assets held in
0.4 Ireland are likely.
Employee (€bn)
• Support for airlines through fiscal packages in the
Profits (€ bn) 4.7 US and China will alleviate some concerns
• Secondary impacts on retail given high value jobs
Industry % of GNI* 2.6
could be lost. Dublin office market may lose a
demand source. Only fiscal impact is lost taxes
Source: CSO (2018);
*based on 70% reduction in Q2 travel numbers (CAPA forecast) 13Consumption is being curtailed by lockdown; Oil price
drop is welcome boost for importer like Ireland
Lockdown economy means as much as 40% Oil price drop might boost the economy by
of consumption may not be happening 0.5-1% of GNI*
100 8
90 7
80
6
Food & Drink 70
(increased 5
groceries), 60
Lost 23% 50 4
consumption Fuel
, 40% and
40 3
light , 30
3% 2
Housing 20 significant drop in
(10% import cost in 2015/16 1
10
moratorium reversing in 2017/18
use), 18% 0 0
2013
2005
2006
2007
2008
2009
2010
2011
2012
2014
2015
2016
2017
2018
2019
2020
Prof services
(incl.
Recreation medical),
and 12%
Brent Oil €/Barrel
education, Non-durable
goods, 2% Mineral Fuels Imports (12m rolling, €bns)
2%
Source: CSO; DataStream; NTMA calculations
Using Household Budget survey data, we can estimate how much consumption of goods and services 14
can still occur during the lockdown. We make allowances for extra grocery shopping and reduced
housing costs given government moratorium policy.Construction sector has been shuttered for the time
being; good news that it is set to restart in mid-May
Building and construction investment will be Another surge of IP into Ireland in 2019 –
hit in Q2 but can rebound quickly helps ICT but distorts investment picture
300 40 160
€ billions
35 140
250
30 120
200 100
25
80
150 20
60
15
100
40
10
50 20
5
0
1998
1996
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
0 -
2016
1998
1999
2001
2002
2004
2005
2007
2008
2010
2011
2013
2014
2017
2019
Building Investment Other Domestic Investment
Construction Employment (000s) Distortions (mainly IP) Modified GFCF
Building GFCF (4 quarters, RHS) Total GFCF
Source: CSO; NTMA calculations 15Fiscal response €13bn (6.5% of GNI*) is considerable;
more could be announced as needed
€4.8bn for income support measures:
1. A temporary wage subsidy scheme (TWSS) has been introduced for 12 weeks which pays 70-85% of an
employee’s income up to €410p/w. This equates to any salary below €38,000.
Subsidy is for businesses with >20% reduction in turnover and keeps employee on the books.
Most furloughed salaries are below €38,000; average payment close to €350 p/w more likely.
2. A pandemic unemployment payment (PUP) for employees (and self-employed) who were laid off due
to Covid-19 is now €350 p/w. This is larger than the usual benefit of circa €200 p/w.
3. A sick leave payment for actual Covid-19 diagnosis or self isolation is available and is €350 p/w.
€2bn for increased health spending to combat Covid-19.
€6.5bn for business supports: Some of these supports need to be legislated for in coming weeks.
1. A €10,000 restart grant for micro and small businesses;
2. A three month commercial rates waiver for impacted businesses;
3. A €2 billion Pandemic Stabilisation and Recovery Fund within the Ireland Strategic Investment Fund
(ISIF), which will make capital available to medium and large enterprises on commercial terms;
4. A €2 billion COVID-19 Credit Guarantee Scheme to support lending to SMEs;
5. The ‘warehousing’ of tax liabilities for a period of twelve months
Other measures enacted include support for bank borrowers, reducing the CBI’s Countercyclical Capital Buffer,
deferrals on tax payments including VAT & stamp duty, temporary rent freezes and temporary ban on evictions.
16Government’s income supports have seen historic take-
up: those on TWSS are still employed; PUB unemployed
Around 40% of workforce have received Those furloughed under TWSS are weighted
either one of two Covid-19 income supports towards the lower end of wage scale
250 120% 25%
225 53% below median
200 100% earnings of c.30k
175 PUP – 598k 20%
80%
150 TWSS – 427k
125 60% 72% below avg.
100 15% earnings of c.40k
75 40%
50 20%
25 10%
0 0%
5%
0%
Temporary Wage Subsidy Scheme
Pandemic Unemployment Payment
% of Sector Employment (RHS) Distribution of weekly net pay of TWSS participants
17
Source: Department of Social Protection (as of 5 May), Revenue(as of 30 April), CSORoadmap for phased re-opening laid out by Government;
May 18th is start, sees all sectors back open in early Q3
600
Phase
One:
500 Outside
Partial Works - Phase Two:
Shut Construction Small
down Phase
Garden retail
400 centres outlets
Three:
More retail Phase
Cafes Four:
Restaurants Hotels, Phase Five:
300 museums, Cinemas,
parks theatre, pubs
open
200 Full Lockdown
100
0
29-Feb
04-Jul
11-Jul
18-Jul
25-Jul
04-Apr
11-Apr
18-Apr
25-Apr
30-May
06-Jun
13-Jun
20-Jun
27-Jun
01-Aug
08-Aug
15-Aug
22-Aug
29-Aug
07-Mar
14-Mar
21-Mar
28-Mar
02-May
09-May
16-May
23-May
Daily cases (7 day average)*
Source: HSE, Department of the Taoiseach, NTMA analysis
*Daily cases are adjusted for backlog of testing which meant cases related to end-March/early April but were
not confirmed until mid April.
** Roadmap subject to change. Arrows are illustrative. Covid-19 cases & other indicators will need to fall or be18
contained for Ireland to move through the proposed phases. Ultimately the re-opening will be guided by public
health advice.External environment – monetary policy and oil positives
will partially offset negative external shock Ireland faces
2019 2020
EA Monetary Policy Accommodative in Q4 Maximum accommodative
EU Fiscal Policy Minimal Expansionary
US Monetary Policy Easing Maximum accommodative
US growth YC inversion, but still growing Covid-19 shock
Significantly down on demand
Oil price Flat y-o-y
and Saudi action
UK growth Brexit uncertainty headwind Covid-19 shock
Euro Growth Sluggish Covid-19 shock
Euro currency No change y-o-y v. £; weaker v $ Neutral so far
Source: NTMA analysis 19High-skill jobs were added in recovery; wage growth and
low inflation pushed real wages up in the last five years
High-skill employment grew sharply in Real wages increase helped HHs to repair
recovery period (index, 100 = end 2008) balance sheets, increase living standards
130 16% 8,000
14% 7,000
120 12% 6,000
10% 5,000
110 8% 4,000
6% 3,000
100 4% 2,000
2% 1,000
90 0% 0
Arts & Rec
Industry
IT
Fin, Insurance & RE
Total
Public admin
Transport/Storage
Prof, science & tech
Wholesale/Retail
Health
Construction
Education
Accom & Food
Admin & Support
80
70
2006 2008 2010 2012 2014 2016 2018
High Skill Other 2015 v 2019 real wage %chg average € increase (RHS)
Source: Eurostat; CSO 20
High skill jobs include the ISCO08 defined groupings Managers, Professionals, Technicians and
associate professionalsIreland has used recovery period to repair private sector
balance sheets – especially households
Household debt ratio has decreased due to Legacy of crisis is on the Government
deleveraging and increasing incomes balance sheet not the private sector’s
220 400%
200
350%
180
160 300%
Economic growth has
140 250% allowed smooth private
120 sector deleveraging
200%
100
80 150%
60 100%
40
50%
20
0 0%
Debt (€Bns) Disposable Income Debt-to-Income Public and Private Private debt (% of Public debt (% of
(€Bns) Ratio (%) debt (% of GNI*) GNI*) GNI*)
2008 2013 2019Q3 2003 2008 2013 2019Q3
Source: CBI Source: CBI data, CSO
Note: Private debt includes household and Irish-resident enterprises (ex. financial intermediation) 21
CBI quarterly financial accounts data used for household and CSO data for nominal government
liabilities.Savings rate around EU average – pointing towards
households being more prudent
Gross household saving rate lower than Interest burden down to 3% of disposable
peak but close to EU average income from peak of 11%
16 12%
14 10%
% of Disposable Income (4Q MA)
% of disposable Income
12
8%
10
6%
8
4%
6
2%
4
0%
2 2003 2005 2007 2009 2011 2013 2015 2017 2019
0 Ireland EA-19
2002 2004 2006 2008 2010 2012 2014 2016 2018 Germany Spain
Italy Netherlands
Ireland EU-28 EA-19 UK
Source: Eurostat, ONS, CSO ; CBI, Eurostat NTMA calculations
22
Note: Gross Savings as calculated by the CSO has tended to be a volatile series in the past, some
caution is warranted when interpreting this dataRecent general election was inconclusive but coalition
likely in coming months
Sinn Féin the biggest
No two parties together can form govt. No new legislation can be
winners of the GE but
passed without govt. formation which will force issue
may not enter govt.
Breakdown of seats in Dáil Éireann following 2020 General Change since GE 2016
Election (160 Seats total)*
Sinn Féin 14
Greens 10
Fianna Fáil, 38
Labour, 6
Soc Dems 3
Greens, 12
Social AAA-PBP -1
Democrats, 6 Fine Gael, 35
Labour -1
Sinn Féin, 37 Other/Ind -2
Fianna Fáil -6
Other/Ind, 21
Fine Gael -15
AAA-PBP, 5
-20 -10 0 10 20
Source: NTMA analysis 23
*Note: Number of seats increased by two to 160 in 2020 election.Section 2: Fiscal & NTMA funding Ireland was in relatively good shape fiscally before Covid-19
NTMA already funded €11bn of revised funding plan of
€20-24bn for 2020; Ireland relatively well placed
Flexibility 10 years AA-
Ireland has large cash balances, One of the longest weighted Ireland has been upgraded to
the final 2020 redemption average maturities in Europe AA space by S&P
prefunded and a year free of
maturing bonds in 2021 The NTMA used ECB QE to On relative basis, hit to Ireland
extend debt maturities reduce may be less than other
Funding can come from several interest cost and repay the IMF. countries given multinationals,
sources. Bonds, Short Term Now the ECB has started to relatively smaller domestic
paper and the Rainy Day Fund. buy again without limits share of economy and tourism
sector
Ireland has large cash balances,
2020 redemptions prefunded,
minimal redemptions in 2021
25Two positives for Ireland: smoother maturity profile and
no bond redemptions in 2021
16
14
12
10
8
Billions €
6
4
2
0
Bond (Fixed) EFSM EFSF Bond (Floating Rate) Green Other (incl. Bilateral)
Source: NTMA
Note: EFSM loans are subject to a 7-year extensions. It is not expected that Ireland will refinance any
of its EFSM loans before 2027. As such we have placed the pre-2027 EFSM loan maturity dates in the
26
2027-30 range although these may be subject to change.Near term redemptions much lower than last five years;
this + lower borrowing costs provides NTMA with flexibility
NTMA issued €80bn MLT debt since 2015; Even with extra Covid-19 borrowings, NTMA
13.3 yr. weighted maturity; avg. rate of 0.94% might not match supply since 2015
6.0 18 80
€ Billions
5.5
5.0 15 70
3.9
4.0 12 60
2.8 10Y 10Y 50
3.0 9
12Y 12Y 7Y
15Y 30Y 15Y 40
2.0 1.5 6
0.8 0.9 1.1 0.9
1.0 3 30
5Y 5Y 10Y 7Y 5Y 0.3
8Y 10Y 16Y 30Y 10Y 20Y
0.0 0 20
2012 2013 2014 2015 2016 2017 2018 2019 2020f
10
Auction
Syndication 0
Weighted Average Yield % (LHS) Redemptions (2017-2020) Redemptions (2021-2024)
Source: NTMA, CSO, Department of Finance 27
Only showing marketable MLT debt (auctions and syndications). Other issuance such as inflation
linked bonds, private placement and amortising bonds occurred but not shown.The NTMA took advantage of QE to extend debt profile
Various operations have extended the …Ireland (in years) now compares
maturity of Government debt … favourably to other EU countries
16 12
€ Billions
14
10
12
10 8
8
6
6 10.4 10.3 10.1
4 4 8.7 8.0
7.8 7.7 7.7
6.9 6.7 6.4 6.1
2
2
0
2026
2020
2021
2022
2023
2024
2025
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036-40
2041-45
2046-50
2051-53
0
Debt Prefunded
Long-term Extensions since 2014
Govt Debt Securities - Weighted Maturity
Debt Profile EA Govt Debt Securities - Avg. Weighted Maturity
Source: NTMA; ECB Note: Data excludes programme loans. Ireland’s maturity 28
including these loans is still similarFiscal discipline in evidence in last decade – after Covid-
19 stimulus Ireland will have to do the hard yards again
Government worked to get Gen. Govt. 2019 GGB Deficit/Surplus (% of GDP):
Balance (€bn) to surplus before Covid-19 Ireland started in better shape than most
10 Denmark
Luxembourg
Bulgaria
5 Netherlands
Cyprus
Greece
Germany
0 Ireland (GNI*)
Austria
Sweden
-5 Slovenia
Malta
Croatia
Lithuania
-10 Czechia
Portugal
2020 estimates Latvia
Estonia
-15 caveated by large EA19
degree of EU27
Poland
-20 uncertainty Finland
Slovakia
Italy
Belgium
-25 Hungary
UK
Spain
France
Romania
GG Balance Primary Balance -6 -4 -2 0 2 4
Source: CSO; Department of Finance Eurostat 29Gross Government debt likely close to 59% of GDP at end-
2019 but 100% of GNI*; will reverse in the short term
Debt-to-GNI* had dropped since last crisis No country will be running primary surplus
necessary to keep debt ratio in check
180% 30.0%
160% 2020 estimates
20.0%
caveated by large
140% degree of
uncertainty 10.0%
120%
100% 0.0%
80% -10.0%
60%
-20.0%
40%
~
-30.0%
20% -40%
0%
1995 1999 2003 2007 2011 2015 2019 Primary Balance (% of GNI*)
Debt to GNI* Debt to GDP Debt Stabilising PB (% of GNI*)
Source: CSO; Department of Finance, NTMA analysis 30Various sources of funding will be used to meet Covid-19
borrowing requirements – cash balance and flexibility key
€40
• Two bonds mature in 2020: the first matured in
April and the second will mature in October. €36 Other: 3
UK Bilateral 2 Change in
• Four of the remaining five tranches of the UK €32 cash: 10
bilateral loan mature in 2020. €28 Other 1
Redemption Net ST
• The Exchequer Borrowing Requirement (EBR) has €24 paper: 5
of Bonds: 17
been revised to €15.5bn up from €1.6bn. This is
€20
subject to change given the economic uncertainty.
€16
• Existing cash balances will be run down to meet
part of the 2020 funding requirement. €12 Bond
issuance: 22
• Short term paper will also be an important funding €8 EBR: 16
source – one Ireland has not tapped in recent €4
years.
€-
Funding Requirements (€bn) Sources of Funding (€bn)
Source: NTMA
Notes:
Other funding: Includes general contingency provision including for potential FRN purchases
Bond issuance: Mid-point of €20-€24bn bond funding range.
Net ST paper: Forecast net growth in short-term paper.
Other Sources: Includes retail (State Savings), private placements and EIB loan drawdowns.
31NTMA must finance EBR with cash but GG balance
includes other revenue/costs; use GGB for deficit comps
Methodological
Gap between EBR and GGB (€bns) usually EBR GGB
Differences
minor - stark in 2020
Accounting basis Cash (exchequer) Accrual
10 Financial
Included Excluded
transactions
0
Subset of Central Includes all of
Scope
Govt. central + local
-10
Intra-Government
No Yes
Consolidation
-20
2019 2020 2021 Comments
This is the deficit in cash terms that
-30 EBR 0.6 -15.6 -11.1 the NTMA must finance each year
Prom. Note capital Accruals can relate to interest, taxes,
Adjust for Accruals 0.9 1.4 0.8 other expenditures
-40 transfer to recap
banks hit GGB in Transactions between the Exchequer
2010 but not EBR Exclude Equity & and NAMA, CBI and other govt.
-50 -2.5 -4.8 -2.4 entities: this benefits funding req.
(non-cash Loan Transactions
expenditure) Archaic funding structure of social
-60 Social Insurance
1.5 -2.1 -0.3 insurance in Ireland is outside
Fund Exchequer. Consolidated in GGB
Semi State, ISIF, Dividends and profits from
1.2 -0.4 0.0 government entities
other funds
GG Balance EBR Local Govt. -0.5 -1.7 -0.9 Local governments fund themselves
Most complete metric for fiscal
GGB 1.3 -23.1 -13.8 position. Use this for deficit
Source: CSO comparison with other nations 32Debt metrics improved but debt stock is high and will
increase; assess other metrics apart from debt to GDP too
2019 GG debt to GG revenue % GG interest to GG rev % GG debt to GDP %
Greece 370.0% 6.2% 176.6%
Italy 286.4% 7.2% 134.8%
Portugal 274.7% 7.0% 117.7%
Spain 244.2% 5.8% 95.5%
Ireland 233.3% 5.1% 58.8%
Cyprus 231.7% 6.1% 95.5%
UK 226.5% 5.6% 88.1%
Belgium 196.1% 3.9% 98.6%
France 186.6% 2.7% 98.1%
EA19 181.1% 3.5% 84.1%
Austria 143.7% 2.9% 70.4%
Germany 127.6% 1.7% 59.8%
Finland 113.8% 1.6% 59.4%
Netherlands 111.4% 1.8% 48.6%
Sweden 71.5% 0.8% 35.6%
Source: Eurostat
Ireland 99% Debt to GNI* ratio in 2019 33ECB’s parameters on new purchases (no limits,
Diverse holders of Irish debt – sticky sources account for
over 50%; will increase further with Eurosystem’s PEPP
Ireland roughly split 80/20 on non-resident “Sticky” sources - official loans, Eurosystem,
versus resident holdings (Q4 ‘19) retail - make up over 50% of Irish debt
250
200
Other Debt
(incl.
IGBs - 150
Official)
24% Private Non
Resident 100
Retail, 35%
Resident 50
IGBs -
11%
Private
Resident 0
6%
Eurosystem
22% Short term
2% IGBs - Private Non Resident IGBs - Private Resident
IGBs - Private Non Resident IGBs - Private Resident Short term Eurosystem
Short term Eurosystem Retail Other Debt (incl. Official)
Retail Other Debt (incl. Official) Total Debt (€bns)
Source: CSO, Eurostat, CBI, ECB, NTMA Analysis
IGBs excludes those held by Eurosystem. Eurosystem holdings include SMP, PSPP and CBI holdings of
FRNs. Figures do not include ANFA. Other debt Includes IMF, EFSF, EFSM, Bilateral as well as IBRC- 35
related liabilities. Retail includes State Savings and other currency and deposits. The CSO series has
been altered to exclude the impact of IBRC on the data.Investor base for Government bonds is wide and varied
Investor breakdown: Country breakdown:
Average over last five syndications Average over last five syndications
8.6%
Other, 9.6%
15.2%
Pensions/ Fund/Asset
Insurance, Manager, 22.2%
14.2% 34.2%
8.1%
Banks/ 43.6%
Central
Banks*,
38.4%
Ireland UK
US and Canada Continental Europe
Nordics Asia & Other
Source: NTMA 36
* Does not include ECB. ECB does not participate on primary market under its various asset purchasing
programmesCorporation tax revenue to be cushioned by payments
relating to 2019 and defensive nature of Pharma and ICT
Corporation tax (CT) receipts have more Sectors with large MNC presence dominate
than doubled in four years CT receipts (2018)
24.0% 12.0 100%
90%
20.0% 10.0 80%
70%
16.0% 8.0
60%
12.0% 6.0 50%
40%
8.0% 4.0 30%
In 2018, 45% of CT paid 20%
4.0% by 10 companies 2.0 10%
0%
0.0% - 2011 2012 2013 2014 2015 2016 2017 2018
2009
1995
1997
1999
2001
2003
2005
2007
2011
2013
2015
2017
2019
Manufacturing ICT
Corporation Tax (€bns, RHS) Financial & insurance Admin & support services
Corporation Tax (% of tax revenue) Wholesale & retail trade Other
Source: Department of Finance, Revenue 37Ireland rated in “AA” category by Standard & Poor's
Date of last
Rating Agency Long-term Short-term Outlook/Trend
change
Standard & Poor's AA- A-1+ Stable Nov 2019
Fitch Ratings A+ F1+ Stable Dec 2017
Moody's A2 P-1 Stable Sept 2017
DBRS A(high) R-1 (middle) Positive Jan 2020
R&I A a-1 Stable Jan. 2017
38
Source: NTMASection 3: Long term fundamentals Ireland’s long run positives like demographics will reassert in time
Ireland’s structural drivers of growth will reassert when
crisis passes
Gross National Income* at current prices Ireland’s GNI* per capita above 2007 levels
(1995=100) and compares favourably to EA
320 45,000
300 "Celtic Tiger" Credit/Prop Bubble Recovery
1994-2001 erty Bubble Burst 40,000
280
260 35,000
240
220 30,000
200 25,000
180
160 20,000
140
15,000
120
100 10,000
80
5,000
60
40 -
20
0
1995 2000 2005 2010 2015 Ireland (GNI*) EA 19 (GDP) Germany (GDP)
40
Source: CSO, EurostatIreland’s population profile younger than the EU average
Ireland’s population was 4.92m in 2019 – Ireland’s population will remain younger
over 200,000 more than 2011 Census than most of its EA counterparts
2.0% Japan
1.8% % of population in age cohort Greece
Portugal
1.6% Italy
1.4% Spain
Germany
1.2% Finland
France
1.0% Denmark
0.8% Ireland
UK
0.6% 25% of Ireland’s Belgium
population aged 17 or China
0.4% below versus 19% for EU Canada
0.2% Sweden
USA
0.0% WorldFavourable population characteristics underpin debt
sustainability over longer term: next 10 years look healthy
Percentage of population: Ireland’s has The consequence is that working-age
relatively more young people and fewer old population expected to grow (2020-2029)
70%
India
US
60%
Ireland
Denmark
50% UK
Spain
40% Belgium
Netherlands
30% France
Austria
20% EU
Euro area
10% China
Italy
0% GermanyOpenness to immigration has been beneficial to Ireland;
migration in 2020 to be closer to zero given lack of travel
Latest Census data show net migration Highly educated migrants moving to Ireland
positive since 2015 – mirroring economy “Reverse Brain Drain”
150 3.0% 120
100 2.0% 90
60
50 1.0%
30
0 0.0%
0
-50 -1.0%
-30
-100 -2.0%
-60
1995
1987
1989
1991
1993
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
-90
Emigration (000s)
Immigration (000s) -120
Net Migration (000s) Third level Other Education Net Migration
Net Migration (% of Pop, RHS) 2009-2013 2015-2019
43
Source: CSOOpenness to trade is also central to Irish success – led by
services exports; Ireland is living within its means again
Cumulative post-crisis total exports (4Q sum Current account is distorted heavily by
to end-2008 = 100, current prices) MNEs: modified CA is consistent with GNI*
290 190.00
20%
270 170.00
15%
250 150.00
230 130.00
10%
210 110.00
190 90.00 5%
170 70.00
0%
150 50.00
130 30.00
-5%
110 10.00
-10%
90 -10.00
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Current Account (% of GNI*)
Contract Manufacturing* Services
Modified Current Account (% of GNI*)
Goods ex. CM Exports
Source: CSO, NTMA calculations * Contract manufacturing proxy
Nominal values, exports excludes contract manufacturing.
Modified CA=CA less (IP Depreciation + Aircraft Leasing Depreciation + Redomiciled Incomes + R&D
Services Exports) adding back (Imports of related to Leasing Aircraft + R&D related IP and services 44
Imports). Significant caution should be exercised when viewing Ireland’s current account data. MNC’s
action distort metrics heavily.Ireland scores well on social issues and ability to do
business
Ireland is close to OECD norms socially Favourable metrics on property rights and
government efficiency
100 Ireland
95 UN Goal – Ireland Normalised
OECD
90 Peace, Justice and Actual (world
Average
Strong institutions Figure leader =
85
100)
80
Overall - 87.5 75.8
75
Corruption Perception Index
70 73.0 79.4 73.5
(0-100)
65 Government Efficiency
4.8 74.8 52.8
60 (1-7)
Homicides (per 100,000
55 1.1 97.8 96.1
people)
50 Prison population
Gender Decent work Reduced Sustainable 80.0 87.8 74.6
(per 100,000 people)
Equality and economic Inequalities Cities and
growth Communities Property Rights (1-7) 6.1 94.8 73.1
Ireland (World leader = 100) OECD Average Population who feel safe
75.0 73.7 67.4
walking alone at night (%)
Source: United Nations SDG project 450
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.1
Slovakia
Slovenia
Czech Rep
Iceland
Finland
Denmark
Norway
Belgium
Hungary
more equal society
Sweden
Lower GINI score means
Austria
Poland
Netherlands
France
Source: OECD
Germany
Switzerland
Luxembourg
Canada
Ireland
Estonia
GINI Coefficient (Post Taxes and Transfers)
Italy
Australia
Portugal
Russia
Greece
Japan
Spain
Israel
Latvia
UK
Korea
Pre Taxes and Transfers
Lithuania
income equality is around OECD average after tax
USA
Turkey
Chile
Income equality – Ireland’s progressive system means
Mexico
Costa Rica
South Africa
46OECD’s BEPS 2.0 process could impact the business tax
landscape globally – agreement might be delayed to 2021
Pillar One : proposal to re-allocate taxing Pillar Two: proposal for minimum global tax
rights on non-routine profits
• The OECD has proposed further corporate tax • Pillar Two - the basic idea is to introduce a
reform - a BEPS 2.0. minimum tax rate with the aim of reducing
incentives to shift profits.
• BEPS 2.0 looks at two pillars. The first pillar
focuses on proposals that would re-allocate taxing • Where income is not taxed to the minimum level,
rights between jurisdictions where assets are held there would an “income inclusion rule” which
and the markets where user/consumers are operates as a ‘top-up’ to achieve the minimum
based. Non-routine profits could - to some - rate of tax.
degree be taxed where customers reside.
• The obvious questions arise:
• Under such a proposal, a proportion of profits what is the appropriate minimum tax rate?
would be re- allocated from small countries to who will get the ‘top-up’ payment?
large countries. Such a proposal will reduce Is the minimum rate taxed at a global (firm)
Ireland’s corporation tax base but it is impossible level or on a country-by-country basis?
to predict the size of the impact.
• These questions are as yet unanswered. If the
• Nothing has been decided as of yet. OECD original minimum rate agreed is greater than the 12.5%
deadline of end 2020 is likely to be delayed by the rate that Ireland levies, it would erode this
Covid-19 pandemic. country’s comparative advantage.
47Section 4: Property Property market in hibernation for a few months with low transactions
House prices had plateaued before the virus arrived
House prices have stabilised 20% Office prices have diverged from retail and
below their peak (100 in 2007) industrial (peak = 100)
120 120
100 100
80 80
60 60
40
40
20
20
0
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
1996 1999 2002 2005 2008 2011 2014 2017
National Excl. Dublin Dublin Retail Office Industrial
Source: CSO; MSCI data 49Housing supply still below demand; supply was catching
up before Covid-19 put the sector in hibernation
Housing Completions* above Housing supply picking up in a uniform fashion –
25,000 in 2019 coronavirus to hamper supply H2 2020
30 12
Thousands
Thousands
25 10
20 8
15 6
10
4
5
2
0
-
2015 2016 2017 2018 2019
2016 2017 2018 2019 2020
Non-Domestic
Reconnection Dublin Starts (advanced 12 months) Dublin Completions
Unfinished
Commuter Belt Starts (advanced 12 months) Commuter Belt Completions
New dwelling completion
All connections ex-GDA Starts (advanced 12 months) ex-GDA Completions
Source: DoHPCLG, CSO, NTMA Calculations
* Housing completions derived from electrical grid connection data for a property. Reconnections 50
of old houses or connections from “ghost estates” overstate the annual run rate of new building.Demand will fall off given migration and unemployment –
less than 30K units needed per annum in coming years
Mortgage drawdowns (000s) rose from Non-mortgage transactions still important
deep trough before Covid-19 impact but closer to 40% of total
120 20 80.0%
Thousands
18 70.0%
100 16
60.0%
14
80
12 50.0%
60 10 40.0%
8 30.0%
40
6
20.0%
20 4
2 10.0%
0
0 0.0%
2006 2008 2010 2012 2014 2016 2018 2020
Q4 2012
Q4 2010
Q2 2011
Q4 2011
Q2 2012
Q2 2013
Q4 2013
Q2 2014
Q4 2014
Q2 2015
Q4 2015
Q2 2016
Q4 2016
Q2 2017
Q4 2017
Q2 2018
Q4 2018
Q2 2019
Q4 2019
Residential Investment Letting
Mover purchaser Non-mortgage transactions
Mortgage drawdowns for house purchase
First Time Buyers Non-mortgage transactions % of total (RHS)
Source: BPFI (4 quarter sum used) Source: BPFI; Residential Property Price Register
51Covid-19 impact on prices unclear as both supply and
demand impacted but rents should come off highs
Dublin resi. property prices fell in 2019; Rents are well above previous peak – out of
higher end of the market most hit line with prices
30% 180
160 Rents now well
20% above prices
140
10% 120
100
0%
80
-10% Prices were
60 above rents
-20% 40
20
-30%
0
2006 2008 2010 2012 2014 2016 2018 2020
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
National (Y-o-Y %) Ex Dublin (Y-o-Y %)
Dublin (Y-o-Y %) Rents (100 = 2005) Price
Source: CSO; RTB 52Irish house price valuation metrics remained well below
2008 levels throughout last cycle
Deviation from average price-to-income ratio (Q3 2019, red dot represent Q1 2008)
60%
40%
20%
0%
-20%
SD BG NL OE NW LX DN FR ES IE PT EA UK BD FN GR IT
Deviation from average price-to-rent ratio (Q3 2019, red dot represent Q1 2008)
80%
60%
40%
20%
0%
-20%
SD NW BG UK DN FR LX ES IE NL OE FN EA BD PT GR IT
Source: OECD, NTMA Workings 53
Note: Measured as % over or under valuation relative to long term averages since 1980.Section 5: Brexit “Hard Brexit” risk has de-escalated but cliff edge at end 2020 is sill possible
Amid Covid-19, trade agreement still progressing – hard
Brexit is a possibility for 2021 but extension better for all
Withdrawal Agreement in 2019 helped to UK-EU Future trading relationship
solve Northern Ireland border issue unresolved
• Northern Ireland will remain within the UK • With the withdrawal agreement sorted we enter
Customs Union but will abide by EU Customs the transition period, which is slated to finish at
Union rules – dual membership for NI. the end of 2020.
• No hard border on the island of Ireland – customs • The UK government has stated its intention to
border will be in the Irish sea. Goods crossing seek a free-trade arrangement for the long term.
from ROI to NI will not require checks but goods
going to UK will. • The upshot is that the trading relationship will be
more distant, making negotiations difficult.
• Complex arrangements will be necessary to
differentiate between goods going to NI and • There is only one year to negotiate what normally
those travelling through NI to UK or vice versa. takes several years.
Customs checks at ports, VAT and tariff rebates • More time has been lost as politicians are rightly
and alignment of regulations will be needed. concentrating on the global pandemic.
• All of this is backed by a complex consent • Risk of hard Brexit if the transition period is not
mechanism, which allows Stormont to opt-out extended.
under simple majority at certain times.
55Negatives of hard Brexit outweigh positives in short-term,
although opportunities may appear longer term
Cons Pros
Short term Short term
• Major trade disruption from tariffs, customs • Cheaper domestic food prices
checks and documentation (red tape)
Long term
• Regions suffer severe recession in agriculture and
UK-focused manufacturing; tourism might suffer • Fiscal help from Europe is likely; selective
temporary waiving of State Aid rules?
• Confidence shock to business and households
• FDI influx from UK, as multinationals avoid
• Liquidity may dry up in property market turmoil; UK’s reputation might be tarnished
Financial services (passporting lost by UK)
• Fiscal impacts are likely given need to support
regions Other multinationals - especially
IT and business services
Long term
• Commercial property occupancy could rise; there
• Lower consumer spending thanks to higher may also be an influx of well paid workers
inflation when tariffs dominate the FX benefit
• Gradual partial trade recovery
• Political economy cost (loss of ally in the EU) Irish companies may steal EU market share
from British ones (and finally diversify)
Import substitution (especially in food) 56Whichever type of Brexit materialises, trade is likely to be
negatively impacted
% of Goods Services Total
Irish/UK trade linkages will suffer following Brexit
total (2018) (2018) (2018) The UK is the second largest single-country
export destination for Ireland’s goods and
Exp. Imp. Exp. Imp. Exp. Imp. the largest for its services
At the same time, Ireland imports c. 20% of
US 27.9 18.5 11.6 25.4 18.0 23.1 its goods from the UK.
Ireland’s trade with the UK is labour intensive
UK* 11.5 21.7 15.7 9.6 13.8 13.6
The UK might only account for 14% of
Ireland’s total exports, but Ireland is more
NI 1.6 1.6 n/a n/a n/a n/a dependent than that because those UK-
reliant sectors are labour intensive
EU-27 38.8 37.4 29.4 26.8 33.5 30.3 SMEs account for over 55% of Irish exports to the
UK. They are likely to be more adversely affected
China 3.9 5.9 2.6 1.5 3.1 3.0 than larger companies by the introduction of tariffs
and barriers to trade
Other 21.8 22.4 43.3 38.3 30.7 31.1
57
Source: CSO 2018 * UK data includes Northern Ireland
NTMA calculations; Data does not include contract manufacturingAgri-food and tourism most at risk from trade barriers
Agriculture has not diversified from the UK Tourism numbers linked to FX moves
60% 30% 20%
Agri. exports to UK
15%
50% 20%
10%
40% 10%
5%
30% 0% 0%
All other goods
20% -5%
exports to UK -10%
-10%
10%
-20%
-15%
0%
-30% -20%
2010
2013
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2016
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
% of Irish Agri Exports going to UK Euro/Sterling (y-o-y, Lagged 3Qs, RHS)
% of Other Irish Goods Exports going to UK Visitors to IE from UK (y-o-y)
58
Source: CSO, DataStream EikonHard Brexit impact estimates all show similar story –
return to WTO rules would be negative for Ireland
Forecast vs. no Brexit Short term Medium term Long term
baseline (2 years) (5 years) (10-15 years)
Department of Finance
-2.4% -3.3% -5.0%
(ESRI)
-7.0%
Copenhagen Economics -2.0 to 2.5% -4.5% (of which -4.9pp is due to
regulatory divergence)
Central Bank of Ireland -4.0% - -6.0%
Bank of England
-5.0% -6.2% -6.2%
“disruptive” (implied)
Bank of England
-6.3% -8.2% -8.2%
“disorderly” (implied)
UK Treasury range (implied) - - -5.0 to 7.2%
59
Source: ESRI, Copenhagen, Bank of England, UK treasury
Implied uses the impact on UK GDP and an elasticity measure of 0.8 to calculate the impact on Irish GrowthMany financial institutions have announced that they will
expand or set up in Dublin
FDI: Ireland benefitting already Companies that have indicated jobs to be
moved to Ireland
Ireland could be a beneficiary from displaced FDI.
The chief areas of interest are
Financial services
Business services
IT/ new media.
Dublin is primarily competing with Frankfurt,
Paris, Luxembourg and Amsterdam for financial
services.
Ireland’s FDI opportunity will depend on the
outcome of post-exit trade negotiations. The UK
(City of London) is almost certain to lose its EU
passporting rights on exit, so there may be more
opportunities in time.
60Section 6: Other data Ireland’s banks now among strongest in Europe – complete reverse of late 2000s
Ireland’s pillar banks in relative good shape to weather
Covid-19 storm
• Banks profitable before Covid-19: income, cost and balance sheet metrics much improved.
• Interest rates on mortgages and to SMEs are still high compared to EU thanks to legacy issues and the
slow judicial process in accessing collateral.
• An IPO of AIB stock (28.8%) occurred in June 2017. This returned c. €3.4bn to the Irish Exchequer to be
used for debt reduction. Further disposal of banking assets unlikely in the short term given valuations
• Irish banks had paid dividends in recent years.
All three pillar banks were profitable in recent years
Net Interest Margin Profit before Tax
3.0% 1.4
2.5% 1.2
2.0% 1
0.8
1.5%
0.6
1.0% 0.4
0.5% 0.2
0.0% 0
AIB BOI PTSB AIB BOI PTSB
2017 2018 2019 2017 2018 2019
62
Source: Annual reports of banks - BOI, AIB, PTSB
Profit measures are before exceptional itemsCapital ratios strengthened as banks shrunk and
consolidated in last ten years
CET 1 capital ratios (Dec 2019) allow for Loan-to-deposit ratios have fallen
amble forbearance in Q2 significantly as loan books were slashed
25% 200
180
160
20%
140
120
15%
100
80
10% 20.3% 60
18.1% 17.3%
15.0% 40
13.8% 15.0%
20
5%
-
Loan-to- Loans (€bn) Loan-to- Loans (€bn)
0% Deposit % Deposit %
CET1 % (Transitional) CET1 % (Fully Loaded) AIB BOI
AIB BOI PTSB Dec-10 Dec-19
Source: Published bank accounts Source: Published bank accounts
Note: “Transitional” refers to the transitional Basel III required for CET1 ratios
63
“Fully loaded” refers to the actual Basel III basis for CET1 ratios.Ireland’s banks are among the most capitalised banks in
Europe
11
Leverage Ratio (%, Fully phased in definition)
10 Slovenia
Stronger Greece Ireland
9
Latvia
8 Cyprus
Portugal
Malta
7
Austria Luxembourg
Belgium
6
Italy SSM Countries Finland
Spain
France
5
Germany Netherlands
4
10 12 14 16 18 20 22
Common Equity Tier 1 Ratio (%)
Source: ECB consolidated banking data (Q4 2019)
Note: Leverage Ratio = Tier 1 capital/Total leverage exposure; CET1 = Common tier 1 capital/total risk 64
exposures. “Fully loaded” refers to the actual Basel III basis for CET1 ratios.Domestic bank cost base has risen but marginally
Cost income ratios improve dramatically… … and IE banks* below EU average
90%
150% 80%
144% 70%
123%
125% 60%
50%
100% 40%
88%
30%
75% 68% 20%
63%
56% 10%
0%
50%
LV SK ES PL DK GR PT NL HU SI GB FI IS IE IT EU AT LU BE FR CY DE
Staffing (000s) halved post crisis
25%
30
20 26
0%
AIB BOI PTSB
16
10
2012 2013 2014 2015 10
10 2
2016 2017 2018 2019 5
0
AIB BOI PTSB
Source: Annual reports of Irish domestic banks
2008 2019
Source: Annual reports of Irish domestic banks, EBA 65
* EBA data includes three domestic banks as well as Ulster Bank, DEPFA & Citibank.Pillar banks sold non-performing loans during 2018/19
All 3 Pillar banks (€bn) Dec-18 Dec-19 Non-performing exposures % of total loans1 (loss provision % of NPE)
Total Loans 158.2 159 Dec-18 Dec-19 Book (€bn)
Non-performing Exposures 12.7 7.9 BOI Irish Residential Mortgages 9.5(21) 6.3 (25) 23.1
UK Residential Mortgages 2.3(15) 2.1 (13) 23.2
(NPE as % of Total) 8.0% 5%
Irish SMEs 11.2(49) 7.5 (54) 7.3
Provisions 4.4 3.0 UK SMEs 6.1(53) 6.3 (46) 1.7
(Provisions as % of book) 2.8% 1.9% Corporate 2.6(60) 2 (60) 11.4
CRE - Investment 10.7(44) 7.7 (37) 7.2
(Provisions as % of Impaired) 34.6% 38.4%
CRE - Land/Development 14.0(54) 3.8 (64) 0.9
Non- Consumer Loans 2.1(140) 1.7 (159) 5.7
performing 6.3(35) 4.4 (37) 80.5
Exposures,
7.9, 5%
AIB Residential Mortgages 10.1 (20) 7.4 (22) 31.5
SMEs/Corporate 5.2 (36) 2.2 (32) 20.3
CRE 17.9 (29) 5.1 (35) 7.9
Consumer Loans 11.2 (50) 6.4 (60) 3.0
9.6 5.4 (27) 62.1
Performing PTSB Residential Mortgages 8.9(39) 5 (38) 12.2
Loans, Buy-to-let Mortgages 12.8(113) 10.5 (138) 3.5
151.1 Commercial 33.3(76) 24.8 (93) 0.17
Consumer Loans 7.5(112) 4.9 (133) 0.37
10.0(64) 6.4 16.4
Source: Published bank accounts
1 Non-performing exposures include impaired loans, loans past due greater than 90 days but not 66
impaired, and Forborne Collateral RealisationsIrish residential mortgage arrears could reverse course in
2020 – moratorium will help
Mortgage arrears (90+ days)* Repossessions**
20% 12.0 PDH Arrears 3500 6.0%
18% 10.0 (by thousands)
8.0 3000 5.0%
16%
6.0
14% 2500
4.0 4.0%
12% 2.0
10% 2000
0.0
3.0%
8% -2.0 1500
6% -4.0
2.0%
4% -6.0 1000
2% -8.0
10 11 12 13 14 15 16 17 18 19 500 1.0%
0%
10 11 12 13 14 15 16 17 18 19 0 0.0%
PDH + BTL (by balance) Over 90 days 90-180 days 13 14 15 16 17 18 19
181-360 days 361-720 days
PDH + BTL (by number) PDH BTL % of MA90+ (RHS)
>720 days Total change
Source: CBI
• Non-bank entities now hold 13 per cent of all PDH mortgage accounts outstanding; 11 per cent are held by regulated retail credit
firms, with the remaining 2 per cent held by unregulated loan owners. Credit Servicing Firms hold 22 per cent of all PDH mortgages
in arrears over 720 days
* Over 40% of those cases in arrears > 720 days are also in arrears greater than five years. 67
** Four quarter sum of repossessions. Includes voluntary/abandoned dwellings as well as court ordered
repossessionsThe European Commission’s ruling on Apple’s tax
affairs does not change the NTMA’s funding plans
• The EC has ruled that Ireland illegally provided State aid of up to €13bn, plus interest to Apple. This
figure is based on the tax foregone as a result of a historic provision in Ireland’s tax code. This was
closed on December 31st 2014.
• This case has nothing to do with Ireland’s corporate tax rate. In its press release the EC stated: “This
decision does not call into question Ireland’s general tax system or its corporate tax rate”.
• Apple is appealing the ruling, as is the Irish Government. This process could be lengthy. Pending the
outcome of the appeal, Apple has paid approximately €13bn plus EU interest (c. €2bn) into an escrow
fund.
• Bank of New York Mellon has been selected for the provision of escrow agency and custodian services
to hold and administer the fund.
• Amundi, BlackRock Investment Management (UK) Limited and Goldman Sachs Asset Management
International have been selected for the provision of investment management services for the fund.
• As the funds will be held in escrow pending the outcome of the appeal, the NTMA has made no
allowance for these funds.
68Government’s NDP outlines green projects; aim to cut CO2
emissions by at least 80% by 2050
1 in 5 euros in the National Development Plan
(NDP) to be spent on green projects
Sustainable Transition to a
Management Low carbon
Sustainable and Climate
Total:€23
Mobility of Water and billion (13%
Environmental Resilient
€8.6 billion Resources Society of GNI*)
€6.8 billion €7.6 billion
Further details are available at ntma.ie Source: National Development Plan 69
2018-2027GNI* is a better measure of underlying economic activity
than GDP/GNP; best as a level rather than a growth metric
National Account – 2015 2016 2017 2018
• GDP headline numbers do not reflect the “true” Current Prices
growth of Ireland’s income due to MNCs. (€, y-o-y growth rates)
Gross Domestic Product 262.8bn 271.7bn 297.1bn 324.0bn
• Reasons for 2015-18 MNC distortions:
(GDP) (34.9%) (3.4%) (9.4%) (9.4%)
Re-domiciling/inversions of several minus Net Factor Income
multinational companies from rest of the world
The “onshoring” of IP assets into Ireland = Gross National Product 200.8bn 220.6bn 234.9bn 253.1bn
by multinationals (GNP) (22.9%) (9.9%) (6.5%) (7.7%)
The movement of aircraft leasing assets add EU subsidies minus 1.2bn 1.0bn 1.1bn 1.1bn
in Ireland. EU taxes
= Gross National Income 202.0bn 221.6bn 236.0bn 254.2bn
• By modifying GNI to take account of these factors, (GNI) (22.9%) (9.7%) (6.5%) (7.7%)
GNI* gives us a better understanding of the minus retained earnings -4.7bn -5.8bn -4.5bn -5.0bn
underlying economy. of re-domiciled firms
minus depreciation on -30.1bn -35.3bn -42.5bn -46.3bn
foreign owned IP assets
minus depreciation on -4.6bn -4.9bn -5.1bn -5.4bn
aircraft leasing
= GNI* 162.7bn 175.6bn 184.0bn 197.5bn
(9.4%) (8.0%) (4.7%) (7.3%)
Source: CSO 70Disclaimer
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