Bank of Ireland, Prepared and Ready to leave Bank Guarantee Scheme

We have prepared for and are ready for the expiry of the ELG.

So says the interim statement by the Goverbner of BOI this morning.

As expected, and despite the ongoing pressure arising from exceptionally low official interest

rates, the Group’s Net Interest Margin has started to be positively impacted by the actions

taken by the Group to reduce the cost of deposits and other funding and to improve charge

rates on loan assets where commercially appropriate and possible.

The Group has continued to reduce its pay rates on customer deposits in the Irish domestic

market and deposit volumes have remained resilient.  There are signs that key competitors
have begun to reduce their pay rates. In addition, following some easing of competitive
intensity in the UK deposit market, the Group has been able to reduce the rate it pays to attract
new deposits and to retain existing deposits on roll‐over in that market.  Since 30 June 2012,
the Group has transferred loan assets amounting to €2.8 billion to BOI UK plc which has
facilitated greater balance sheet efficiencies, with consequent reductions in wholesale funding
and the reduction of lower yielding liquid assets.

Further progress has been made on disengaging from the exceptional Eligible Liabilities
Guarantee Scheme (ELG).  Total liabilities covered by the ELG reduced from €36 billion at 30
June 2012 to less than €28 billion in November 2012 reflecting  the reduction in wholesale
funding from the loan asset transfers to BOI UK plc, some further reductions in ELG covered
wholesale funding from deleveraging activities and growth in non ELG covered deposits. We
have prepared for and are ready for the expiry of the ELG.

Operating costs remain under tight control with our cost reduction initiatives delivering
sustainable cost savings.  Staff numbers are reducing in line with our expectations and we
expect that the restructuring provision of €66 million taken at 30 June 2012 will be fully utilised
by year‐end.

Asset Quality
Although the Irish Economy has begun to stabilise, challenging conditions remain.
We continue to actively focus on credit quality and our exposures to the Irish SME sector and
our Irish Mortgage book continue to be key priorities.  With regard to our Irish Mortgage book,
the pace of arrears formation has continued to reduce and we have continued to formally
restructure and modify a significant number of customer mortgages on a sustainable basis.
86% of those customers whose mortgages are currently in formal restructure or modification
are fully meeting their revised arrangements.

Our international corporate, unsecured consumer and UK mortgage books have continued to
perform relatively well and in line with our expectations.
We maintain our expectation that impairment charges will reduce from the elevated levels
experienced in 2011, trending over time towards a more normalised impairment charge as the
domestic economy recovers, with the pace of reduction particularly dependent on the
performance of our Irish residential mortgage book and of commercial real estate markets.

The Group has made further progress towards its deleveraging targets with its Loan to Deposit
ratio reducing from 136% at June 2012 to less than 130% in November 2012.
Ongoing redemptions and repayments on our loan assets remain in line with our expectations.
Customer deposits continue to grow and amount to €74 billion in November 2012 as compared
with €71.7 billion at 30 June 2012.
Wholesale funding in November 2012 is €44 billion a reduction of €8 billion compared to June
2012 due to deposit growth, the impact of the transfer of assets to BOI UK plc and ongoing
asset deleveraging.  The reduction in wholesale funding includes Monetary Authority drawings
of €21 billion which have reduced from €28 billion in June 2012.  Wholesale funding is expected
to continue to reduce in the coming months.

The Group continues to assess the significant impacts on its capital ratios arising from the
phased transition to the Basel III capital framework and to develop the range of potential
mitigation strategies available to it with respect to such items. Clarification is awaited from
regulatory authorities on a number of material technical and other items which could increase
the Group’s expected loss adjustments and its level of Risk Weighted Assets in relation to any
requirement to make credit valuation adjustments for derivatives with corporate
counterparties.  In addition, clarification from regulatory authorities on the calculation of risk
weightings for SMEs could reduce the Group level of Risk Weighted Assets.  Since 30 June 2012,
the discount rate used under IAS 19 to discount the Group’s defined benefit pension fund
liabilities has reduced such that, despite an increase in asset values, the deficit has increased by
€0.6 billion to €1.6 billion. The Group is actively considering actions and mitigants with respect
to the Pension deficit. In addition and partly offsetting the Pension deficit increase, the
improved funding conditions for the Irish sovereign has benefited the value of the Group’s
Available for Sale (“AFS”) portfolio such that the AFS Reserve improved by €0.5 billion since 30
June 2012 to a positive value of €0.1 billion currently.
The Group’s Core Tier 1 ratio (PCAR/EBA basis) was 13.9% at end October 2012.

For further information please contact:
Bank of Ireland
Andrew Keating  Group Chief Financial Officer                +353 (0)766 23 5141
Tony Joyce      Head of Group Investor Relations     +353 (0)766 23 4729
Dan Loughrey      Head of Group Communications                 +353 (0)766 23 4770