Bank of Ireland : Extract from Annual Report for the year ended 31 December 2016 - 2 MB

Year ended 31 December 2016

for the year ended 31 December 2016

Forward-looking statement

This document contains certain forward-looking statements with respect to certain of the Bank of Ireland Group's (the 'Group') plans and its current goals and expectations relating to its future financial condition and performance, the markets in which it operates, and its future capital requirements. These forward-looking statements often can be identified by the fact that they do not relate only to historical or current facts. Generally, but not always, words such as 'may,' 'could,' 'should,' 'will,' 'expect,' 'intend,' 'estimate,'

'anticipate,' 'assume,' 'believe,' 'plan,' 'seek,' 'continue,' 'target,' 'goal,' 'would,' or their negative variations or similar expressions identify forward-looking statements, but their absence does not mean that a statement is not forward-looking.

Examples of forward-looking statements include among others, statements regarding the Group's near term and longer term future capital requirements and ratios, level of ownership by the Irish Government, loan to deposit ratios, expected impairment charges, the level of the Group's assets, the Group's financial position, future income, business strategy, projected costs, margins, future payment of dividends, the implementation of changes in respect of certain of the Group's pension schemes, estimates of capital expenditures, discussions with Irish, United Kingdom, European and other regulators and plans and objectives for future operations. Such forward-looking statements are inherently subject to risks and uncertainties, and hence actual results may differ materially from those expressed or implied by such forward-looking statements.

Such risks and uncertainties include, but are not limited to, the following:

• geopolitical risks which could potentially adversely impact the markets in which the Group operates;

• uncertainty following the UK vote to exit the EU as to the nature, timing and impact of a UK exit, could impact the markets in which the Group operates including pricing, partner appetite, customer confidence and demand, and customers' ability to meet their financial obligations and consequently the Group's financial performance, balance sheet, capital and dividend capacity;

• concerns on sovereign debt and financial uncertainties in the EU and the potential effects of those uncertainties on the financial services industry and on the Group;

• general and sector specific economic conditions in Ireland, the United Kingdom and the other markets in which the Group operates;

• the ability of the Group to generate additional liquidity and capital as required;

• property market conditions in Ireland and the United Kingdom;

• the potential exposure of the Group to credit risk and to various types of market risks, such as interest rate risk and foreign exchange rate risk;

• the impact on lending and other activity arising from the emerging macro prudential policies;

• the performance and volatility of international capital markets;

• the Group's ability to address weaknesses or failures in its internal processes and procedures including information technology issues, cybercrime risk, equipment failures and other operational risk;

• the effects of the Irish Government's stockholding in the Group (through the Ireland Strategic Investment Fund) and possible changes in the level of such stockholding;

• changes in applicable laws, regulations and taxes in jurisdictions in which the Group operates particularly banking regulation by the Irish and United Kingdom Governments together with the operation of the Single Supervisory Mechanism and the Single Resolution Mechanism;

• the impact of the continuing implementation of significant regulatory and accounting developments such as Basel III, Capital Requirements Directive (CRD) IV, Solvency II, the Recovery and Resolution Directive and IFRS 9;

• the potential impact of certain ECB initiatives including its thematic review of internal models termed Targeted Review of Internal Models (TRIM);

• the exercise by regulators of powers of regulation and oversight in Ireland and the United Kingdom;

• the exposure of the Group to conduct risk such as staff members conducting business in an inappropriate or negligent manner;

• the introduction of new government policies or the amendment of existing policies in Ireland or the United Kingdom;

• the outcome of any legal claims brought against the Group by third parties or legal or regulatory proceedings more generally, that may have implications for the Group;

• the development and implementation of the Group's strategy, including the Group's ability to achieve its targets and ambitions on net interest margins and total operating expenses;

• the inherent risk within the Group's life assurance business involving claims, as well as market conditions generally;

• potential further contributions to the Group sponsored pension schemes if the value of pension fund assets is not sufficient to cover potential obligations;

• the Group's ability to meet customers' expectations in mobile, social, analytics and cloud technologies which have enabled a new breed of 'digital first' propositions, business models and competitors;

• failure to establish availability of future taxable profits, or a legislative change in quantum of deferred tax assets currently recognised; and

• difficulties in recruiting and retaining appropriate numbers and calibre of staff.

Analyses of asset quality and impairment in addition to liquidity and funding are set out in Risk Management. Investors should read 'Principal Risks and Uncertainties' in the Group's Annual Report for the year ended 31 December 2016.

Nothing in this document should be considered to be a forecast of future profitability or financial position and none of the information in this document is or is intended to be a profit forecast or profit estimate. Any forward-looking statement speaks only as at the date it is made. The Group does not undertake to release publicly any revision to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date hereof.

2 Annual Report - year ended 31 December 2016