WIXLIB

Governor’s Statementws, GovernorRichard BurroBrian Goggin & Richard BurrowsStrong organic growth is the main feature of our results for theyear to 31st March 2007. Profit before tax increased 28% to 1,958 million. On an underlying basis, profit before tax rose22% to 1,700 million.This growth was achieved through excellent performances in ourIrish and UK divisions and in Capital Markets. Thus the growthis diversified and well balanced. In addition, in a benign creditenvironment in Ireland and the U.K., the Group’s asset qualityis very good.Capital ratios also improved during the year. Total capital ratioimproved from 11.4% to 11.8% and Tier 1 ratio from 7.5% to 8.2%.Thus your directors are recommending an increased final dividendof 39.4cent which, if approved, will result in total dividend growthfor the year of 15%.The performance of the Group was achieved in a positive economicenvironment in our major markets. We benefit from a clear strategic4Bank of Ireland Report & Accountsfocus on our core markets in Ireland and the UK and on our chosenniche markets internationally. We have also made major progressin our objectives of improving efficiency and investing in businessgrowth while maintaining excellent asset quality. Competitionis increasing but we are well positioned to maintain the growthmomentum of recent years.Bank of Ireland Group today is following an aggressive organicgrowth strategy with strong leadership, exceptional employees,a focus on quality customer service and the flexibility to adapt asrequired to any changing market circumstances. I thank BrianGoggin and his management team and all of the employeesof Bank of Ireland worldwide for their contribution to theseexcellent results and for their commitment to the future successof the business.

Governor’s StatementCourt changesThere have been a number of changes to the composition ofthe Court in the past year. George Magan was appointed DeputyGovernor and Caroline Marland as Senior Independent Directorin October 2006 following the resignation of Denis O’Brien fromthe Court.Dennis Holt was appointed to the Court as a non-executivedirector in October 2006. Dennis is a former Group Chief Executiveof AXA UK plc. He also served as Chairman of AXA IrelandLtd. Prior to joining AXA in 2001, he held various managementpositions and served as an executive director with Lloyds TSBGroup plc.Three executives, Richie Boucher, Des Crowley, and DenisDonovan were also appointed to the Court in October 2006.Richie joined Bank of Ireland Group as Chief Executive,Corporate Banking from Royal Bank of Scotland in December2003. He was appointed Chief Executive, Retail Financial ServicesIreland in November 2005.Denis joined Bank of Ireland in 1985. He was appointedChief Executive of the Bank’s new Capital Markets Division,encompassing Corporate Banking, Global Markets and AssetManagement, in September 2006, having held the position of ChiefExecutive, Wholesale Financial Services Division since April 2003.From 1999 to 2003 he was Chief Executive of Global Markets,with responsibility for Bank of Ireland’s treasury and internationalbanking operations. Previously he had been Chief OperatingOfficer – International in Bank of Ireland Asset Management.I welcome all the new directors to the Court. Together theybring a wide range of experience and ability that I am confidentwill make a significant contribution to the future growth andsuccess of the Group.After the forthcoming Annual General Court, two directors, CarolineMarland and Tom Moran, are due to retire having each served twoterms as non-executive directors. Caroline and Tom, and DenisO’Brien who resigned from the Court in September 2006, madevery significant contributions to the deliberations of the Court andI thank them very warmly.Economic and business outlookDes joined Bank of Ireland in 1988 from Arthur Andersen & Co.In March 2000 he was appointed Chief Executive, Retail Bankingand Distribution Ireland. He was appointed Chief Executive, RetailFinancial Services Ireland in April 2004 and Chief Executive, UKFinancial Services in November 2005. He is Chairman of the boardof the UK Post Office joint venture.The economic outlook in our main markets in Ireland and the U.K.continues to be positive. In Ireland the current macro economicindicators do not suggest a significant softening in the pace ofgrowth, although there is likely to be some easing as a result ofrising interest rates. The economic fundamentals of employment,retail sales and industrial production, however, remain robust andstrong domestic demand should underpin continued economicgrowth. Growth in the UK continues to be solid, underpinnedby firm consumer spending, although here also there is likelyto be some easing as the year progresses on the back of risinginterest rates.The main underlying indicators of performance have been trendingvery positively for Bank of Ireland Group for the past few years.We are well positioned for further strong and sustainable growthsupported by a new streamlined operating model that will ensurethat as this growth is achieved we continue to improve ourefficiency ratios. Most importantly, in an increasingly competitiveenvironment, our customer satisfaction ratings are improvingsignificantly. We have strong growth ambitions for the businessand the outlook is positive for this year and beyond.Richard Burrows, GovernorBank of Ireland Report & Accounts5

Group Chief Executive’sOperating and Financial ReviewPerformance HighlightsYear ended31 March 2007Year ended31 March 2006Restated*% Change1,9581,52428 Gain on disposal of business activities / property(358)(176) Gross-up for policyholder tax in the Life business(19)(69)27 Investment return on treasury shares held for policyholders6875 Cost of restructuring programme49321,7001,39322Basic earnings per share172.2128.534Underlying earnings per share144.6118.52260.452.515Retail Republic of Ireland69855027Bank of Ireland Life14813410Capital Markets57247121UK Financial Services44134926Group Profitability ( Million)Profit before tax (PBT)Non-core items:Deduct:Add: Hedge ineffectiveness on transition to IFRSUnderlying profit before taxPer Unit of 0.64 Ordinary Stock ( cent)DividendDivisional Pre-tax Profit Performance ( Million)**Group CentreUnderlying profit before tax(159)(111)431,7001,39322Group Performance**Net interest margin (%)1.771.79Cost/income ratio (%)5457Cost/income jaws (%)75Impaired loan loss chargeReturn on equity (%)9bps11bps2324Balance SheetTotal stockholders’ equity ( Million)6,7245,18630Total assets ( Billion)18916217Total lending ( Billion)130107217262168.27.511.811.4112.997.5Total customer accounts ( Billion)CapitalTier 1 ratio (%)***Total capital ratio (%) ***Risk-weighted assets ( Billion)******616Restated for change in accounting policy – see page 86Based on underlying performance, which excludes the impact of non-core items above.The Financial Regulator has issued a requirement that a Prudential Filter be applied to proposed final dividends with effect from July 2007. If the proposed final dividendwas deducted the tier 1 ratio and total capital ratio for the year ended 31 March 2007 would have been 7.9% and 11.5% respectively. This requirement is already in forcefor Interim Dividends.Bank of Ireland Report & Accounts

Group Chief Executive’s Operating and Financial ReviewBrian Goggin, Group Chief Executive“We have delivered an excellent performance driven bythe continuing successful implementation of our clear andfocussed strategy. We are driving growth across all Divisionsand delivering cost savings significantly ahead of schedulein our efficiency programme. Bank of Ireland is a revitalisedorganisation.”Brian Goggin, Bank of Ireland Group Chief Executive, commentedBank of Ireland Report & Accounts7

Group Chief Executive’s Operating and Financial ReviewGroup Performance Highlights*Divisional Highlights* Excellent underlying Group profit before tax (PBT) growth of 22% Growth & investment strategies delivering strong performanceacross all Divisions Strategic Transformation Programme significantly aheadof schedule Strong volume growth across the Group: loans 21% andresources 16% Group income increased by 13% benefiting from strong volumegrowth and a slowing rate of margin attrition Cost growth well contained at 6%: Significant improvement in our efficiency ratio –cost / income ratio down 3% to 54% Excellent Cost / Income Jaws performance of 7% Asset quality remains excellent – impairment charge of 9bps Strong Capital ratios: Total capital ratio 11.8% Tier 1 capital ratio 8.2% Equity tier 1 ratio 5.2% In Retail Republic of Ireland: PBT 27% Excellent business momentum with strong growth inresources and lending Mortgages, Business Banking and Private Banking alldelivering strong performances Significant efficiency gains resulting in improved cost/incomeperformance In Life: Operating profit 29% Excellent sales growth and effective cost-control drivingperformance PBT growth of 10% reflecting impact of significant positiveinvestment variance in prior year In Capital Markets: PBT 21% A particularly strong performance form Corporate BankingPBT 56% Investment in expanding our international franchise drivingstrong and sustainable growth. Arrangement fees and some loan loss provision write-backsduring the period contributing to this performance Strong performance delivered by Global Markets againsta backdrop of challenging markets PBT 7% Asset Management performed in line with expectationsPBT -22% In UKFS: PBT 26% Return from investment strategies continuing to deliverexcellent performance Business Banking a key driver of performancePBT 37% – with excellent growth in loans and resources Mortgage Business PBT 8% - delivering strong growth inspecialist lending UK Post Office relationship progressing well Post Office Financial Services (POFS) reachedbreak-even in the second half of the financial year First Rate Exchange Services (FRES) performed well inchallenging market conditions* Note: based on underlying performance which excludes the impact of non-core items8Bank of Ireland Report & Accounts

Group Chief Executive’s Operating and Financial ReviewJohn O’Donovan, Group ChiefFinancial OfficBrian Goggin,erGroup Chief ExecutiveDenis Donovan,isionive Capital Markets DivcutExeChiefy,wleCrosDeancial ServicesChief Executive UK Finial Services IrelandExecutive Retail FinancRichie Boucher, ChiefuringactnufMaGroupTony Wyatt, DirectoricerOffkRisiefChupGroRonan Murphy,Bank of Ireland Report & Accounts9

Group Chief Executive’s Operating and Financial ReviewOverviewBank of Ireland Group has delivered an excellent performancein the year to 31 March 2007. Group profit before tax (PBT) isup 28% to 1,958m and basic earnings per share up 34% to172.2c. Excluding non-core items, Group underlying PBT andEPS are both up 22% to 1,700m and 144.6c respectively. Thisperformance has been achieved by the excellent execution of ourclear and focussed strategy of driving growth from our leadingIrish franchise, growing our businesses in the UK and building ourinternational niche, skill-based businesses.Ireland’s positive macroeconomic and demographic backdropcontinues to support the very strong performance in our Retailand Life businesses with profit growth of 27% (PBT) and 29%(Operating profit) respectively. The economic outlook remainspositive and we expect GDP growth to continue to outpace thatof the eurozone average over the medium term. We compete froma position of real strength in our core market: we have the leadingdistribution platform; the broadest product offering; a relentlessfocus on customer service; and highly committed employees.Collectively, these translate into a sustainable competitiveadvantage and provide us with the capability to drive furthergrowth in a competitive marketplace.In the UK we have successfully restructured our businesses andnow have a clear focus on three areas with significant growthpotential: business banking, mortgages and consumer financialservices. This clear focus, combined with our continued investmentin the Division, has resulted in an excellent performance withUK Financial Services PBT growth of 26% to 299m. BusinessBanking has been a key contributor to this performance deliveringvery strong loan and resource growth. In Mortgages, we continueto build our specialist lending portfolios. In Consumer FinancialServices, we continue to build on our successful relationship withthe UK Post Office. POFS reached breakeven in the second halfof the financial year and by May 2007 had in excess of 1 millioncustomers - through First Rate Exchange Services (FRES), weremain the leading provider of personal foreign exchange serviceswith a market share of 30%.Capital Markets delivered an excellent performance with PBTgrowth of 21% to 572 million. Corporate Banking deliveredparticularily strong results as we continued our geographicexpansion in the UK, the US and Continental Europe. Stronggrowth in customer income was a particular feature in GlobalMarkets. Our asset management business made progress in itsturnaround phase with performance in the business is in line withexpectation. In October 2006, the Group completed the sale ofits 90.444% shareholding in J&E Davy Holdings Limited (Davy, theGroup’s stockbroking business) with a profit on disposal of 229m.10Bank of Ireland Report & AccountsA priority for the Group during the year was to strengthen ourcapital position. We achieved this through the successful executionof mortgage securitisations and the sale and leaseback of 36 ofour retail branches in Ireland. Active capital management remainsa core focus and continues to support the growth in our business.As we invest to deliver on our strategic growth agenda, ourfocus on cost control remains strong. The Strategic TransformationProgramme, launched in March 2005, was designed not onlyto remove significant costs from the business, but also to embeda culture within the organisation where operational efficiency inthe middle and back office would support our ambitious growthobjectives. This is based on achieving economies of scale andbuilding capability by centralising certain activities and outsourcingothers.On the launch of the Strategic Transformation Programme inMarch 2005 we set a cumulative annualised savings target of 120 million to be achieved by March 2009. In the year to 31March 2007, we have delivered cost savings of 95 million againsta target of 75 million. Our Group cost / income ratio was reducedby 3 percentage points to 54%. We expect to achieve annualisedsavings of 140 million by March 2008 and thus complete theStrategic Transformation Programme at that date, one year aheadof schedule. This programme has fundamentally changed andstrengthened our business providing us with an efficient platformto drive sustainable profitable growth. The central elements ofthis programme – efficiency, capability and scalability are beingembedded in the culture of Bank of Ireland and will enable theGroup to achieve a cost / income ratio of mid 40s percentagepoints in the medium term.A significant contributor to our efficiency gains has been theintroduction of our new business model under which we have: Consolidated and standardised similar activities into a singlemanufacturing function now employing in excess of 4,500staff. Activities include credit operations, contact centres,payments, IT and Banking services; and Consolidated support functions into single Group-wide centresof excellence. Activities include human resource management,finance, legal services and corporate communications.A key enabler in this process has been the outsourcingof a number of activities including facilities management,procurement and learning.Bank of Ireland Group has made considerable progress in recentyears in the implementation of a clear and focussed strategy.We have launched our new operating model, we have furtherstrengthened our domestic franchise in Ireland, we have revitalisedour UK Financial Services Division, and we are successfullydeveloping our international growth platforms. As we stand today,

Group Chief Executive’s Operating and Financial ReviewBank of Ireland Group is a much strengthened, re-focused andre-energised organisation. Based on the progress we have madeand positive economic indicators in our main markets we seesignificant potential for further enhanced growth, in particularthe opportunity for accelerated growth from our internationalbusinesses as a result of our ongoing investment.To maximise this potential we have set out a number of strategicpriorities for the Group: To drive further growth from our leading Irish franchise To significantly reposition the geographic earnings profile of theGroup increasing the profit contribution from our internationalbusinesses to over 50%.Grow the United Kingdom as our second core marketDrive significant international expansion in our niche skillbased businesses with a particular US focus Maximise efficiency from our new business model Outlook to March 2008Looking to the year ahead, the economic conditions in our majormarkets remain positive and supportive of business growth. Weremain confident that our strong franchise in Ireland will enable usto continue to meet the challenges of a competitive marketplace.We expect to see continued growth in both our revitalised UKbusiness and our other international operations. During the yearwe will continue to invest in our business to support continuinggrowth into the future. We will maintain our relentless focus oncosts and expect further efficiencies to be achieved in our drive tofurther reduce our cost / income ratio. We remain vigilant to anyindications of a change in the credit environment which remainsexceptionally benign. We are guiding a low double digit percentagegrowth in underlying EPS for the year to 31 March 2008 (from abase of 144.6 cent for the year to 31 March 2007).Based on the successful implementation of these strategicpriorities we are confident that we will deliver a strong andsustained earnings performance over the medium term.Bank of Ireland Report & Accounts11

Group Chief Executive’s Operating and Financial ReviewDivisional PerformanceDivisional Profit Before TaxRetail Republic of Ireland31 March 2007 m31 March 2006Restated* m% Change69855027Bank of Ireland Life14813410Capital Markets57247121UK Financial Services44134926Group CentreUnderlying profit before taxNon-core itemsProfit before ated for change in accounting policy – see page 86Retail Republic of IrelandRetail Republic of Ireland incorporates our Mortgage, Consumer Banking, Business Banking and Private Banking activities in theRepublic of Ireland.Retail Republic of Ireland delivered an excellent performance for the year to March 2007 with PBT growth of 27%. Our unrivalled distribution,the scope of our product range and our commitment to service excellence continue to underpin our leading franchise. In a competitivemarketplace we have retained our leading position as the number one provider of mortgages in Ireland. In Business Banking we successfullytargeted the fast growing SME and start-up segments with a competitive offering that has driven growth and enabled us to strengthen ourcompetitive position in this market. We continue to drive very significant growth from our Private Banking business.Retail Republic of Ireland: Income StatementNet interest incomeOther incomeTotal operating income31 March 2006 m% Change1,3111,119173773566141,6881,475Total operating expenses9278716Operating Profit before impairment losses76160426I

7 Denis Donovan, B Comm, MBA, Chief Executive, Capital Markets Joined Bank of Ireland in 1985 from the Central Bank of Ireland. He was appointed Chief Executive of the Bank's new Capital Markets Division in September 2006, having held the position of Chief Executive, Wholesale Financial Services Division since 2003. He was CEO of Global Markets