- After-Tax Profit: EUR2.4 billion.
- Return on Tangible Equity (ROTE): 26.7%.
- Net Interest Income: Increased by 7% to EUR4.1 billion.
- CET1 Ratio: 15.1%.
- Total Distributions: EUR2.6 billion, representing a payout ratio of 109%.
- New Lending: Increased by 17% to EUR14.5 billion.
- Gross Loans: EUR71.2 billion, a 6% increase.
- Cost of Risk: 8 basis points, with a charge of EUR55 million.
- Total Income: EUR4.9 billion, up 4%.
- Net Fees and Commission: Increased by 5% to EUR666 million.
- Costs: EUR1.9 billion, with an underlying growth of 7%.
- Cost Income Ratio: 40%.
- Customer Accounts: EUR109.9 billion, increased by EUR5 billion.
- Proposed Cash Dividend: EUR861 million or EUR0.36984 per share.
- Share Buyback: Regulatory approved EUR1.2 billion.
- New Mortgage Lending: EUR2.8 billion to first-time buyers.
- Green or Transitional Lending: 35% of new lending.
- Market Share: 40% in personal main current accounts, 49% in business main current accounts, and 36% in mortgage market share.
- Assets Under Management: EUR17 billion.
- Net Interest Margin: 3%.
- Other Income: EUR779 million, down 13%.
- Staff Costs: Increased by 9%.
- Headcount: Reduced by 1%.
- Funding and Liquidity: LDR 64, LCR over 200, and net stable funding ratio of 162%.
- Capital Generation: 400 basis points.
- Deferred Tax Asset Benefit: 50 basis points in 2024.
- Basel IV Positive Effect: 120 basis points.
Release Date: March 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AIB Group PLC (AIBRF, Financial) reported an after-tax profit of almost EUR2.4 billion, representing a return on tangible equity (ROTE) of 26.7%.
- The company's net interest income grew by 7%, surpassing expectations, with strong performance across both assets and liabilities.
- AIB Group PLC (AIBRF) maintained a robust capital position with a CET1 ratio of 15.1%, allowing for proposed total distributions of EUR2.6 billion.
- Significant progress was made in green finance, with 35% of new lending being green or transitional, and over EUR16.5 billion of the EUR30 billion Climate Action Fund deployed.
- The company achieved a 17% increase in new lending to EUR14.5 billion, with strong growth in corporate and SME lending, particularly in renewable energy and infrastructure.
Negative Points
- The commercial real estate market remained subdued, with new property lending down 21% for the year.
- AIB Group PLC (AIBRF) faces potential challenges from geopolitical uncertainties and trade tensions, which could impact the Irish economy.
- The company anticipates a moderation in the growth rate of modified domestic demand in Ireland from 3% in 2025 to 2.3% by 2027.
- There is a need for significant upgrading of critical economic and social infrastructure in Ireland, which could pose challenges if not addressed.
- The cost of risk was 8 basis points, with a charge of EUR55 million, indicating some level of risk in the asset portfolio despite strong overall asset quality.
Q & A Highlights
Q: What is the potential impact of tariffs on the Irish economy, and how does AIB view the green finance opportunity in the US given the Trump administration's stance on sustainability?
A: Colin Hunt, CEO, stated that tariffs generally have a negative impact, leading to lower growth and higher inflation. Ireland, being an open economy, will not be immune, but the fundamentals remain robust. Regarding green finance, Hunt sees it as a significant opportunity, with AIB actively deploying capital in Ireland, the EU, and North America, maintaining a disciplined approach to capital allocation.
Q: How does AIB view its Net Interest Income (NII) beyond 2025, especially with consensus at EUR3.52 billion for 2026?
A: Donal Galvin, CFO, indicated that the consensus for 2026 appears light, given the guidance for 2025 is greater than EUR3.6 billion. He expects NII to be at least that amount in 2026, considering the current economic outlook and deposit beta trends.
Q: What are AIB's thoughts on distributions, particularly regarding buybacks versus special dividends?
A: Donal Galvin explained that AIB's focus is on generating strong returns and engaging with the Board and regulators to determine the best approach. The decision between cash payouts and buybacks will depend on share price and shareholder structure, with a consistent focus on sustainable returns.
Q: How does AIB view its deposit beta and hedge strategy moving forward?
A: Donal Galvin noted that the deposit beta is expected to max out at around 25%, down from previous expectations of 30%. Regarding the hedge, AIB has increased its size and duration, aligning with deposit growth, and expects the hedge to grow in line with deposits.
Q: Can you explain the impact of Basel IV on AIB's Risk-Weighted Assets (RWAs) and CET1 ratio?
A: Donal Galvin mentioned that the Basel IV impact is better than anticipated, with a positive effect of 120 basis points. AIB expects RWA growth to align with loan growth, despite executing SRTs and benefiting from Basel IV, due to growth in higher risk-weighted sectors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
