Bank of Ireland Group plc

Bank of Ireland said 2025 saw Irish loans and deposits both rise 6%, fee income increase 7%, Wealth and Insurance fee income rise 12%, operating expenses rise 3%, and impairment charges of EUR 193 million, or 23 basis points of cost of risk. Organic capital generation was 270 basis points, NPEs ended at 2.2%, and reported CET1 was 15.1% after EUR 1.2 billion of distributions. Management also disclosed a noncore charge of EUR 430 million, mainly linked to U.K. Motor Finance, and EUR 153 million of restructuring costs. For 2026, guidance included NII of around EUR 3.4 billion, net lending growth of around 4%, deposit growth of around 3%, fee income growth of around 4%, total costs of around EUR 2.2 billion, cost of risk in the low to mid-20 basis points, and statutory ROTE of around 12.5%. For 2028, the new targets are NII greater than EUR 3.85 billion, total income growth of more than 4% per year, total costs stable around EUR 2.2 billion, a mid-40s cost-income ratio, statutory ROTE greater than 16%, and CET1 operating guidance around 14.5%.

Myles O'Grady framed the quarter and the new plan around Bank of Ireland's 'unrivaled' position in Ireland, its embedded customer franchise, and the strength of the Irish economy. He stressed that the next cycle is an organic growth story driven by lending, deposits, wealth, and investment in digital and AI capabilities, while keeping pricing and risk discipline. His tone was confident but pragmatic: he repeatedly said management had been 'pragmatic' on market-share assumptions, competition, and capital, and emphasized that the bank wants to protect the franchise while also funding growth and shareholder returns.

Mark Spain focused on the mechanics of the financial outlook: NII benefitted in 2025 from balance sheet growth, bond purchases, and structural hedging, and is expected to rise to around EUR 3.4 billion in 2026, greater than EUR 3.6 billion in 2027, and greater than EUR 3.85 billion in 2028. He highlighted 2025 fee income growth of 7%, Wealth and Insurance fee income growth of 12%, 2025 operating expense growth of 3%, a EUR 430 million noncore charge, and a EUR 193 million impairment charge, while guiding to 2026 total costs of around EUR 2.2 billion and cost of risk in the low to mid-20 basis points. He also said organic capital generation should be around 250 basis points in 2026 and around 260 basis points on average over the cycle, with about 25% of capital generation needed to support growth and CET1 targeted at around 14.5%.

Analysts pressed management on why CET1 guidance was raised to 14.5% rather than lowered, and management said the higher target is meant to support safe growth, shareholder distributions, and investment while keeping a strong buffer. Questions also focused on why capital distributions did not exceed 100% of profits, with management replying that the EUR 1.2 billion payout was already a full payout of 2025 profits and that future surplus capital would be returned unless better strategic uses emerged. On NII, analysts asked about conservatism, hedge roll-off, and competition; Mark Spain pointed to lower rates, about EUR 70 million from the U.S. acquisition finance runoff over 3 years, balance-sheet growth, and the hedge, and said the hedge yield would move to 1.16% in 2027 and 1.06% in 2028. Analysts also raised AI and fee-income mix concerns; management said AI is both an opportunity and a risk, and that Wealth investment should help grow capital-light fee income over time.