Bank of Ireland Group plc

Bank of Ireland reported 2025 organic capital generation of 270 basis points and said the reported CET1 ratio was 15.1% after EUR 1.2 billion of distributions. Management said 2025 distributions equated to a 100% total payout ratio, including a EUR 0.70 ordinary dividend per share, up 11%, and a EUR 530 million share buyback. They also said the 2025 impairment charge was EUR 193 million, or 23 basis points cost of risk, and the NPE ratio ended 2025 at 2.2%. For 2026, they guided NII to around EUR 3.4 billion, 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, net organic capital generation of around 250 basis points, and statutory ROTE of around 12.5%. Over the new cycle, they expect income to grow at more than 4% annually, total income to rise to greater than EUR 4.75 billion in 2028, NII to exceed EUR 3.85 billion in 2028, total costs to stay around EUR 2.2 billion, and statutory ROTE to exceed 16% by 2028. They also set a new CET1 operating target of around 14.5% and said net capital generation over the plan should be around EUR 3.7 billion.

Myles O'Grady framed the bank as having an 'unrivaled' position in Ireland and said the strategy is built on three priorities: continued momentum in Irish growth, smarter capital allocation, and more investment for the future. He repeatedly emphasized balance-sheet growth, customer reach, and the opportunity from Ireland's macro backdrop, while also stressing price discipline and risk management. His tone was confident and constructive, but he acknowledged a more competitive market and said the group is deliberately planning for some business to flow to other providers.

Mark Spain highlighted solid 2025 execution: loans and deposits were both up 6%, fee income rose 7%, operating expenses increased 3% in line with guidance, impairment was EUR 193 million, and capital generation was 270 basis points. He pointed to a EUR 430 million noncore charge, mainly related to U.K. Motor Finance, and EUR 153 million of restructuring costs. He guided 2026 total costs to around EUR 2.2 billion and said restructuring will move above the line from 2026 onward, with total costs stable around EUR 2.2 billion across the cycle. On the revenue side, he said 2026 NII should be around EUR 3.4 billion, helped by balance-sheet growth, structural hedge rollovers, and bond purchases, with NII rising to more than EUR 3.85 billion in 2028 and potential upside beyond.

Analysts focused on the higher 14.5% CET1 target, asking why the bank increased it instead of reducing it, and management said it reflects the need to safely protect and grow the business while still supporting distributions and investment. Questions also centered on the apparent gap between the EUR 3.7 billion net capital generation guidance and higher market expectations; management pointed to the need to retain about 25% of organic capital for growth and to DTA usage through mid-2028. Analysts pressed on NII conservatism, competition, fee-income growth, and AI disruption; management said the NII path is being upgraded again, that fee growth is being held back partly by one-offs and interchange changes, and that AI is a positive disruptor but not without long-term risks. They also said the plan is organic, with no M&A included, though they would consider opportunities if they fit strategy and returns.