AIB Group (A5G) Q3 2024 TU earnings summary

Executive summary

• Gross performing loans surpassed €70.4 billion, up 5% since year-end, marking the highest level in 15-16 years for the group.

• New lending rose 17% year-to-date to €10 billion, with 35% classified as green or transitional; mortgages up 10%, personal lending up 8-9%, SMEs up 4%, and capital markets up 11%.

• Completed €500 million directed share buyback, reducing State shareholding to 20.99% and bringing total payments to the State to €17 billion.

• Credit quality remains robust, reflecting a strong economic backdrop and conservative underwriting.

• Maintains confidence in outlook, supported by a 3.3 million customer base, competitive positioning, and resilient income.

Financial highlights

• Net interest income up 12% year-over-year for the nine months to September; NII guidance for 2024 is greater than €4 billion, with NIM at 320-330 bps in Q3.

• Deposit portfolio increased by €3.2 billion in 2024, with 92% of deposits in the Republic of Ireland; total liabilities reached €100 billion.

• Underlying fees and commissions are up 6% for the year, with other income expected to exceed €700 million.

• Operating costs rose 6% year-over-year, in line with guidance; cost/income ratio at 38%.

• Wealth and Goodbody platform AUM increased from €11 billion to €12.5 billion.

Outlook and guidance

• Upgraded loan book growth guidance for 2024 to 5%-6%, with similar annual asset growth expected for 2025 and 2026.

• Full-year 2024 NII expected at c. €4.0 billion, other income > €700 million, costs to rise 6-7% plus c. €25 million one-off spend.

• NII consensus for 2025 and 2026 at €3.5 billion is considered comfortable, supported by deposit stability, structural hedge performance, and asset growth.

• Fee and commission income expected to grow 5%-6% annually.

• Return on tangible equity (ROTE) target remains at 15% medium-term, with current consensus at 16%.