AIB Group plc

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Good morning and welcome to the presentation of AIB Group's results for 2025, a landmark year for our company. I'm going to spend some time outlining the macroeconomic backdrop and giving an overview of the progress on our 23 to 26 strategy before handing over to Donal, our CFO, who will bring us through the details of our financial performance. 2025 was another year of successful delivery by AIB Group against our strategic objectives, priorities and targets. We're pleased to be delivering a profit after tax of over €2.1 billion, representing a roti of 25%. In a looser monetary policy environment, our NII remained resilient, coming in ahead of expectations of €3.75 billion. The strength of our financial performance and the scale of organic capital generation allowed us to grow our business, to invest in our business and to propose total distributions of 2.25 billion euro, a payout ratio of 105%, while still delivering an exceptionally strong capital outturn with CET1 ending the year at 16.2%. And 2025 was the year that AIB returned to full private ownership, having returned a cumulative circa 21 billion euro to the Irish state. So it was a landmark year, a year of progress and closure, a year that positions us to build an ever better, ever stronger, trusted AIB in the interests of all our stakeholders and the economies and the communities that we serve. We remain resolutely committed to the sustainability agenda, an agenda that sits at the core of our strategy and at the very heart of our purpose. We're making good progress towards meeting our long-established 2030 targets, with almost €23 billion of green and transition lending deployed since 2019, and last year's new green lending reached an all-time high for us of 43% of all new lending, well on track to hit the 70% target we've set for ourselves. We're also continuing to decarbonise our own business with 92% of our electricity needs sourced from our virtual power purchase agreement from the output of two solar farms. The scale of the environmental and social lending opportunity and our excellent credentials in this space create the platform for continued success in ESG bond issuance and I'm very proud of the fact that AIB is now one of the world's leading issuers of ESG paper globally. Our confidence in the outlook for AIB in 2026 and beyond is underpinned by continuing solid and consistent performance by the Irish economy. Growth in modified domestic demand surprised somewhat on the upside in 2025, and it's expected to hover around 2.5% to 3% over the next few years, a rate of expansion that is reasonable in an Irish context and stellar compared to our neighbouring economies across the Irish Sea and indeed further afield. Our population continues to grow and it's likely to exceed 6 million in the next decade. And our labour force exceeded 2.8 million people at the end of last year, representing an increase of an incredible 59% since 2000. And now that demographic bounty is a key driver of Ireland's economic success, and it creates a very positive operating backdrop for AIB, Ireland's leading financial institution. And while we've seen remarkable growth in the numbers at work and in the country's GDP, the balance sheets of the country, businesses, households, individuals, are all very conservatively positioned. Net government debt fell to 40% of gross national income last year, and the downward trajectory is expected to remain a feature of the budgetary landscape over the coming years. The government is in a very strong position to deliver on its ambitious national development plan, which will see €275 billion deployed in building a world-class public and social infrastructure here over the next decade. And meanwhile, households continue to deliver with debt to disposable income running at about 40% of the post-GFC peak, with the savings ratio running at 15%, an indicator which is very well reflected in our own liabilities performance. Ireland remains a preferred destination for foreign direct investment. Now, we will, of course, continue monitoring the international trade climate, but it's only fair to say that the performance in 2025 surprised on the upside, both in terms of investment and also in terms of export volumes. I made mention already of the government's NDP, a plan which will see a much-needed ramping up of investment in critical infrastructure. And if this country is to consolidate and sustain its economic progress, we need to close existing gaps in housing, water, energy and transport infrastructure, and we need to do it at pace. We look forward to continued progress on the delivery of new housing, with 2025 seeing over 36,000 new homes being completed. And that was the best output performance since the GFC, but it's still well adrift of the level of housing completions needed to satisfy demand. We expect to see housing output continuing to grow year in, year out, with the level of completions forecast at 45,000 in 2028, representing an increase of some 25% on the 2025 performance. But given the scale of unsatisfied demand that's out there, housing supply is going to have to reach levels well ahead of in-year structural demand if the market is to return to equilibrium. So challenges remain, but we are seeing good progress and we are optimistic about the supply outlook and the opportunities that creates for our lending businesses, both in mortgages and development finance. Looking back to the lending performance last year, new lending was 2% higher than in 2024. We saw 4% decline in new mortgage lending in a growing market, with our mortgage market share falling to 30%. Now, I've remarked on many occasions that we do not target mortgage market share per se. Instead, we are focused on writing the right business at the right price. That said, it is important to note that not all mortgage market shares are the same, and we have a strong preference for having direct relationships with our customers as they embark on the biggest financial decisions of their lives. In the direct-to-consumer market, we remain by some distance the leading player, with a market share of 46%, and the pipeline for the early months of 2026 looks very good. Personal lending was 4% ahead, and now 88% of personal loans are applied for digitally across the group. Total property lending saw an increase of 25% off the subdued base of recent years. Corporate lending had a good performance with new lending up 8%, but this was offset by a quieter year for climate and infrastructure capital in a noisy external environment. A number of deals which we expected to close in December tipped into January, and that business is off to a very good start this year. Given the macro backdrop and the strong and visible pipeline ahead for the operation divisions, we are confident in our ability to deliver a medium-term lending growth CAGR of 5% out to the end of 2027. Our franchise remains exceptionally strong, and we are very pleased to be now serving more than 3.4 million customers, with more new customers choosing AIB than any other financial institution in Ireland. And the trust that our customers, both longstanding and new, place in us is underpinned by the resilience of our digital offering, with level one service availability running at 99.99% in 2025, and by the strength of our physical presence, with AIB having the largest branch network in Ireland. And that community engagement is key to our relationship with our customers, particularly for the very biggest moments in their financial lives, who know that we are digitally trustworthy and we are there in person when it really matters. I'm pleased with the response of our customers to our enhanced savings and investment offering through AIB Life and Goodbody, with total AUM now comfortably exceeding €18 billion, with plenty of growth in the pipeline. On a standalone basis, AIB Life is now showing real traction, with AUM reaching €3 billion, which was a 20% increase in 2025. Now, as Ireland ages and government policy evolves, we believe there is potential for significant additional growth in savings and investments in 26 and beyond. We remain the bank of choice for new account openings, with the group enjoying a market share of 49% of the flow and 40% of the stock of current accounts in 2025. Our corporate and business banking franchise remains exceptionally strong and we're going to continue to invest in secure and speedy digital enablement over the years ahead as we meet the evolving needs of these critical parts of Ireland's economic success. And of course, we remain the country's leading green bank, a standing we will maintain as we grow the share of green lending and broaden and enhance the range of green products and services across the group. Looking now at the first of our strategic priorities, the focus on customers, their expectations and their needs is key to the long-term success of AIB. Through a data-driven approach to customer segmentation, we understand those expectations and needs like never before. And that unrelenting focus on our customers is paying dividends in the form of net promoter scores with all-time highs in five of the six key customer journeys being recorded in 2025. Meanwhile, service levels in our customer engagement centres remain very strong, and we continue to invest in delivering an easier, more engaging and protective relationship with our customers. And we will use AI extensively to help us deliver that high-quality relationship of real trust. Abby, our AI digital assistant, whom we launched in December of 2024, is engaging now with an ever greater number of customers. Covering 66 customer journeys, Abby has assisted over 1.3 million customers since her rollout. And the feedback has been very positive, with particular reference being made to the speed and the ease of dealing with our digital assistant. 80% of our customers who call our engagement centres choose to continue dealing with Abbey. We're continuing to make steady progress on our second strategic priority, greening our business. We're playing an active role in financing the transition to a more sustainable future. We've now deployed almost €23 billion of the €30 billion Climate Action Fund. And we lent an additional €6.3 billion in new green and transition lending in 2025. with the greatest contribution coming from retail banking, predominantly in the form of green mortgages, which now account for 62% of all new Republic of Ireland mortgage lending. Across corporate and business banking, we are the leading player in financing sustainable lending to the engines of economic development, while climate and infrastructure capitalists continue to play an important role in funding solar, wind, bioenergy, waste-to-energy assets in Ireland, Britain, the European Union and in North America. The loan book in this division has now expanded to more than €6 billion and we expect to see further significant growth in 2026 and beyond. And notwithstanding our ambition to be a champion of the transition to a greener future, the scale of the opportunity is simply enormous and continues to grow, allowing us to be highly selective in choosing the technologies and the geographies where we are willing to put the group's capital to work. Our third strategic priority speaks to ever greater operational efficiency and resilience, and I am very pleased to report accelerating progress right the way across the organisation. We've invested significantly in resilience because it is fundamental to customer trust and trust is the prerequisite for any credible digital ambition. We're continuing to strengthen, simplify and streamline AIB with a 40% decline in the number of legal entities within the group, an ongoing decommissioning of legacy applications and increased digital automation of customer contact. We've invested wisely in AI with Copilot now deployed across the organisation and the first wave of internal agentic assistance is now being deployed. We're making great progress in enhancing credit decisioning through Encino, which now handles two-thirds of all new SME lending. Our platforms remain resilient with world-class level one service availability and zero critical cyber incidents in 2025. And the rollout of push notifications on our app is making a material difference to the quality of our everyday customer engagement. There's so much more to come with our next generation app set to launch in the summer. And by design, it will be more agile and flexible than any other app previously deployed by us. And it will be capable of rapid and high frequency enhancements. Allied with the imminent launch of Zippy across the Irish retail banks, our customers are going to enjoy and experience a significant improvement in the quality of their digital interaction with us over the coming months. Now, this foundation gives us the right to accelerate. Our new digital platforms can scale confidently because the underlying estate is stable, secure and well-governed. The pace of technological change that we're seeing is unprecedented in the history of banking. Now, our team has demonstrated clearly and consistently the efficiency, security, resilience and customer experience gains that they are capable of delivering. And given that track record of achievement and the speed of change that is now readily apparent, we believe that we can credibly build the future faster at AIB. Our annual investment in the business has increased from an average of €300 million recent years to €350 million last year and will rise to €400 million this year and beyond. And the bulk of that increase is devoted to strategic projects, which will allow us to continue enhancing our customer experience, our digital agility and the resilience and the durability of our systems. We will build the future faster here and in so doing continue to earn the trust of our €3.4 million and growing customer base. We are now well embarked on the final year of the strategic cycle. And while we're very focused on delivering on our targets for 2026 and continuing to generate attractive shareholder returns, our minds are inevitably turning to the next strategic cycle, which will bring us to 2030. And as we move through the months ahead, our plans and our targets will take more concrete form and seek board approval for what comes next in December before we share the full details with our investors and the analyst community. Now, it would be premature of me at this stage to outline the set of performance indicators and parameters which will guide the next phase of AIB's development. However, they will, I believe, be fully reflective of my own 2030 ambitions for this organisation. I want AIB to be the best bank in Europe and the most trusted brand in Ireland. These may be audacious aspirations, but they're grounded in what we have already achieved together. We've made huge progress in recent years in reshaping and transforming the group in the interests of all our stakeholders. We have the leading customer franchise. We're generating shareholder value, including a roti of 25% and return on assets of 1.4%. Our organisation is in great shape, with 370 basis points of organic capital generation and €2.25 billion return to our shareholders. And I'm very excited about what I know it can and will deliver over the months and years ahead. 2025 was a landmark year. We delivered against the commitments we set for ourselves, we performed ahead of expectations, and we did so with positive momentum across the business. However, 2025 was a milestone. It wasn't a destination. We've come a huge way in recent years with a strong capital base, a very clear strategic ambition, and a market-leading position. AIB is well positioned for the future, and I remain convinced that our best days still lie ahead as we work relentlessly to build a better, stronger, more resilient AIB in the interests of all those who put their trust in us. Donal.

Thank you very much, Colin, and good morning, everyone. I'm very happy and pleased to be able to deliver at the financial highlights for AIB for 2025. We've delivered a profit after tax of 2.1 billion euros with a return on tangible equity of 25% and earnings per share of 93.3 cents. Our total income was 4.5 billion euros, which was down 8% on the year. That's broken down between a net interest income reduction of 9% and net fee and commission income increase of 4%. Our costs were slightly lower than expected, at 1.99 billion euros, which is up 1% on the year. And that gave us a cost-income ratio of 44%, and our FTEs were 3% lower year to year. Our gross loans increased 2% or 3% on an underlying basis to €72.3 billion, and that included €14.7 billion of new lending, which was up 2% year on year. Our asset quality remains resilient, and our ECL coverage remains at 1.6%. We had an ECL charge of 172 million euros, which represents a 24 basis points cost of risk. And our NPEs finished the year at 2.2% of gross loans, which is the lowest for a number of years in AIB. Our funding position remains exceptionally strong. We have customer deposits of 117.2 billion euros, and that represents a 7% increase on the year, which is well ahead of our own expectations. Within wholesale markets, we issued AT1, Tier 2, Euro Senior and Dollar Senior, leaving us with a very strong funding position. Our capital at the end of the year, our CET1, was 16.2%, well ahead of regulatory requirements, but that incorporates very strong organic capital generation of 370 basis points and very strong performance on RWA optimisation initiatives. Our total distributions for the year are 2.25 billion euros, representing a 105% ratio. 263 million euros was already paid in November as an interim. We have a 988 million proposed final ordinary cash dividend. And we've announced and already begun to execute a 1 billion euro on market buyback. I'll say on the income statement, I don't want to really repeat myself too much. Obviously, income was down 8%, as I previously mentioned. But notwithstanding that fact, we can see earnings per share flat year on year. Total cash dividend per share of 58.58 cents is up 58%. So really strong performance there, we feel, on the returns. Our bank levies and regulatory fees were €114 million in the year, and that includes €94 million for the Irish banking levy. As we look into 2026, we don't expect any material exceptional items, and our bank levies and regulatory fees we currently estimate will be around €140 million. Net interest income of 3.748 million, down 9%. I'll just try to walk through the moving parts here. There's a 42 basis points benefit from our structural hedge program. Obviously related to this, a 45 basis points reduction in net interest margin from cash held with central banks. Customer loans and investment securities are down 22 and 19 basis points. Again, just reflecting those lower interest rates. And on the liability side, we had a strong benefit from wholesale funding costs of 119 million euros. And we had an associated cost of 88 million euros as customers termed out some of their deposits. Our Q4 exit NIM was 269 and it ends the year overall at 2.73%. This is an important slide, I think, for us to show how we have managed our interest rate exposure through the last number of years. Obviously, interest rates going from minus 50 up to 4% and landing down at 2% has meant that we have had to proactively manage our balance sheet. As we give our guidance for 2026, the assumptions that we make is that we'll have an ECB deposit rate of 2% and that deposit beta will remain at 20% as it was throughout 2025. We're very comfortable with our NII resilience, which we believe we have shown over the last number of years. And what gives me the great confidence going into 26 and beyond is that we have a growing and granular deposit base, which we have seen grow significantly over the last number of years. We see growth in all of our core markets of around 5% per annum. And we very proactively manage our balance sheet. We do this through our structural hedge program. I think last year in the mid-year, I would have referenced a 15 billion euro increase in our structural hedge in 2025. Already this year, in the last number of days, we have executed an additional 10 billion euros of structural hedge. The average yield on that was 2.3% and the average life was five years. So the impact that has is reducing our NII sensitivity to 100 basis points move or shock from 378 million euros down to 286 million euros. Some of the other moving parts with the structural hedge are that we expect to have 6 billion euros of swaps maturing in 26, 6 billion euros of swaps maturing in 27. Throughout 24, 25 and even earlier this year, I have talked about wanting to extend the duration, which is now expected to be 5% by the end, 5 years by the end of 2026. So we expect at the end of 26 to have a received fixed yield of 2.3% on euros and 2.7% on sterling. In addition, as we've talked about before, we have a large quantum of fixed rate mortgages of around 21 billion euros. They have a yield of 3.1% and a weighted average life of 1.9 years. And that's relevant because we leave them unhedged really to add a little bit of natural duration to our balance sheet. I've really tried to summarise the position for year end. We'll have an average life of 5.1 years on our euro hedge and that will remain in place over the next number of years and our receive fixed yield is around 2.3% so at stroke in the money. So looking through that or looking at that, that's what really underpins and gives us the confidence for our NII guidance. to be circa 3.8 billion euros in 2026. Other income was 756 million euros, and our net fees and commissions were up 4% in the year. I think the main standouts really was in our cards business, which was up 11%, our wealth and insurance business, which was up 7%. And as we've talked about previously, this is a huge area of focus for the organisation going forward. We have 18.3 billion euros of AUM, as Colin would have mentioned, a number of years ago. Obviously, that would have been a much lower number or approximately zero. But obviously, post the acquisition of Good Bodies, post the start-up of our joint venture with AIB Life, we feel we have a very strong foundation. So the Good Bodies AUM is 15.3 billion euros, which grew by 7% in the year. The AIB Life AUM is 3 billion euros, which grew 20% in the year. I think in the coming years, what you should expect to see in this area is AUM growth of 10% per annum and revenue growth of 15% per annum. But that is going to be a massive area of focus for the organisation, linked to the huge customer numbers that we have, obviously linked to a lot of the activity we are embarking on with respect to digitalisation and personalisation. Other income, some of the other line items can always be a little bit more volatile. I tried to just update and guide as the year progresses. But overall for 2026, other income greater than €750 million. Our cost performance was strong in 2025, a turn of 1.99 billion euros, which is up 1%. A few different moving parts here. Staff costs were down 1%, mainly due to reduction in headcounts. G&A expenses up 6%. We're seeing some inflationary impacts there, higher business volume impacts there, and also higher OPEX-related investment spends. So not all of our technology spends get capitalised. Some also goes through our OPEX, and you will see it here. And our depreciation number is down 3% on the year as we really tightly manage the execution of our big programmes. So overall, that gives us a cost income ratio of 44%. Like I said, our FTE reduction was down 3%, ending the year with 10,207 employees. And this is a trajectory we expect to maintain in the coming years. We believe that we'll be able to do it on an organic basis, obviously, as we go through the next number of years. Colin mentioned that we were going to increase our investment spend from 300 to 350, up to 400 million euros now in 2026. And we're going to really look to accelerate our digitisation, which will enable faster innovation, scalability, enhanced security and obviously operational efficiency. As a result of this, you can expect to see our depreciation grow by 3% or 4% per annum, but that is obviously going to be partially offset by ongoing cost-saving initiatives and efficiencies that come from the rollout of these large programs. But for 2026, we expect our cost to increase by 2%. With respect to asset quality, we had an ECL charge of $172 million for the year, which represents a 24 basis points cost of risk. I'll just really simply break it down into three different areas. We had a write-back of €52 million from macros, and that's really reflecting the fact that the way we saw the different range of outcomes post-Liberation Day, the outturn, particularly in Ireland, ended up being significantly better. We had a 210 million net charge relating to underlying credit performances, which is really just the normal movement of credit between stages. And lastly, with our PMA, we had a small charge of 14 million euros in the year, leading us overall to that charge of 172 million euros. So we have an ECL stock of 1.1 billion euros and an ECL cover rate of 1.6%. where PMA of 254 million represents around 26% of our ECL stock. Notwithstanding all of the volatility that remains in the world at the moment, we feel we are very, very conservatively provided. So for 2026, we expect a cost of risk within the range of 20 to 30 basis points, and I look to narrow that as the year progresses. Main movements on the balance sheet side, obviously loans increased 2%, liabilities increased 7%. That obviously gives us an excess liquidity position. So what you're seeing here is an increase in the amount of investments we make in the Treasury world. We bought an additional €2.4 billion worth of bonds in the sovereign and supranational space in the Eurozone. And for 2026, I think you can expect to see that grow by another €4 or €5 billion. Loans to banks was €48 billion, which included €36 billion at the CBI and €3.8 billion sterling with the Bank of England. Overall, our loans increased by 3% on an underlying basis or 2% on a reported basis. Big FX impacts in the year, slight impact from some disposals in the year. But overall, I think we are more confident now than ever that we'll be able to reach and achieve our 5% asset growth targets for 26 and 27. What we saw in 2025, I would say, was our wholesale businesses performed very strongly. Property market still a little bit muted, recovering from the interest rate changes and valuation shock. Our personal consumer business performed very, very strong. And on our mortgage business, we saw growth overall in the year. As I look to 2026, I think what you can expect to see is growth in all of these areas, just slightly more. So our funding and capital position remains very strong. LDR of 61%, LCR of 204%, and a net stable funding ratio of 163%. Our MRL ratio was 35.2% in excess of our requirements, so a very strong foundation there. But I think the big story on the liability side or the balance sheet side for 2025 was really deposits and the deposit growth. So notwithstanding the fact that we had a movement of around 2.4 billion euros of our customers moving to term, we actually had an increase overall in our current account and demand deposits. So 7% growth is an exceptionally strong outturn, though we do expect that to temper somewhat in 2026, more in line with modified domestic demand. There's no other reason there, no competitive environments that we're necessarily concerned about. It's just we feel that 2025 was maybe an unusually large growth area, but that remains to be seen, and we will obviously be able to watch that quarter by quarter. Capital generation for 2025 in AIB was exceptionally strong. We started the year at 15.1%, and then early in Q1, we had a Basel IV impact of 120 basis points. We had organic capital generation of 370 basis points from our business activity. We have a reduction of 390 basis points for distributions, as we've talked about. We engaged with the government and we cancelled the warrants that they were granted in 2017 around the time of the IPO, and that had a cost of 70 basis points. Given our strong business performance, we had really strong DTA utilization benefit of 40 basis points. with some other equity movements of 20 basis points cost, which is really just AT1 coupons. And then in other RWA movements, we have a number of RWA optimization items where we had a strong outperformance. That includes execution of a mortgage SRT in quarter four, the sale of our 49% shareholding in AIB merchant services, and also the implementation of a new IRB model for our climate and infrastructure capital business, which also had a positive benefit. That doesn't even incorporate the €1.2 billion directed buyback that we did with the government in the first half of the year, where we bought back €1.2 billion of stock at a price of €6.25, because that was obviously deducted from the prior year's returns. So the outturn of 16.2% is very strong, over 6% of capital generated in the year, which is really, really strong. And we're very happy with that. Obviously, comfortably above all of our buffers. With respect to how we think about capital, same as prior years, come in on the 1st of January and drive as strong a business performance as is possible. So obviously 370 basis points was the out term for 2025, but I think you should be thinking even for the medium term, greater than 320 basis points on a sustainable basis on our deferred DTA benefit of circa 35 basis points steady state going forward. We're going to invest in our business in two ways. Number one, increase our investment spend and change in technology up to 400 million euros. And we're obviously going to utilise more of our capital as we grow our balance sheet on a 5% annualised basis. We will continue to optimise our balance sheet wherever we can in whichever format we can. So we will do this through SRTs where we've already issued two transactions, two different asset types. Obviously, the corporate transaction was done in 24. The mortgage, AIB mortgage transaction was done in 25. And now in 2026, we will look to execute an SRT transaction within our project finance or climate and infrastructure capital portfolio. IRB model adoption and development is an ongoing theme. We do expect to have 80% of our balance sheet on IRB models by 2028. I'd mentioned the benefit from the project finance model. 2026, we have two different portfolios which we're hoping to review and conclude, that being EBS mortgages and commercial real estate, but it's a little bit too early to know what the outturns there are going to be. And lastly, we look to deliver market-leading distributions. We've paid out over 100% in 2024 and 2025. We've paid out €6.5 billion in distributions since 2023. For our ordinary dividend policy, we look to pay a sustainable dividend within a 40% to 60% payout range. Our ordinary dividend will be paid in cash. Our interim dividend will be paid at one third of the prior year's ordinary distribution, ordinary dividend per share. With respect to additional distributions, we have capacity for above policy payouts subject to annual review and necessary approvals. We have optionality to utilise share buybacks, special dividends or a combination of both as we look to move towards our medium term target of greater than 14%. So wrapping it all up, our 2025 performance we feel was strong. Already achieved or outperformed our 2026 targets. 2026 guidance will be interest income, circa 3.8 billion euros. Other income greater than 750 million euros. Costs are expected to grow by 2%. We expect a cost of risk between 20 and 30 basis points. Loans will grow by 5% and we expect deposits to grow by 2 or 3% and will deliver a return on tangible equity greater than 20%. So for 2026 and beyond, we expect to deliver a strong performance in the final year of our strategy. Moving into the next strategic cycle, we have a lot of positive momentum in our business. Sustainable business growth and returns, strong organic capital generation, increased investment in our business and market-leading shareholder distributions. Our medium-term targets continue to guide the business and will be refreshed for our next strategic cycle this time next year. Thank you all very much.