AIB Group plc

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Good morning and welcome to the presentation of AIB Group's results for the first half of 2026. I'm conscious that the analyst community has a very busy day of announcements, so Donal and I will get through the performance highlights of a decent clip before we open to the floor for your questions. H1 was another period of progress with purpose for AIB, building on our exceptional customer franchise and the momentum of recent years. We're pleased to be reporting a profit after tax of €939 million, representing a roti of 23.2%, with strong organic capital generation of circa 170 bps and a closing CET1 of 16.1%. The strong financial outturns reflect an excellent performance across the business with new lending of €7.5 billion, an increase of 10%, bringing our gross loans to €74.5 billion, representing growth of 3% since the start of the year. With good visibility in the second half pipeline and a strong first half booked, we're well on course to meet our full year guidance for loan growth of circa 5%. Now in the face of an evolving competitive environment, our NIM remains resilient at 2.68% and our deposit base grew to almost 119 billion euro. And all of this positions us well to declare an interim dividend of 19.528 cents per share, representing an increase of almost 60% on the prior year. Sustainability continues to sit at the very heart of our mission and our purpose. Greener transition lending accounted for 41% of all new lending in the half, with €26 billion of our €30 billion climate action target now successfully deployed, directly and positively supporting Ireland's transition to a low-carbon future. and aligned with our success in green and social lending we remain a leading issuer of ESG bonds with 8.2 billion euro issued since 2020 and we've comfortably exceeded our 2026 first-time buyer lending target while supporting some 23 000 customers to buy their first home our medium-term sustainability targets are all well in hand These results are reflective of the ongoing economic strength and resilience of our core market, Ireland. Growth in modified domestic demand is expected to remain robust over our current forecasting horizon to 2028. The pace and durability of Ireland's post-Covid balance has been exceptional with real per capita economic growth ranking at the upper end of the world's largest developed economies. The employment market remains strong and while there has been a moderation in the pace of new jobs growth in recent years, we're expecting the unemployment rate to remain no higher than 5% out to the end of 2028. Balance sheets of households, businesses and government remain in robust health and are very conservatively positioned and that augurs well for the medium-term outlook for both consumption and investment. And the strength of the fiscal position with the surplus of some 3% of gross national income and a debt to GNI of 54% forecast for 2026 is key to the unlocking of Ireland's true potential over the years ahead. The successful and timely execution of the 275 billion euro national development plan over the next decade would underpin demand metrics but more importantly would transform and modernise the supply side of the economy for the medium term and beyond. There is real momentum now as Ireland seeks to build the housing, energy, water and transport infrastructure we need to sustain our economic and social progress. You can see it clearly reflected in housing stats with completions expected to reach 39,000 this year and to remain on an upward trajectory over the years ahead. But we need to decide faster, build faster and connect faster. Ireland has the resources, the ambition and the opportunity to pivot critical infrastructure from a constraint to an enduring competitive advantage. In that vein, last week we welcomed the Irish Government's designation of nine projects as critical infrastructure under the Critical Infrastructure Act. The potential benefit for AIB, Ireland's leading bank, and the impact we can make to both society and the economy are significant. Turning now to new lending, we are pleased to report a strong performance in the first six months of the year. Solid outturns in personal and SME lending, while new mortgage lending was €2.1 billion with our mortgage market share standing at 30% for the first half and we remain the largest direct to customer mortgage lender. Property and corporate lending reported strong growth rates, reflecting the strength of our customer base and the quality of our delivery. And I'm particularly pleased with the exceptional performance of our climate and infrastructure capital team, which after a sluggish 2025, due largely to geopolitical considerations, had a stellar first half with new lending doubling to 1.2 billion euro. As we continue our relentless focus on supporting our customers in the required transition to a low carbon future, the impact we are making is clear with green and transition lending now representing 61% of €7.5 billion in new lending and 60% of the new lending for mortgages. Looking out to the end of this year, the pipeline across all our lending teams remains strong and we're confidently reiterating our guidance of loan growth of some 5% for the year as a whole. Once again, we can state with confidence backed by facts that AIB is Ireland's leading bank. We continue to welcome more new customers to AIB than any other financial institution with the total number of customers we serve reaching 3.5 million for the first time. And while we maintain and are very committed to the largest branch network in Ireland, we're continuing to enhance our digital offering, our key customer interface, with 84% of our personal customers now digitally active. We've delivered a complete rebuild of our mobile offering which we launched in the first half of the year to a very positive reception. Built in the cloud, the new app will allow us to add new functionality with ease over the months and quarters ahead, further underpinning the quality and the reliability of our products. I also want to draw attention on this slide to the success we've enjoyed in growing our savings and investment management businesses at both GoodBuddy and AAB Life, with Total Group AUM now standing at over €20 billion, including our recently agreed legacy wealth management acquisition, which is subject to regulatory approval. And now, turning to the first of our strategic priorities, customer first, we've further progress to report. I'm delighted to see that the efforts of my colleagues in supporting our customers across the group are being recognised by those customers in net promoter scores at all-time highs across multiple customer journeys. We're also making real progress in improving our understanding of our customers' needs through their life stages, which will help us to deliver more tailored personalised propositions. I'm also pleased that together with the other retail banks, we successfully launched Zippe, enabling our customers to send requests and split money instantly using their mobile phones. We're encouraged by early adoption and usage levels. And meanwhile, Abby, our digital assistant, is continuing to triage and handle an increasing number of customer journeys in our customer engagement centres, and she is now fully embedded in our new app. Abby is delivering a very high quality of service to those of our customers who are happy to engage with her, supporting some six and a half thousand calls per day, which is up about 25% since the end of last year. And she's now supporting 90 customer journeys in our customer engagement centre, up 60% over the same period. And we look forward to further service enhancements on the app, at the website, and indeed in our customer engagement centres in the second half of this year. We maintain our commitment to greening our business, and I'm delighted that the performance in green and transition lending in the first half was the standard, with 87% of our €30 billion climate action target now deployed. 41% of all new lending in the first half was green, with solid contributions being made across each of our operating divisions. And as I mentioned earlier, Climate and Infrastructure Capital had an exceptional first half with 13% growth in gross loans. We've built the expertise, we have the skills and the reputation and we're building a really strong franchise in an area of great opportunity as the world continues to electrify. The scale of that opportunity is immense and it allows us to be highly selective about the projects that we choose to finance, some of which are spotlighted on the slide here, referencing some of the transactions that we've been involved with here in Ireland, in Europe and indeed in the United States. Operational efficiency and resilience is the third of our strategic priorities and we're continuing to make real tangible progress. I'm encouraged that in an ever more challenging and dynamic cyber environment we maintained more than 99.99% IT service availability across our critical customer service areas while at the same time we continue to digitalize at pace with 2.4 million digitally active customers. Meanwhile we are continuing to enhance our internal efficiency through relentless simplification, digitalization and product rationalization. Now this is a multi-year process but I'm very pleased with the real results that we're now generating and I expect far more to be delivered. In terms of scaling AI adoption we are well beyond experimentation and firmly focused on operationalization with AI now embedded across hundreds of workflows. Having built the foundations and demonstrated value through use cases such as Abbey, we're now scaling adoption across core business processes with new agentic capabilities live and expanding to improve our productivity, to strengthen our resilience, to enhance our risk management and to deliver better customer outcomes. In June we successfully launched our new mobile app which was designed in collaboration with our customers and which will be fully rolled out by the end of October. I'm really pleased with the enhanced functionality the look and the feel of the app which is the number one channel for customer engagement on a day-to-day basis. This investment was not just about our customer interface but it represents a transformation of our digital engagement platform and we're going to continue to invest around 400 million euro per annum increasing our resilience leveraging scale and accelerating innovation for future growth. As we embark on the final six months of our current strategic planning cycle, I'm really pleased with how the Group is performing. We're very clear on our strategic priorities and we're focused and relentless in our execution. Our franchise is strong and growing while our multi-year investment in technology is bearing fruit in the form of our new key customer interface, enhanced efficiency and robust system reliance, resilience and security. We are very well placed to reach the end of this strategic cycle in mood health, delivering on our targets and on our commitments to all our key stakeholders. Now we are looking beyond the end of 2026 and towards our new planning horizon. With great momentum in our business and a strategy framed in the context of the structural forces of electrification, digitalisation and demographic change, I am very excited about the prospects for AIB today, tomorrow and in the years ahead. Clear focused delivery built upon the pillars of a remarkable franchise and capital strength will position AIB strongly to deliver sustainable long-term value for our shareholders for many years to come. We are very well advanced now on planning for our next strategic cycle and we look forward to sharing our 2030 targets with you all in March.

Donal. Thank you very much Colin and good morning everyone. I'm going to run you through the financial highlights for the first half of 2026. We had a profit after tax of €939 million and that equated to a return on tangible equity of 23.2% and an earnings per share of 42.2 cents. Our total income was €2,282,000,000 which was up 2%. Our costs were just over 1 billion, which are up 2% as guided, leaving us with a cost to income ratio of 44%. Our gross loans increased by 3% to 74.5 billion euros. And we had 7.5 billion euros of new lending, which was up 10% year on year. Our asset quality remains resilient and our ECL cover is unchanged at 1.6%. and we had a charge in the first half of the year of 91 million euros which is a 25 basis points cost of risk. Our customer deposits were 118.8 billion euros which increased 1.6 billion euros which were up 1.3%. Our CET1 ratio is 16.1% which is well ahead of regulatory requirements and we have strong organic capital generation in that of 170 basis points An interim ordinary dividend of 19.52 cents. And our 1 billion share buyback announced in March continues with 410 completed at June. I'm just going to run through some of the key highlights here on the income statement. Return on tangible equity strong 23%. EPS 42.2%. Return on assets 1.2%. Our levies and reg fees were 109 million euros which includes a levy of 94 million euros. I think for full year 2026 reg fees and levies of 140 million euros are expected and no material exceptional items. Name of 1.8 billion euros is stable at 268 and exit name of 271. Moving parts here really SHP offset by lower returns from cash at banks and cost of liabilities offset by customer loans. NII has been resilient through the interest rate cycle and we expect our NII to be greater than 3.8 billion euros in 2026. Other income is €411 million, which is up 15%. And we expect other income to be around €800 million for the full year. Very strong performance in wealth and insurance. Costs are €1 billion, which are up 2%, which is very much in line with guidance. And like I mentioned, we have an ECL charge of €91 million, which is a 1.6% ECL cover rate. Cost of risk for the year is expected to be 20 to 30 basis points. Overall on balance sheet, as Colin would have mentioned, we've had growth at 3% in the first half of the year. We expect that to be around 5% for the full year and deposits were up 1.3% and we expect them to be greater than 3%. The moving parts on balance sheet growth really in our consumer areas mortgages and personal are up low single digits and in the wholesale areas we saw significant growth as Colin would have mentioned. Funding and capital remain very strong all of our key ratios above key metrics. CET1 ratio 16.1%, very strong, comfortably ahead of all targets. Pathway to CET1 target, we will continue to invest in our business and drive sustainable profits, greater than 320 basis points of underlying business, a DTA benefit of 35 basis points, investing 400 million euros per annum, and supporting balance sheet growth of 5%. With respect to IRB and capital, we'll continue our multi-asset SRT program. We implemented the slotting model for our project finance business that had a benefit of 900 million euros. And there are other factors impacting IRB ways. We look to execute an SRT in quarter four of this year on our project finance book that will have a benefit of 25 to 30 basis points and then we'll also have a rollout or continued rollout of our IRB program. Our EBS mortgage model is expected to be broadly neutral and post implementation of our commercial real estate model we do expect there to be an increase in RWAs of up to 50 basis points. We will continue to deliver market leading distributions. We delivered over 100% in 2024 and 2025 and 6.9 billion euros in total distributions since 2023. We'll pay a sustainable dividend with a 40 to 60% payout policy and an interim dividend set at a third of the prior year's ordinary dividend. With respect to additional distributions, We have capacity for above policy payouts subject to annual review and necessary approvals. And we have optionality to utilize share buybacks and special dividends or a combination of both as we move towards our medium term target of 14%. So to wrap all that up, our net interest income will be greater than 3.8 billion euros. Other income will be circa 800 million euros. We expect costs to increase by 2%. but a cost of risk of between 20 and 30 basis points. Growth in customer loans of 5% and deposits of 3%, giving us a ROTI of greater than 20%. So for 2026 and beyond, we're moving into the next strategic cycle with positive momentum in our business. We have sustainable business growth and returns, strong organic and capital generation, increased investment in our business and market leading shareholder distributions. So our medium term targets continue to guide the business and will be refreshed for strategy 2030 with full year 2026 results in March 2027. Thank you.

Thank you so much indeed, Donal. And now we're going to turn to the floor for questions. And I think the first up is Dennis McGoldrick from GoodBilly. Good morning, Dennis.

Good morning, Colin and Donal, and thank you for taking my questions. Just two, please, if I may. Firstly on the mortgage market, obviously your share remains very strong at circa 30%. Could you talk us through anything you've seen in that market in the first half of the year and your strategy in that market from here? And then secondly, just on NAI, you've updated your assumption for an ECB rate of 2.5% from the end of this year. I guess any colour you could give us in terms of how you view consensus NII for 27 and 28 based on that rate assumption would be great. Thank you.

Okay, thanks for both questions Dennis. I'll leave Donal Handle question two. On the mortgage market, we've consistently said that we don't target mortgage market share per se, but I'm very, very happy with Niamh O'Shea Direct to consumer market in particular is because we want to have that direct relationship with our customers. We think that's in the best interest of the customers, ultimately in the best interest of the group. And it also, of course, allows us to sell other products to our customers. And of those customers with whom we have a direct relationship, We sell home insurance and mortgage protection insurance to about 60% of them. So happy with the performance of the business. One of the interesting things is we're now seeing a drift higher in terms of the customers who choose to deal with us digitally. We've seen an ongoing climb in terms of usage on the personal front. That's been high for quite some time but now in the first half of this year 90% of our personal loans were delivered digitally. Probably last year we were looking at about 25% of mortgages being delivered digitally. Big step up relatively in the first half of this year. That number is now running at 29%. But overall very happy with how we are performing in the mortgage market business. Our focus consistently has been on writing the right business with the right customers at the right price. Donal, do you want to cover NII?

Yeah, look on ECB rates we had initially expected a year-end 2%. Looks like there's going to be another hike in September 2025. Thank you very much. Now we're going to down the street to Dermot Sheridan in Davie. Good morning, Dermot.

Good morning, Colin. Good morning, Donal. Thanks for taking my questions. Maybe just two questions, please, if I can. Just on the medium-term targets, I appreciate you're going to come back to us in March next year, but I guess the observation is you're running well ahead on the three pillars that you set out. I guess How should we think about you approaching those as you look to the next cycle? Are you going to look to increase those or are you comfortable kind of keeping them at a baseline and then looking to exceed them going forward? And then secondly, maybe somewhat interrelated, just in terms of dividends and distributions, just in terms of going forward. Obviously, you know, being quite a strong delivery on both the dividend and the buyback side, given where valuation is now, would you still look at the buyback as being kind of as material as it has been over the last couple of years? Thank you.

OK, well on the medium term targets, the executive team here have been given a lot of consideration to the shape of the strategy for the next four years. We're going a little bit longer than normal, normally it's a three year cycle, we're going to do four years this year because 2030 is just too attractive an end point to miss. Our strategy is going to, in my view, continue to be focused on those three strategic pillars that I speak about. Customer first, greening our business and driving ever greater operational efficiency and resilience through the business. We're going to obviously be taking into account what we've identified as three major structural forces out there. You will have heard me referring to them in my earlier remarks and that's going to shape the discussions that we have at board later on this year. I'm not going to front run where we're going to end in terms of medium term targets. We will go through the appropriate governance internally here. And I think that the best juncture thereafter is to share those medium term targets with you when we present our full year results for this year. But rest assured. This is a management team that has been consistently ambitious in our strategy and conservative in our execution. It's worked really well in terms of delivery for all our stakeholders in the past number of years and that will be the overriding principles that guide how we approach The Strategy Out to 2030. On dividends and distributions, we have a very clear policy in relation to ordinary dividends. We will continue to adhere to that policy. Delighted today to be announcing a 19.528 cent interim dividend, which is our second cash interim dividend and a 60% increase in the prior year outcome. Anything about that, anything outside our policy in relation to ordinary dividends is a matter for annual board discussion and we'll be having those discussions with the board as we near the end of this year. Our next question is coming from Fatima in KBW. Good morning.

Good morning. Thanks a lot for taking my question. So just two from me. It looks like your deposit cost trended down in the first half. So is this supporting your NIM expansion? And can you expect any more repricing tailwinds to come on the fixed book of your deposits? And then following on from that, is there any impact that you're seeing from competition in the deposit market on deposit margins? Are you sort of expecting any pricing pressure there?

So I'll let Donnelly cover the cost and the deposit costs and the NIM aspect to your question but we are conscious we are in an evolving competitive environment and this is in a competitive environment that has been evolving for many many years we've had a number of overseas entities opening operations here in Ireland we've had a number of overseas entities indeed leaving We are obviously conscious of what's happening out there. Our job as a management team is to ensure that we deliver decent products and services to our customers every day of the week. We have an unrivalled customer base here in the Republic. We give them a choice in relation to how they deposit their funds with us, but I suppose the key test in terms of how we're performing Is that our deposits continue to rise and were 1.3% higher at the end of June compared to where they were at the end of December last year?

Yeah, Fadim, I think with respect to the NIM, the quarter to exit was 271. We expect to see continued liability growth in the second half of the year with a mix broadly similar to what we've seen in H1 with a deposit beta for the end of the year at 20%. With respect to items that are repricing, we have around 5 billion euros of fixed rate mortgages repricing in 2026, 7 billion euros repricing in 2027. On the fixed rate side, and in addition, we also obviously have structural hedge swaps, which are maturing in a broadly similar amount, €6 billion in 27, €6 billion in 2026. So obviously, as the rate environment changes, as it is, you will see changes in deposit mortgage pricing, etc. But we don't talk about those in advance. But I would just take those main drivers, the asset growth, the liability growth, what the existing mix is, and indeed the fact that year-end ECB rates are expected to be 2.5% from September. So we do think that Niamh is obviously going to increase from here.

Okay, thanks so much. I think our next question is coming from Jordan at Mediabanco. No, it's not.

Can you hear me okay?

Yes, I can.

Brilliant. Yes, one on SRTs. A number have already been conducted and several more are planned. I just wonder if you could give a quick update on what the run rate costs of that protection is and how much it's likely to cost for the remaining planned SRTs. And then secondly, on the mortgage market. So you already had a question there in terms of the 30% mortgage share. That's dropped down a little bit further. Have you adjusted the proposition at all since last year to try and capture a greater share of future flow? I know you've said that you're happy to continue to target the direct-to-customer segment. It's just whether the landscape's changed now, given the AI and the technology we have, whether customers are just increasingly preferring to go via an intermediated offering. So those would be my two questions, please.

OK, I'll cover mortgages, Donal will do SRT. On the mortgage market, it's roughly 50-50 split out there between the direct channel and the broker channel. That's in terms of the market as a whole. We did make some rate adjustments in the closing quarter of last year. and just looking across the business now like we were 30% for the year as a whole last year 30% of the first six months this year we are obviously watching the market closely our applications are trending well and interesting that customer behavior shift increasingly towards directing is engaging with this using technology but for the vast majority of our customers This is an important competitive advantage that we have. For the vast majority of our customers, for the biggest engagements in their life, the biggest financial engagements in their life, they want to talk to us directly. And they do that either in our 170 branches embedded in communities right the way across the country, or indeed using our customer engagement centres. But our focus is ensuring that we have A product that appeals to all parts of the of the market while being conscious that we want to maintain as a relationship bank that we want to we have a preference for maintaining a strong direct relationship with our customers and we do that our share of the direct to consumer market running at 46% as I said in the first half on average and a little bit above that in the month of June.

On the SRTs, as you know, we've executed two already. The first one we did was on our corporate loan book. Then the second was on our AIB mortgages. Both of those transactions were done with less than €10 million NII cost and both done with implied cost of equities of 3% or 4%. So for quarter four of this year, the next transaction we're looking to execute will be on our project finance portfolio. We look to target over a billion euros of RWAs and we'll look to generate a CET1 benefit of 25 to 30 basis points. And again, we expect that to have an implied cost of equity of under 5% and probably an NII cost of around 10 million euros.

OK, we're going to Seamus Murphy now from Caricat. Good morning, Seamus.

Just a quick one. I just want to go through your costs and just I'm wondering about the evolution of your cost basis as we look forward into 2027. I suppose I'm just worried about the fact that we continue to see a consistent increase and I suppose part of that, I know the salary, sorry the staff numbers are coming down I think down kind of like progressively year on year and half on half but I was just worried about also thinking about the average payment per staff number in terms of it seems to be up quite significantly in the first half of the year and I'm just wondering, my perception was that it was the older people were retiring and they were being replaced by younger staff. And I'm just wondering, is there something I should read into that? And I suppose then that obviously aligns with your use of AI or the potential for AI optimisation as we look forward.

Thank you, Seamus. We're 10,000 colleagues. They do an amazing job for our customers every day of the week. We have seen an ongoing reduction in terms of total headcount. That's been driven... By natural attrition, as people choose to build their careers in other institutions or in other industries, and of course by retirements in the normal course, that's a trend we expect to see continuing. That said, obviously we have had a relaxation of some of the remuneration restrictions. We were delighted to introduce an approved profit share scheme for our colleagues. We were delighted to introduce Save As You Earn as well and we'll continue to enhance the employee value proposition but overall we you know I think we've delivered pretty strong cost management in this organization and it remains an unrelenting priority for us. It will be a key focus as we roll our operational efficiency and resilience priority forward into the next four years and a point that I think it's pretty important to make and just to reiterate some of the remarks I made earlier. We're not in the experimentation phase on AI. We've put in place the foundations in terms of governance, in terms of building the skills. We then moved into a phase of testing use cases. And we're now very much in implementation phase. And we're using AI, we're using it exceptionally well, supported by our 400 million capital investment. We're using it in our cyber defence. We're using it in financial crime prevention and monitoring it. and monitoring we're using it for software engineering we're using it in our customer engagement center with Abbey who's now triaging about 70% of the calls coming into the customer engagement centers and handling about 16% in total with very very high customer satisfaction rates and finally we're also using it internally in a number of parts of the bank including our legal departments and our HR departments we remain Very focused on making sure this organisation continues to be a very efficiently run organisation and it will be a major priority as we move into the next strategic cycle. That brings matters almost to a halt. That is the last question we have from the floor this morning. But I am very conscious of the fact that Donal and I have presented these results now together 15 times in this room. And he's been a great colleague. He has been a huge positive force in the transformation of our institution over the course past number of years. and I want to take this opportunity to wish him every happiness and success in future years thank you in life you've around 29,000 days

Go after everyone. Don't live in the someday. Because life isn't measured in years. But in moments. Where in the hush of a breath, You reach out into the unknown and go for the life you really want. At AIB, we're here to help you get those moments. Go after everyone. AIB, for the life you're after.