Bank of Ireland Group plc

Good morning everyone. I'm Eamonn Hughes, Investor Relations Officer and you're all very welcome to Bank of Ireland's H1 2026 results presentation. You'll shortly hear from our CEO Myles O'Grady and CFO Mark Spain about a performance since the start of the year and then we'll open the floor to questions. So over to you Myles.

Thanks Eamonn and good morning everyone. I'm pleased to report a profit before tax of 960 million, driving EPS growth of 36% and returns of 14.4%. We are meeting or beating all strategic targets, growing loans and deposits and wealth assets under management. All of this supports upgraded guidance for this year and reaffirms a positive outlook to 2028. On slide five, I've summarized our updated three-year strategy. And as a quick reminder, we are driving growth in Ireland, optimizing capital allocation, and investing for the future. All of which drive growth, create operating leverage, and substantially improve returns. Turn to the macro environment. Ireland is a highly attractive market, and we have an unrivaled position as Ireland's national champion bank. Ireland benefits from being an open economy but there are also some risks. And while the team and I remain alert to the uncertain geopolitical backdrop, the Irish economy is resilient. We expect the domestic economy to grow on average of 2-3% out to 2028 and the UK economy is also forecast to grow. Favourable demographics are also very supportive, whether that's growth in population or household wealth. Bank of Ireland's business model is uniquely positioned to both drive and benefit from this backdrop, supporting much needed home building, vital infrastructure investment and financial security and wealth creation for our customers. The strength of the Bank of Ireland franchise is translating into growth in total customer volumes. Put simply, more customers are choosing Bank of Ireland. Deposits, loans and assets under management had a combined growth of 6% and I expect that momentum to continue driving sustainable balance sheet growth and value creation. We see examples of this excellent momentum in H1. In an evolving competitive environment, the Irish loan book grew by 7%. Eamonn Hughes MSc, Chris Mangan, Owen Clifford Turning now to slide 9 and the first of our divisional performances. Supported by Ireland's resilient economy, Retail Ireland continues to perform very strongly. Everyday banking delivered 4% growth in new product opening and customer experience continues to improve, supported by digital investment. This includes our new mobile app, the busiest, most important touchpoint for our customers, bringing greater functionality and improved user experience. Turning to the mortgage business, where we continue to hold a market leading position. The Irish mortgage book grew 6% during H1 and this growth was underpinned by strong pricing and risk discipline. This book growth also offers valuable cross-sell opportunities for life and general insurance. And we continue to innovate. As an example, we rolled out a new trade-down mortgage proposition which will help to improve the supply of second-hand homes in the market. Supported by the annual demand for housing units and the increasing supply of homes, I expect this book to grow by 5% on average over the coming years, a key source of value creation for the group. We are seeing great momentum in our wealth business. AUM grew to a new all-time high of 65.5 billion and that's up 18% supported by net inflows of 1.6 billion. Ireland's strong demographics offer a structural growth opportunity for our two leading brands, Davey Wealth and New Ireland Assurance. Meeting the financial needs of our mass affluent, high net worth and life protection customers is a strategic priority for Bank of Ireland. It is the engine of capitalised fee income growth for the Group and I am pleased that we are so well positioned to meet this important customer need. Turning to slide 12 on our retail UK division continues to perform well. Total income increased by 8%, while the lending book reduced by 2%, margins improved 8 basis points, both of which reflect our discipline strategy, which is focused on optimising returns over volume. Our corporate and commercial business enjoyed a good H1 as Ireland's number one commercial lender. A notable highlight was the 14% increase in Irish lending, a key strategic outcome driving growth in Ireland. And against an uncertain geopolitical backdrop and accelerated international deleveraging, I am pleased to report strengthening asset quality with the MPE ratio falling to 3.8%. This overall outcome is a great example of optimising capital while growing our Irish franchise. During H1, we delivered a number of important product and service enhancements. There are many examples set out on slide 14, all of which point to a relentless focus on investing for the future. I referenced our new mobile app earlier, while Zippe, the industry-led peer-to-peer payments platform, launched in March. We've also introduced payment enhancements in the UK and a new brand platform right with you. This represents our focus on supporting our customers through every step and stage of their financial lives. And there is more to come. As we set out in March, we are investing around 1.5 billion to strengthen the relationship with our customers and strongly position the group in an evolving competitive market. Focus areas include product and service enhancements for consumers and businesses in Ireland, a new UK savings platform, Irish savings and investment account propositions in wealth and insurance, and improving digital capabilities in corporate and commercial. In March, I set out our plan to 2028 to create significant operating leverage of circa 600 basis points. And we've laid the groundwork for this, and the H1 scorecard is positive. Growing income faster than cost has improved the cost-to-income ratio by 0.8%, supported by securing 41 million of cost efficiencies and a reduction in FTE of 2%. And there's more to come. We will continue to transform our operating model, streamline customer processes, and secure more value from our supplier partnerships. I look forward to sharing more progress on this important work over the course of this strategic cycle. Creating that operating leverage is supported by a range of AI-enabled initiatives, some of which are set out on slide 16. We've laid strong enterprise AI foundations and established a scalable AI platform. We are seeing early value being achieved in areas such as easier customer onboarding and KYC, faster software development and reduced contact centre hand-offs as some examples. And we have more to do here. We are working hard on a number of priority AI initiatives that will deliver further value. And alongside this value creation, we continue to invest in new cyber security to address emerging AI frontier model risk. We are two quarters into our 12 quarter strategy. Ireland is a highly attractive market driving quality growth. We have an unrivalled position as Ireland's national champion bank. We've upgraded guidance and I reaffirm our targets to 2028 and continued momentum to 2030. And let me pause here for a moment. Bank of Ireland continues to be a highly capital generative business. This makes it possible for us to grow our balance sheet, invest in our operating model and reward our shareholders. And while the environment continues to evolve, at Bank of Ireland we have a winning strategy and we are executing strongly against it. Thank you. I'll now hand over to Mark.

Thanks Myles and good morning everyone. As Myles said, we've made a strong start to our new strategic cycle. We especially see this in the momentum in our Irish businesses, a growing NII with added resilience and materially higher returns with a statutory ROTI of 14.4%. Today we are upgrading our full year guidance for net interest income, asset quality, ROTI and capital generation. Our performance and our positive outlook underline our conviction on delivering a ROTI of greater than 16% in 2028. Slide 21 sets out our key financial metrics. Total income was up 7%. We retained cost discipline and we had a strong asset quality outturn. Our interim dividend per share is up 56%. This is in line with our new distribution policy and it's a clear indication of confidence in our prospects. Slide 22 focuses on our NII which shows continuing momentum. In the first half, NII grew 2%, with balance sheet growth and structural hedge rollovers more than offsetting the impact of lower rates and planned deleveraging. Interest rate expectations are now higher than when we announced our strategy, and our structural hedge is larger. Reflecting these changes, we now expect NII of around 3.5 billion for 2026, up from 3.4 billion previously. The same factors support an upgraded outlook for 27 and 2028. We now expect net interest income of around 3.75 billion euros and greater than 3.95 billion euros respectively. This revised guidance assumes an ECB rate of 2.5% from the end of this year to end 2028, noting that current rate expectations are higher but volatile. If I stand back, I have spoken at previous results presentations about the drivers of our NII trajectory being Irish balance sheet growth and the structural hedging decisions we have taken. We are seeing these factors play out now, both in terms of our H1 performance and our positive and upgraded outlook. Our loan book grew by 1.5 billion, up 4%. Ireland grew 7% with strong performances in mortgages and commercial lending. In the UK, we continued our focus on value over volume, responding agilely to dynamic market conditions. And plan D leveraging in selected international corporate portfolios has progressed well in the first half. For FY26, we continue to expect around 4% growth in our loan book. Customer deposits continue to grow, with group volumes up 2%. Our Irish everyday banking franchise is the key driver of this growth. This has continued to perform well in an evolving competitive landscape. For the full year, we continue to expect deposit growth of around 3%. Turning to the structural hedge. Average volumes were modestly higher in the first half. Rollovers and additions of swaps were done at an average yield of 2.79%, more than double the rate on maturing yields. This rollover dynamic will continue to be a key driver of NII over this strategic cycle. The average yield for H1 was 2.01%, up 17 basis points year-on-year, while the exit yield was 2.09%. In July, we increased the size of the hedge by €8 billion. This decision enhances our NII resilience. As a result, the sensitivity of our NII to interest rates has reduced by approximately a third. We grew fee income by 6%. This was driven by our market leading wealth and insurance franchises and supported by investment gains in corporate and commercial. I also note the positive impact from valuation items, which we don't budget for. For the full year, we continue to expect total fee income growth of around 4%. Total costs were up 2%, in line with our expectations. The moving parts here are inflation and investment, partly offset by efficiencies and lower restructuring costs. Our efficiency initiatives are delivering, with savings equivalent to around 4% of H1 costs achieved. For the full year, we continue to expect total costs, which includes restructuring of around 2.2 billion, up around 2% from last year's outturn. Notwithstanding the uncertain geopolitical backdrop, our asset quality is strong, with the NPE ratio improving to 2% at end June from 2.2% in December. The impairment charge was 32 million euros, reflecting an excellent performance across our portfolios. Our updated full year cost of risk guidance is mid to high teens basis points. Reflecting a balanced view for H2 in the context of the evolving external environment. This is an improvement on our previous guidance of low to mid 20s basis points. Our business model is highly capital generative, with 135 basis points of organic capital generated in the first half. After taking RWA investment and dividends into account, our CET1 ratio was 15.5%. We have declared a dividend of 39 cents, equivalent to half of our H1 earnings. And we are progressing the 530 million buyback announced in March, with more than 40% now executed. For the full year, we see capital generation of around 270 basis points, up from circa 250 basis points previously. And we expect RWA investment to consume around 25% of this. Our objective remains to operate at around a CET1 guidance of around 14.5%. Slide 30 recaps on our guidance for FY26. At the heart of this is our expectation for statutory ROTI of greater than 14%. This is a meaningful upgrade on our previous guidance of 12.5%. We also expect EPS growth of greater than 35% this year. And looking further ahead, our 26 performance and our positive outlook both enhance our conviction on delivering a ROTI of greater than 16% in 2028. Thank you for your time this morning and we'll now turn to questions.