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AIB: AIB Group's 2025 Earnings: Strong Performance and Growth Prospects

AIB Group reported a total income of EUR 4.5 billion, down 8% on the year, with net interest income (NII) at EUR 3.75 billion, despite a looser monetary policy environment. The earnings per share (EPS) came in at EUR 0.3529, beating estimates of EUR 0.3222. The company's return on tangible equity (RoTE) was 25%, and the proposed total distributions were EUR 2.25 billion, representing a payout ratio of 105%. The net interest margin (NIM) was 2.69%, ending the year at 2.73%.

AIBG.L

GBp 778

2.64%

A-Score: 6.6/10

Publication date: March 4, 2026

Full Report

Author: Analystock.ai

📋 Highlights
  • Strong Profitability AIB Group reported a profit after tax of EUR 2.1 billion, achieving a return on tangible equity (RoTE) of 25%.
  • High Dividend Payout Total distributions proposed at EUR 2.25 billion with a payout ratio of 105%, including a EUR 1 billion on-market buyback.
  • Resilient Net Interest Income NII remained at EUR 3.75 billion despite a 9% decline, supported by a structural hedge program benefit of 42 basis points.
  • Capital Strength CET1 ratio ended at 16.2%, exceeding the 14% target, with organic capital generation of 6% and LDR of 61%.
  • Sustainability Milestone Deployed EUR 23 billion in green and transition lending since 2019, returning EUR 21 billion to the Irish state by 2025.

Financial Performance Highlights

The company's financial performance was characterized by a strong lending growth, with new lending up 2% year-on-year to EUR 14.7 billion. The mortgage market share was 30%, and personal lending was up 4%. The asset quality remains resilient, with an ECL charge of EUR 172 million and NPEs at 2.2% of gross loans. The funding position is strong, with customer deposits of EUR 117.2 billion, up 7% on the year.

Capital Position and Guidance

AIB Group's capital position is robust, with a CET1 ratio of 16.2%, well ahead of regulatory requirements. The company guided for 2026 with an interest income of circa EUR 3.8 billion, driven by a growing and granular deposit base. The cost of risk is expected to be between 20 and 30 basis points, and loans are expected to grow by 5%. The company's medium-term target is to achieve a return on tangible equity of over 20% and a CET1 ratio of over 14%.

Valuation and Dividend Yield

Using the current Price-to-Tangible Book Value (P/TBV) of 1.45 and Dividend Yield of 5.65%, it appears that the market is pricing in a reasonable valuation for AIB Group. The company's strong capital generation and commitment to returning capital to shareholders through dividends and buybacks are positives. With a proposed final ordinary cash dividend of EUR 988 million and a EUR 1 billion on-market buyback, the company is expected to maintain its payout ratio.

Growth Prospects and Investment Spend

AIB Group's growth prospects are strong, with a target of 5% loan growth in 2026. The company is investing in digital engagement and data insights, with a new mobile app launching in the summer. The company's presence in the mortgage market through its direct channel and Haven, and its prioritization of green mortgages, are positives. The investment spend is expected to drive growth in the company's asset management business, with AUM CAGR guided at 10% to 2028.

AIB's A-Score