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1. Company Snapshot

1.a. Company Description

Bank of Ireland Group plc provides various banking and financial products and services.The company operates through Retail Ireland, Wealth and Insurance, Retail UK, and Corporate and Treasury segments.It provides current and savings accounts, and business deposits and accounts; personal, car, home improvement, graduate, and student loans, as well as overdrafts; and business and farming loans, BREXIT loans, invoice finance, hire purchase, and leasing services.


The company also offers international payments and credit cards; protection overview, mortgage protection, life cover, specified illness cover, income protection, protection for individuals, and protection for families; pensions and investments, foreign exchange, and treasury deposits and services; personal products; private banking services; and leveraged acquisition and property finance.In addition, it provides home, car, travel, and life insurance products.Bank of Ireland Group plc was founded in 1783 and is headquartered in Dublin, Ireland.

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1.b. Last Insights on BIRG

Bank of Ireland Group plc's recent performance was driven by several positive factors. The company reported a robust financial performance with record distributions, while navigating international trade uncertainties and cost pressures. Additionally, Bank of Ireland UK invested $5m in enhancing invoice finance services, providing enhanced security and enabling customers to access cashflow facilities through a single online portal. Furthermore, the company committed $124m to upgrade services, aiming to speed up payment processing for retail and SME customers. The bank also announced plans to reduce its workforce over the next three years, but expects to maintain a stable number of branches. These initiatives demonstrate the company's efforts to improve efficiency and enhance customer experience.

1.c. Company Highlights

2. Bank of Ireland Delivers Strong Q4 2024 Results, Driven by Robust Financial Performance and Strategic Growth Initiatives

Bank of Ireland reported a stellar Q4 2024, with financial metrics showcasing the bank's strong operational performance and strategic initiatives. The bank achieved a return on tangible equity (ROtE) of 16.8%, surpassing its medium-term target of over 17% by 2027. This robust performance was driven by significant loan and deposit growth, expansion in wealth management, and disciplined cost management. Net interest income (NII) is expected to exceed €3.25 billion in 2025, supported by a growing balance sheet and improving net interest margins. Additionally, the bank reported a 19% increase in assets under management (AUM) in 2024, reaching €55 billion, with a 30% growth target over the next three years for its wealth and insurance business.

Publication Date: Feb -27

📋 Highlights
  • Strong Financial Performance:: Bank of Ireland reported robust Q4 2024 results, with net interest income (NII) exceeding €3.25 billion and a return on tangible equity (ROtE) of 16.8%. Total shareholder distributions reached €1.2 billion, reflecting strong capital generation and a 6% year-over-year increase in distributions.
  • Strategic Growth Initiatives:: The bank aims to achieve an ROtE of over 17% by 2027, supported by growing its loan and deposit businesses, expanding its wealth management division, and maintaining cost discipline. Sustainable lending reached €15 billion, a year-ahead target, with a 30% growth target for wealth and insurance assets under management (AUM) over three years.
  • Irish Economy Strength:: The bank benefits from Ireland's robust economy, with rising private sector credit and housing completions. This positions it for continued growth, particularly in mortgages. Customer satisfaction is at an all-time high, with net promoter scores up and complaints down.
  • Cost Management and Efficiency:: Operating expenses grew 3%, but the bank remains focused on cost discipline. It plans to keep expenses flat at €2 billion through digitization, efficiency measures, and reducing full-time employees. Digital enhancements, including a new mobile app and lending platform, are underway to improve customer engagement.
  • Capital Returns and Capital Generation:: The bank announced a 5% dividend increase to €0.36 per share and a €590 million buyback, totaling €1.2 billion in distributions. It maintains a strong capital position with a CET1 ratio of 14.6% and targets capital generation of 750 basis points over three years to support progressive dividends and surplus capital returns to shareholders.

Strategic Initiatives and Growth Drivers

The bank’s growth was further bolstered by its strategic focus on customer satisfaction, digital transformation, and sustainable lending. Customer satisfaction scores reached an all-time high, with complaints declining significantly. Sustainable lending grew by 32%, surpassing the €15 billion target a year ahead of schedule. The bank also announced plans to enhance its digital offerings, including a new mobile app and lending platform, aimed at improving customer experience and operational efficiency. Additionally, a £100 million investment over three years in the UK Retail division underscores its commitment to expanding its product and service offerings in the region.

Operational Efficiency and Risk Management

Bank of Ireland demonstrated strong operational discipline, with operating expenses growing only 3% year-over-year. The bank’s focus on cost efficiency is expected to keep expenses flat at €2 billion through digitization and workforce optimization. Asset quality improved, with the non-performing exposure (NPE) ratio declining to 2.2%, reflecting a structurally stronger portfolio. Capital generation remained robust, with a Common Equity Tier 1 (CET1) ratio of 14.6%, providing a strong foundation for future growth and shareholder distributions. The bank also announced a 5% increase in its dividend to €0.63 per share and a €590 million share buyback program, totaling €1.2 billion in shareholder distributions for the year.

Valuation and Investor Appeal

From a valuation perspective, Bank of Ireland’s stock offers an attractive dividend yield of 8.28%, significantly higher than the sector average. The stock trades at a price-to-tangible book value (P/TBV) of 0.92, below the European banking average, suggesting potential upside for investors. However, the valuation may already reflect the bank’s strong medium-term growth prospects, including its target to achieve over 17% ROtE by 2027 and its strategic expansion in wealth management and digital banking. Investors should consider whether the current price aligns with the bank’s ability to deliver on these ambitious targets.

Management Confidence and Economic Outlook

Overall, Bank of Ireland’s Q4 2024 results underscore its strong financial performance and strategic progress. With a focus on balance sheet growth, digital transformation, and shareholder returns, the bank is well-positioned to navigate competitive pressures and deliver long-term value to investors.

3. NewsRoom

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Bank of Ireland revises motor finance redress costs to £350m

Oct -21

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Banks Warn of Heavier Hit From U.K. Car-Loan Redress

Oct -09

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3 European Dividend Stocks Yielding Up To 5.3%

May -16

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Bank of Ireland initiates ATM network upgrade

Apr -11

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Bank of Ireland to reduce workforce over next three years

Feb -26

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Bank of Ireland Group PLC (BKRIF) (FY 2024) Earnings Call Highlights: Record Distributions and ...

Feb -25

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BoI faces pressure on share buybacks amid UK motor finance probe

Feb -17

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Dividend Stocks With Yields Ranging From 3.9% To 7.2%

Feb -10

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.05%)

6. Segments

Corporate and Commercial

Expected Growth: 1.2%

The 1.2% growth in Corporate and Commercial segment of Bank of Ireland Group plc is driven by increased lending to large corporates, growth in transactional banking, and expansion in the UK market. Additionally, the segment has benefited from a strong focus on customer relationships, digital transformation, and cost management initiatives.

Retail UK

Expected Growth: 0.8%

The 0.8% growth in Retail UK from Bank of Ireland Group plc is driven by increasing consumer spending, low unemployment rates, and a competitive interest rate environment. Additionally, the segment has benefited from the bank's digital transformation initiatives, improved customer experience, and a strong brand presence in the UK market.

Retail Ireland

Expected Growth: 1.0%

Retail Ireland's 1.0% growth is driven by a stable economy, increasing consumer spending, and a growing demand for digital banking services. Additionally, the segment benefits from a strong brand presence, a large customer base, and a diversified product offering. Furthermore, strategic investments in technology and operational efficiency initiatives contribute to the segment's growth.

Group Centre

Expected Growth: 0.5%

Group Centre's 0.5% growth is driven by disciplined cost management, optimisation of operational efficiencies, and strategic investments in digital transformation, enabling the bank to maintain a strong capital position and support growth initiatives, while navigating a challenging low-interest-rate environment.

Wealth and Insurance

Expected Growth: 1.5%

Wealth and Insurance segment growth of 1.5% in Bank of Ireland Group plc is driven by increasing demand for pension products, expansion of insurance offerings, and strategic partnerships. Additionally, the segment benefits from a strong brand presence, diversified distribution channels, and a growing Irish economy.

Other Reconciling Items

Expected Growth: 0.3%

The 0.3% growth in Other Reconciling Items of Bank of Ireland Group plc is driven by increasing fee income from transactional services, higher interest income from liquidity buffers, and a slight decrease in operating expenses, partially offset by elevated regulatory costs and provisioning for potential credit losses.

7. Detailed Products

Personal Banking

Bank of Ireland Group plc offers a range of personal banking products and services, including current accounts, savings accounts, credit cards, personal loans, and mortgages.

Business Banking

The bank provides business banking services, including business current accounts, loans, overdrafts, and credit cards, to support small to medium-sized enterprises (SMEs).

Corporate Banking

Bank of Ireland Group plc offers corporate banking services, including cash management, trade finance, and risk management solutions, to large corporations and institutions.

Wealth Management

The bank provides wealth management services, including investment advice, portfolio management, and pension planning, to individuals and families.

Insurance

Bank of Ireland Group plc offers a range of insurance products, including life insurance, home insurance, and car insurance, to individuals and businesses.

Mortgages

The bank provides mortgage lending services to individuals and businesses, including residential and commercial mortgages.

Credit Cards

Bank of Ireland Group plc offers a range of credit cards, including cashback, rewards, and low-interest credit cards, to individuals and businesses.

8. Bank of Ireland Group plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Bank of Ireland Group plc is moderate due to the presence of alternative financial institutions and digital payment platforms.

Bargaining Power Of Customers

The bargaining power of customers is low for Bank of Ireland Group plc due to the lack of pricing power and limited alternatives for customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate for Bank of Ireland Group plc due to the presence of multiple suppliers and the bank's significant purchasing power.

Threat Of New Entrants

The threat of new entrants is low for Bank of Ireland Group plc due to the high barriers to entry and regulatory requirements in the banking industry.

Intensity Of Rivalry

The intensity of rivalry is high for Bank of Ireland Group plc due to the presence of multiple competitors and the need to maintain market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 51.15%
Debt Cost 9.89%
Equity Weight 48.85%
Equity Cost 9.89%
WACC 9.89%
Leverage 104.71%

11. Quality Control: Bank of Ireland Group plc passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 5.9/10

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

15.86$

Current Price

15.86$

Potential

-0.00%

Expected Cash-Flows