AIB Group plc (AIBG.L) | Investment Case

1. Company Snapshot

1.a. Company Description

AIB Group plc provides banking and financial products and services to retail, business, and corporate customers.It operates through Retail Banking, Corporate Institutional & Business Banking, AIB UK, and Group segments.The company offers current and savings accounts, demand deposits, notice deposits, fixed term deposits, junior/student saver deposits, and currency deposits.

AIB Group plc also provides personal, car, home improvement, education, business, farm development, startup, farm investment, future growth, and brexit loans; graduate, corporate, asset, energy efficiency, forestry, invoice, prompt pay and insurance premium, debt, real estate, and trade finance; business and farmer credit line, government credit guarantees, and overdrafts; and venture capital funds, as well as mortgages.In addition, the company offers credit and debit cards; investment funds; life, home, car, travel, and business succession insurance products; and pension products.Further, it provides payment, merchant, cash management, FX rates, foreign currency and interest rate risk management, exporting, international cash flow management, foreign exchange, and interest rate fluctuation management services; and trade finance products, such as documentary collections, import and export letter of credit, standby letter of credit, and bank guarantees.

AIB Group plc operates through a network of 296 locations in the Republic of Ireland and 29 locations in the United Kingdom.The company was formerly known as Allied Irish Banks, p.l.c. and changed its name to AIB Group plc in December 2017.AIB Group plc was founded in 1825 and is headquartered in Dublin, Ireland.

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1.b. Last Insights on AIBG

AIB Group plc's recent performance has been positively driven by Ireland's completion of its disposal of AIB shares, marking a significant step towards private ownership. This move, part of a broader strategy to return the banking sector to private hands, has likely boosted investor confidence. Additionally, Fiserv's acquisition of AIB Merchant Services has given the payments processor a stronger foothold in Europe. AIB's robust financials and history of reliable payouts have also attracted investors, positioning the company as a strong dividend stock in the European market.

1.c. Company Highlights

Last Price	768
Change Percentage	-1.79%
Open	782
Previous Close	782
Market Cap ( Millions)	16410
Volume	38254
Year High	802
Year Low	423
M A 50	709.78
M A 200	606.91

FCF Yield	4.01%
Dividend Yield	5.66%
ROE	10.41%
Debt / Equity	85.42%
Net Debt / EBIDTA	-1187.35%
Price To Book	1.44
Price Earnings Ratio	13.36
Price To FCF	24.92
Price To sales	5.52
EV / EBITDA	-3.12

2. AIB Group Delivers Solid Q1 2025 Performance Amid Economic Resilience

AIB Group reported a robust Q1 2025 performance, driven by strong loan growth and stable net interest income. The bank saw a 14% year-on-year increase in new lending, with 38% of this growth attributed to green initiatives. Net interest income remained in line with expectations, while net fees and commissions rose by 7%. The bank maintained a disciplined approach to cost management, with costs increasing only 3% and the cost-to-income ratio steady at 43%. AIB's capital position remains strong, with a CET1 ratio of 16.8%, underscoring its financial stability. The bank's actual EPS of 0.4137 surpassed analyst estimates of 0.3475, reflecting its operational efficiency and robust profitability.

Publication Date: May -04

                                    📋 Highlights
                                    Loan Growth:
                                                New lending increased by 14% year-on-year, with 38% being green loans.
Net Fees and Commissions:
                                                Rose by 7%, contributing positively to income growth.
Cost Management:
                                                Costs increased by 3%, maintaining a cost-to-income ratio of 43%.
Capital Position:
                                                Strong capital position with a CET1 ratio of 16.8% at the end of March.
Guidance Reaffirmation:
                                                AIB reaffirmed its 2025 guidance, expecting to exceed its RoTE target and meet it comfortably in 2026.

                                

Loan Growth and Economic Outlook

The bank's loan book growth outpaced expectations, with management noting that business lines performed well across segments. AIB remains confident in its 5% loan growth target for 2025, supported by Ireland's resilient economy. Employment growth of 2.5% and a 3% increase in real modified domestic demand highlight the country's stable economic environment. Colin Hunt, AIB's CEO, emphasized, "Ireland's economic performance continues to underpin our confidence in achieving our targets." The bank's green lending initiatives are also gaining traction, aligning with its sustainability goals.

Capital Position and Shareholder Returns

AIB's strong capital position is a key highlight, with the CET1 ratio of 16.8% providing a solid buffer against external uncertainties. The bank has received regulatory approval for a directed buyback, subject to shareholder approval at the upcoming AGM. Management also indicated plans to resume normalized dividend distributions, with discussions scheduled for the first half of 2025. This signals AIB's commitment to returning capital to shareholders while maintaining a conservative approach to provisioning.

Valuation and Outlook

From a valuation perspective, AIB trades at a Price-to-Tangible Book Value (P/TBV) of 1.03, reflecting its strong capital position and profitability. The Net Interest Margin (NIM) remains stable, supported by the ECB's deposit rate assumptions. The dividend yield of 6.17% is attractive, especially for income-focused investors. While analysts estimate a modest revenue decline of -1.1% for 2026, AIB's ability to exceed its Return on Tangible Equity (RoTE) target and maintain a solid capital position suggests the stock is well-positioned for long-term growth.

3. NewsRoom

Top European Dividend Stocks For October 2025

Oct -31

Source:

AIB Group (ISE:A5G): Assessing Valuation After Recent Share Price Momentum

Oct -03

Source:

Fiserv, Inc (FI) Announces the Acquisition of Remaining 49.9% of AIB Merchant Services

Sep -16

Source:

Starling Bank reportedly plans secondary share sale targeting £4bn valuation

Sep -11

Source:

Here's Why You Should Retain Fiserv Stock in Your Portfolio Now

Sep -10

Source: zacks.com

Fiserv Continues European Growth by Closing Acquisition of AIB Merchant Services

Sep -05

Source:

3 European Dividend Stocks Yielding Up To 5.1%

Sep -04

Source:

Financial Services Roundup: Market Talk

Aug -01

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.98%)

6. Segments

Retail Banking

Expected Growth: 5.07%

AIB Group plc's 5.07% growth in Retail Banking is driven by increasing demand for digital banking services, expansion of mortgage lending, and growth in current accounts. Additionally, the bank's focus on customer acquisition and retention, coupled with a favorable interest rate environment, have contributed to this growth.

Capital Markets

Expected Growth: 9.27%

AIB Group plc's 9.27% growth in Capital Markets is driven by increasing demand for debt capital markets, growth in corporate lending, and expansion in treasury services. Additionally, the group's strategic focus on digital transformation, cost reduction initiatives, and strong risk management practices have contributed to this growth.

Allied Irish Bank United Kingdom

Expected Growth: 4.55%

AIB UK's 4.55% growth driven by strong lending growth in mortgages and commercial loans, supported by a robust UK economy. Additionally, the bank's digital transformation efforts and investments in customer experience have improved customer acquisition and retention. Furthermore, AIB UK's focus on SMEs and corporate banking has led to increased market share and revenue growth.

Group

Expected Growth: 4.77%

AIB Group plc's 4.77% growth is driven by strong loan growth, improved net interest margin, and robust fee income. Additionally, the group's focus on digital transformation, cost reduction initiatives, and strategic investments in technology have contributed to its growth momentum.

Exceptional Items

Expected Growth: 6.5%

AIB Group plc's exceptional items growth of 6.5% is driven by improved cost management, reduced impairment charges, and a significant decrease in restructuring costs. Additionally, the bank's focus on digital transformation and investment in technology have enhanced operational efficiency, contributing to the exceptional growth.

7. Detailed Products

Personal Banking

AIB offers a range of personal banking services including current accounts, savings accounts, credit cards, personal loans, and mortgages.

Business Banking

AIB provides business banking services including business current accounts, loans, overdrafts, and credit cards, as well as cash management and trade finance solutions.

Corporate and Institutional Banking

AIB offers corporate and institutional banking services including cash management, trade finance, and risk management solutions for large corporations and institutions.

Wealth Management

AIB's wealth management services include investment advice, portfolio management, and pension planning for individuals and businesses.

Insurance

AIB offers a range of insurance products including life insurance, home insurance, and car insurance.

Mortgages

AIB provides a range of mortgage products including fixed and variable rate mortgages, tracker mortgages, and buy-to-let mortgages.

8. AIB Group plc's Porter Forces

Forces Ranking

Threat Of Substitutes

AIB Group plc operates in a highly competitive market with many substitutes available to customers, however, the switching costs for customers are relatively high, which reduces the threat of substitutes.

Bargaining Power Of Customers

AIB Group plc has a large customer base, but the customers have a high bargaining power due to the availability of alternative banking services, which can lead to a loss of customers if the bank does not meet their demands.

Bargaining Power Of Suppliers

AIB Group plc has a diverse supplier base, and the suppliers have a low bargaining power due to the bank's large scale of operations and its ability to negotiate better prices.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the banking industry, including regulatory requirements and high capital requirements.

Intensity Of Rivalry

The banking industry in Ireland is highly competitive, with many established players, which leads to a high intensity of rivalry among the banks, including AIB Group plc.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	42.67%
Debt Cost	8.34%
Equity Weight	57.33%
Equity Cost	12.41%
WACC	10.67%
Leverage	74.41%

11. Quality Control: AIB Group plc passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Banca Mediolanum

A-Score: 7.7/10

Value: 6.1

Growth: 4.9

Quality: 8.2

Yield: 9.4

Momentum: 9.0

Volatility: 8.7

1-Year Total Return ->

AIB

A-Score: 6.6/10

Value: 6.0

Growth: 6.2

Quality: 7.7

Yield: 6.9

Momentum: 8.5

Volatility: 4.0

1-Year Total Return ->

Monte dei Paschi

A-Score: 6.4/10

Value: 8.4

Growth: 3.9

Quality: 7.7

Yield: 6.2

Momentum: 9.0

Volatility: 3.0

1-Year Total Return ->

Ringkjøbing Landbobank

A-Score: 6.3/10

Value: 4.7

Growth: 6.0

Quality: 7.6

Yield: 1.2

Momentum: 9.5

Volatility: 9.0

1-Year Total Return ->

Jyske Bank

A-Score: 6.3/10

Value: 6.3

Growth: 5.2

Quality: 5.2

Yield: 3.1

Momentum: 9.0

Volatility: 8.7

1-Year Total Return ->

Avanza Bank

A-Score: 6.2/10

Value: 2.8

Growth: 6.9

Quality: 8.8

Yield: 6.2

Momentum: 8.5

Volatility: 4.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-11.75%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.67%

AIB Group plc - IE00BF0L3536

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on AIBG

1.c. Company Highlights

More Volatile

Stable Momentum

Average Yield

Fairly Valued

Average Growth

Average Quality

Earnings Miss

Revenues Miss

Medium Volatility

Earnings Beats

Revenues Beats

Strong Momentum

2. AIB Group Delivers Solid Q1 2025 Performance Amid Economic Resilience

Loan Growth and Economic Outlook

Capital Position and Shareholder Returns

Valuation and Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.98%)

6. Segments

Retail Banking

Expected Growth: 5.07%

Capital Markets

Expected Growth: 9.27%

Allied Irish Bank United Kingdom

Expected Growth: 4.55%

Group

Expected Growth: 4.77%

Exceptional Items

Expected Growth: 6.5%

7. Detailed Products

Personal Banking

Business Banking

Corporate and Institutional Banking

Wealth Management

Insurance

Mortgages

8. AIB Group plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: AIB Group plc passed 4 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

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

7.68$

Current Price

7.68$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA