Good morning, and welcome to AIB Group PLC Q1 2026 Trading Update conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star one and one again. Finally, I would like to advise all participants that this call is being recorded. I will now pass you over to our speakers for today's session, Chief Executive Officer, Colin Hunt, and Chief Financial Officer, Donal Galvin. Mr. Hunt, please go ahead.
Thank you, Nadia. Good morning, all, and thank you for joining us on our Q1 call. I have Donal with us, as Nadia said, this morning, and we will both be available to take your questions very, very shortly. I'd like to make some brief introductory remarks. We're very pleased with the performance of the business in the first quarter, and the group is performing very much in line with our own expectations. We entered 2026 with great momentum, and that has been maintained in terms of actuals and outlook. I'm particularly pleased with loan growth of 1.7% in the quarter. With a strong pipeline now building before us, we're confidently reiterating our guidance for 2026. We're seeing a strong performance right the way across the franchise as the group fires on all cylinders.
The strength of the performance that we're reporting today reflects the ongoing resilience of the Irish economy in the face of marked geopolitical uncertainty. With almost a third of the year now behind us, we can comfortably assert that we are confident in our ability and in our outlook for 2026 and beyond, as well as in our ability to deliver strong, sustainable returns to our shareholders today, tomorrow, and over the medium term. I'll stop there, and I'll turn over to you for your questions.
Thank you. Dear participants, as a reminder, if you would like to ask a question, please press star one one on your telephone keypad. Now we're gonna take our first question. It comes line of Denis McGoldrick from Goodbody. Your line is open. Please ask your question.
Good morning, Donal and Colin, thank you for taking my questions. Just two please, if I may. Firstly, I'm interested if you're seeing any impact yet on the business or on your customers from the higher fuel and energy costs. Secondly, could you walk us through the NII movements quarter- on -quarter, the outlook as you see it for the remainder of the year? Thank you.
Good morning, Denis, and thank you for your questions. I'll take the first one. Like we're obviously monitoring the situation very closely. Certainly from all engagements that we've had with the network and with colleagues in the various business units, we are not seeing any impact coming through as of yet. Obviously we are dealing with a very uncertain environment, it is not having an impact on either the performance of the book in terms of the credit performance, or indeed, it's not having an impact on the pipeline.
I have to say, just to reiterate the comments I made earlier, we're looking at a very strong pipeline over the course of the next number of months. Great thing about this business is you can see activity coming at you over the horizon. Certainly the flow is very, very reassuring at this particular point in time. In short answer to your question, no impact discernible as of yet.
Yeah, on the NIM NII question, I think if you're looking at a quarter -on -quarter, you know, there's just one or two smaller items impacting there. We issued some Tier 2 at the very back end of 2025, a couple of days less in Q1. Overall, I would say that the NII guidance, we're certainly very firm on that. Obviously we have not amended or adjusted any of our interest rate assumptions and maintained a year-end ECB position of 2%. The market has clearly moved quite a bit away from that. Just given the volatility, we have decided not to change any of those assumptions as of yet, but naturally there is some upside there.
Thank you. Now we're gonna take our next question. The question comes line of Diarmaid Sheridan from Davy. Your line is open. Please ask your question.
Hey, good morning, Colin. Good morning, Donal. Two, if I may please. Maybe just firstly on NII and the structural hedge. Just the EUR 10 billion that you referred to in today's statement, is that separate to the EUR 10 billion that was referred to in the full year presentation or is it the same EUR 10 billion? Just the sensitivity to rates looks like it has fallen further from, I don't know what you would have flagged at the full year presentation. Just wondering what might be behind that.
Secondly, just on the disposals in the bond portfolio, was that tactical kind of a point in time in the quarter or is that an ongoing program and are they being just put into cash for now or are you deploying them back into the bond market? Thank you.
Thanks very much, Diarmaid. On the structural hedge, it's not a new EUR 10 billion. You know, we referenced that we executed EUR 10 billion early 2026. None of the metrics that I talked about previously have changed. Overall, the sensitivities have slightly changed. I think the new number that we've provided you with for a 100 basis points change is around EUR 256 million, that's for a 100 basis points change. What I would say on that is that's pretty linear. Okay, between 20, 50, 75. Depending on your view on rates, that's the position that you should look at.
I mean, we obviously recognize that the issues in the Middle East were going to be inflationary, put upward pressure on rates. But really looking to the 2027, 2028, 2029 years, we really felt that we wanted to add some duration, which is why we executed that hedge, and we're very happy that we did. With respect to the fixed income security, nothing really to report there. You know, every year we will look at different segments where we want to participate, and we would have switched out of some sectors into new sectors, would have benefited from that. That capital has already been redeployed into euro SSAs and euro Sovereigns.
Great. Thanks very much.
Now we're going to take our next question. The question comes line of Jordan Bartlam from Mediobanca. Your line is open. Please ask your question.
Hi, guys. Thanks for taking my question. I was interested on the deposit line. We saw a small Q-on-Q decline there. I know there's a bit of negative seasonality typically. I just wonder, was that a little bit more adverse than you normally expect? What was driving that decline? Are you perhaps seeing a little bit more competition from the new entrants in the market at this stage? Maybe just a very brief one on fees as well. That was down 5% year-on-year. You flagged some positive one-offs last year. I just wonder if you could remind us what those were, and maybe a bit more color on just how you're seeing the fee generating business's performance right now. Is that aligned to your expectations?
Is it outperforming or is it underperforming? Those would be my two questions. Thank you.
Very good. Yeah, on the deposit side, I would say very much in line with our expectations. If you can remember Q1 2025, we also, you know, saw a, let's say, a flat quarter with respect to growth. It's somewhat of a seasonal effect. We still maintain our overall guidance for the year at 2%, 3% growth on the liability line. You know, as you mentioned, the competition seems to be becoming a little bit more prevalent. Certainly as of yet, we're not seeing any significant outflows. No change to our estimations on that one.
On fees, it was like a Visa rebase that we would have received in quarter one of 2025 that wasn't repeated. Just that year-on-year analysis looks a little bit lower. Overall on the fees and comms line, I think we're very comfortable to maintain our overall guidance. Obviously one of the main areas of growth for us is going to be in the wealth and insurance space, certainly for the first quarter of the year. We're very happy with the growth trajectory there. Otherwise everything else very much in line with our guidance.
Now we're going to take our next question. The question comes line of Sheel Shah from JP Morgan. Your line is open. Please ask your question.
Great. Thanks for the questions. I've got two, please. Firstly, you've mentioned the pipeline a few times on this call. Could you explain, you know, what you're seeing in the pipeline? Is it broad-based? Are you seeing any of the fiscal infrastructure plan feeding into the economy yet? I'd be interested to get some color on that. Secondly, maybe just to follow on the last question, I'd like to get your thoughts on the competitive environment. You know, we've had a few more neobanks enter the segment. We've had BAWAG's recent offer for PTSB. More of a longer term question, but, you know, your thoughts around lending and deposit margins considering the pickup in competition. Thanks.
Okay. Thanks very much indeed, Sheel, for the questions. We do believe that the National Development Plan is going to have a material impact on activity in our business. We're really not going to see that in a material way until 2027, 2028. Very, very pleased with the progress that has been made in terms of that is currently being made in terms of the reduction of barriers to the swift implementation of the government's ambitious NDP. The pipeline that we're referring to this morning is the pipeline that we see across our various operation divisions. It's the pipeline in mortgages. It's the pipeline in corporate. Good strong performance in business banking.
Of course, Climate and Infrastructure Capital having a very, very strong start to the year and with a very strong pipeline ahead of us. We're not yet seeing the impact of that NDP, but that will be a positive carrying us into 2027 and 2028, we believe. In relation to the competitive environment, obviously it is evolving in front of our eyes. We continue to see very, very strong flow in terms of new account openings. You will have heard me talk in the past about us having a share of new account openings in Ireland of 49%-50%. That is, we believe that remains very stable in terms of our share.
That said, you know, it is an evolving competitive environment. We're going to continue to monitor it very, very closely. You know, we have the strongest franchise in the country, and we know what we need to do. What we need to do is to ensure that we have an attractive range of products and services that are appropriately priced and to present it to our customers in the way that they want. We do that every single day through our digital channels, through our customer engagement centers and through 170 branches.
Thank you. Now we're going to take our next question. The question comes line of Mike Evison from Autonomous. Your line is open. Please ask your question.
Yeah. I mean, I'll just pick up on two things. On the loan growth point, obviously it looks like the loan growth didn't come through new mortgage growth, which is broadly sort of flat year-on-year despite probably stronger system level trends. I wondered if you could say anything to what you're seeing in housing completions or the housing market and the possible for mortgage growth there, or whether you see growth coming from other lines, so that's sort of green lending and corporate lending. Then just, if you have any thoughts on the sort of ever-changing topic of investment accounts and SIU in Ireland. It seems like the government might be moving away from the ISK style accounts. I wondered if you had any comments on what you saw as the potential impact there, please. Thank you.
On the mortgage market, I can tell that obviously we made some rate adjustments at the back end of last year. The first impact you're going to see of that is in terms of application activity, and then that flows through to approvals. We've been seeing some drawdown impacts in the month of March. In fact, our market share in the month of March was the strongest that we've seen for about 13 months. We're building a nice head of steam there in the mortgage market. On the completion side, we've about 36,000 units last year that was just a bit ahead of expectations. As a house, we expect completions this year to be about 39,000.
We would have financed just shy of a third of the new build last year in terms of output of homes, and we'd expect something similar on the development side. In fact, our development pipeline is the strongest it has been in many, many years. Our development lending pipeline is the strongest it's been in many, many years. That augurs very, very positively for activity on the building side and indeed on the mortgage side going into 2027 and indeed beyond. On the FIAs, we've been, we believe we have a responsibility to support the medium to long term financial well-being of all our customers. We strongly welcome the initiative in terms of SIAs.
There seems to be now more of a preference on the part of government for an ISA style model. But whatever shape that model takes, whatever is the final proposal brought or the final product shape proposed by the government, we'd be ready to go with it. We've a team. We have working groups established already within the organization to ensure that when that product is launched, and we expect it to be launched later on this year, that we'd be ready to put it on the shelves of all our stores and have it in the hands of our customers.
Thank you. Now we're going to take our next question. The question comes line of Fatima Ghaznavi from KBW. Your line is open. Please ask your question.
Hi. Thanks for taking my question. Just a couple from me. On the share of new lending, you mentioned that this was flat, versus the end of 2025. Is this sort of a normalized level? Can we expect a 30% share of new lending going forward? Sort of in 2025, we were seeing more of a decrease in the market share. Would you say that's flattened out now? Then also when I look at the quarterly NII, it leaves a bit of work to do in the second quarter to meet consensus for the second half.
Can you talk a bit more about the moving parts on the margin, and whether you're sort of expecting that to pick up in the second quarter and whether these new hedge volumes will help with that?
Yeah, I'll take the second one. Yeah, on NII, you're absolutely right. We do expect to see a pickup in the second quarter. A little bit of that is going to be driven by the cumulative effect of the higher asset growth. Obviously we do expect to see some liability growth as well. Those two factors alone will lead to some improvement. Obviously in the second half of the year, we are expecting to see some rate effects. On the mortgage market share, we don't specifically target market share. You know, for all of our products, we're very disciplined in our pricing approach. Our market share is in some respects an outcome for us.
We remain very focused on the direct to consumer market for our, for our main brands, where we are able to capture more financial activity with our customers. We do expect the mortgage market to increase year-on-year, driven by those increased housing completions that Colin referenced. Obviously, AIB will have a very large role to play in that market.
Certainly, Fatima, the trend that we're seeing coming through in terms of applications and approvals is very comforting at this point.
Thank you. Now we're going to take our next question. The question comes line of Seamus Murphy from Carraighill. Your line is open. Please ask your question.
Hi, guys. Thank you so much for taking the question. Just one relatively straightforward question. Just in terms of the FTE evolution in the quarter, I'm just wondering, I think you previously guided we have FTEs down 3% in the year, and they just fell a small amount in Q1. Can we still think in that context for 2026 and 2027, please?
Yeah. We would expect our headcount to come down, Seamus. Good morning to you. We would expect our headcount to come down by something of the order of 3% this year and the same number next year. That's very much in line with our experience in 2025 and the business plans for the year are fully in line with that reduction in total headcount of about 3%, and we expect that to continue into 2027 as well, and potentially beyond.
Thank you.
Thank you. Now we're going to take our next question. The question comes line of Borja Ramirez, Citi. Your line is open. Please ask your question.
Hello. Good morning. Thank you very much for taking my questions. I have two questions, please. Firstly is on the capital is quite strong. I would like to ask if it's ahead of your prior expectations. My second question would be on the deposit growth going forward. According to the Central Bank of Ireland, given the uncertainty, there could be an increase in potentially in individuals' savings because of very precautionary savings. I would like to ask what are your views on this point. Thank you.
Hi, Borja. Yeah, look, obviously financial performance for quarter one was very strong as it was throughout 2026. We remain very capital generative. I would say that the capital number ended up being exactly where we expected it to be. Maybe, you know, asset growth was slightly ahead of where we had imagined, but overall, no surprises for us on that one. On the deposit growth side, what I would say to date is that we have not seen any cautionary activity, whether that be on on the asset side for for new lending, for new projects, or similarly, any unusual increases on the liability side that could be driven by the same factors.
You know, so as of now for Q1 and even towards the end of April, I would say, you know, very little impact to date, from the, from the volatility that has been created from the Middle East conflict. Obviously things can change on a week-to-week basis, and we remain very vigilant.
Yeah. What I would just add in relation to that, Borja, is that we're starting with a very, very high savings ratio. The savings ratio in this country is at the upper end of the range for Europe. Secondly, what I would say is that this was the most immediate impact of what's happening in the Middle East, is its impact on the amount of income available for saving, 'cause it's having a dampening impact on disposable income, net of fuel and energy costs. We wouldn't expect there to be a significant bump in deposit flow as a consequence of the conflict in the Gulf. I believe that's our last question this morning.
Can I thank you all for your questions, and thank you all for joining us this morning. We obviously have our AGM later on this morning, and we're very much looking forward to presenting a good set of results for the first half on this day, three months' time, 13th of July. At that point, I'd say good morning to you all, and have a good day.
This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.