AIB Group LON: AIBG management said the bank’s first-quarter performance was “very much in line” with expectations, supported by loan growth and what executives described as a strong pipeline across the franchise, while noting limited direct impact so far from higher fuel and energy costs and broader geopolitical uncertainty.
Chief Executive Officer Colin Hunt told listeners the group entered 2026 with “great momentum” and had maintained that trajectory in both results and outlook. “I’m particularly pleased with loan growth of 1.7% in the quarter,” Hunt said, adding that the bank is “confidently reiterating our guidance for 2026.”
Performance and outlook
Hunt framed the quarter’s results as evidence of “ongoing resilience of the Irish economy in the face of marked geopolitical uncertainty.” With “almost a third of the year now behind us,” he said AIB is “confident in our ability and in our outlook for 2026 and beyond,” including the ability to deliver “strong, sustainable returns” over the medium term.
Asked about any early signs of pressure from rising fuel and energy costs, Hunt said the bank was monitoring conditions closely but had not observed deterioration in customer behavior or credit performance. “We are not seeing any impact coming through as of yet,” he said, adding that uncertainty “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.”
Net interest income, rates assumptions, and the structural hedge
Chief Financial Officer Donal Galvin addressed quarter-on-quarter net interest income (NII) movements, citing “one or two smaller items,” including the impact of Tier 2 issuance at the “very back end of 2025.” Galvin said the bank remained “very firm” on its NII guidance and had not changed its interest-rate assumptions, including an end-of-year European Central Bank rate of 2%.
“The market has clearly moved quite a bit away from that,” Galvin said. “Just given the volatility, we have decided not to change any of those assumptions as of yet, but naturally there is some upside there.”
On the structural hedge, Galvin clarified that the referenced €10 billion executed in early 2026 was “not a new €10 billion,” and that “none of the metrics that I talked about previously have changed.” He said sensitivities “have slightly changed,” pointing to a disclosed figure of “around €256 million” for a 100 basis point rate move, and described the sensitivity as “pretty linear.”
Galvin added that the bank wanted “to add some duration” in the hedge, looking out to “the 2027, 2028, 2029 years,” and said management was “very happy” with the decision.
Deposits, fees, and competition
In response to questions about a modest quarter-on-quarter decline in deposits, Galvin said the movement was consistent with expectations and seasonality. He pointed to a similar pattern in the first quarter of 2025 and reiterated guidance of 2% to 3% growth in liabilities for the year. While acknowledging that competition “seems to be becoming a little bit more prevalent,” he said AIB was not seeing “any significant outflows” and had made “no change” to its estimates.
On fees and commissions, Galvin attributed a 5% year-on-year decline to a one-off item in the prior year. “It was like a Visa rebase that we would have received in quarter one of 2025 that wasn’t repeated,” he said. He added that AIB remained comfortable with overall guidance, highlighting wealth and insurance as “one of the main areas of growth” and saying management was “very happy with the growth trajectory there.”
On broader competitive dynamics—including neobank entrants and sector developments—Hunt said the environment was “evolving,” but AIB continued to see strong new account opening flows. He reiterated prior commentary that AIB’s share of new account openings in Ireland had been about 49% to 50% and said the bank believes it “remains very stable.” Hunt said AIB’s approach is to offer “an attractive range of products and services that are appropriately priced,” delivered through digital channels, customer engagement centers, and a network of 170 branches.
Lending pipeline, housing, and bond portfolio activity
Executives repeatedly pointed to strength in the lending pipeline. Hunt said the pipeline spans multiple divisions, including mortgages, corporate lending, and business banking, while also citing “Climate and Infrastructure Capital having a very, very strong start to the year.”
Asked whether Ireland’s National Development Plan (NDP) is feeding into activity yet, Hunt said AIB expects it to be a positive driver, but not “in a material way until 2027, 2028.” He added the bank was encouraged by progress in “reduction of barriers to the swift implementation” of the plan.
On the mortgage market, Hunt said AIB’s rate adjustments late last year first affected application activity and then approvals. He said drawdowns in March supported improved momentum: “Our market share in the month of March was the strongest that we’ve seen for about 13 months.” He also discussed housing completions, saying Ireland delivered “about 36,000 units last year,” and that AIB expects completions to be “about 39,000” this year. Hunt said AIB financed “just shy of a third of the new build last year,” and expects a similar share on the development side, adding that the development lending pipeline is “the strongest it has been in many, many years.”
On bond portfolio repositioning, Galvin described it as part of routine allocation decisions rather than a major strategic shift. “Every year we will look at different segments where we want to participate,” he said, adding that proceeds had already been redeployed into “euro SSAs and euro Sovereigns.”
Capital, headcount plans, and savings products
On capital, Galvin said the position was as expected. “The capital number ended up being exactly where we expected it to be,” he said, noting that asset growth may have been “slightly ahead” of internal assumptions, but with “no surprises.”
Regarding deposits and “precautionary savings” amid uncertainty, management said it had not seen notable shifts in customer behavior. Galvin said there had been “very little impact to date” from volatility tied to the Middle East conflict, including through late April. Hunt added that Ireland already has a “very, very high savings ratio,” and argued that higher energy costs could reduce income available for saving. “We wouldn’t expect there to be a significant bump in deposit flow as a consequence of the conflict,” he said.
Hunt also reiterated workforce expectations, stating the bank expects headcount to decline by “something of the order of 3%” in 2026 and “the same number next year,” consistent with 2025 and planning assumptions extending into 2027 “and potentially beyond.”
On potential new Irish savings and investment products, Hunt said AIB “strongly welcome[s] the initiative” and is preparing for an ISA-style model, noting internal working groups are already established. He said the bank expects the product to be launched later this year and intends to be ready to offer it to customers when finalized.
Closing the call, Hunt said AIB would provide a first-half update on July 13 and referenced the group’s annual general meeting later in the day.
About AIB Group LON: AIBG
AIB Group plc operates predominantly in Ireland and the United Kingdom. Our shares are quoted on the Euronext Dublin and the London stock exchange and we are a member of the FTSE4Good index. Our three core segments are: Retail Banking, Capital Markets and AIB UK. We also operate wholesale treasury activities along with control and support functions.
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