Bank of Ireland Group (LON:BIRG) said it upgraded several 2026 targets after reporting continued loan, deposit and fee-income growth through the third quarter, while management pointed to resilient asset quality and confidence in the Irish economy.
Chief Executive Officer Myles O’Grady said total customer volumes increased by more than €13 billion year to date. Loans rose 5%, deposits increased 3%, and consumer deposit balances grew 5%. Assets under management in the group’s Wealth and Insurance business climbed 16% to €67 billion, supported by €2.8 billion of net inflows.
“Three quarters into the first year of our new strategic cycle, and we are delivering our targets with strong momentum across the group,” O’Grady said. He added that Bank of Ireland had raised its modified domestic demand growth forecast for Ireland in 2026 and 2027, citing the domestic economy’s momentum and resilience despite geopolitical uncertainty.
Guidance Raised Again
The bank raised its 2026 guidance for net interest income to more than €3.5 billion, loan-book growth to 5%, and capital generation to more than 270 basis points. O’Grady said all other 2026 guidance was reaffirmed.
Chief Financial Officer Mark Spain said the net interest income target is expected to be approximately €20 million to €30 million above the €3.5 billion level. He attributed the improvement to stronger-than-expected lending and deposit growth, a larger structural hedge and a benefit from sterling strengthening during the period.
Spain said the bank’s nine-month performance and its outlook reflected favorable trends in balance-sheet growth and the structural hedge. Bank of Ireland expects net interest income of about €3.75 billion next year and more than €3.95 billion in 2028, based on a 2.5% European Central Bank rate assumption. He said current rate levels offer potential upside to that outlook.
The structural hedge stood at €77 billion in the third quarter following an €8 billion increase in July. Spain said the expansion reflected the group’s assessment of deposit stability over the previous cycle, and that the hedge should grow in line with overall deposit growth going forward.
Commercial Lending and Credit Quality
O’Grady said Irish commercial lending had accelerated, with the Irish commercial book up 14% year to date and the broader Irish lending book up 8%. He said Bank of Ireland remains the largest provider of Irish commercial lending by market share.
Business lending growth was broad-based, according to O’Grady, with customers investing in acquisitions, refinancing, automation, sustainability, capacity expansion and productivity. He identified hospitality and leisure, manufacturing and engineering, data centers, and food and agriculture as notable contributors to growth.
The CEO said the group was growing commercial lending “safely,” adding that credit quality remained resilient and that there was no evidence of material deterioration or systemic portfolio concerns. The non-performing exposure ratio was 2.0% across the group.
In mortgages, O’Grady said the bank remains Ireland’s leading provider and described the expanding supply of homes and resulting market growth as the principal driver of activity. He said the bank’s mortgage pricing strategy is focused on the economics of the full portfolio rather than only new lending flows.
Addressing recent deposit-rate increases, O’Grady said the changes were planned actions under the group’s strategy rather than responses to a material shift in competition. Management said it considers deposit and mortgage pricing together, with an emphasis on maintaining net interest margin and asset yields.
Capital, Distributions and Costs
Bank of Ireland generated 210 basis points of capital year to date. O’Grady said the upgraded full-year capital-generation target would leave the group in a strong position at year-end and support its progressive dividend strategy.
He said the group expects to remain comfortably above its capital target of about 14.5%. Subject to approvals, that position could support consideration of a share buyback, he said. O’Grady added that there had been no change in the group’s capital-requirement outlook, while Spain said risk-weighted assets were expected to end the year at around €59 billion.
The group continues to target €250 million in cost efficiencies through 2028 and operating leverage of 600 basis points, which it expects will bring the cost-income ratio into the mid-40% range by 2028. Spain said valuation items, which were around €40 million year to date, are not forecast by the bank and are excluded from its cost-income ratio.
Technology and AI Investment
O’Grady said Bank of Ireland is expanding the use of artificial intelligence in fraud prevention, software development, human-resources queries and call-center operations. The bank has rolled out a new mobile app to all customers and migrated €28 billion of corporate lending to the cloud.
The group appointed Prag Sharma as chief AI officer at the start of the month. O’Grady said the role is intended to help scale AI applications across the organization and turn individual use cases into measurable business outcomes.
He said AI-enabled initiatives account for a meaningful portion of the bank’s planned cost savings, but the bank also sees opportunities to improve customer service, strengthen its personal current-account business and support expansion into the mass-affluent wealth market. Management said it expects to provide a further update at its full-year 2026 results.
About Bank of Ireland Group (LON:BIRG)
Bank of Ireland Group is one of the largest financial services groups in Ireland, with total assets of €162 billion at 30 June 2025. We provide a broad range of banking and other financial services. We are organised into four trading segments (Retail Ireland; Wealth & Insurance; Retail UK; and Corporate & Commercial) and one support division (Group Centre) to effectively serve our customers.
