Bank of Ireland said today it expects to increase earnings, accelerate returns to shareholders and cut costs over the next three years, after reporting lower profits for 2025.
Shares in Ireland's biggest lender were 3.8% lower in lunchtime trade, while main rival AIB fell 2.3% as bank stocks fell throughout Europe due to the conflict in the Middle East.
Bank of Ireland said it expects to increase its net interest income to €3.85 billion in 2028 from €3.37 billion last year by lending more and attracting more deposits in Ireland's fast-growing economy, and "disciplined growth" in its much smaller international business.
At the same time, it plans to cut its cost-income ratio to the mid-40% range from 52% last year. Artificial intelligence will be at the core of the new three-year strategy, CEO Myles O'Grady said.
Bank of Ireland said its full-year pre-tax profit fell to €1.4 billion from €1.86 billion a year earlier.
This was below the €1.53 billion expected by analysts polled by LSEG SmartEstimate - due to lower interest rates and increased impairments - and marked the second successive year of profit decline.
"We grew lending, deposits, customer numbers; indeed our wealth assets under management reached record levels," Mr O'Grady said. "That, of course, means helping more people with their first home, supporting businesses, and indeed, more customers with their wealth and retirement plans."
The bank said it plans to return €1.2 billion to shareholders through a mix of dividends and share buybacks, equivalent to 100% of its earnings.
The new strategy will drive significant shareholder value creation, including the distribution of surplus capital on at least an annual basis, it added.
"The benefit of having a very strong business model... allows us to use that capital to invest wisely both in supporting shareholders... but also investing heavily in our business model," the bank CEO said.
"Over the last three years, our Irish lending book has grown by 33%. That's an example of us investing. And, of course, investing in our technology as well. So we invest in our business model, we support shareholders, and of course, we invest in our balance sheet growth," he added.
The bank said its Irish lending and deposit book both grew by 6% last year, while its wealth assets under management rose by 9%.
Its loan book stood at €82.5 billion by the end of December, which was flat on 2024.
Its net interest income of €3.37 billion was lower than the 2024 figure of €3.57 billion due to prevailing interest rate environment. It is guiding NII of €3.4 billion for 2026.
Customer deposits for the year rose by 4% to €107.5 billion, led by a notable 6% increase in Irish Everyday Banking.
It said its corporate deposits were flat, while its Retail UK volumes were up 4%, driven by a strong performance in Northern Ireland.
The bank's operating expenses rose by 3% to €2.03 billion for the year - in line with the bank's guidance.
It also took a €264m charge relating to its UK motor finance business, which came on top of the €137m set aside last year.
Mr O'Grady said that the bank had given "very careful consideration" to this issue and he was confident that they had now set enough aside to cover any potential compensation requirements.
He also welcomed moves at a national and European level to incentivise consumers to grow their savings and investments, despite the impact that may have on the amount held in low-to-no interest deposit accounts.
"This is entirely aligned with Bank of Ireland's strategic objective to grow our wealth business... It's also an endorsement of why we acquired Davy Wealth," he said. "I want our customers to have choice from a simple savings account to discretionary wealth advice to pensions.
"So it's all about choice and we're very supportive of Initiative."
Bank of Ireland today announced a final dividend of 45 cent of the year.
Myles O'Grady said the bank closed out its 2023-2025 strategic cycle on a very strong footing, delivering clear benefits for customers, colleagues, shareholders and society.
"Over the past three years, the Irish loan book grew by 33%, Irish deposits by 11% and Wealth Assets Under Management by 54%. This reflects the strength and depth of Bank of Ireland's franchise, as Ireland's National Champion Bank," the CEO said.
"This excellent business performance enabled strong shareholder returns of €3.6 billion through buybacks and dividends, supported by consistent execution on the financial targets that we set for the Group, where we delivered an average 16% adjusted ROTE, beating our target," he said.
Mr O'Grady said the bank is entering its new strategic cycle with momentum, and from a position of strength across its franchise.
"Our Strategy 2028 will drive significant shareholder value through earnings growth, accelerating returns and strong capital generation, with continued momentum to 2030," he said,
The Bank of Ireland CEO said the lender is poised for growth.
"We continue to invest for the future in support of our more than 4 million customers, creating long term value through a step change in our operating leverage and earnings growth profile," he added.
Bank of Ireland shares were lower in Dublin trade today.
