Bank of Ireland Reports Strong Start to 2026, Reaffirms Guidance Amid Geopolitical Uncertainty

Key facts

• Net loans rose 5% annually to €83.6 billion in Q1 2026.
• Retail Ireland net lending increased by €0.5 billion to €42.1 billion, with a 41% market share of new mortgage lending.
• Deposits were flat at €107.2 billion, reflecting seasonal effects.
• Net interest income was flat year-on-year, in line with expectations.
• Non-performing loans ratio improved to 2% from 2.2% at end-2025.
• UK motor finance provision remains at £374 million; no material change expected.
• Wealth assets under management rose to €60.3 billion, with net inflows of €1.1 billion.
• Full-year net interest income guidance reaffirmed at €3.4 billion, assuming an average ECB deposit rate of 2%.

A Strong Start Despite Global Headwinds

a robust first quarter for 2026, with net loans growing by 5% on an annual basis to €83.6 billion, as the lender said it started the year “with momentum.” The bank reaffirmed its full-year guidance, including net interest income of around €3.4 billion, even as geopolitical tensions from the Middle East conflict create uncertainty. Chief executive Myles O'Grady attributed the performance to the bank's successful strategy, the breadth of its franchise, and the resilient Irish economy. “The group has started 2026 with momentum, with loans growing by 5% annualised, deposits strong at €107 billion, and Wealth AUM net inflows of €1.1 billion,” he said in a trading update on Friday.

Mortgage and Commercial Lending Drive Loan Growth

The growth in net loans was led by Retail Ireland, where net lending rose by €0.5 billion to €42.1 billion, underpinned by strong mortgage activity. Bank of Ireland now commands a 41% market share of new mortgage lending, a significant position in the Irish market. The Corporate and Commercial business also saw a €0.5 billion increase in net lending to €22 billion, while Retail UK lending remained stable compared to the end of December. The bank noted that credit trends remain strong, with stable arrears and resilient portfolio performance.

Deposits Flat, Net Interest Income Stable

Deposits were flat at €107.2 billion in the first quarter, which the bank attributed to seasonal effects. Net interest income – the difference between interest earned on loans and paid on deposits – was also flat year-on-year, in line with expectations. The bank said its performance reflected strong business momentum, with higher bond income and favourable structural hedge dynamics offsetting lower average interest rates from the European Central Bank and foreign exchange impacts. The ECB deposit rate currently stands at 2%, and the bank noted that a 25 basis point increase would generate an annualised net interest income benefit of around €45 million.

UK Motor Finance Provision Unchanged Despite FCA Redress Scheme

Bank of Ireland said it does not currently expect any material change to its cumulative UK motor finance provision of £374 million (€433.6 million), following the UK Financial Conduct Authority's final details on a redress scheme announced in late March. The FCA had reduced its estimated cost for lenders by almost £2 billion from an initial £11 billion. The scheme has been challenged by Mercedes-Benz, Volkswagen, and consumer group Consumer Voice, which the FCA said will delay compensation payments. Bank of Ireland's provision remains in place as the situation evolves.

Asset Quality Improves, Costs Rise Slightly

The bank's asset quality continues to strengthen, with the non-performing loans ratio improving to 2% from 2.2% at the end of last year. Total operating costs, including restructuring costs, rose by about 2% compared to the same period in 2025. Bank of Ireland said it remains vigilant to the evolving geopolitical environment, particularly the Middle East conflict, which has prompted expectations that major central banks may increase interest rates to combat inflation. The bank sees potential upside to its full-year net interest income forecast if rates rise.

Wealth Management Inflows and Strategic Outlook

Assets under management in the bank's wealth and insurance segment rose to €60.3 billion, up €300 million from the end of 2025, with net inflows of €1.1 billion. Total fee income grew by 1% in the first quarter, in line with expectations, though growth in wealth income was offset by lower corporate and commercial fees. O'Grady outlined a strategy to 2028 aimed at creating significant customer and shareholder value, with building blocks including driving growth in Ireland, optimising capital allocation, and investing for the future. “This strategy capitalises on our unrivalled position in one of Europe's best performing economies, our proven track record of delivery and our highly capital generative business model,” he said.

Guidance Reaffirmed, Vigilance Maintained

Bank of Ireland reaffirmed its full-year guidance for 2026, forecasting net interest income of around €3.4 billion, total fee income to advance about 4%, and total costs of approximately €2.2 billion. The guidance assumes an average ECB deposit rate of 2%. While the bank's performance in the first quarter was strong, the path ahead is clouded by geopolitical risks. O'Grady emphasised the bank's vigilance, noting that asset quality remains strong across portfolios. The coming months will test whether the lender can sustain its momentum amid an uncertain global environment.

The bottom line

• Bank of Ireland's net loans grew 5% annually to €83.6 billion in Q1 2026, driven by mortgage and commercial lending.
• The bank commands a 41% market share of new mortgage lending in Ireland.
• Deposits were flat at €107.2 billion, and net interest income was stable year-on-year.
• Non-performing loans improved to 2%, and the UK motor finance provision remains at £374 million.
• Full-year guidance is reaffirmed: net interest income of €3.4 billion, fee income up 4%, costs at €2.2 billion.
• CEO Myles O'Grady cites the resilient Irish economy and a strategy to 2028 focused on growth, capital allocation, and investment.