Bank of Ireland Group Stock

Good morning, everyone. I'm Eamonn Hughes, Investor Relations Officer, and you're all very welcome to Bank of Ireland's H1 2026 Results Presentation. You will shortly hear from our CEO, Myles O'Grady; and CFO, Mark Spain, about our performance since the start of the year. And then we'll open the floor to questions. So over to you, Myles.

Thanks, Eamonn, and good morning, everyone. I'm pleased to report a profit before tax of EUR 960 million, driving EPS growth of 36% and returns of 14.4%. We are meeting or beating all strategic targets, growing loans and deposits and wealth assets under management. All of this supports upgraded guidance for this year and reaffirms a positive outlook to 2028. On Slide 5, I summarized our updated 3-year strategy. And as a quick reminder, we are driving growth in Ireland, optimizing capital allocation and investing for the future, all of which drive growth, create operating leverage and substantially improve returns.

Turning to the macro environment. Ireland is a highly attractive market, and we have an unrivaled position as Ireland's National Champion Bank. Ireland benefits from being an open economy, but there are also some risks. And while the team and I remain alert to the uncertain geopolitical backdrop, the Irish economy is resilient. We expect the domestic economy to grow on average of 2% to 3% out to 2028, and the U.K. economy is also forecast to grow. Favorable demographics are also very supportive, whether that's growth in population or household wealth. Bank of Ireland's business model is uniquely positioned to both drive and benefit from this backdrop, supporting much needed homebuilding, vital infrastructure investment and financial security and wealth creation for our customers. The strength of the Bank of Ireland franchise is translating into growth in total customer volumes. Put simply, more customers are choosing Bank of Ireland.

Deposits, loans and assets under management had a combined growth of 6%. And I expect that momentum to continue driving sustainable balance sheet growth and value creation. We see examples of this excellent momentum in H1. In an evolving competitive environment, the Irish loan book grew by 7%, while everyday banking deposits grew by 3%. Wealth AUM, an important source of growing fee income, increased by 18%. And this strong franchise performance is driving a reported return on tangible equity of 14.4% and supports the $0.39 dividend per share we announced today, up 56% year-on-year. Turning now to Slide 9 and the first of our divisional performances. Supported by Ireland's resilient economy, Retail Ireland continues to perform very strongly. Everyday Banking delivered 4% growth in new product opening and customer experience continues to improve, supported by digital investment. This includes our new mobile app, the busiest, most important touch point for our customers, bringing greater functionality and improved user experience.

Turning to the mortgage business, where we continue to hold a market-leading position. The Irish mortgage book grew 6% during H1, and this growth was underpinned by strong pricing and risk discipline. This book growth also offers valuable cross-sell opportunities for life and general insurance, and we continue to innovate. As an example, we rolled out a new trade-down mortgage proposition, which will help to improve the supply of secondhand homes in the market. Supported by the annual demand for housing units and the increasing supply of homes, I expect this book to grow by 5% on average over the coming years, a key source of value creation for the group. We are seeing great momentum in our wealth business. AUM grew to a new all-time high of EUR 65.5 billion, and that's up 18%, supported by net inflows of EUR 1.6 billion.

Ireland's strong demographics offer a structural growth opportunity for our two leading brands, Davy Wealth and New Ireland Assurance. Meeting the financial needs of our mass affluent, high net worth and life protection customers is a strategic priority for Bank of Ireland. It's the engine of capital-light fee income growth for the group. And I am pleased that we are so well positioned to meet this important customer need.

Turning to Slide 12 and our Retail U.K. division continues to perform well. Total income increased by 8%, while the lending book reduced by 2%, margins improved 8 basis points both of which reflect our disciplined strategy, which is focused on optimizing returns over volume. Our Corporate and Commercial business enjoyed a good H1 as Ireland's #1 commercial lender. A notable highlight was the 14% increase in Irish lending, a key strategic outcome driving growth in Ireland. And against an uncertain geopolitical backdrop and accelerated international deleveraging, I'm pleased to report strengthening asset quality with the NPE ratio falling to 3.8%. This overall outcome is a great example of optimizing capital while growing our Irish franchise.

During H1, we delivered a number of important product and service enhancements. There are many examples set out on Slide 14, all of which point to a relentless focus on investing for the future. I referenced our new mobile app earlier, while Zippay, the industry-led peer-to-peer payments platform launched in March. We've also introduced payment enhancements in the U.K. and a new brand platform, right with you. This represents our focus on supporting our customers through every step and stage of their financial lives. And there is more to come. As we set out in March, we are investing around EUR 1.5 billion to strengthen the relationship with our customers and strongly position the group in an evolving competitive market. Focus areas include product and service enhancements for consumers and businesses in Ireland, a new U.K. savings platform, Irish savings and investment account propositions in wealth and insurance and improving digital capabilities in corporate and commercial.

In March, I set out our plan to 2028 to create significant operating leverage of circa 600 basis points. And we've laid the groundwork for this, and the H1 scorecard is positive. Growing income faster than costs has improved the cost-to-income ratio by 0.8%, supported by securing EUR 41 million of cost efficiencies and a reduction in FTE of 2% and there's more to come. We will continue to transform our operating model, streamline customer processes and secure more value from our supplier partnerships. And I look forward to sharing more progress on this important work over the course of the strategic cycle.

Creating that operating leverage is supported by a range of AI-enabled initiatives, some of which are set out on Slide 16. We've laid strong enterprise AI foundations and established a scalable AI platform. We are seeing early value being achieved in areas such as easier customer onboarding and KYC, faster software development and reduced contact center handoffs as some examples. And we have more to do here. We are working hard on a number of priority AI initiatives that will deliver further value. And alongside this value creation, we continue to invest in new cybersecurity to address emerging AI frontier model risk. We are 2 quarters into our 12-quarter strategy.

Ireland is a highly attractive market driving quality growth. We have an unrivaled position as Ireland's National Champion Bank. We've upgraded guidance, and I reaffirm our target for 2028 and continued momentum to 2030. And let me pause here for a moment. Bank of Ireland continues to be a highly capital-generative business. This makes it possible for us to grow our balance sheet, invest in our operating model and reward our shareholders. And while the environment continues to evolve, at Bank of Ireland, we have a winning strategy, and we are executing strongly against it. Thank you. I'll now hand over to Mark.

Thanks, Miles, and good morning, everyone. As Myles said, we've made a strong start to our new strategic cycle. We especially see this in momentum in our Irish businesses, a growing NII with added resilience and materially higher returns with a statutory ROTE of 14.4%. Today, we are upgrading our full year guidance for net interest income, asset quality, ROTE and capital generation. Our performance and our positive outlook underline our conviction on delivering a ROTE of greater than 16% in 2028. Slide 21 sets out our key financial metrics. Total income was up 7%. We retained cost discipline, and we had a strong asset quality outturn. Our interim dividend per share is up 56%. This is in line with our new distribution policy and is a clear indication of confidence in our prospects.

Slide 22 focuses on our NII, which shows continuing momentum. In the first half, NII grew 2% with balance sheet growth and structural hedge rollovers more than offsetting the impact of lower rates and planned deleveraging. Interest rate expectations are now higher than when we announced our strategy, and our structural hedge is larger. Reflecting these changes, we now expect NII of around EUR 3.5 billion for 2026, up from EUR 3.4 billion previously. The same factors support an upgraded outlook for '27 and 2028. We now expect net interest income of around EUR 3.75 billion and greater than EUR 3.95 billion, respectively. This revised guidance assumes an ECB rate of 2.5% from the end of this year to end 2028, noting that current rate expectations are higher but volatile.

If I stand back, I've spoken at previous results presentations about the drivers of our NII trajectory being Irish balance sheet growth and the structural hedging decisions we have taken. We are seeing these factors play out now, both in terms of our H1 performance and our positive and upgraded outlook. Our loan book grew by EUR 1.5 billion, up 4% Ireland grew 7% with strong performances in mortgages and commercial lending. In the U.K., we continued our focus on value over volume, responding agilely to dynamic market conditions. And planned deleveraging in selected international corporate portfolios has progressed well in the first half.

For FY '26, we continue to expect around 4% growth in our loan book. Customer deposits continue to grow with group volumes up 2%. Our Irish Everyday Banking franchise is a key driver of this growth. This has continued to perform well in an evolving competitive landscape. For the full year, we continue to expect deposit growth of around 3%. Turning to the structural hedge. Average volumes are modestly higher in the first half. Rollovers in addition to swaps were done at an average yield of 2.79%, more than double the rate on maturing yields. This rollover dynamic will continue to be a key driver of NII over this strategic cycle. The average yield for H1 was 2.01%, up 17 basis points year-on-year, while the exit yield was 2.09%.

In July, we increased the size of the hedge by EUR 8 billion. This decision enhances our NII resilience. As a result, the sensitivity of our NII to interest rates has reduced by approximately 1/3. We grew fee income by 6% -- this was driven by our market-leading wealth and insurance franchises and supported by investment gains in Corporate and Commercial. I also note the positive impact from valuation items, which we don't budget for. For the full year, we continue to expect total fee income growth of around 4%. Total costs were up 2%, in line with our expectations. The moving parts here are inflation and investments, partly offset by efficiencies and lower restructuring costs. Our efficiency initiatives are delivering with savings equivalent to around 4% of H1 costs achieved. For the full year, we continue to expect total costs, which includes restructuring of around EUR 2.2 billion, up around 2% from last year's outturn.

Notwithstanding the uncertain geopolitical backdrop, our asset quality is strong, with the NPE ratio improving to 2% at end June from 2.2% in December. The impairment charge was EUR 32 million, reflecting an excellent performance across our portfolios. Our updated full year cost of risk guidance is mid- to high teens basis points, reflecting a balanced view for H2 in the context of the evolving external environment. This is an improvement on our previous guidance of low to mid-20s basis points. Our business model is highly capital generative with 135 basis points of organic capital generated in the first half. After taking RWA investment and dividends into account, our CET1 ratio was 15.5% -- we have declared a dividend of $0.39, equivalent to half of our H1 earnings.

And we are progressing the 530 million buyback announced in March with more than 40% now executed. For the full year, we see capital generation of around 270 basis points, up from circa 250 basis points previously. And we expect RWA investments to consume around 25% of this. Our objective remains to operate at around the CET1 guidance of around 14.5%. Slide 30 recaps on our guidance for FY '26. At the heart of this is our expectation for statutory RoTE of greater than 14%. This is a meaningful upgrade on our previous guidance of 12.5%. We also expect EPS growth of greater than 35% this year. And looking further ahead, our '26 performance and our positive outlook both enhance our conviction on delivering a ROTE of greater than 16% in 2028. Thank you for your time this morning, and we'll now turn to questions.

[Operator Instructions]

It looks like our first question comes from Sanjena in UBS.

Two questions from me, please. The first on -- so basically, if you could provide more color on the credit performance in the period and the 8 basis points, what it would look like excluding the insurance credit and recovery? And how are you thinking about developments into the second half and next year? And second, if you could talk about some of the customer initiatives in more detail, the launch of Pay, how the take-up has been the new mobile banking app, what are the changes and what function were missing and have been added? And any other examples that basically how you're competing with the new banks?

Thank you for those questions. I'll ask Mark to take the credit quality question. And I'll cover the significant improvements that we're making to our retail franchise in terms of product services and related technology investments. I mean, firstly, Sanjeno (sic) [ Sanjena ] we've committed in the region of EUR 1.5 billion to invest in our business model over the next 3 years. And we're on a kind of relentless path now of delivering great improvements. We saw last year SEPA Instant Payment, peer-to-peer payments in quarter 1 and the communication now of the rollout of our mobile app, which we announced yesterday.

Our app at its heart will be faster and easier to use. It's a native app, which means its response time will be better. New functionality includes a greater visibility of content and balances, easier to scroll, less clicks, but also importantly, been able to stay within app to progress start to apply for other products, particularly in the deposit space. I'm thinking about our Smart Start, our Super Saver, our mortgage Saver products, you've been able to do that from within app. But importantly, it also allows us to deploy greater upgrades more easily. And I'm thinking about as we develop our wealth affluent product over the course of this year and be able to access that from our app is important as well.

And with more to come as well, where we'll be investing in the corporate and commercial space in the context of making it easier for our customers to manage our operational finances. I mentioned the wealth investment, but also in the U.K., a new savings platform out over the strategic cycle. So investments across the breadth of our franchise, it's a key pillar of our overall strategy, and it supports our outlook out to '28. And Mark, on asset quality, over to you.

Yes. Thanks, Myles. Yes, we've had a really strong outturn in asset quality in the first half. Sanjena, our NPE ratio at 2%. That's at multiyear lows. If you look at our Stage 2 volumes also down versus December as well. And if I look across our portfolios overall, our customers are in good shape and are weathering the uncertain geopolitical environment very, very well. So that's contributed to the H1 charge of 8 basis points -- maybe if I just go to our full year guidance first, and I'll come back on the credit insurance. So if you recall back in March, our guidance for the full year was in the low to mid-20s.

And in the context of the environment that we're in, we've simply for our full year guidance, we've taken that guidance, the full year guidance and apply that to the second half and added that to our first half outturn. That's what leads to the mid- to high teens. We think that's a balanced approach in the context of the environment that we're in. But I'd say what we're seeing on the ground is that our customers are in really, really good shape. And just specifically on the credit insurance, so the credit insurance, EUR 30 million benefit in the first half in the impairment charge, Sanjena. And that's really the mechanics of credit insurance mechanism working out. By that, I mean that the bank takes a reduced first loss over time. but the actually underlying credit quality in relation to the insured portfolios is stable relative to where it was in December.

And would you be able to quantify the recoveries because there's a mention of some recoveries.

Yes.

Just trying to get a sense of the underlying that's in the first half.

Yes, exactly. So this is separate to the credit insurance. Yes, we've had -- I mean, we've had the benefit of recoveries in the first half, primarily in our corporate portfolios, about EUR 30 million, Sanjena. And that really reflects, I would say, really good work on the ground by our teams in relation to optimizing positions on NPEs.

Our next question comes from Diarmaid in Davy.

Myles and Mark. Two questions, if I may. Firstly, just a very strong activity level in the first half, particularly in Q2. I just wonder within that context, it's not showing much by way of signs of competition impacting at this point. If you have any observations of what you're seeing on the ground, that would be very helpful. And secondly, just around risk-weighted assets, I guess, as we look at outside of kind of normal lending dynamics, what are you seeing or what are you thinking about in terms of risk-weighted asset initiatives on SRT, CRTs and any other model kind of refreshes that you're expecting to come through going forward? That would be helpful.

I'll ask Mark to take the RWA-related question. And I'll take the start to the year, Diarmaid. We've had a very a good start to our news strategy. We've hit the ground running. I would characterize as we've created an engine that's firing on all cylinders and generating a very strong performance. And for sure, in an evolving competitive backdrop, in H1, we have retained our #1 position for mortgages, our #1 position for wealth. We've seen deposits grow by 3%. And of course, we remain the largest commercial lender in the marketplace as well.

So we're performing very strongly. And I should say to you as well that when we think about our performance out over the next 3 years, the biggest source of growth for Bank of Ireland is going to be the overall market growing. And we're very well positioned, whether that's a mortgage market, whether that's the wealth business, we're particularly well positioned for that. And when we set our targets, we assume that our growth is a little less than the overall market growth. So that's a pragmatic view on how competition may evolve. But no real change in H1 in the context of significant change in competition. We had a very strong performance indeed.

Yes, so on RWA, playing out really exactly as we planned. So if you recall back in March, we guided for RWA to account for around 25% of our capital generation. You see that in H1. That's our expectation for the full year. And if I think out over 3 years, that's how it will play out as well. Specifically then on CRTs, Diarmaid, we're very experienced users of CRTs. They're an important part of our risk and capital management toolkit. And typically, we'll have about 4 or 5 transactions live at any one point in time. We'll typically do a new one every 12 to 18 months. So I expect our next CRT transaction to be in the first half of next year.

Thanks, Mark. And anything on any model refreshes that we should be thinking about going through?

No. So Diarmaid, there's nothing to call there. And again, the 25% investment in RWA, that's how I think about it. There's always moving parts under the hood, but actually, there's nothing material to call out.

We'll go next to Mike in Autonomous.

Yes. So 2 questions from me. So firstly, deposit growth obviously recovered in the quarter. It looks like it's about 3% annualized now. I just wanted to ask, you called out the savings and investment account as an opportunity in the presentation. I just wanted to know what you're seeing sort of in terms of competition on the ground now as we've seen sort of some international players coming to the market and how you see that progressing and particularly around that sort of savings and investment account and the potential opportunity and risks there, please, particularly given obviously a 77% loan-to-deposit ratio. That's a key focus.

And then just a slight technical point on the hedging that's been put on about -- I think it's about EUR 8 billion in July. Has that been done sort of in line with the original hedge? Anything been done to the duration there? Just want to understand a bit more about what you've got on there, please.

Mike, Mark grab the hedging question, and let me take the deposit and the savings and investment account. I mean, firstly, we're very pleased with the performance of our deposit book, Everyday banking balances up by 3%. So that structural dynamic and that household wealth piece around deposit balances growing in the Irish market and our franchise is well positioned to benefit from that and hence, the growth. I'm very supportive of the savings and investment account. And just to put that into context, we have a unique wealth business in the Irish franchise. It's underpinned by 2 very strong brands, New Ireland and Assurance for Life and Protection and Davy Wealth as Ireland's leading wealth provider. We've seen our AUM grow to all-time high of EUR 65.5 billion.

And our strategy, of course, is to build on that very strong performance and in particular, to grow our affluent and our mass affluent wealth business. So in many ways, we're entirely aligned with this government initiative. It also offers an opportunity to really deepen and expand our franchise over time. And I'm very comfortable with more than 4 million customers. We have 2.5 million retail customers. And so I want them to have a current account, a deposit account, an investment account and indeed a mortgage over time as well. So I'm comfortable with the economics that will play out as we build this affluent business on the back of that savings and investment account. And again, I'd point to the fact that as part of our guidance out to '28, and we've seen it in H1, that expectation that each year, both deposits and wealth AUM will grow. Mark, on the hedge rate...

Yes, on the hedge and maybe, Mike, maybe to link it to an overall theme and one of the themes this morning is our enhanced conviction on achieving returns of greater than 16% in 2028 and the sustainability of those returns as well beyond that. And the hedge very much plays into that. So the work we've done in the first half of the year was looking at the performance of our -- and the behaviors of our deposit base over the last cycle. And when we did that work, that supported an increase in the hedge by EUR 8 billion. We put that on at 2.96%, same duration as the hedge -- existing hedge of 3.5 years. And I suppose one way of thinking about that is a reflection of our confidence in our deposit base and Myles has spoken to the growth that we've seen that we expect there as well. And just as an output from that as well, obviously, our sensitivity to rates reduced by about...

Our next question comes from Sheel in JPM.

Hopefully you can hear me. Two questions from my side, please. One to follow up on the hedge, please. You can see the EUR 8 billion or so hedge balance increase gives your sort of notional hedge balance sitting at around EUR 75 billion or so. Is there more scope to improve or increase this hedge further when you're thinking about maybe some of the savings accounts that you're holding? Or do you think you're fully hedged out at this point? And then secondly, can I just ask with regards to investments, is there anything in the external environment, whether it's the pace of AI change, the pace of fiber developments or anything that may make you reconsider some investments that you're making, either change the quantum of investments through the plan or change either the pace of investments through the plan? I'd be interested to hear your thoughts there.

Sheel, I mean let me take the investment question first and then Mark, over to you on Sheel's Hedge question. Sheel, we have communicated an investment of EUR 1.5 billion over the next 3 years. And of course, that spend is captured within our cost target guidance and also within our strategic objective to take our cost-income ratio to the mid-40s. And when I look at that overall spend, it's nicely balanced between making sure that we are going after a very strong operational resilience backdrop. That's hugely important in the context of cyber threats in the context of protecting our customers from fraud.

The other part of that spend, and I would have called out some of these when talking to Sanjena earlier in her question, it's a broad area of digital investments that are really designed to make sure that we are supporting our customers and their needs for the future while also protecting our franchise. And those two work very well together. And of course, they support our target to improve ROTE by 16%. I mean one of the things that I'm encouraged by is that this level of strong performance, I mean, the fact that we have upgraded our guidance on net interest income and on capital generation is that there is capacity if we need to, for the right investments to alter that investment profile. And no, there's no plans to do that, but we have the capacity to do it. Always very clear, though, that our objective to secure returns above 16% and to keep our cost-income ratio in the mid -- to get to the mid-40s, that they're an absolute imperative. But we do remain agile. Things can change. We can reprioritize. That is often the case, but we're making very good progress against that investment spend.

Great. So on the hedge, you should regard the EUR 8 billion increase, it takes usually about EUR 77 billion point in time now. That's the material increase. And from here, the hedge really will grow in line with deposits. That's the material intervention. And maybe, Sheel, just maybe to add on just because I think probably the dynamic of the hedge, and I think you understand this is that hedge today exiting at 2.09% in -- or just over 2.09% in H1. It's that stock flow dynamic that hedge repricing to market, that's a key driver of our NII expectations and growing to greater than EUR 3.95 billion by 2028, which is obviously within a stone throw of 4.

Great. If I can have one quick follow-up. You've also increased the Eurobond portfolio in the half. Is there more appetite there? -- assets continue to be attractive. So is there more scope there as well?

Yes. So we're there, thereabouts in line with, I'd say, the sector at this stage in terms of the split of bonds and cash. But maybe to step back, if I go back 18 months ago, that bond portfolio, the Eurobond portfolio was sub EUR 10 billion. So we've stepped up by almost EUR 15 billion over the last 18 months. that's actually been, I'd say, a well-timed decision in terms of the spreads we've achieved on that, which weren't available before that point. And that, again, is supporting our NII development and that positive trajectory out to 2028 and beyond.

Our next question comes from Denis in Goodbody.

Myles and Mark. I just have one, please. If you could maybe give us an update on how you're progressing with the deleveraging portfolios? And I guess maybe if you can give us an indication of when you expect that to be largely completed.

Thanks, Denis. Mark, do you want to...

I will.

Take that, please?

Yes, so we had EUR 1.8 billion at the end of December last year, EUR 1.2 billion now, that's in U.S. LAF, our corporate GB and U.S. CRE Denis -- so we're making good progress. That's played out very much, maybe even slightly ahead in terms of the pace in the first half. And we've allowed for that in the NII guidance we're giving this morning for this year and also out to 2028. But broadly, by the end of 2028, that portfolio of those portfolios are sort of fully run down.

And maybe just one quick follow-up, please, Mark. So as that rolls off, obviously, a little bit quicker than expected, I guess maybe your confidence in that revised cost of risk guidance. Obviously, you're implying quite a step-up in H2 of this year versus the 8 basis points in H1. Maybe your own thoughts on that, please.

Yes. Thanks. So Denis, as I said an answer to Sanjena's question earlier, our approach for the balance of this year is very mechanical. We're applying our original guidance for H2 and adding it to H1. We think that's a balanced approach. We're still early enough in the year. There's a lot going on externally. It's not a reflection from our own portfolios. Our own portfolio, I think you'll see from the results in really, really good shape. And that's what we're seeing on the ground. We've got a very positive outlook into the second half of the year. We think that's a sensible approach. More broadly, looking out to '27, 2028, we think low to mid-20s. We think that's about right as we think about the shape of our portfolios in the type of interest rate cycle that we're in. Obviously, we keep that under review, but we think that's a reasonable assessment as we stand today.

[Operator Instructions]

We'll go to Seamus from Carraighill for the next question.

Two questions, please, as well. So I think your staff numbers are down 2% since December, which is running kind of ahead of where you would have suggested before, I think it was about 3% per annum. So that's the first question. So can we kind of expect that to kind of accelerate from here? And secondly is I suppose like the other actually the average cost or the average salary per employee seems to be another, again, 6% or 7% on an annualized basis in the first half. So how should we think about that up to now like kind of close to 90,000 given the fact that one would have assumed perhaps that it was the older or more mature employees would have been retiring. That's the first question.

Second question, -- and then just coming back to your NII. I mean you've kind of called out yourself, Mark, but like the NII is great and you kind of expect. But if we think about it, then it really only comes from the hedge in terms of that component we kind of operate today because if we take out the hedge component of the NII, the balance of the NII, floating rate book really, we haven't any growth coming through and that part of the book. I suppose the question is would consider this to be an ultra conservative position on your '27,'28 NII guide because there's 2 particular reasons. Obviously, we obviously have volume growth coming through. But secondly, you raised your ECB deposit rate guidance by 50 basis points, I think, in terms of where we were at the end of when we did the plan. And obviously, there's a pass-through rate, but it's not going to be 100 on that raised guidance. So like exception conservative 27 and 28 if we think about the balance of the book ex hedge components. And I suppose is that a fair comment?

Seamus, thanks for that. Let me take the first question, and I'll pass to Mark on NII and the hedge-related queries. Seamus, if I just maybe position the answer in the context of what are we -- what's our strategic intent in the context of efficiency. I'm going to play it back into the objective by 2028 to secure a cost-income ratio in the mid-40s, which means an improvement in that cost-income ratio of 600 basis points. And the headline drivers for that, of course, is average income growth of 4% per year out of '28 and average cost growth of around 1%. And within that is a cost -- gross cost reduction of EUR 250 million, and we've secured EUR 41 million of that in H1. Part of that objective is a lower FTE number. I've spoken before about an average reduction of about 3% per year, and that's going to be achieved through natural attrition in the main.

And in the context of average salaries, I mean, we are in -- one of the reasons why our cost is higher is because we are in an inflationary environment. but also, of course, because we're investing for the future. Hence, the reason to go after those saves be really important, that EUR 41 million save, that growth save that we secured in H1 as part of that EUR 250 million over the next 3 years as an example of doing that. And on average salaries, I wouldn't read too much into that. And one of the important things that we are doing is a conscious choice to in-source many of the capabilities that we would have previously have outsourced. I'm thinking about technology change as an example, but also bringing in highly skilled, augmenting our workforce in the space of cyber protection as one example. But overall, I'm pleased with our performance in terms of keeping costs at 2%. The machine is working hard to create that efficiency, again, in support of that overall objective to secure a cost-income ratio in the mid-40s. Mark?

Great. Seamus, on the NII and the hedge piece then. So maybe a couple of things. One of the key things that's part of this result is our Irish loan book and deposit book driving NII. And you can see that in the first half, our Irish loan book growing by 7% annualized basis with strong performances in both mortgages and in commercial and our Irish deposit book growing by 3%. Now if I step back and I look at our overall loan and deposit assumptions, so we set and Miles mentioned this earlier, when we set our targets as part of the cycle, we expected our loan book overall to grow around 4% each year and our deposit book to grow around 3% each year. And that's actually what happened in the first half.

So the business is performing very much in line with the plans that we set out back in March. And then if I just look at our NII trajectory in that -- against that context, so we're upgrading the NII guidance today. And if I just take 2028 as sort of a reference point on that. So previously, our guidance for NII in 2028 was greater than EUR 3.85 billion. We're increasing that today to greater than EUR 3.95 billion. Our prior guidance is based on an ECB rate of 2.25%. We're now assuming 2% to 2.5%. So the delta between EUR 3.85 billion and EUR 3.95 billion, about 60% of it is rate. The balance is hedge related, including the EUR 8 billion that we've put on. So those are the 2 key moving parts. And at greater than EUR 3.95 billion, we're in the next field to EUR 4 billion. So with a bounce of the ball, we think we could get there as well. But -- and maybe just the last piece I'll add, Seamus, then is I look on our NII trajectory over the sort of 3 years. So from 2025 to 2028, we're EUR 3.4 billion last year, greater than EUR 3.95 billion in 2028. About 40% of that is coming from balance sheet growth driven out of Ireland. We've seen that again in the first half, about 60% from the repricing of the hedge.

Okay. We'll go next to Jordan of Mediobanca.

Thank you. A few issues with the webcam. Yes, I had two questions. Firstly, on net interest income. Mortgage volumes have been very good. Still number 1 player in the Irish mortgage market, it does look at the sector level, like mortgage margins are under a bit more pressure, particularly when you look at them relative to swap rates. There is quite a bit of tightening there. I just wonder maybe for some of the non-bank players in the market, whether we’re going to start seeing a bit more pressure here, whether there’s going to need to be increasing mortgage rate hikes, or whether this is sort of a sustainable level. That’d be my first question. Secondly, on the savings and investment account. Just had a little bit of color already. Just be good to know how ready the 2 platforms across New Island and Davy are once -- we don't know exactly what shape it will take. But when it does go live, are we in a good place? Or is it going to need quite a long lead time before it's ready? Those are my questions.

Lovely. Thanks a lot, Jordan. In relation to our mortgage business and a really, really strong performance. And of course, we know that the mortgage market offers a structural opportunity to continue to grow our balance sheet. This is a mortgage book that grew 9% last year. It's grown 6% so far this year on an annualized basis. And we've managed to achieve that whilst maintaining very strong pricing and risk discipline. That's hugely important to Bank of Ireland. It's part of our DNA, and that will continue. And in the context to your question as to is there pressure on margins, I mean, I don't think so. It's not what we're seeing. I mean, as an example, when we think about our pricing strategy for mortgages, we always relate that to our pricing strategy for our deposit book as well.

We think about both together. In essence, it is the Irish franchise that is funding our mortgage book in Ireland. And so we always play that off well. We want to ensure we reward deposit holders but also ensure that we're getting the right strong economic returns from our mortgage business. I think we can see that come through in the numbers overall as a component of net interest income, where the asset yield has expanded in H1 versus H1 of last year. That's an example of that discipline coming to life. We are working very hard to be ready for the savings and investment account. I mean absent this government initiative, we are working hard anyway to leverage 2 very strong brands. Again, in response to an earlier question, we've grown our AUM by 18% to EUR 65.5 billion, an all-time high. And we most certainly want to step into the affluent and mass affluent space. So obviously, the timing of this new account is within the government's mandate to do, but we will be ready when that product comes to the market. And we're actively working today on what that affluent platform is going to be. And we look forward to updating the market on that in due course. Thanks, Jordan.

We'll go next to Guy in BNP.

Really just a follow-up on the longer-term interest income guidance, some of the assumptions around that. You've called out the benefit from short-term rates. You called out the benefit from what you've done on the hedge already this year. I'm not sure you've called out any sort of change in the reinvestment yield on the hedge in future periods. So if you could just clarify if your assumptions there have changed or not. I think you using 2.5% previously. And then sort of building on the last question, any changes to how you're thinking about competitive dynamics within the plan? It doesn't sound like you're shifting your views, but it is a regular discussion point with investors around whether we should be mindful of the increased competition. So any updated thoughts would be very helpful.

I mean let me take the competition question and Mark, on the NII longer-term factors. I mean, Guy, again, just to -- in some ways, cover off what I said previously, but important to reemphasize, we have -- we've had an excellent start to the year. Our strategy, I would describe as one of momentum on the back of a very strong 2025. That momentum is continuing. We are expanding and deepening our franchise. We're growing lending, deposits, wealth assets under management, deposit accounts. It's all working very well. We're #1 for mortgages, #1 for commercial lending, #1 for wealth and with very strong growth in deposits. But we're not complacent. And hence, the reason why in the context of delivering returns of more than 16%, we are investing for the future as well. That investment is really important. that's around ensuring that we can offer the best possible products and services to our customers. And I think our track record in that over the last 18 months has been good, very good.

I gave some examples earlier in relation to separate instant payments in relation to peer-to-peer payments and our communication of our new app as well and with more to do. So we feel very good about our overall competitive position. And as an example, on the everyday banking space, our new product, our new-to-bank customers grew by 4%. That's a very strong metric for the half year. And actually, within that, that I am particularly encouraged by is a 20% increase in our youth sector, segment of that part of our everyday banking. That's very important if you look to where longer-term value will come from for Bank of Ireland. So yes, for sure, competition is evolving. We compete every day with domestic banks, international banks and fintech our objective is to hold a very strong position that we have today.

And just on the reinvestment yield, that is a factor probably a little bit in 2026 in terms of guidance for 2026. But if I look at the reinvestment yield or the sort of projected sort of 7-year sort of swap rates for '27 and '28 today versus where they were back in sort of late February, there's actually no material change. That's not a huge factor in terms of our NII or upgraded NII outlook.

Looks like our last question comes from Borja in Citi.

I'm sorry, my camera is not working. Sorry for that. I have 2 questions, please. One is on NII. I would like to ask -- so the updated guidance assumes 2.5% ECB rate for 2028. And then could you provide a bit more color on the assumptions on deposit pass-through and volume growth as well? That would be my first question. And then my second question would be -- I'm sorry if you mentioned this already and had another results call. If you could provide your thoughts on the potential cash ISAs please.

Let me take the savings and investment. We've had a couple of questions on this over the course of the morning. I'm very happy to cover it again. And then Mark, on NII. And we're -- I mean, I -- we are very pleased. We're very supportive of this government's initiative to introduce a savings and investment account. Bank of Ireland, we are particularly well positioned with our two very strong brands, New Ireland Insurance, and Davy wealth. We're #1 for wealth in Ireland. And that product is entirely aligned with our ambition to grow our affluent business.

And so absent that product coming to the market, we would have been bringing a product anyway in this space to support mass affluent and affluent customers to protect their long-term future and to invest. So we're working hard on that. We're waiting to hear the particular terms of that product that's due out from the Irish government later this year, but we'll be ready to bring that product to the market as part of an overall suite of products as Ireland's National Champion Bank. And Mark, on NII?

On NII, so Borja, just on the ECB rate. So the assumption there is the ECB hikes 250 in September and then it remains at that level over the next 2 and a bit years thats the end of 2028. From a deposit perspective, our assumption is unchanged on that. The deposit growth is around 3% each year over 2026 to 2028. You see our H1 performance very much in line with that. And on the float to term, you'll see again from the materials today that our term and related balances are around 12% of our Irish deposit volumes, and we see that level being broadly stable over the next 2 and a bit years.

This concludes today's results presentation. Thank you for your participation this morning. We look forward to engaging with as many of you as possible over the coming weeks. And if you have any questions on these results, please reach out to any of us on the Investor Relations team. That brings the presentation to conclusion. Thank you.

Good morning, everyone. I know there's still a few people coming in, so just give them a second. Welcome to the Bank of Ireland AGM. I'm Sarah McLaughlin, the Group Company Secretary. I'm going to start by introducing our panel today. So our Chairman, Akshaya Bhargava; our Group Chief Executive, Myles O'Grady; our Chief Financial Officer, Mark Spain; and our General Counsel, Ann Lalor. The bank's other directors are also with us today, Giles Andrews, Emer Finnan, Michele Greene,Niamh Marshall, Hans van der Noordaa, Steve Pateman and Margaret Sweeney. Thank you.

We're also joined by Barrie O'Connell from KPMG, our auditor. So may I please ask you to take note of the nearest exit to you. If you do hear the alarm, please leave the building via the nearest exit. Please also check that your mobile phone is switched off or set to silent to avoid any disruption to the meeting. We have made this meeting accessible to as many shareholders as possible by providing an audiocast, which will allow shareholders to listen live to the proceedings. So on to today's business. We will start with presentations from Akshaya and Myles. This will be followed by an opportunity to raise questions that any shareholders may have on the resolutions that are put before the meeting today. We will then proceed to voting on the resolutions. And when the meeting concludes, light refreshments will be served.

So I'll hand over to Akshaya.

Thank you, Sarah. I want to add my own welcome to all of you for today's Annual General Meeting. Before we move on to today's business, I want to draw your attention to several of our Bank of Ireland colleagues who have joined us at the back of the room today. They are here to assist you for any support you may want with any personal banking matters. Now the purpose of our meeting today is to review the financial performance of the group for the year ended 31st December '25 and to consider the resolution set out in the notice of the meeting. This notice has been available to shareholders on 16th of April. It's also on the bank's website since that date. May I take the notice and the auditor's report as read? Thank you.

Under Article 51 of the company's resolution, the quorum for AGM requires the attendance of 2 persons entitled to vote on the business to be transacted, each being a member or a proxy. A quorum is present, and I therefore, declare the meeting duly constituted.

Today, I want to talk about the bank's performance during '25, which was also the last year of our 3-year strategy. I will talk about this and give you an update on distributions for the year. I want to talk about our thinking for the future, how we see geopolitical scenario, which provides a really important context to the strategy that we have adopted. In our strategy, we have kept in mind both the major uncertainty that we face and the opportunity that is presented to us by the immense technological change that is happening around us. You will remember that at last year, I said that Bank of Ireland plays a very important role in lives of more than 4 million customers. That remains true today. The bank also plays an integral part in the Irish economy as well as in the Irish society. And we take our responsibilities very seriously.

It is for this reason that I'm very proud to tell you, all shareholders, of what we have achieved in 2025. Our results reflect the discipline, the commitment and the collective effort of our 11,000 or so colleagues across the group under the leadership of our CEO, Myles O'Grady, and supported by his senior executive team. Under their leadership, we grew the balance sheet maintained discipline in lending, managed our costs and delivered attractive returns for our shareholders. This included growing the loan book, growing the deposit book and growing our assets under management in our wealth business, successfully concluding the 3-year strategic cycle and delivering tangible benefits for all our shareholders, customers, colleagues and society at large.

Myles will tell you more about the financial details on the financial performance, but let me move on to the updated strategy that we announced in March. This strategy will shape our performance to 2028 and beyond. Under this strategy, we will focus on the business we have, making it more efficient where we can and growing it where we can. We recognize that the world economy is very uncertain. Therefore, we will prioritize what is in our control and this strategy will see us innovate, simplify and strengthen the group to deliver sustained value. Having spoken personally to many shareholders, I know that distributions are a very important part of their investment case for Bank of Ireland. We value their support, and we will never take it for granted.

During 2025, we paid an interim dividend of EUR 0.25 a share in November. And today, we will ask you to vote on our proposal to pay a final dividend of EUR 0.45 a share, bringing our total dividend for the year to EUR 0.70 per share. This is an 11% increase over the EUR 0.63 we paid in 2024. And this will be the fifth consecutive year in which the group has increased the full year dividend payout, and I'm very glad we have been able to deliver on our guidance of progressive per share dividend. Further, during 2025, the group repurchased 5% of its shares at a cost of EUR 590 million. And in March this year, we announced a buyback of EUR 530 million.

2026, again, will be the fifth consecutive year in which the group has repurchased its shares, thereby enhancing value for all of you, our shareholders. At last year's AGM, a number of shareholders asked me about the possibility of the group launching a very targeted buyback for shareholders who have very small shareholdings. We committed to progressing this matter, and I'm pleased to say that today -- later today, you will be asked to vote on our odd-lot offer, which is designed to address this matter. I will provide more details in due course in the meeting.

Looking to the future, our progress so far gives us strong foundations, and we have used this to formulate a clear strategy for the years ahead. While remaining very mindful of the global situation, we do see clear evidence of continued resilience for now in both the Irish economy and our customers. This reflects in continued customer demand, and this is good. However, I believe that the long-term impact of tariffs of the war in the Middle East have not played out fully, and we remain very watchful. As a result, while developing our new strategy out to 2028, the Board and the executive team have factored in both the risks as well as the opportunities and devoted significant time to debating these aspects. Our core strength is that we have a strong product in Ireland -- strong product offering in Ireland across many products. This is what gives us an enviable depth in our relationship with our customers. This has become the cornerstone of our new strategy.

And when Myles shares the details with you, you will see for yourself that our strategy focuses on what we do today, and we are wanting to make it better. We are trying to make it stronger, and we're trying to make it more efficient. In a world of uncertainty, focusing on what you can control does feel like the right approach. This strategy helps us maintain clarity in our long-term goals while retaining some flexibility for near-term change, which, as you will understand, is very important in today's world. A related point that connects very well with our strategy that I wish to highlight is the headlines we have seen about the Irish government's plans to support Ireland's savings and investment landscape by launching a savings and investment program similar to the ISA program in U.K. or similar to the ISK program in Sweden. We have been following developments here very closely.

At the Bank of Ireland, we are very supportive of this initiative of the government. In the U.K., I know that the ISA market is due to cross GBP 1 trillion soon. Now I see this as a great initiative for wealth creation in Ireland, not only at an individual level, but also collectively at a national level. Another reason this is close to our heart is because our Wealth and Insurance business is core to our strategy. It is underpinned by our subsidiaries, New Ireland, which we have owned for the last 30 years and Davy, which we acquired in 2022. I believe that this combination of capabilities is unique, and it is a potent formula that will help all our customers grow their wealth regardless of their starting point.

We look forward to supporting this government initiative by aligning our own plans to innovate within our Wealth and Insurance division. It will be a key part of our vision to offer unrivaled financial choice now and for generations to come. Having said all that, no conversation on strategy, in my view, is complete without some mention of technology, especially artificial intelligence. As some of you may know, I'm personally a keen observer and follower of developments in this area and more importantly, about thinking about their implications for the bank.

Many banks are using AI to make internal processes more efficient as they should and as we will too. Some others are making -- are using AI to enhance customer service, again, as they should and again, as we will be. These are important steps. But in my view, these are necessary but not sufficient actions. I believe that simple efficiency and productivity is too narrow a lens through which to consider the very far-reaching implications that this technology creates to come up with new products to help customers in different ways, to reimagine the role of banking in an emerging ecosystem of an interconnected digital AI-led economy in Ireland and beyond. And these are things that give customers greater choice.

We are, therefore, challenging ourselves to think more broadly and more ambitiously about the application of AI, innovating for new products, reimagining things we do today, trying to think of things we do not do today and improving customer experience and using AI to create new products and services that will grow our revenues. To me, this is not a choice. This is a strategic imperative. We must remain competitive. We must innovate. We must leverage AI, both to maintain pace with the market and where possible, to move ahead of it.

However, at heart of all this is not technology, but our human capital. It is our colleagues, their passion, their judgment, their creativity, their innovation, their tenacity. It is they who will drive this vision and what we will achieve. And ultimately, it will be you, our customers, who will be the ultimate judges of whether we succeed or not. In summary, we have entered our new 3-year cycle -- strategic cycle with strong momentum. We remain very alert to the range of risks and opportunities in the wider world from technology, from geopolitics, from trade, from tariffs and also from very fast-evolving customer expectations of the bank.

Our strategy will take us through to 2028, but we also have a well-defined long-term vision beyond that and a capable organization that has the ambition to deliver it. It is for these reasons that we have confidence and conviction that the Bank of Ireland will continue to have a meaningful role and a positive impact for all its stakeholders.

Now before I pass on to Myles for details on the financial performance and the strategy, I want to acknowledge a number of our former colleagues, members of our pension scheme who gathered outside this morning. To begin with, I want to say that I, along with the entire Board, appreciate the strength of feeling -- their strength of feeling in this matter. Indeed, we discussed this at the AGM last year and some of you who were there will remember. For those of you who are not familiar with this matter, let me give you a little bit of background. We have a defined benefit pension fund called BSPF, which was closed to new members in 2006. This fund has about 16,300 members, of which about 1/3 are current pensioners. So the bank has 11,000 people, the pension fund is bigger than the bank in terms of number of members. So it's a large fund.

The financial crisis of 2010 resulted in a very significant deficit in the fund. And after extensive review and consultation, we came up with a shared solution between the members of the fund and the bank, where the members took some cuts and the bank contributed EUR 1 billion to the fund. I'm happy to say the fund is now in surplus, although the surplus is really very small. Importantly, the fund is now positioned to fulfill its obligations to all its 16,300 members for the next 60 years. It's a very long-term fund. We are collectively custodians of the pension fund for the next 6 decades. It's beyond our lifetimes, certainly beyond my lifetime, but it's a very long-term goal. And our goal is to make sure that the fund always remains in a position to meet its obligations to its members. And as a result, we have to be incredibly careful, considered and cautious before we make any changes.

In April of this year, the fund provided an increase of 1.7%, which followed an increase of 3% in 2024, 3% in 2023 and 2.7% in 2022. We review the operations of the fund regularly. A detailed review by an independent third party was conducted last year, and we will continue to review this matter regularly on an ongoing basis. However, at this time, we do not believe that any further actions are warranted. I realize that this is not welcome news to some of you. And while I empathize with the feelings involved here, I believe that our actions are the right ones and in the best interest of ensuring that the fund remains financially viable for many decades to come.

I will now pass on to Myles for an overview of group's performance in '25 and our new strategy. Thank you.

Thank you, Akshaya, and good morning, everyone. 2025 marked the successful conclusion of the group's 3-year strategy, finalizing the year in an unrivaled position as Ireland's national champion bank. During this period, customer numbers grew to more than 4 million, deepening and expanding our franchise. We're #1 for mortgages with a market share of 42%, #1 for wealth management with wealth assets growing by 54% to EUR 60 billion and #1 for SME lending with market shares above 50%.

We translated this performance into tangible benefits for all of our stakeholders. For shareholders, in the past 3 years, we've announced EUR 3.6 billion in dividends and share buybacks. For our growing customer base, we made it easier to bank, materially improving our customer relationship Net Promoter Score, a measure of overall long-term customer loyalty and sentiment. And during this period, the group invested more than EUR 1.5 billion in technology and operational resilience while materially accelerating our customer digital capabilities.

For our colleagues, we moved up the ranks to become one of Ireland's leading employers. And for society, we grew our sustainable lending book to EUR 18 billion and established a leadership position in protecting customers from the relentless scourge of fraud.

Turning to the 2025 financial year. The group reported a profit before tax of EUR 1.4 billion. Our loan book finished the year at EUR 82.5 billion, reflecting 6% growth in our Irish loan book, offset by planned international deleveraging and FX. The group's deposit book grew 4% while wealth assets increased by 9%. Total income of EUR 4.2 billion included 7% growth in fee income, led by an excellent performance from our wealth management business. Operating expenses rose 3% last year, in line with expectations. And the group's overall net impairment charge of EUR 193 million included EUR 40 million set aside for the potential impact of geopolitical risks.

Bringing all this together resulted in an adjusted return on tangible equity of 13.9%, supporting total shareholder distributions of EUR 1.2 billion and a dividend per share of EUR 0.70, an 11% increase on 2024. And our CET1 ratio, a key measure of capital strength, finished the year at 15.1%, providing strong prudential protection, positioning the group very well for future investments and enabling capital returns to our shareholders.

This very strong financial performance supported a number of important product and service innovations. At last year's AGM, I referenced our support for Irish homebuilding, one of the most pressing issues we face today. The group has made available EUR 2.5 billion of funding for new housing, including EUR 1 billion for social and affordable projects. At the end of last year, the group is supporting the construction of circa 26,000 homes across Ireland. We also committed an additional EUR 100 million of equity capital in support of Ireland's Strategic Investment Fund to deliver new homes. We are the largest provider of mortgages in Ireland, and last year, we supported customers with the purchase of 16,000 homes.

Our market leadership is underpinned by product innovation. This includes our EcoSaver Mortgage, which offers customers lower rates for higher energy weighted homes. We also launched a trade down equity release mortgage, allowing customers to downsize our move to a less expensive home without having to first sell their current home, in turn, freeing up the supply of secondhand homes.

We expanded our suite of current account propositions. During 2025, we launched Smart Start, an engaging product for 7- to 15-year olds. We also launched Coming to Ireland, the bespoke account opening service for those moving or returning to Ireland. And by the end of 2025, Coming to Ireland has been availed up by customers from 130 countries.

Bank of Ireland operates some 200 locations across the island of Ireland, and we continue to invest in our branches, including the replacement of our 650 strong ATM fleet with state-of-the-art machines which are more accessible, more reliable and more energy efficient. We operate in an increasingly competitive environment and this will continue to evolve.

Our physical footprint, combined with engaging human-centric platforms and propositions, underpins our commitment to our customers. Last year, we rolled out separate instant payments, allowing customers to transfer money in seconds, and a new business borrowing solution, which has greatly improved the service we offer our business customers. And we are building on this progress. Since the start of this year, we have introduced Zippay, a peer-to-peer mobile payment solution for Irish customers, and we will soon launch our new mobile app, an important development as it is our most highly used channel for customer service. We are making smart use of AI to strengthen the relationship we have with our customers, and you heard from Akshaya earlier regarding the opportunity it offers.

During 2025, AI-driven fraud detection assessed around 1 billion card transactions and presented -- sorry, and prevented EUR 10 million in customer losses. Use of AI has also allowed us to reduce call transfers in our contact centers by over 40%. This means faster first-time resolution of our customer queries and quicker, more effective services. All of this points to our ambition to significantly, progressively and tangibly enhance our customer offering and deepen the positive role we play in society.

To that point, in March, we unveiled our new strategy. This strategy and our clear vision to offer unrivaled financial choice now and for generations to come will guide the group's performance to 2028 and beyond. Ireland, our home market, continues to be highly attractive. And notwithstanding geopolitical uncertainties, which I'll come back to shortly, Ireland is one of the fastest-growing European economies. Demographic and wealth creation are supporting long-term growth while private and public sectors are also positioned for strong growth, notably enabled by Ireland's EUR 275 billion national development plan to 2035.

Against this favorable backdrop, our group strategy has three priorities: driving growth in Ireland by enhancing our mortgage, wealth and insurance and everyday banking franchises; optimizing our capital, leveraging core group strengths to ensure growth in our U.K. and international businesses; and investing in the future, including building future-ready capabilities, harnessing investments in digital, cyber protection, operational resilience, AI, data, our people and culture.

This strategy is underpinned by new financial targets: averaging loan and deposit book growth of 3% to 4% per year; wealth assets growing by an average of 10% per year; combined with income growth and carefully managing costs, reducing the group's cost-income ratio to the mid-40% range by 2028, all building to a sustainable return on capital equity of greater 16%.

[Technical Difficulty]

Looking ahead, I am confident that we have a clear and compelling strategy in support of our customers, one that will fully capture the opportunities across the breadth of our business and deliver sustainable, attractive returns for shareholders and long-term value for stakeholders.

In closing, I would like to thank our customers for their trust in which we do not take for granted, our colleagues for their continued dedication and focus, which has been instrumental in the success of our recent strategic cycle and continue to drive us forward and, you, our shareholders, for placing your trust in the Bank of Ireland Group.

I'll now hand back to Sarah to move ahead with the business of the meeting. Thank you.

Thank you, Myles. So as set out and explained in the notice of the meeting, which has been taken as read, there are a total of 27 decisions to be put to today's meeting via 18 resolutions. As there are many resolutions before you today, in the interest of time, it is proposed that rather than reading out each resolution in full, the main thrust of the resolution to be put before the meeting will be summarized.

For each of the resolutions today, the Chairman is demanding a poll. Our registrar, Computershare Investor Services, has already provided the details of the proxies received from shareholders, including those proxies which instruct the Chairman how to vote on behalf of the relevant shareholders in his capacity as the Chair of the meeting.

To vote today, you each have an attendance card with you. On the reverse of that card, you will see the 18 resolutions and 3 boxes opposite each resolution. That's your polling card. Before you leave, we ask you to tick the relevant box to indicate your vote on each resolution. If you can please ensure you sign the polling card, please, as the absence of a signature, will invalidate your vote. Then as you leave, please put your polling card into one of the poll boxes situated throughout the room or at the exit doors.

Our registrar, our colleagues are in the room and they will assist you as you leave. The registrar will count the votes -- the results of your votes immediately after the meeting, and we will add these to the proxies received in advance of the meeting. Details of the results will then be published on the group's website and released to the stock exchanges after the meeting. To note that while a vote withheld is not a vote, for the purpose of today's poll, details of any votes that are withheld will also be provided.

As we move to shareholder questions, similar to last year's AGM, we did ask for -- we did invite questions in advance of the meeting. We received a small number of questions, and we have responded to each of them. In terms of the questions that we've received, they mainly refer to the odd-lot, the London Stock Exchange delisting proposal and pension-related matters. The responses provided to the questions received can be found on the Investor Relations section of the group website. Any questions that was made available on the website relate to individual accounts, pension or administrative matters.

The Chairman is now going to invite questions from shareholders of the white admission card that relate to the resolutions that are before you today. Any questions raised should relate to the business of the meeting. So if you have any queries related to personal banking or other matters, as mentioned earlier, we do have colleagues in the room that can speak with you after the meeting. If you would like to ask a question, if you can please raise your hand and your white card, we'll get a microphone to you. And if you could please share your name when you're asking the question. I would just say, we have a shareholder in the room that has put 2 questions and just asked if we can read the question out. So when you open for questions, I'll read those out. So back to Akshaya to take your questions.

Thank you, Sarah. Why don't we start with the questions that we have received?

Thank you. So again, on behalf of the shareholder in the room, the first question is, going forward, is there any chance of shares in lieu of dividends?

I can tell you, as of now, there is no plan at the moment. But this is something that we review regularly. The Board reviews distributions very carefully at the end of the year also sometime in the middle of the year, and we will bear this in mind. But as of now, we can tell you there are no plans.

Thank you. And the second question, it was just 2. Did the company have any interest in the Irish permanent as an add-on to the group?

Interesting question. I will pass on to Myles to answer.

Thank you, Akshaya. I mean, Bank of Ireland as a leading national champion bank and a very strong Irish franchise in our home market, it's in that context that the addition of PTSB to Bank of Ireland would not be seen as an appropriate strategic fit. And in that context, we didn't engage in that particular transaction.

Thank you. Thank you, Sarah. I now open the floor for questions. I would ask you to keep your questions brief as possible, and we will do our best to answer. Yes?

[ Brian Hanratty ] is my name, retired staff. The group CEO mentioned the bank's active involvement in relation to construction in Ireland. The government have just announced recently that they've extended the Living City initiative to another 5 later urban centers, the largest being the emerging city of Drogheda which, at last census, had 10,000 more souls within the 9-kilometer radius than Waterford.

Dereliction is a cancer in all of those major urban centers, cities and towns. And in relation to that, I wonder would Bank of Ireland considers doing a packaging and promotion initiative to support government and local government's response to the Living City initiative. And just in mentioning Drogheda, Bank of Ireland has been there this year for 150 years.

Thank you for your question. If I may, I will pass it over to Myles O'Grady to answer that.

Yes. Thanks, Brian. So in the context of my comments earlier, we are currently supporting the development of 26,000 homes. And we think we can take that up to 30,000 out over the next number of years. So we very much want to play a very practical and dedicated role in the support of new homes. And those housing numbers of 26,000, we are supporting the development of homes across the length and breadth of Ireland.

And certainly, if the housing problem is to be solved, it does require much collaboration between banks like Bank of Ireland, the government and of course, the building sector as well. We did a lot of work last year with those different stakeholders. Hence, the reason we communicated EUR 100 million equity capital support as well. So certainly, there isn't anything off the table. We are particularly interested in housing developments that are in urban centers and certainly Drogheda that would meet that criteria for sure. And so no specific details today, but in the context of our support for homebuilding, we're very happy to engage with developers and indeed the government in that regard.

Thank you.

Can I address this to Mr. O'Grady, please? I'm actually not a shareholder. I'm not even a customer of Bank of Ireland, but I think it's very important to tell the shareholders how viciously Bank of Ireland are treating people in family home repossessions. I'm a victim at your hands, and I can't tell you what you've done. You've served as someone's on my daughter with Down syndrome. You served as someone's on me a day before cancer surgery and the hope that I wouldn't be well enough to enter the appearance after second diagnosis breast cancer surgery. I'm at the center of a family home repossession, I'm set to lose my home. I never signed up the contract. My ex was a solicitor.

Bank of Ireland have had a very vicious legal team chasing me for 10 years through every court in the land. I've written to you yourself. You hope my name is Heather Cody. You've always ignored my letters, Mr. O'Grady. And I think it's not nice to stand up there and say, we're all for society, we're all for customers when you are viciously assaulting people through the courts. And I invite every single shareholder to attend the forecourts to see what's happening there on behalf of Bank of Ireland. There's no mediation. There's no decency. I tried to do a deal with Bank of Ireland 12 years ago. They just beat me through the courts and then put all the costs on me. They're set to take our family home and leave my 2 daughters of disability on the side of the road and walk away. There's no audit. There's no accountability.

The account I'm talking about was set up and it's a fictitious name, Mr. Heather McMillan, Center Street Carlo, Carlo address, Carlo phone number, occupation; solicitor, sex; male, and I'm still losing and you're saying you're trying to protect people from fraud. I have a fraud investigation number, PULSE number, and you're all ignoring it. And you set with me more on it, and I can't tell you how vicious they are, and you're sitting back and saying it's okay. And on the 4th of August last summer, a farmer [Indiscernible] hung himself from a tree when Wilson put up an auctioneer sign on his farm. You're not being kind to farmers. You're throwing them out after generations, they're doing their best. There's no audit, there's no accountability. Courts support the banks. Bank of Ireland are the most vicious. People complain about culture funds. Bank of Ireland are so vicious.

On the 2nd of August 2025, near here in Dublin 4, Bank of Ireland sent in a gang of people with high bid jackets and they beat a couple out of the house. And the man was on the roof, he got so panicked. He fell off the roof and broke his bone in his hip. At the hands of Bank of Ireland, black and tans wouldn't have done worse. And I think it's shameful and there's no one I can talk to. I've tried writing to you have always ignored me. and it's not good enough to say you're protecting customers when this is what you're doing on the ground, the most vulnerable. And most people are shamed to speak up. Most people are afraid. Most people are terrified. People are committing suicide at your hands, and there has to be another way.

And today, I'm asking you for another way. I was down in Westford Circle Court, 12 people had their houses repossessed. They were afraid to turn up. Every single person is decent. Nobody tries to be in this situation, nobody sets out. Somebody could be there, like my case, in the heart of the Moran and Partners. Somebody could be there because of cancer, because of alcoholism, because of unemployment. You have to start thinking about this, and I'd be so grateful if you use this moment to think about it and be decent, be kind, don't be -- you should go down to the high court yourself. You can sit beside me there. I'm waiting for an appeal in the court of appeal. It could go wrong for me. If it is, myself, my daughter with Down Syndrome, my daughter with [Indiscernible] will be thrown out on the ground. And you don't care and you should care about people.

It's not good enough to say we're very successful. We're very lucrative. We're doing really well. We care about society when you are targeting the most vulnerable. And in most cases, you go after separated vulnerable women because you think -- and we have to be lay litigants. We don't have any legal teams and you send in viciously legal teams with huge, big legal pockets and you don't stop until you repossess the houses. And I'm asking you today, can there be another way, please? Can you go forward in a more decent way?

I know you addressed the question, Myles, but please let me, allow me to respond. I'm really sorry to hear your experience seriously. I think you raised some serious matters. May I ask that after the meeting we have Myles O'Grady, our CEO, and our Head of Legal, Ann Lalor. Ann has recently joined the bank. She will look at everything with a fresh pair of eyes. And if you have a little bit of time after this meeting, I think I will ask Myles and Ann to sit down with you and have a conversation. Thank you.

I had always wanted to speak. I'd just like to say that I'm a shareholder of 30 years and my wife -- over 30 years, and my wife is a shareholder of something over 20 years. And I am very concerned what I was going to say about a matter, I wasn't going to say what the matter was. But I was speaking to Sarah and I was speaking to Ann and I was speaking to yourself, Mr. Chairman. And even though I'm very, very disappointed, I wrote a reasonably long letter to yourself, and I got a very short reply and I'm extraordinarily disappointed in the reply, but I'm extraordinarily satisfied with the response that I got here today with the 3 of you, and I much, much appreciate it. I think it's a matter that we can find interest on both sides because this may be a very serious matter of disrepute for the bank.

So I think as a long-time shareholder, I think this can be resolved with good intentions. And thanks very much for your courtesy this morning.

Thank you for bringing this to my attention. Again, I'm glad you are satisfied with the discussion that you and I had before the meeting. Ann we'll get in touch with you after this meeting. Ann is getting a little busy, but she'll be happy -- I'm joking, but she'd be happy to sit down with you and look at it with a fresh pair of eyes.

I have a number of questions here. One question is on the U.K. industry redress scheme for water finance compensation claims. I understand the Bank of Ireland has set aside a cumulative provision with the U.K. Finance Commission of 429 million pursuant to the U.K. Financial Authority redress scheme for customers who were sold care loan schemes. This scheme is banned here in Czechia. The question is, was the increased estimate for the Motor Finance Commission redress scheme pursuant to the recent U.K. Supreme Court decision, which narrowed the scope of compensation payouts originally suggested by the Court of Appeal with the view to particular lenders in the worst-case scenario. The next question, is the Bank of Ireland committed to providing appropriate redress and compensation scheme and the handling of a large-scale compensation scheme for the U.K. motor finance in a timely manner? And question number three is, as the digital adoption continues, new challenges are emerging, how many digital active customers have the Bank of Ireland? And the final question is, how many Bank of Ireland customers log into the mobile banking app during peak times? Thank you, Governor.

Okay. I think there are two parts to your question, sir. One has to do with Motor Finance, which I will ask our CFO, Mark Spain, to answer. And on how many customers log in to mobile, do you remember?

Yes, I have some starts to help with that, and thank you for the question. So Mark will take the car finance question. So we have that 2.5 million retail customers on the island of Ireland. About 85% are digitally active, which means they have in some capacity used their mobile app over the last recent period. So it's a very strong level of digital activity from our customers. And I referenced earlier that, combined with a very strong physical footprint, our 200 locations across the island of Ireland, for both of those channels, the physical channel but also our mobile app is a winning formula in the context of meeting our customer needs. And of course, I referenced earlier, we have a new mobile app due for launch in quarter 2. Mark?

Yes. So on the provision, that is actually in response to the FCA consultation paper, which was published in October last year. The FCA has subsequently finalized that scheme in March. Our provision level remains unchanged. We communicated that in our most recent trading update in terms of timing of the timing of customer redress will be in line with the time line set out by the FCA, and we're operationally gearing up to do that.

Thank you. Any further questions?

Mr. Chairman, Sean O'Neill or John A. O'Neil. Just I personally know Heather, and I empathize with her difficulties. I'll move on then to another question, if I may address one to Mr. Spain, please. Mark, could you give me an idea as to the rate of return the BSPF gets on the escrow account? I call it the magic bucket. I tend to ascribe a nickname to something I don't understand and something that I'm very suspicious of. So is there any return given to the BSPF on the funds in the escrow account?

Mark, would you like to?

Yes. I maybe just to provide some context for other shareholders and attendees in the escrow account. So the investment approach taken by the trustees in which the banks in the BSP is designed to reduce volatility and derisk the BSPF. And that's taking that 60-year view, which the Chair referred to in his opening, so to reduce that volatility.

John, that investment approach does reduce return on assets. And as part of the -- and that reduces or reduce -- there's a cost to the bank in terms of that. And that's the context for the escrow account being agreed between the bank and trustees that applied from 2022 to 30th of September 2025. about EUR 140 million in the escrow account today. That is available in the event of the BSPF encountering difficulties and remains in that escrow account for up to 15 years. There is no further escrow. So contributions from October 2025 are in cash into the BSPF, about EUR 38 million a year. And again, John, specifically in answer to your question, the returns on that escrow account were part of that negotiation between the bank and the trustees on which the trustees took independent actuarial and legal advice.

There is absolutely no figure then if you can give me say it's getting 3%, 4%, 5%.

My understanding is that the returns are in that range, yes.

Now if I could just refer to a previous question there on the U.K., the write-off or the hits that Bank of Ireland had at EUR 430 million in the accounts. That obviously is as a result of the great policy that the bank has allowed to creep in and has crept in years and years ago. And I call it a kind of a toxic culture. If a problem was brought to the attention of the bank, it's pushed aside, it's denied, it's forgotten, the old system is procrastinated, it ends up in law cases and court cases, substantial legal fees expended.

And there are a number of issues brought to the attention of this Board on previous meetings here. And the Chairman referenced the group of people outside today, the protest group. They're protesting about a 1% clawback under pension increases. I have -- the question I have, the Chairman has -- he certainly hasn't encouraged those people out there and he certainly hasn't encouraged me that, that 1% clawback will disappear anytime soon. And that, I'm telling you, is a potential difficulty and the possibility of a reflection on the bottom line of the bank at some time in the future unless the position is addressed. And I like you to take note of that because that will happen for sure.

Thank you. No, look, I completely understand. And like I said earlier, I do empathize. But the fact is that we have to make sure that the pension fund is able to support its obligations for the next 60 years for 16,000-plus people. We have looked at it very carefully. And the reason I'm being a little careful in how I answer is because this is not something we take lightly. We know how concerned you are. You are all people who have worked with the bank. In my first job, I worked 22 years with an organization. And I know what it feels like to be a long-serving employee.

So we don't take this lightly at all. However, as custodians of the fund, as long-term custodians of the fund, making sure that the fund is able to meet its obligations, at this point, I'm really sorry but this is the only answer I can give you, that we will review the situation every year. And if something does change, nothing will give me greater pleasure than to make some changes. But as of now, I don't think it is possible.

Mr. Chairman. I'm glad to hear that you will review the position every year. And hopefully, there will be a positive result for pensioners because by the end of March next pensions through that 1% clawback, which I maintain is open daylight robbery, they will have contributed between EUR 8.5 million and EUR 10 million in the last 5 years. 4.8% or 4.9% has been taken from them. You're well aware of that. And those funds of EUR 10 million approximately will remain in the BSPF while, at the same time, the bank had [ solving ] money into the escrow account at very little return. It's not a very definitive answer I got from Mark about the interest return on that.

I think we should move on to other questions now. I think we should move on to other questions now. There's a question here.

Sean Quinn. Mention has been made of the saving and investment accounts that are going to be introduced by the government, which are likely to be introduced in January. That's going to mean that people will be going to online platforms and purchasing shares, EFTs and whatever. Now we in Ireland, there's very little choice with respect to online brokerages. One of them is Davies. And taking Davies as an example, which is owned by the Bank of Ireland, their costs are far too much. If you go on to DEGIRO, you can buy and purchase shares for about EUR 3.80. If you go on to Trade Republic, it's about EUR 1. If you go on to Trading 212, there's no charge. If you go on to Davies, you're talking about, I think it's a GBP 50 quarterly. And if you wish to purchase shares, there's commission charges, which are astronomical. Now billions are going to go into these savings and investment accounts. And more and more people are going to be using online platforms.

And like they're going to be -- they're not going to be using Davies, which is owned by the Bank of Ireland, unless Davies and the other Irish platforms reduce their fees considerably. So would you not consider what's coming and bringing about a drastic reduction on the costs that Irish people have to incur from Irish platforms?

Well, thank you for bringing that up. What you raise is an extremely important point because what the Irish Government is doing, and I've seen this in the U.K., there are 40 million ISA accounts in the U.K. 40 million out of a 68 million population is a very big number. And I hope that in 27 years' time, just like U.K. has reached, Ireland will reach about 60% of population investing in these accounts.

Ease of use, ease of access and ease of understanding are critical. They have been critical for many years, but they are even more critical in today's world.

And I believe we are -- I know that Myles and his team are very focused on how we will interact, how we will deal with the investment account product when it is introduced by the government. I'm going to ask Myles to give you his views of it. But you're absolutely correct. We cannot be charging EUR 50 a share and expect everyone to invest because these are small investments. So we will have to come up with a tailored kind of service, and I look forward to working on that.

Just to add, Mr. Quinn. Our wealth strategy is designed to ensure that we can expand our product offering, not just to high net worth customers but moving into affluent, mass affluent and indeed the mass market as well. And of course, in doing so, we know that comes with a different pricing model, a different set of economics. We're very supportive of the government's initiative. And we have been in discussion with the government for quite some time on bringing this type of product to market.

Right now, the Davy team, the wealth team are actively working on what that platform will be. The objective is to have that platform live to coincide with the introduction of a new offering to the Irish population. And our absolute objective in bringing that product to market, that service platform is one, ease of being able to take on that product, and two, to make sure that it is affordable for those customers because we have more than 4 million customers in Bank of Ireland, we want to look after all of their needs.

And certainly, I would like to see an increase in investment and savings participation. So our mindset will be to ensure that we are there to support those customers, both in terms of ease and in terms of cost as that product comes to the market next year.

Thank you, Myles. I think we have time for 2 more questions. So are there any? Thank you. A question here.

Yes. John Kelly, shareholder and pensioner. I just have a couple of questions. I'll be brief. You have many, many billions of funds in demand deposit accounts now. They're there for probably a lot of customers are maybe do it through loyalty, I don't know, maybe do it to fear of moving. But for that loyalty, they are awarded with an interest rate of 0.01%.

Now do you have any plans to improve that? Because companies like Revolut have come in and, figuratively speaking, wiped your eye in this, both in the technology area -- I know you've introduced Zippay, but again, figuratively speaking, I think Bank of Ireland has been asleep at the wheel. And Revolut have zoomed in and they've accumulated many thousands. So that's two. I know Zippay is addressing that, but it's been late to the game.

Myles will you answer that?

Yes. Very happy to Mr. Kelly. At Bank of Ireland, we offer a range of deposit products. And certainly, for those customers who wish to save or wish to put the funds into a term deposit, for example, we offer 2.15% on a 12-month term product. So we do want to encourage our customers to save. That's good for Bank of Ireland, too, because it offers us continuity of funding. That's really important. So I would be urging our customers to consider those term deposit products that do offer attractive rates and, I would say, attractive relative to where the competitive market is at. That's our objective.

I'm certainly very happy to offer some details on that from colleagues at the back of the room. But we do encourage our customers. We've seen a significant flow over the last number of years of customers moving from overnight deposits into term deposits, and that's a good thing. We're very happy to reward those customers.

Thank you, Mr. Kelly. Last question, in the corner there.

Yes. Finbar O'Neil, Chairman. Last year and in the prior year, I referred at the AGM to statements in the Chairman's report, which suggested that the government should establish a level-playing field and remove crisis a restrictions on the bank. I'm glad to see you left it out this year because my response at the meeting last year was that, that's fine, but I think you should also remove the crisis era restrictions on the pensioners. Immediately following last year's meeting, I had a brief discussion with Mr. Pateman, and I took the trouble to write to him on the 1st of July 2025 because he had offered to -- if he could lend a hand in resolving the pensioner issues, he would try and help.

So I wrote him in July and asked him, as I had suggested to you in a prior discussion around the AGM last year to meet with a few pensioners, just to get a feel so the Board, the independent directors could get a feel of how pensioners feel, not just hear it from your own executives, which are very strong in the view and are very attentive to making the case. And in fact, you've made a spirited defense yourself of the bank position on the BSPF. And in response to my letter, I got a letter from Mark. It was in November. And he again made a spirited defense of the bank position. But I didn't get a response from Mr. Pateman. And I had suggested in my letter that I'd be happy to meet with you and/or with him to just give a brief to the Board.

So I'm disappointed that my letter did not at least elicit a personal acknowledgment of the letter. The letter from Mark said, and I quote, following your letter to Mr. Pateman, a number of Board members discussed your query and have asked me to respond on behalf of the Board. I'm not sure if Steve actually saw the letter. He certainly, as I said, didn't respond to it. But I just feel there is always an opportunity to look slightly differently at issues. And obviously, the Board's obligation is to do that. You have some new directors up for election here, and I would hope that new directors will maybe look through the [Indiscernible]. In other words, the haunted fog and see perhaps that there are other ways to resolve an issue, which, as a colleague has said earlier, may become a mounting issue for the bank and follow the catalog of other large provisions you have made.

And I need to refer to all of them, but in particular, the tracker mortgage case was an outstanding case of poor management by the Board and the bank over a long, long period. And in its citation, if people take the time to read it, the Central Bank was very specific on some of the issues that caused the problem to take so long to resolve and eventually cost the bank so much. The fine was massive, damages and the compensation paid to tracker mortgage holders was massive. And there is a risk, Chairman, that you are doing exactly the same again. So I would ask you to just look through the [Indiscernible] and look at this with new eyes, particularly new Board directors coming on board. Thank you.

Again, I can only emphasize that we hear you loud and clear. This is something that we look at very carefully every year, including at the Board. And I can only repeat what I said, that our primary obligation is to make sure that the pension fund is solving, because if the pension fund is not -- cannot meet its obligations, the implications of that are very, very severe. And again, it's not something I say lightly, not something that we take lightly. But again, as of now, we have taken all the actions that we could.

Thank you very much for all your questions. We will now move on to the business of the meeting. As Sarah has said earlier, we have 18 resolutions. The group is presenting its statutory financial statements for the year, which are published on the 2nd of March 2026. Copies of these statements were approved by the Board of Directors report and the auditor's report may be found on the group's website. The of the group, since that date, are summarized in our quarter 1 statement, interim management statement published on 1st of May, and this is also available on the group's website.

The full text of each resolution is set out in the notice of the meeting, and I will read out a summary. Before I do that, I'd like to provide some additional information on two matters that are being considered here. One is a proposed delisting of the group's shares from the London Stock Exchange and the second is the odd-lot offer. Taking these in turn.

Bank of Ireland are currently listed on both Euronext Dublin and LSE in London. The Board keeps company's listing arrangements under regular review. In recent years, trading volume in ordinary shares on LSE has been negligible compared to the overall trading in company's shares. As a result, the Board considers that the cost of maintaining the LSE listing is no longer in the interest of the company and its shareholders. Accordingly, the Board has resolved to propose cancellation of company's listing of ordinary shares on the official list of the FCA and the cancellation of its admission to trading on the main market of the LSE.

The proposed U.K. delisting will not affect the continued listing of ordinary shares on the main market on Euronext Dublin. It will also have no impact on group's day-to-day operations in the U.K. If approved today, the Bank of Ireland shares will be delisted from London Stock Exchange on the 29th of June.

On the odd-lot offer, some of you will remember last year that we committed to provide a mechanism for shareholders with small holdings. We have roughly 75,500 registered shareholders in the company, of which about 26,000 people hold -- or 35% hold 30 shares or less. This is a very sparse shareholding.

Our rationale, therefore, for the odd-lot offer is threefold. One is to give the ability to small shareholders to deal with their shares without being constrained by disproportionate costs. Second is based on our experience with mailing annual reports with the dividend checks, we believe that a number of the shareholders are inactive. Finally, recurring administration costs resulting from this large number of shareholders are disproportionate to the size of the small shareholdings.

So if approved today, the directors will facilitate the disposal at some point in the next 18 months by eligible holders of odd-lots and their shares at a 5% premium over the weighted average share price traded on Euronext Dublin over the 5 preceding days and without which and without any dealing costs that render such a transaction uneconomic. Of course, shareholders are free to elect to retain their shareholding in the company if they choose to do so. I will now formally propose each resolution as set out in the notice and put to the meeting in summary.

Resolution 1, that the financial statements, reports of directors, reports of the auditor for the year ended December 31, '25 submitted to this meeting be considered and received.

Number 2, to declare a final dividend of EUR 0.45 per share for year ended December 31, '25, payable on June 9, '26 to all members on the register as a 5:00 pm on 24th of April '26.

Resolution 3a to 3j are for election or reelection of directors and are proposed as a separate resolution each: 3a, that Emer Finnan be elected as a Director of the company; 3b, that Niamh Marshall be elected as a Director of the company; 3c, that Hans van der Noordaa be elected as a Director of the company; 3d relates to me, so I'm going to hand over to Myles.

I propose that Akshaya Bhargava be reelected as a Director of the company.

Thank you, Myles. 3e is that Giles Andrews be reelected as a Director of the company; 3f, that Michele Greene be reelected as a Director of the company; 3g, that Myles O'Grady be reelected as a Director of the company; 3h, that Steve Pateman be reelected as a Director of the company; 3i, that Mark Spain be reelected as a director the company; 3j , that Margaret Sweeney, be reelected as a Director of the company.

Resolution 4, that at the appointment of KPMG as the auditor of the company be continued until the conclusion of the next AGM of the company.

#5, that remuneration for the auditor be fixed by the Board of Directors for the 2026 financial year.

#6, that an Extraordinary General Meeting, other than an EGM call for passing of a special resolution, may be called by not less than 14 clear days notice in writing in accordance with Article 50B of company's Articles of Association.

#7, to receive and consider directors remuneration report for the year ended 31st December, '25.

#8 is being proposed as a special resolution and seeks to authorize the company or any of its subsidiaries to make market purchases of up to 10% of all issued ordinary shares at the date of passing the resolution. The authority will expire the earliest of AGM to be held in 2027 or 21st of August 2027.

#9 relates primarily to the share buyback program. It is proposed to put a routine authority in place, setting the maximum-minimum range at which treasury shares may be reallotted off market. The authority will expire at the close of business on date of AGM in 2027 or on 21st of August 2027.

#10 is being proposed to authorize directors to issue new ordinary shares up to a maximum of 316,924,322 shares, representing approximately 33% of issued share capital of the company as of 13th of April '26, subject to statutory preemption rights where applicable.

#11 is being proposed as a special resolution to authorize the directors to allot ordinary shares for cash without offering them first to other ordinary shareholders. The authority in Resolution 11 is limited to an allotment pursuant to a rights issue authorized under Resolution 10 and up to 47,539,123 ordinary shares, otherwise then in connection with an offer to ordinary shareholders in accordance with their preemption rights.

#12 will be proposed as a special resolution, which is to authorize directors to allot ordinary shares for cash without offering them first to other ordinary shareholders. Resolution 12 also authorizes the disapplication of preemption rights in respect to additional 47,539,123 ordinary shares for purposes of acquisition or special capital investment. The authority is being sought in Resolutions 10, 11 and 12, if granted, will remain in force until the date of AGM in 2027 or 21st of August, whichever is earlier. For clarity, there are no current plans to issue any ordinary shares on foot of this authorization.

#13 and 14, I will take them together. Here, the directors are seeking a general authority to issue additional Tier 1 contingent equity conversion notes, or AT1s, as they are called; and secondly, to a lot ordinary shares issued upon conversion or exchange of AT1s without first offering them to existing shareholders. Resolution 13 is proposed as an ordinary resolution and Resolution 14 is proposed as a special resolution as set out in the notice.

#15 is the special resolution, which proposes the cancellation of the group's listing of ordinary shares on the official list of the FCA and its cancellation to admission to trading on the main market of the LSE, noting that the group will remain listed on the official list of the main market of Euronext Dublin.

Resolution 16 to 18 are resolutions that approve proposals to authorize the Board to carry out an odd-lot transaction within the next 18 months, whereby shareholders holding 30 or fewer ordinary shares will be in a position to sell the shares at a premium to market price while not incurring any brokerage fees. The resolutions include amendments to Articles of Association, granting the authority to the Board and authorizing the off-market purchase of ordinary shares. A copy of the proposed odd-lot purchase offer contract is available for inspection at the registration desk.

Again, to vote on the resolutions proposed, you are asked to put your polling card into one of the polling boxes throughout the hall or the exit doors as you leave the meeting. And as Sarah said, details of the results will be published on our Investor Relations section of the group's website and also released to the stock exchange today.

We now come to the final part of our AGM. There were a number of changes to the composition of the Board during the year, to which I would like to draw your attention. During 2025, we strengthened the Board through a number of new appointments, ensuring that we continue to maintain strong and diverse mix of experience and perspectives aligned to our strategy. We are therefore delighted to welcome Niamh Marshall, Emer Finnan and Hans van der Noordaa as independent non-executive directors. Collectively, they bring a great deal of expertise and experience across finance, banking, technology and transformation.

As part of our ongoing commitment to maintain an effective and highly performing Board, we also recognize the importance of orderly rotation and succession planning, ensuring the continued suitability of the Board in the context of the group's strategy and the external environment in which we operate. In that context, Richard Golding retired in March and Ian Buchanan in April of this year, having served the Board since 2017 and 2018, respectively. I would also like to thank Richard and Ian for their very significant contributions to the Board and its committees during the term with us. Finally, Michele Greene was appointed Deputy Chair and Senior Independent Director in June 2025.

In closing, I would like to reaffirm our confidence in the outlook for the Bank of Ireland while remaining mindful of the uncertainties in the external world. I want to thank you for your continued support and confidence in the group as shareholders.

This now concludes the formal proceedings of the meeting, and I invite you to join us for refreshments. Thank you very much.

Welcome to the Bank of Ireland Q1 IMS Analyst Call. Please note that the call will be recorded. [Operator Instructions]

I would now like to turn the call over to Chief Executive Officer, Myles O'Grady. Please go ahead.

Thank you, Kavalani, and good morning, everyone, and welcome to Bank of Ireland's Quarter 1 Analyst Call. I'm joined by our CFO, Mark Spain.

Quarter 1 marks the opening of the group's new 3-year strategic cycle, and we've made a strong start. Our performance reflects disciplined execution of our new strategy, the breadth of our franchise and the continued resilience of the Irish economy.

The group entered 2026 with momentum. Loans grew 5% annualized in quarter 1. Our Irish franchise grew 8%. Deposits were strong at EUR 107 billion and our Wealth and Insurance franchise delivered EUR 1.1 billion of net inflows. Asset quality remains robust, and the business continues to be highly capital generative.

The Irish economy continues to demonstrate growth and resilience against an uncertain external backlog. While the group's updated economic forecast points to some changes in headline GDP, our expectations regarding domestic growth rates, employment and house prices are broadly unchanged versus the start of the year. And we remain vigilant should the current geopolitical backdrop persist, mindful of the potential long-term impacts for our customers.

Looking ahead, our strategic priorities driving growth in Ireland, optimizing capital allocation and investing for the future are designed to deliver a disciplined top line growth, a step change in operating leverage and accelerating returns. Strong balance sheets across households, corporates and the state underpin our confidence in asset quality and volume growth.

And on net interest income, while there is potential upside from higher rate expectations, we retain our guidance at this early stage of the year. And as we conclude quarter 1, the group reaffirms all of the 2026 guidance and financial targets out to 2028, including statutory return on tangible equity building to above 16% and mid- to high teens annual EPS growth.

I'm going to hand back now to Kavalani and open the floor to questions. Thank you very much.

[Operator Instructions] Our first question comes from Diarmaid Sheridan.

Two questions, if I may. Firstly, maybe, Mark, just on NII. I wonder if you could just maybe give us a little bit more detail around the areas you talked to in the statement around the pluses and minuses? And how we should think about maybe those going through the next couple of quarters and into year-end and beyond?

And then maybe secondly, Myles, maybe just on Wealth and Insurance. Obviously, we have a little bit more detail now around the savings product at this stage is likely to launch. I just wonder in terms of against the backdrop of the wealth strategy that was unveiled recently, how you think about how that plays into the broader strategy that you're looking to?

Yes. Diarmaid, thanks for the questions. Let me take the wealth question, first of all, and then I'll ask Mark to cover the moving parts on NII. So we are very supportive of the government's initiatives to introduce an ISA type product. And of course, this is against a backdrop across Europe of savings and investments union. Our wealth strategy that we expect our wealth assets under management to grow to EUR 75 billion out to 2028. They've grown in the first quarter, net inflow is very strong against a volatile market backdrop of EUR 1.1 billion. And of course, part of that strategy of growing to EUR 75 billion and indeed, a EUR 100 billion by 2030 is developing further our affluent business model. And therefore, it is in that space that potential ISA product that the government is working on, that sits very firmly within our strategy of developing our affluent business. We're very supportive of it.

Diarmaid, on NII and so Q1 performance is very much in line with our expectations. We are reiterating our guidance of around EUR 3.4 billion for 2026 today, very, very confident in that. If we look forward to '27 and '28, we provided an outlook at our full year results on those. So NII growing to greater than EUR 3.6 billion by 2027 and to greater than EUR 3.85 billion by 2028, very much on track.

The key drivers over the outer years, but also playing out in Q1, loan and deposit growth, obviously, a very strong performance, particularly in our Irish loan books in Q1. So we're really pleased with that, and also the benefits of the structural hedge.

In Q1, Diarmaid, we would have also had the offset of lower interest rates and FX impacts and also the impact of deleveraging portfolio. So they played out, that has left the flat versus Q1 last year. But I'd say overall, the performance in Q1 gives us a very strong confidence in our guidance for the year of around EUR 3.4 billion.

Our next question is from Sanjena Dadawala with UBS.

I wanted to ask about competitive trends. So you've raised term deposit rates a couple of weeks ago. So what's prompted that? Were you losing some business to competition at prior rates? And what has been the customer response to that increase? And also on the mortgage side, where the rate comparison suggests you priced above peers but still maintaining a high market share. How do you think BAWAG's entry changes there?

Sanjena, thank you for the question on competition. I guess, at the broadest level, when we communicated our strategy on the 2nd of March 2028, I spoke about a couple of things. One, firstly, that in setting out our target out to '28 in terms of loan book growth, in terms of deposit book growth, we have factored in that in a growing market that some of that growth could go to an elevated level of competition. So in that context, we remain very comfortable with all of the targets that we have set out.

In terms of competitive activity on the ground, obviously, we note the significant transaction. But actually, very little new activity relative to 2025 we've seen in the quarter. The move on our deposit was scheduled and planned. And again, we see a very stable overall deposit base for everyday banking and in fact, very small and marginal flow-to-term mark for quarter 1.

And on the mortgage space, again, I spoke earlier about the overall lending book for Bank of Ireland grew by 5%. The Irish book grew by 8%. And within that, of course, it's a strong mortgage performance. Market share is at 41%. So that's a very good performance. And actually looking at some of the expected completions of housing for quarter 1 that points to a growing mortgage market that we expected over the course of this year. So again, very confident around our ability to grow our balance sheet and having captured, we think, the likely impact of increased competition.

Our next question comes from Mike Evison with Autonomous.

I hope this doesn't cross over the previous person's question because I got cut off when I switched as a participant. Just one question on the deposits. So obviously, deposits were slightly down over the quarter. They were flat for retail, and there was a slight contraction in corporate deposits. I just wondered if you could talk a little bit more to the reasons there given the system growth?

And then on NII. It looks like NII on an annualized basis is pretty much bang in line with guidance, but you've got lending growth coming through, expecting deposit growth and the hedge to churn through. So I just wondered if you could talk to whether there were any headwinds, which are the reason you haven't sort of said ahead of the guidance? Or are you seeing anything coming through which might act against that, please?

Thanks very much, Mike. Mark, do you want to address this?

Yes, Mike. Deposits in Q1 are very much in line with our expectations and actually typical seasonal trends there. If you look actually over the last couple of years, you'll see deposits flat in Q1 growth over Q2 to Q4. It varies around a bit. So we're -- I mean if we look at April, Mike, I would say, trends playing out in April very much as we expect. So we're feeling good about the year on deposits.

On NII, yes, as I said in answer to Diarmaid's question earlier, we're really, really pleased with Q1 and very strong volume trends. As Myles mentioned, our Irish book growing by 8% on an annualized basis in Q1 and strong performance both in mortgages and in our business and corporate lines as well.

And that really gives us that really strong confidence in the EUR 3.4 billion for the year. As Myles mentioned in his opening remarks, there's upside potential from higher rates. We're not reflecting that at this stage. It's just too early. We'll come back to that at the interims. But at the interims, also Mike, I think we'll just reflect overall on business performance in H1 on the outlook and bring it all back together. But feeling really, really confident about that circa EUR 3.4 billion for this year.

The next question comes from Denis McGoldrick with Goodbody.

Just two, please, if I may. One, you recorded good growth in your core corporate and commercial book in the quarter. So just wondering if you can give us a sense of the type of new lending that you're seeing there and how sustainable you think that might be.

And then secondly, just more generally, are you seeing any impact yet to your customers in relation to the higher energy and fuel costs? And any comments around asset quality more generally, please?

Denis, thank you for those questions. So the Corporate and Commercial business, particularly in the Irish franchise had a very strong quarter 1. I referenced the Irish lending book growing by 8% and Corporate and Commercial were a very strong contributor to that performance. So we're pleased, and you'll see it in the numbers that I've said in the IMS.

And again, it's the sectors that we have seen very good progress on last year continues to play out. So agri has been good, manufacturing and retail as well, also professional services areas as well has been another source of good business for Bank of Ireland. On the energy piece, certainly, we haven't seen any real material impact in quarter 1. But of course, this has a longer tail to play out, and that's my point around remaining very vigilant to this. But we enter this, I guess, elevated period of uncertainty from a very strong position. Our overall NPE ratio at 2%, asset quality across the book particularly strong, no areas of vulnerability that I'm seeing over the quarter. And also mindful of course, Mark, on the impairment charge. We took a PMA at the end of last year of EUR 40 million to get ahead of the geopolitical risk.

The other interesting data point, Denis, which is that if you look at energy intensity or energy consumption of Ireland relative to European peers as a measure against either GDP or modified GDP, we're relatively low, and that's a function of the energy makeup in Ireland. But certainly, it's an area for careful attention, and we're working closely with our customers as they navigate this period of uncertainty as well. But so far, a very strong quarter and feel comfortable about the overall guidance for the full year.

Next question comes from Seamus Murphy with Carraighill.

So two questions please, again. So let's start with the strategic plan. Can you just remind us of what the reinvestment rate you had assumed in your hedge just for the rolling maturities because obviously, we've had a reasonable movement in rates in the most recent period. So obviously, I presume that's quite a significant upside as we look forward.

And secondly, I know it's only a quarter, but RWAs in the quarter were up EUR 600 million. I think for loans we're at EUR 1.5 billion -- sorry, EUR 1.1 billion. So that's kind of an incremental RWA intensity of around 55%. I'm just -- I know you had guided around 25% at the time of your strategic plan. So was there something going on in the quarter? Or is it just -- how should we think about that as we look forward?

Yes. Seamus. On the RWA, so firstly, FX will be in that as well. So just to think about so sterling and the dollar were both slightly stronger versus the end of the year. And then if you look at the breakdown of our lending, you've got about half in corporate where you have higher risk weights, half in mortgages. But just the metric I think you're thinking about is about 25% of organic capital generation invested in RWA, okay? So that's the metric, and that is actually -- we see that playing out actually in this quarter, and we see that playing out over the year as well.

On the structural hedge, Seamus, you're right. I mean we talk about the upside potential from higher rates. Obviously, that would feed through in the context of the hedge as the hedge rolls over. So reinvestment yields Q1 right across sort of sterling and euro in the sort of [ 270 ] sort of range and a sort of building to that level is what we assume in the plan. So there's potential upside on that as we go forward if rates -- markets remain where they are.

Our next question is from Jordan Bartlam with Mediobanca.

I have two on net interest income, if I may. The first one, I saw you added a further EUR 3.4 billion volume into the bond portfolio. Just interested, how much more capacity is there to go further on that? Are you still anticipating a further 50 basis point margin uplift on those investments?

And then the second question, I just wanted to know if we can have a bit of an update on the portfolio wind-downs? So where are we on the books being delevered? What sort of time frame could we expect for full exits? And how much net interest income headwinds remain from those exits? So those would be my two questions.

Thanks, Jordan. Mark, do you want to go?

I will, yes. So bond portfolio, we've added EUR 3.5 billion in Q1. I'd say that's the bulk of our activity for the year in that, Jordan. We'll obviously continue to keep that under review, the spreads on that about 40 basis points in terms of the wind-down portfolios. Again, we've given the disclosure in the IMS on that. But I would say 3 portfolios there are corporate GB, U.S. LAF and U.S CRE books. Again, all have reduced in Q1, pleased with some of the NPE exits there as well supporting the NPE ratio dropping to 2%. In total over the 3 years, about EUR 110 million or so of NII headwinds between '26 and '28, and a lot of that this year, about EUR 60 million, EUR 70 million of that this year.

Our next question comes from Aman Rakkar with Barclays.

Just to -- so on the mortgage market share, please, the 41% share of gross lending in Q1, it's pretty consistent with the kind of 42% level that you delivered in prior periods, but you kind of pointed us to some kind of market share below that going forward.

So I was interested in kind of spot because is there any chance you can give us kind of spot market share like quarter-to-date? How have you been developing your expectations on how that might develop through the course of the year, that would be very helpful.

And then secondly, just on the ECLs. Obviously, credit is very benign in the quarter, but you're deferring the update to macroeconomic assumptions to H1, which I understand. I was just interested, Mark, how you're approaching that exercise more broadly, to be honest with you, given the Middle East. I mean, the sense is that actually Ireland has quite a resilient backdrop, right? And you've kind of alluded to that. So you might actually expect a relatively modest impact on ECLs from any exercise that's coming in H1, but would be keen to kind of get your sense of how you're thinking about that, please?

Let me take the mortgage market share question and the outlook for that. And Mark on second question. I mean firstly, I mean you've heard me say before, we don't have a mortgage market share target. It's not the right thing for us to do. But certainly, we've had a very strong quarter 1 performance and again, an average drawdown share of 41%, and it's been broadly consistent over the 3 months that they've been just bobbing above the 40% level.

And then my point on this one is that firstly, our outlook for the year remains very strong for this business. This is a book that grew 9% last year. And I referenced earlier in quarter 1, our overall average book grew by 8%. And the mortgage book was a very important clearly component of that.

And I guess the headline point really is that, that market share is elevated, but it doesn't need to be that high for us to ensure that we continue to grow our mortgage book over the course of the year and indeed, out to '28 and in support of those targets to grow our book by an average about 4% for the total group for each year out to '28.

My point here, Aman, is simply that the biggest source of value for our mortgage business is the fact that the mortgage market, the system mortgages are growing year-on-year, heavily supported by the supply of new homes. In fact, the most recent data that's come out points to a significant increase in housing output this year, possibly above 40,000, and that's very significant. And so yes, the market share of front book is relevant, of course it is. But in terms of the total book, that system growth is really important, and we're very -- we've got a very positive view on that. And indeed, that book growing strongly over the course of '26 and beyond.

Aman, just on the ECLs. So maybe just a couple of data points that we will go through that exercise as we approach the half year. But as Myles mentioned, firstly, I think we've got ahead of this a little bit in a sense of taking the geopolitical PMA of EUR 40 million at the end of last year. So that certainly provides some protection as part of an overall PMA stock of over EUR 100 million.

I think the second thing is we published our own updated economic forecast a couple of days ago. If I just look at our forecast for domestic growth in the Irish economy, they're basically the same as our central case back in December. So obviously, we need to see where we are in June, but I think that's sort of a data point that's relevant.

And then the third point is if you look at the weightings in our ECL model and you'll see we've got 30% indented to the downside. So again, I'd say some protection there. So obviously, we need to go through the exercise, but certainly, there are some, I'd say, hopefully, helpful data points as we're thinking about it.

[Operator Instructions] Our next question will come from Borja Ramirez with Citi.

I have two, please, and I apologize if this has been answered beforehand. Unfortunately, I got disconnected. So my first question would be if I look at the NII outlook, I do see some positive upside to -- both to consensus but also to your prior guidance of NII. I see NII around 2% to 3% higher than current consensus for the next 3 years. So I would like to ask if you could kind of provide some color. And then my second question would be some competitors have been increasing the hedge of the structural hedge notional. And I would like to ask if this could be a possibility for Bank of Ireland to further benefit from the current higher rate environment?

Borja, in my opening remarks, I made the point that on the net interest income, there is potential upside from higher rate expectations. And I guess in this early part of the year, at the end of quarter 1, we are retaining our guidance but there certainly is upside.

And Mark, if you'll take Borja through some of the moving parts.

Yes, absolutely, Borja. I mean I think just going back to the 2nd of the March, that NII trajectory building to greater than EUR 3.6 billion in 2027, greater than EUR 3.85 billion by 2028, and that was based on an ECB rate assumption of 2% this year, and getting to 2.25% in 2028, okay? And in terms of BoE, similarly rate expectations have increased there, they are higher now than they were.

But we are early in the year, Borja. So we're also -- an answer to an earlier question, we're also very pleased with Q1 performance in terms of, let's say, what's going on in the ground in the business from a volume perspective. So we will sort of bring all that back together at the interim results. We have had a couple of great set of meetings at that point as well, hopefully a little bit more visibility and provide an update on where we're at.

But as I said, really a high conviction in our circa EUR 3.4 billion guidance for 2026. And on the structural hedge, actually, sorry, just to answer on the second question. Yes, the structural hedge, we see growing modestly over the next 3 years, Borja, basically in line with our deposits and our equity. And those are the key drivers of that. We'll always, around the edge of that, we'll always look and examine particularly our deposit base and see if there are opportunities for taking further action, but nothing to report on that today. So we should think about -- I think we gave quite a bit of disclosure on the structural hedge outlook back on the 2nd of March, and I think that remains intact today.

Our next question comes from Fatima Ghaznavi with KBW.

Just a follow-up on the housing market. I know you said that you see increase in completions at the end of the year, and that might expect to drive some acceleration in the Irish retail lending. Just a quick question. Do you expect -- do you normally sort of see some seasonality in this and expect the first quarter to be a bit slower usually? And then also, it looks like your interest rate sensitivity has decreased slightly versus the full year. Could you maybe talk through what the moving parts might be on that?

Fatima, thanks for the questions. I mean on the housing supply, I mean, firstly, the overall message is that we expect that the housing output for 2026 to be higher than 2025. And that's super important in the context of supporting a growing mortgage book.

I'd say it's less about seasonality factors and more about the lead time when developers commence projects. And for example, a housing development can take in the region of 12 months to -- from start to finish. If you think about an apartment build, which is a huge part of the solution of solving the housing challenge in Ireland. And again, supporting our mortgage business, that can take up to 2 years.

So the data that we watch as well as the completions in a particular point in time. And again, quarter 1 completions year-on-year, very strong, again, indicating housing outputs could break through 40,000 for the full year. The data that we look at typically is around when developers start their work on the ground. And again, that data is also very supportive of a higher level of housing outputs and therefore, supporting growth in the mortgage book this year.

Yes. And Myles, just want to add on that. And Fatima, just going to the seasonality in the mortgage business as well. Fatima, from a mortgage business perspective, Q4 will typically be the strongest quarter and so on and so. On the NII sensitivity, Fatima, no, there's no change. I think we've just given in the statement the sensitivity, 25 bps on euro. But obviously, the NII disclosure we've given overall is across all currencies. So I think if you just look at the euro column back in the slides at the end of the year, you'll see that the numbers are the same.

Our next question comes from Sheel Shah with JPM.

A question on the retail U.K. lending business, please. So your trends were flat. We've seen a lot of U.K. peers and the mortgage market in the U.K. grow a fair amount in the first quarter. So I'm wondering what's going on underneath the hood there? Because clearly, U.K. is in a, let's say, a more challenging situation compared to Ireland. Is there a case of maybe capital allocation being favored in Ireland as opposed to the U.K.? Are the margins and the returns of these mortgages that you're lending out, are they maybe not as attractive at this moment in time? I'm keen to get your thoughts there.

Yes, Sheel. I mean the performance of our U.K. business in the quarter 1 was a strong performance and supportive of the overall group performance. If I could take it back for a moment just to the strategy that we communicated on the 2nd of March, I spoke about the most important pillars of that strategy was driving growth in the Irish franchise, and second of all, optimizing capital allocation. And those 2 objectives play very much to your question.

So I'm very comfortable with the capital that we have allocated into our U.K. business. And certainly, there is an opportunity for that book to grow modestly over the next number of years. And we've seen some of that in quarter 1. I mean the U.K. book grew, so it was supportive of the overall group growth of 5%. But it's not a part of the business, certainly, from an organic perspective that we're putting significantly more capital into relative to what we will be doing on the Island of Ireland franchise.

So again, nothing of note. The book has performed well. Credit quality is in good shape and performance aligned with expectations and indeed, with our strategy.

Our next question comes from Sanjena Dadawala with UBS.

I thought this time, let me try to squeeze two more in. So 1Q cost growth in line with full year guidance, but wondering if you could provide some color on OpEx and restructuring within that. Are restructuring costs in the year progressing as expected? Are they expected to be fairly linear or front ended? And then maybe on the U.K. motor provision of around EUR 430 million. So unchanged, but is it now incorporating only one scenario that is the FCA final redress scheme? Or are there certain other considerations in that?

Thanks, Sanjena. Mark, do you want to grab both?

Yes. In reverse order, Sanjena. So obviously, we've reviewed the final FCA redress scheme and there's no change in our provision of GBP 374 million relative to where we were in March, and we have aligned with the FCA expectations, for example, an opt-in rates, et cetera, on that. So confident actually now that, that actually should put that matter behind us.

In terms of cost growth, again, Sanjena, very much in line with expectations. Obviously, there's hard work on the ground to deliver that. I mean, we have obviously inflation, we're making significant investment. We called that out as part of the strategy, including, for example, in our Wealth business, we're making really good progress in Q1. But to offset that, we're delivering savings as well, and they're playing out as expected in Q1.

Our restructuring costs, I'd say, broadly linear over the year, it will be -- it won't be exactly linear. But again, nothing to call out today in that regard. And we're happy with the progress that we're making.

This concludes the Q&A session. I'll now hand back to management for closing remarks.

Thank you very much. I know it's a busy day in the market today. So thank you for your time, and I hope you all have a very good Friday, and look forward to talking to you all in due course. Thank you very much.

Good morning, everyone. I'm Eamonn Hughes, Investor Relations Officer, and you're all very welcome to Bank of Ireland's 2025 Results and Strategy Update. Myles will shortly take you through an overview of our business and how it performed over the last cycle. Mark will then go through the key points from our 2025 financial results. And then we'll turn to our strategy update covering our plans for the next 3 years to 2028. We'll then wrap up with the investment case for the group and open to the floor for your questions. Over to you, Myles.

Good morning, everyone, for those with us in person in London and those on the call. You're very welcome to our 2025 results and strategy update. I'd like to start by giving you an overview of the unique shape and deep reach of Bank of Ireland's franchise. Put simply, we have an unrivaled position in Ireland with complementary international businesses.

And what you see on the first slide is that unrivaled position across Mortgages, Everyday Banking, Corporate & Commercial Lending and Wealth and Insurance. Our position is underpinned by 4 long-established respected brands, Bank of Ireland, Davy, New Ireland and Bank of Ireland U.K. This embeds the group into every community in Ireland, its economy and indeed its society.

This is key to our growth over the coming years, complemented by supportive businesses outside of Ireland. Being embedded in Ireland means being embedded in one of Europe's fastest-growing economies. This is a highly attractive market driving balance sheet growth. Ireland's average annual GDP growth is forecast to be 3% out to 2028 and as demographics are also highly supportive.

These include a population expected to increase by 17% by 2040. A structural growth story in wealth management, sustained credit formation. And at this point, private sector credit grew 6% last year and Ireland's national development plan. This plan aims to drive Ireland forward with a EUR 275 billion public investment in infrastructure, unlocking economic and balance sheet growth.

We're also mindful of the risks presented by the geopolitical uncertainty. Ireland is navigating these risks well with a resilient and growing economy. Healthy public finances can help to shield against volatility and Bank of Ireland's strong balance sheet is well positioned to manage potential future challenges, underpinning a bright future for the group. Bank of Ireland's unrivaled position in Ireland and the strength of the Irish economy come together on Slide 8. This combination is driving outstanding business performance.

Over the past 3 years, new to bank customers increased by 18%. We have significantly improved customer satisfaction. And this has been supported the balance sheet momentum you see here. Our Irish loan and deposit book grew 6% in 2025, while wealth assets under management increased by 9% to an all-time high. Capital generation was 270 basis points last year, bringing the total over the cycle to 920 points. That's EUR 5 billion of capital generation.

On Slide 9, we recap on the returns profile since 2022. In early '23, we committed to a range of financial targets, which have been delivered. That's ROTE, cost income ratio, a progressive dividend and returning surplus capital. This performance has supported strong distributions, totaling EUR 3.6 billion over the last cycle, equivalent to 37% of our starting market capitalization.

And for 2025, this includes EUR 1.2 billion of distributions, which equates to 100% total payout of earnings, comprising a progressive dividend per share of EUR 0.70 and the EUR 530 million approved share buyback we are announcing today. We enter 2026 and our new cycle to '28 with real momentum and strong capital generation. And I'll share more on this with you shortly. For now, I'll pass over to Mark, who will take you through last year's financial performance.

Thanks, Myles, and good morning, everyone. We've had a strong financial performance in 2025. Slide 12 sets out the key highlights, including continued momentum in Irish loans and deposits, both up 6%, growing fee income led by our Wealth and Insurance franchise, ongoing cost discipline and robust asset quality. All of these contributed to capital generation of 270 basis points and support total shareholder distributions of EUR 1.2 billion.

Subject to shareholder approval, the ordinary dividend will be EUR 0.70 per share, up 11% compared to last year, reflecting our confidence in the bank's prospects. We've had a good NII performance in 2025 with balance sheet growth, bond purchases and our structural hedging helping to counter the impact of lower interest rates and planned deleveraging. We expect NII to grow from 2025 levels to around EUR 3.4 billion in 2026, above our expectation of the high 3.3s.

The key dynamics here are business momentum and hedging, playing remaining interest rate and deleveraging impacts, including our recently announced intention to run down our U.S. acquisition finance book. We expect stronger growth in 2027, where we are upgrading our prior guidance of the mid 3.5s with NII of greater than EUR 3.6 billion now expected.

As part of our strategy update, we have published new guidance for 2028 today with NII of greater than EUR 3.85 billion expected with the potential for further upside beyond. The supportive Irish macro backdrop that Myles spoke to earlier and the breadth of our franchise both contributed to the strong growth in Irish loans in 2025. Our Irish Mortgage business had another excellent year with a greater than 40% share of new lending for the third year running, while retaining our commercial and risk disciplines.

International corporate contracted as planned due to the portfolios and runoff and FX was a headwind in 2025. In 2026, we expect to see net lending growth of around 4%, once again led by our Irish books. We saw good growth in customer balances in 2025. This was led by our Irish Everyday Banking propositions, where flow to term dynamics reduced as expected.

Retail U.K. balances were higher with a good performance by our Northern Ireland business. For 2026, our expectation is around 3% growth in deposits, led by continued strong growth in Irish Everyday Banking. Slide 16 provides more detail on our structural hedge, which is one of the key drivers of our NII trajectory into 2028 and beyond. Rollovers and additions meant the average yield in the hedge rose 16 basis points to 1.89% in 2025 with an exit yield of 1.98%. And there's more to come this year.

Helped by our modest growth in our hedge volumes and the rollover dynamic, we see fixed leg income increasing by 10% in 2026. The group's total fee income increased by 7% last year. Wealth and Insurance, which now accounts for nearly half of total fee income, had a really good performance with fee income up 12%, reflecting the benefits of our strategic execution over the past 3 years. For 2026, we expect to see around 4% growth in fee income, driven by Wealth and Insurance. Operating expenses rose 3% last year, meeting our guidance.

Staff and other costs were higher. This reflects a number of factors, including wage inflation in the competitive Irish labor market and ongoing investment in digital capabilities and customer experience. Efficiencies from our restructuring and investment activity were equivalent to around 2% of the cost base. And we'll see more of this over our new strategic horizon.

On Slide 18, I'd also note the noncore charge of EUR 430 million. Majority of this relates to U.K. Motor Finance. EUR 153 million of restructuring costs supported the delivery of our efficiency program. One presentational change to call out here is that from 2026 onwards, restructuring costs will be included above the line. We expect to see total costs of around EUR 2.2 billion in 2026. This is comprised of 2 parts. Firstly, underlying operating expense growth of around 2%, reflecting inflation and investment, including targeted higher investment to support strategic delivery, offset by efficiencies.

And secondly, restructuring costs that are expected to be in line with the 2025 outturn. Looking further out, we expect total costs to be stable at around EUR 2.2 billion over the strategic cycle. Moving now to Slide 19. The impairment charge in 2025 was EUR 193 million or 23 basis points cost of risk, better than we had anticipated following a strong final quarter. Within that, net loan loss experience and portfolio activity was EUR 65 million, with net writebacks in H2, reflecting the team's execution on the ground.

Macroeconomic and model updates account for the balance of the charge with a geopolitical PMA of EUR 40 million, providing protection against potential volatility. The NPE ratio finished 2025 at 2.2%, down 40 basis points in June, reflecting the H2 progress. Looking ahead, we expect the cost of risk to be in the low to mid-20 basis points. Group is a very capital-generative business model. Organic capital generation was 270 basis points last year. Around 1/4 of this was consumed by investment in lending and CRT amortization.

IRB model scalers consumed a further 40 basis points with an objective to at least partially mitigate these over time. We've today announced distributions totaling 225 basis points in respect of 2025 performance. Our reported CET1 ratio was 15.1% after EUR 1.2 billion of distributions with 100% total payout ratio, which compares to 80% last year. For 2026, we expect net organic capital generation of around 250 basis points.

We've updated our CET1 guidance for the new strategic cycle to around 14.5%, which we believe is an appropriate level to both protect the bank and support the ambitious growth plans we are setting out today. Our objective is to operate at this new CET1 guidance. Slide 21 recaps the building blocks of our 2026 financial guidance that produce around 12.5% statutory ROTE expectation for 2026.

On this slide, I would note the changes to the presentation of a number of our key metrics. Having taken on board market feedback and reflecting on peer approaches, from 2026 onwards, we will simplify our reporting by including restructuring costs within our operating expenses and within our cost income ratio and presenting ROTE on a statutory basis. To conclude, as we start 2026, we have real momentum across our franchises, which sets us up very well as we start our new strategic cycle. I'll pass you over to Myles now, who will take us through our new strategy.

Thanks, Mark. The strategy we are setting out today is centered on 3 priorities. The first is continued business model momentum in Ireland, driving growth. And earlier, I spoke to the very strong balance sheet growth over the 3-year period to 2025. That growth story continues. We expect lending growth of 4% per year, deposit growth of 3% and AUM growth of 10% and in turn, creating more value from a highly attractive Irish economy.

The second is allocating capital to optimize returns. We're allocating more capital to the island of Ireland while capturing the most attractive opportunities in our corporate and U.K. franchises. And the third, investing for the future, improving resilience, customer experience and efficiency. This ambition underpins the financial targets we are setting out today. We see income growing at an annual growth rate of more than 4%.

This top line momentum, supported by our investments and cost discipline is transforming operating leverage. This is reflected in our cost income ratio expected to fall to mid-40s by 2028 with an ambition to go beyond. Combined, this sees our return on tangible equity, that's a clean statutory ROTE increasing by more than 500 basis points to greater than 16% by 2028. As set out on Slide 25, the group has a strong portfolio with complementary capabilities across our businesses.

These interlinkages between our Retail, Wealth and Insurance and Corporate & Commercial teams offer significant potential. Examples include 2.2 million retail Ireland personal customers, of whom more than 150,000 are affluent, and this offers an important opportunity to Davy Wealth, connecting our corporate customers with New Ireland corporate pension solutions and leveraging our Davy Capital Markets business to offer more complex solutions for our corporate customers.

We have the opportunity to serve more than 4 million customers at every step and stage of their financial lives. Our Everyday Banking franchise in Ireland, a core value driver for the group, has very attractive market positions. From a position of strength, we have a growing deposit franchise with EUR 87 billion of customer balances equivalent to around 1/3 of total Irish private sector deposits. And we expect continued growth in our deposit and current account franchise.

Our ambition here is threefold: one, to strengthen customer loyalty through improving experience and to protect customers from the ever-increasing surge of fraud; two, to grow our customer and deposit base, supported by product innovation, for example, our Smart Start account for youth customers and our coming to Ireland product for people are returning to Ireland; and three, to drive more efficiency through technology.

Delivering our strategy allows Bank of Ireland to command a leading share of new business, to deepen customer relationships and to drive further cross-sell. We are Ireland's #1 Mortgage provider, and our strategic objective is to retain that position. In the last cycle, we captured a growing share of Ireland's growing Mortgage market. Rising housing output underpinned by Ireland's strong demographics represents a clear structural growth opportunity for mortgages, supporting an expected 5% average annual book growth.

Over the next cycle, we will maintain our right to win in this market while continuing to maintain pricing discipline. And we continue to enhance our capability, making it easier and faster for customers to secure a Mortgage approval. Our overall ambition is to be the unrivaled leader in Irish home buying. We are Ireland's leading wealth provider. Our Davy and New Ireland insurance businesses have more than 650,000 customers. Total AUM was a record EUR 60 billion at the end of last year. This has grown by more than 50% since we completed the acquisition of Davy in 2022.

And supported by favorable dynamics across all segments, high net worth, affluent and corporate pensions, we expect AUM to grow to more than EUR 75 billion by 2028 with an objective to hit EUR 100 billion by 2030. And I expect this business to be the largest source of capital-light fee income growth out to '28 and beyond. This is supported by the strong Irish macroeconomic fundamentals, investment in our digital platforms and further cross-sell into our retail customer base.

We have successfully repositioned our retail U.K. business in recent years. Our reshaped loan book and improved funding base are delivering attractive sustainable returns. Our U.K. subsidiary reported an underlying ROTE of 16% last year, continuing the trend of strong returns from this business. And throughout the new cycle, we expect growth through selective lending and mortgage products and strengthening propositions and capabilities in Northern Ireland, complemented by our specialist lending propositions in Great Britain.

Slide 30 covers our Corporate & Commercial Banking division. With a very strong market position, including an SME lending share of more than 50%, we are well placed to benefit from increased housebuilding and infrastructure investment in Ireland. We're also deepening our relationships with our corporate customers, growing lending and fee income, leveraging our broader business model, including treasury services and Davy Capital markets.

This underpins our strategic objective to retain our leadership position in Ireland. To deliver those business line performances I've just spoken to requires ongoing digital investment. In 2025, we delivered important enhancements. This includes the rollout of a new SME lending platform, SEPA instant payments and a wide range of customer service improvements in our contact centers. We also progressed our new mobile app and Zippay instant payments, both due for launch in the coming months.

Over the new strategic horizon, we are making a conscious decision to invest more than previously planned to protect and grow our core Irish franchise and capitalize on our unique position in wealth. Priority areas of investment include operation resilience, including cyber protection, a new commercial digital platform and as referenced earlier, a scaled wealth platform and automated credit decisioning for mortgages.

And in -- a new U.K. savings platform to support long-term funding needs. These investments offer a better customer experience and allow the group to deepen and grow our customer base. Earlier, I said the group was embedded physically and online in every community in Ireland. The combined power of this presence is a winning formula for our customers and a source of value creation for the group. We're also embracing AI. My focus is on creating tangible value and setting out an ambition that truly captures the positive and profoundly disruptive benefits of AI.

We see emerging tangible value from our deployments to date. Contact center call transfers have reduced by more than 40% as AI connects with the help they need better and faster. AI is also protecting our customers, assessing over 1 billion card transactions last year to help prevent fraud. And we are targeting increased efficiency, reinventing our approach to KYC and customer onboarding. These are just some examples. We see real potential for AI to fundamentally improve a range of areas.

These include customer sales and servicing, middle and back-office functions and changes to our technology delivery. Now bringing this together, this strategy builds on our strong momentum, delivering business and revenue growth, combined with a stable operating cost base, which creates significant operating leverage. We expect to see considerable top line growth in the coming years, and I referenced earlier income growing on average by more than 4% per year.

And over that period, a continued focus on cost discipline and efficiency. As I said earlier, we are targeting a mid-40s cost to income ratio by 2028 with an ambition to go beyond. And that equates to a circa 6% operating efficiency improvement over the next 3 years. To meet our efficiency objectives, we've identified EUR 250 million of cost reduction. And there are 3 main elements to this. Firstly, our operating model, where we have redesigned and we are simplifying our organization and footprint.

Two, redesigning our customer journeys and internal processes. I referenced KYC earlier; and three, rigorously ensuring our third-party providers create maximum value for Bank of Ireland. And related to this, we have radically reduced the number of third parties we work with, focusing on a much deeper, more strategic relationship with a smaller number. And Mark will provide more detail on this objective later.

Slide 25 sets out how our strategy will continue to drive significant shareholder value. At its core is a more than 500 basis point increase in statutory ROTE to greater than 16% by 2028. And that equates to compound earnings per share growth in the mid- to high teens. All of which underpins continued attractive distributions to our shareholders. And we are achieving this by driving growth in Ireland from a structurally advanced economy, the strength of our balance sheet, making the best use of our capital, investing for the future in support of customers and shareholders, maintaining a very sharp focus on efficiency and competing hard, always with a focus on price discipline and risk management. Mark will now take you through our financial targets.

Thanks, Myles. Slide 38 sets out the macro context that underpins the balance sheet growth we expect to see over the new strategy. We expect to see CAGRs of around 3% for deposits, around 4% for loans and around 10% for AUM. For deposits and lending, we've been pragmatic in embedding some of a growing market going to new players, an assumption which sees continued growth momentum for Bank of Ireland's balance sheet. This balance sheet growth and structural hedge dynamics will help total income grow at a CAGR of more than 4%, rising to greater than EUR 4.75 billion in 2028.

NII is expected to increase from around EUR 3.4 billion this year to more than EUR 3.85 billion in 2028, with the growth rate accelerating as we move through the cycle. Given the strong balance sheet drivers and the multiyear benefits from our structural hedge, which I'll come back to shortly, I see the potential for NII to reach EUR 4 billion after 2028. We expect fee income to grow by around 4% a year over the plan with W&I growing at a faster pace.

The structural hedge is an important part of our revenue outlook. We see it providing a gross tailwind of around EUR 0.5 billion over the next 3 years as the yield moves towards the 2.5% level. Hedge volumes will grow over the coming years as customer balances evolve. While other hedging, for example, on our fixed rate mortgages also need to be factored into our NII, the key message here is that the structural hedge is a material positive driver, which should mechanically flow into our NII as hedges roll over.

We are guiding for total costs to be stable at around EUR 2.2 billion over the strategic horizon with a CAGR of around 1% from 2025 levels. The key moving parts are inflation and investment with investments higher than prior plans to support our strategic delivery, offset by material efficiencies, driven by investment in our restructuring activity and lower restructuring costs over the period. As part of this, given that around half of our costs are staff related, we expect staff numbers to fall by around 3% each year, largely from natural attrition.

As Myles said earlier, operating leverage is a key outcome of our strategic plan with our cost income ratio improving by around 6% from 52% last year to the mid-40s in 2028 and with an ambition to go further beyond that. Slide 42 provides details on our 3 areas of efficiency focus, each of which contribute broadly 1/3 to meeting our total efficiency target of around EUR 250 million that Myles spoke to.

Key initiatives include completing our organization redesign, the exit of nonstrategic business lines, material consolidation of third-party suppliers, optimization of KYC and onboarding journeys and transforming our U.K. operations. Slide 43 summarizes the key drivers in our statutory ROTE building to greater than 16% by 2028 from a starting position of 12.8% last year, excluding the Motor Finance impact. Franchise growth predominantly reflects the power of our brilliant Irish Retail business and Wealth franchises.

As I noted earlier, the structural hedge benefits are realized as hedges roll over at rates close to 2.5%. And while our TNAV increases, the growth is lower than RWA growth due to DTA utilization over the next couple of years. The momentum in our franchises gives us confidence that ROTE can increase further in 2029 and beyond. We expect organic capital generation to build to more than 270 basis points by 2028, averaging around 260 basis points over the cycle.

Of this, around 1/4 is required to support business and lending growth. We also guide to a progressive ordinary dividend per share supported by a payout ratio of around 50%. This will leave us with significant amounts of surplus capital, which will be returned to shareholders unless there are more compelling strategic opportunities. Our objective is to operate at a 14.5% CET1 guidance, subject to customary approvals.

Slide 45 recaps on our key financial targets with growth, operating leverage and returns at the heart of our updated strategy. Two items I'd mention here are: firstly, we see net capital generation of around EUR 3.7 billion over the plan, equivalent to around 1/4 of our end 2025 market cap and our expectation for mid- to high teens CAGR in earnings per share growth through this new cycle. I'd note that the EPS guidance does not make allowance for buybacks. Thank you. I'll now pass it back to Myles.

Thanks, Mark. Bringing our presentation to a close, let me recap. Today, we're setting out a strategy to create significant shareholder value by driving growth in Ireland, optimizing capital for maximum benefit and investing for the future. The strategy stands on the back of Bank of Ireland's unrivaled embedded position in one of Europe's best-performing economies and is underpinned by our proven track record of strategic delivery, which has built the foundation, enabled the momentum that drives us forward to 2030. Thank you very much for your interest in Bank of Ireland. We'll now open the floor to questions. And Eamonn, over to you. Thanks.

Okay. As Myles said, we're now open to the floor for questions from analysts, actually first taken in the room before moving to those who have joined us online. And actually, for those of you in the room, you'll note that there's actually a microphone, I think, in the front -- just in front of you there. So please raise your hand and we'll take them in turn. So actually, just Andy we will take you first, if that's okay.

Well. Yes. Just one for me really. The increase in the CET1 target to 14.5%, I thought there was probably more of a chance that you might reduce that at some point rather than increasing it. So what feedback have you had from your -- maybe your debt holders that I can't imagine that they were unhappy with anything, but what was it that made you increase that number because it probably looked like there was room to reduce that rather than increase.

Yes. Thanks, Andy, for that. So as we embark on a new strategic cycle, our updated capital guidance to 14.5% allows the group to protect and safely grow our business. So it supports strong shareholder distributions, balance sheet growth and indeed business model investment. And at this capital level, we see growth coming through in the strong ROTE momentum. So we are with an updated clean ROTE of more than 16% by 2028, underpinned by average capital generation of 260 basis points.

So this is the very nice balance between growing our balance sheet safely with a strong capital position and generating very strong capital returns. And of course, we can link that to distributions, the communication of a EUR 1.2 billion distribution for '25, that's distributing 100% of profits. It's a progressive DPS of 11%. It's an increase in payout from 80% last year to 100% this year. So it's in that context we thought about our capital position out over the next 3 years. Thanks, Andy.

Dermot, next?

[Audio Gap]

Yes. Thanks, Dermot, for that. And the question in the heart, the competition question, I mean, firstly, the -- I called out 3 really important components to our strategy today. So driving growth in Ireland, optimizing capital allocation and investing. And really, that growth in Ireland is the big story here. And so we expect the lending book to grow by, on average 4%, the deposit book by 3% and our wealth assets on average by 10%. Of course, driving top line growth of 4% on income, translating with op lev into ROTE improvement of 500 basis points.

So with that as a backdrop, I mean, from a competitive perspective, for sure, Ireland is an attractive market. You heard me say it earlier, but it's also a competitive financial services market across a range of products. There's about 20 market players, including traditional and FinTech providers. And growing our Irish business, part of that strategy, again, very encouraged by the great momentum coming out of the last cycle, growing lending and deposits by 6%, AUM by 9%.

So we enter '26 from a position of strength, a very strong franchise. Competition is picking up a little bit for sure. We compete on 3 pillars. One is a footprint that offers a deep business relationship and customer service. Two is an ever-increasing digital capability. I referenced earlier a new mobile app and faster peer-to-peer payments coming out soon. And the third pillar, of course, is always going to be to offer value to our customers while maintaining pricing and risk discipline.

And from a guidance perspective, Dermot, I think we've been pragmatic in embedding some of a growing market going to new players. I think that's a reasonable assumption, an assumption with the Bank of Ireland balance sheet and franchise grow. And on the capital point, so certainly, in setting out an updated capital target of 14.5%, I mean 2 observations.

One is in moving to a statutory ROTE with a target of greater than 16% is a sign of our conviction to operate in line with this new guidance, meaning if we hold excess capital and clearly, statutory ROTE would be reduced. And on a relative point, looking forward, we expect to operate at 14.5% each year. And given the need to hold about 25% of cap gen for loan growth, 100% payout would not be a constraint looking forward. I think that's it. Thank you. Thanks, Dermot.

We move to Sanjena next. Actually, just if you can press the button on the mic, I think it will help in terms of getting picked up the question.

Sanjena Dadawala from UBS. I'm trying to better understand the net capital generation number of EUR 3.7 billion, which, as I understand, is the capital available for distributions after growth. So while the P&L to '28 is in line to ahead of consensus, the net cap gen projection is below what consensus currently has in terms of total distributions of EUR 4.2 billion or so.

Potentially half of the cap can be explained by higher RWAs, but if you could help reconcile the rest. And then secondly, on fee income. So the growth number of 4% per annum, while still good, is lower than the usual 5% that we've talked about in the past. Are there any specific factors weighing on this?

Super. Sanjena, thank you for that. I'll ask Mark to take some of those. So just maybe to frame the capital gen question. So that EUR 3.7 billion underpinned by average capital generation of 260 basis points per year. That's really important to make that point because that momentum continues and again, of course, in support of a ROTE that is growing. And Mark, on some of the moving parts...

Yes, on the -- yes, Sanjena. Yes, on the net cap gen, so maybe a couple of things there. So one, we need about 25% of organic cap to invest in growing the business. So that's certainly one factor. A second factor you might just think about is our DTAs, actually, that benefit we have in '26 and '27. We actually use our DTAs by the middle of 2028. So those are probably 2 things just to bear in mind as you think about that.

And on the fee income, the fee income about 4% over the cycle, maybe 2 things I'd call out there. So one is, we had a really, really strong performance in 2025, really pleased with that. We do call out in the detail in the report some modest one-off benefits in our Life business. So I think when you adjust for that. And then the second thing is in our Retail Ireland business, we expect a change in interchange arrangements from the beginning of 2027, which costs about EUR 15 million a year. So [ we've allowed ] for that in the 4% as well.

And maybe just as a final point, I spoke earlier about the ability for our Wealth business to really supercharge our fee income. And against the backdrop of AUM growth of 10%, that fee income component that's coming from Wealth is a hugely important part of our capital-light income model growth. Thanks, Sanjena.

Sorry, can I just follow up on the first one? What -- you mentioned TNAV growing less than RWAs, but would you be happy to put some numbers to that?

Yes, for sure. So with loan growth around 4%, as we say, and Ireland growing faster within that, Sanjena. Then if you think about RWA growth as a second leg on that, a little bit less because of the mix factors, for example, Irish mortgages, U.K. mortgages will carry lower risk weights than corporate. And then TNAV because of the benefit of the DTA in particular, growing at about 1% to 2% a year over the cycle.

I think Guy just had his hand up first, sorry. We move to next.

It's Guy Stebbings at BNP Paribas. The first question was on net interest income. Thanks for all the exhaustive guidance today. Beyond '26, just 2 particular points I want to focus on. On the structural hedge, there's some sort of useful color, but maybe just be a bit more specific in terms of maturing yields beyond '26, so where you expect the yield for the total hedge to go to?

And then on competitive dynamics, I think you talked a little bit about maybe some share giveaways perhaps. But in terms of any impact on product spreads captured in the guidance, that would be helpful. And then back on capital again. I guess I'm trying to understand, is the 14.5% the number because that's what's practical given the strong starting point, the strong capital generation and what you can realistically distribute or is that the number because that's the right number you think the business should run to even well beyond 2028?

Yes. Thanks for that. And Mark, I'll pass it to you on the NII-related questions. On capital, again, it's just that point that we start into a new strategic cycle. And hopefully, you've got a very strong sense that this is a growth story for Bank of Ireland out over the next 3 years. So we want to make sure we grow our balance sheet, grow our business really safely and make sure we've got the right capital to ensure that we can reward shareholders, that we can grow our balance sheet, that we can invest in our business model as well. It's in that context. And again, I'd make the point that linking a 14.5% capital that we can run the business at combined with a target statutory ROTE of 16%, I think is a good balance to think about how we think about our conviction around that level of ROTE performance. And Mark?

Yes. On the NII, I mean, maybe just to stand back for a second, I mean, this is a real story of continuing real momentum here in our NII trajectory. I think we were out with you a year ago. We gave a positive outlook on our NII trajectory to 2027. We've upgraded that outlook several times since, and we're upgrading again today. So again, specifically, we're upgrading 2026 around EUR 3.4 billion, previously high 3.3s, 2027, now greater than EUR 3.6 billion, previously mid 3.5s. And then the new guidance today of greater than EUR 3.85 billion and the key drivers before that balance sheet growth largely in Ireland and the benefit of the structural hedge.

And I did note in the presentation that I see the potential for the business to reach EUR 4 billion, but after 2028. And specifically then on the structural hedge maturing yields, actually, we've got some details in the slide materials. But in 2027, 1.16%; and in 2028, 1.06%. So again, when you think about the reinvestment yield, that is quite a delta between the reinvestments and the maturity.

Okay. [ Perlie, ] I think we go to you next. [ Perlie ] can just press the button actually.

I am sorry about that. On NII, yes, you've mentioned that you've upgraded guidance a few times. And if I look at the building blocks to '26, based on today's rates and what happened in Q4 implied, I think one could make the case that even EUR 3.4 billion looks like there's some conservatism embedded in that. So what are you -- what are some of the areas that could drive it higher or lower?

Competition you've mentioned? And what about deposit migration to term? It looks like it's a little bit slower than expected. So just what are you assuming over there? And then on the cost side, you've mentioned 3% reduction in headcount. Is that in relation to the EUR 250 million AI efficiency saves that you identified?

Yes. Thanks, [ Perlie, ] and good to see you this morning. So I'll ask Mark to take the dynamics on interest income and certainly any potential for upside. On the cost piece, maybe if I anchor my response to the question in terms of what we're doing with operating leverage, really important. So in the context of top line growth of income of 4%, but also creating significant operating leverage from efficiencies.

I've spoken about a mid-40s CIR, cost income ratio by FY '28. That's a 6 percentage point improvement versus FY '25. And certainly, when we get to that upper end of the mid-40s, we want to do more and do better. The EUR 250 million cost savings that are built into that overall outlook for that mid-40s CIR, I mean, there are 3 components that we called out. Much of the work has been done to get those benefits.

So it's the operating model we have deployed. It is our -- going after our customer journeys and our internal processes and also making our third parties work really hard. Within the EUR 250 million, I would say, of those savings in the region, of about 20% are coming from AI. And that's important because when we go beyond 2028 and our objective to create more leverage and take our CIR lower again, AI will play a bigger role in supporting that further improvement in operating leverage.

Yes. So just on the NII, maybe a way to think about this is just year-on-year, and we can look at this in different ways. But if I think about year-on-year, 3 moving parts relative to 2025. So firstly, rates and FX are lower relative to 2025, and ECB rate 25 bps lower on the year. BOE also lower as well. So about EUR 110 million of a headwind there. The deleveraging portfolios, and I think probably -- the market probably hasn't fully taken into account the impact of our U.S. acquisition finance announcement of about EUR 70 million impact over 3 years, about EUR 30 million of that this year.

So together, they're almost EUR 200 million of a headwind. But against that, we've got the balance sheet growth, the structural hedge and the full year impact of the bond purchases we've conducted and they're more than offsetting that, that gets us to the circa EUR 3.4 billion. So happy to get into that in more detail, but those are the big moving parts.

Okay. I'll move down to Sheel, you're next.

Sheel Shah at JPMorgan. I've got 2 questions, please. Firstly, on the capital, again, I'm struggling to understand the point around protecting the bank. You've got RWAs that are growing. You've got a capital base that is also growing, but the capital ratio has now increased on the back of that in terms of the target. Are you holding anything back from maybe M&A or further growth opportunities beyond the organic that you're seeing across the plan?

And then secondly, on costs, could I ask around the investments that you're making and the timing of these investments and the timings of the efficiencies? You mentioned that the bulk of the investments have already been made around the org design. Could I just press you as to the shape of these costs? I appreciate the total cost base is looking flattish, but more around the cost investments and the efficiencies.

Very happy to, Sheel. Let me take the capital and M&A-related question and Mark, the profile of those cost savings. So Sheel, I mean, this morning, we're presenting an organic strategy for Bank of Ireland out to '28. So everything we've set out today is organic growth in the context of our lending book growth, the deposit book growth and of course, our wealth business as well. So nothing included in today's material for M&A.

And of course, we do have the benefit of 2 transformative acquisitions in recent years, Davy, Wealth and of course, the KBC back book as well. And my experience is that M&A can be opportunistic. And certainly, if any opportunities present themselves. I spoke about the importance on driving growth in Ireland. So that will generally be my focus in that regard.

We'll always think about an acquisition in the context that it must be aligned to our strategy, hence the Irish story. Two, that we can integrate it to ensure we generate synergies and further that it generates strong attractive returns. So it's not an explicit linkage, but I think we can say that we are keeping a very strong capital position to grow our business and also, of course, be ready to avail of any opportunities should they present themselves.

So EUR 250 million target over the cycle, maybe just give a bit more color on it somewhere between around 12% and 14% of our addressable cost base. That's offsetting inflation and also the material investments we're making and the 3 buckets we spoke about op model, third-party and AI-enabled process excellence. If I think about the phasing of that EUR 250 million, somewhere around 40 -- 40/20 over the 3 years.

There are clear initiatives in place, and I'll just come back to those in a second. But just to give you a sense of momentum on that, actually in our disclosures for 2025, you can see we've got EUR 38 million of efficiencies. That's mostly H2 weighted. So about sort of run rate of somewhere between 2% and 3% in the second half of last year. We need to get above about 4% in our cost base. So we're building towards that.

And as you note, actually, the members of our exec team are actually all in the room this morning. So I know they'll be really excited afterwards to tell you about what they're working on. But just to give you an example to bring it to life, and we mentioned about material consolidation on our third-party providers.

So one of the things we would have worked on last year and would have been incorporated in the restructuring cost of last year was on our change providers, okay, reducing the number of providers there significantly down to around 5. So all the hard work, thinking the RFP process, et cetera, all run during the back part of last year. And now that's actually coming to life. We're getting the benefits in this year. So it's just one example, but there are many examples.

Toms from RBC. The first on competition. Can you just give us some color about what kind of competition changes you've got baked into the plan? Have you been relatively conservative the Irish banks have been relatively conservative historically?

And does it make any difference do you think that one of your peers potentially might get purchased over the next 6 months to competition in Ireland? And then secondly, on net interest margin, could you just help us a little bit with the shape potentially of net interest margin for this year to kind of give us an idea of the exit rate?

Super. Thank you. And on competition, and I won't -- as you expect, I won't comment on the particular transaction in the Irish market. But I think it is interesting in the context of somebody willing to come into the market. From my perspective, maybe on the harder end of it, I referenced earlier on the guidance point, I think we've been pragmatic. We simply say that this is -- the Irish market is going to continue to grow.

The loan book is going to grow. The system loans will grow. For example, mortgages as a structural positive fact. I referenced earlier; private sector credit grew 6% last year. Business sentiment is quite strong. I expect that to grow as well. System deposits are also going to grow. And certainly, demographically, wealth assets will also grow, and we're particularly well positioned to get the benefit of that.

But we have been pragmatic in assuming that a growing market, some of that will go to an alternative provider, but very focused on ensuring that we continue to compete. I spoke earlier to competing based on our physical footprint plus our ever-increasing digital capabilities. I regard that as a winning formula, and we enter this period of maybe a slightly increasing competition but a very, very strong position.

Yes. Just on the net interest margin. So last year, 2.68%, broadly flat half-on-half, and we expect the net interest margin going forward to track our NII guidance.

It's Aman Rakkar from Barclays. I had a follow-up question on capital. And yes, I'll start with that one. So a follow-up question on capital. So you're talking about the 100% payout ratio. Why -- you're talking about not being constrained going forward, but it appears to have been a constraint today. I think you've kind of -- your distribution outturn for the year is coming below market expectations, right? We're all expecting a payout ratio above 100%.

So why did you not pay out above 100%, you clearly got the capital to do it. And I guess I'm asking that question in the context of what it feels like pretty negative signaling here around capital, right, in terms of you've increased your target CET1 ratio and you've kind of come in below market expectations for distribution. So can you tell us exactly what's gone on in terms of this print and what it means going forward?

And my second question was around AI actually. So it's a clear market concern in the last couple of weeks, the highly disruptive potential impact of AI on actually the revenue streams of banks. And I look at yourself and Irish banks, you've got some of the richest product margins in Europe.

Interested in kind of your reflections. I know it's an unfair question given this is kind of an emerging theme in real time. But just given your vantage point, interested in whether you share that view and actually to what extent you see yourself well defended.

Super. Thanks, Aman. Let me take both of those. On the capital question, I understand the question. And -- I mean, just to reiterate, I mean today, we're announcing a EUR 1.2 billion distribution. And I call that again because it's 100% of profits, and that's an increase of a payout from 80% last year to 100% this year.

So that consistent objective of returning surplus capital back to shareholders through a combination of a progressive DPS that's up 11% on the year, but also surplus capital. And it's always going to be a point-in-time decision. And maybe to anchor it back over the past 3 years, we've returned EUR 3.5 billion to shareholders, representing 37% of our opening market cap in 2023.

And again, as a measure of our commitment, of course, to hold capital to invest appropriately in our business, but also to reward shareholders as well is an absolute priority for us. It always has been, and it will continue to be so as well. And on the go-forward piece, again, I would just point to the very strong capital gen momentum that we see.

So on average, 260 basis points of capital being generated on average for the next 3 years that's capturing momentum. It's capturing growth, its capturing operating leverage, all of which translates into that ROTE target of greater than 16% and that EPS growth of mid- to high teens. So that's how I think about it. And certainly, that priority on returning capital is unchanged.

And I do think there is a dynamic that's worth calling out maybe to the harder part of your question. If I think about looking forward, we expect to operate at 14.5% each year. And I know I'm repeating myself a little bit here, but given the 25% investment in loan growth, that 100% payout would not be a constraint going forward. On AI, I think you're right, Aman. I've spoken to it as a positive disruptor, and that's what it is.

But any disruption, of course, comes at risks and not unique to Bank of Ireland, and not unique to banks actually, I mean, for all sectors. I mean some of those risks are sector dislocation, potential employment risks into the longer term and maybe also deflationary pressure as well. Now they're very much into the long term. I don't think they're a clear and present risk.

So it's important that we absolutely harness the benefits of AI, but also we've got a keen eye on the risks. And again, if I link that to -- it's a broader response to the question, but I think it's relevant. If I think about Ireland and its position, it's very strong economic growth expected over the next 3 years. That's been driven by very strong sector performance in the domestic economy. The multinational sector where we export, that's holding up well. Employment is up.

And really importantly, I think to the heart of your question is that the Irish government's commitment to its national development plan, EUR 275 billion out over the next 10 years, that's going to drive and maintain economic growth in Ireland for some time. I think we can take that as a positive and of course, as we appropriately manage those risks.

At the back here.

[indiscernible]. Just coming back on capital again. You buffered your minimum requirements now over 300 basis points. Should we think about that 14.5%, should we link it to your minimum requirements, you run with a 300-bps buffer? If SOFR comes down, it should mechanically come down. And then you just talked about the national development plan. I mean your loan growth targets don't seem that ambitious given what's coming through there.

And I guess if growth were to surprise on the upside on loan growth, what gives? Is it the payout ratio? Or should we expect that 14.5% to come down? And then just maybe on NII, Mark, you said going to maybe EUR 4 billion after 2028. Is that 2029 or 2030? And what's driving that? Is it rates staying at 2.25? Is it loan growth? Is it hedge? Is it a mix of everything?

Thanks for that. Let me take the first question, and then I'll pass to Mark. Actually, in setting our target to be at 14.5% for a CET1 ratio, we'll always check in as to where we stand against the rest of the market. And when I look across Eurozone banks, that's about 40 banks in total. The average buffer above MDA is, as you say, is about 300 basis points. So we're pretty much comfortably in the pack on that.

And certainly, any mechanical change in regulatory requirements, I think, would have an impact on overall requirements as well. I think you can take that as a reasonable assumption. And on the loan book growth, we've got an incredibly strong Irish franchise. We've seen that in the last 3 years. Loan book growth last year, deposit book growth of 6%. We have factored in very strong growth into the future.

For example, the mortgage book to grow at 5% per year. That's growing faster than the Irish economy. And certainly, if the economy performs stronger, if some of that 10-year national development plan happens sooner, then we're very much well placed. We've got the balance sheet capability to support that growth. And that growth, I don't believe would come at a cost to getting the balance right with distributions as well.

And just to add on that last point, obviously, we've got EUR 1.7 billion of deleveraging portfolio as well. So that's going to come through a lot of that 2026, a little bit less of a drag, '27, '28. In terms of the NII beyond 2028, obviously given guidance and the targets more into 2028, not going beyond.

But my view is I don't think you have to wait for too long. And if I think about the drivers on that, really, you were talking about a pretty stable rate environment at that point. There's still some benefit from the hedge at that point to 2029, but it's really back to the balance sheet growth of those -- that deposit and loan growth, particularly in Ireland.

Okay. There doesn't appear to be any further questions in the room. We can come back to -- sorry. Mic.

It's Jordan Bartlam from Mediobanca. On the loan growth point, I was just gonna ask, it hasn't really been mentioned, but about 10% plus consumer lending growth this year. I wonder what was driving that. Obviously, that's a lot higher margin than on the mortgage or the corporate side. So it's quite an important driver if you continue at that sort of run rate. Yes, that'd be super helpful, a bit of color on that and where you see that piece going in the future.

Thanks, Jordan. I mean, the consumer book is a relatively small component of the overall Bank of Ireland balance sheet. But what is encouraging about it, that growth in the book, I see that as a measure of, importantly, of consumer confidence and willing to borrow. That's important because consumer confidence is the starting point for businesses having confidence to invest in their business.

Yes, of course, we will support that consumer book. The encouraging element of it is that I referenced earlier private sector credit in Ireland up 6% last year. When I look at our business on the ground, we've seen very strong performance in manufacturing, in engineering, retail, holding up really well. In fact, that book is growing, supported, I think, by consumer confidence, which again, gives us confidence to the growth story for Ireland.

A few hands went up there. Send a mic.

Mike Evison from Autonomous. Just 2 questions, please. So on the fees, thanks for giving more details there. You're obviously guiding for some very strong AUM growth and about EUR 0.1 billion contribution to the income growth through '28. Would just be interesting to understand where you think that growth is coming from? Is it competitive market share? Is it just general new growth?

And in that context, how you think about any lost NII on that growth? So obviously, deposits generate strong profits in Ireland. And are you assuming in your cross-sell any movement from the deposit book across the AUM book? And then the second question on the cost guidance. I'm just trying to put together some of the numbers.

You've obviously given the mid-40s cost/income ratio target for '28 and then said a lower than -- you're aiming or would expect to do a lower than 45% by FY '30. Should we be implying from that, that the mid-40s in FY '28 is higher mid-40s? Or should we be looking mid-40s there?

Okay. Thanks, Mike, for that. Let me take those questions. So I mean, on the fee income, the -- I referenced earlier that our wealth business is a hugely important part of where we expect to grow capital-light fee income. It's been an incredibly strong success story, 2 amazing brands with Davy and New Ireland, Davy in particular, looking after high net worth customers and of course, New Ireland, a life and protection business supporting pensions.

So we want those 2 businesses to continue to do what they do so well. But also growing from that, there are areas that we know there are opportunities, in particular, the affluent market. So I referenced earlier, we've got about 2.2 million retail Ireland customers, 2.5 million retail customers if we include Northern Ireland, where Davy is present as well. Within that, it's about 150,000 affluent customers.

So we want to target that. And much of our -- I referenced earlier, we're spending a bit more on our investment profile. Part of that investment spend is in digital and CRM capabilities within the wealth business. So that's an area that we want to step into. And that will not only generate short- to medium-term benefits, but also today's affluent customers, many tomorrow down the line become high net worth customers. That's a good thing to go after as well. The other area that we are focused on is in pension.

So many private workers in Ireland don't have a pension. So using the new Ireland brand to support corporate pension growth is another area and certainly getting all our different businesses interlink together for those cross-sales. And then stepping back from it a little bit, the demographic piece is really important as well. So we called out a 7% expected growth -- household wealth growth out to 2030.

That's a huge part of the story as well. Did I get was there a second question? Or did I answer both? On the cost piece, sorry. Yes, sorry, yes. So again, the uplift piece around getting to mid-40s, I'd say it's about a -- think about the delta, it's a 6% improvement in leverage in part from a top line revenue growth of 4% and keeping our costs a CAGR of about 1% or less than 1%, we call it stable cost mark.

Within that, we have EUR 250 million of cost savings. So I'd say it's probably just you can take 6 off the current position. But I think at the heart of your question is that we don't stop in '28. There's real momentum here to go beyond that, and we will push hard for that.

Okay. Sorry, Aman back to you.

Let me ask another question. Yes, it's just about the revenue mix. So I think you're around 81% net interest income this year. And I think in terms of your forward-looking guidance, you're effectively indicating increasing shift towards net interest income from here. Is that just a reality of the banking system that you operate in the position that you operate in, the opportunity set that's in front of you? And are you inclined to do anything about that? Do you want to try and address that revenue mix at some point? Can you?

Yes. I mean so it's an interesting question because if you know the back story to Irish banks, typically, the fee income has been a smaller component of the total revenue. Now we have the fantastic opportunity to grow our net interest income, which Mark has spoken to. And of course, we want to do that. So that's a good story.

But also, of course, we want to increase our wealth fees or fee income. I mean our wealth business accounted for just under 50% of our total fee income, and that's going to grow more. And of course it's not happening, but had net interest income remained static, then fee income would've become a greater component. But it's great from a diversified income perspective, both are growing.

Certainly I would say, again, I referenced earlier today is an organic story, but certainly if there's anything, any opportunities that were to present themselves that would offer an ability to positively shift that mix, you know, we'd certainly have a look at that.

I might just comment on it as well because I think, if you think about one of the pieces we outlined in today, which is actually getting behind our wealth position, we've got fantastic positions, getting behind it more, investing a little bit more there. Talked about the impact in the near term and costs.

Actually, we see benefits in 2028, but we see benefits, even more benefits into 2029 and 2030. We're making that conscious decision to invest now, recognizing that the medium-term opportunity here is really, really attractive. So I think we'll see further benefits beyond 2028.

We just might give some people online an opportunity now, we can come back to the room. [Operator Instructions] So it looks like our first is from Borja Ramirez from Citi. Borja, you may unmute yourself, turn your video on and ask your question. Borja, if you can hear us. Okay. We'll move on to the next question. We can come back. If Rob Noble is there from Deutsche.

Just on the capital generation point. So I don't understand how 25% of the capital gets consumed by RWA or growth, right? So you're saying 4% loan growth and RWAs grow less than that because of the mix. So if we call it 3%, I don't understand how you'll get anywhere near 25% of the capital being consumed. So is there something in there that I'm missing or doing wrong? I guess linked to that is you'll do 12.5% ROTE, your numbers, 12.5% ROTE this year, generate 250 bps of capital.

How come 16% in '28 is only 270 bps. It seems that it should be materially higher than that even if you take off the DTA partially dropping off. And then last one is on the U.K. So there's a lot of spread pressure in the U.K. So what spreads are you writing on mortgages at the moment? And what ROE do you see the U.K. within the mix of the group? And are you still happy with that business adds value overall.

Rob, thank you for that. I'll respond to the broader question on our U.K. business and then ask Mark to take some of your detail on capital and the spreads as well. I mean we're very pleased with our U.K. business, Rob. We're -- this is a business we've worked very hard in recent years. I called it out in my script earlier to get that business performing well. It's a combination, I think, of a full service offering in Northern Ireland.

That's particularly important because that offers efficient funding to support what I would describe broadly as specialized lending in Great Britain. That's working. So that specialized lending supported by efficient funding, also an efficient operating model. We've taken cost out of that business as well. I mean that's resulted in for last year, if you use our U.K. plc business as a proxy, it's a return on equity of 16%, and that trend has continued.

So earlier, I spoke about 3 components to our strategy: driving growth in Ireland, optimizing capital allocation; and three, investing for the future. The U.K. business sits comfortably in that second bucket where we are optimizing our capital allocation, and I'm very comfortable with that business and how we have repositioned it in recent years. Mark?

Yes. On the RWA point, Rob. So again, we're guiding this morning loan growth of around 4% over the cycle, RWA is around 3% I think the other factors probably you need to think about are op-risk RWA. And obviously, given our outlook, we'll have a higher op-risk RWA based on earnings and also CRT movements, which can move in individual periods as well. So when you bring all that together around 25%, we think is appropriate guidance at this point.

Obviously, in individual periods, we could do better than that, but I think about 25% overall. On the start ROTE and the organic cap generation, so yes, there's a DTA point. I think the guidance maybe though is greater than 270 bps. So just to note the greater than. And also, obviously, we'll think about the average higher risk weights as our balance sheet grows as well in terms of the denominator.

Okay. Our next question comes from Denis in Goodbody.

Just two, please, if I may. So one is the statement this morning referred to a 40-bps impact from IRB model scalers. Just if you could give us a little bit more detail on that, please, and what areas of the loan book is referring to?

And then secondly, maybe just more broadly on the Irish loan growth guidance and the national development plan that you mentioned, Myles, I guess, how do you think about development finance lending in that context? Is it an area you expect to move into more? And is it considered within the guidance? Or are there any constraints which might stop you from leaning in a bit more into that space?

Yes. Thank you very much, Denis. I mean the strategy to grow our Irish business within the lending piece of that, absolutely, there are 2 very, very large significant structural opportunities and one we know very well, which is in relation to housing and the supply of homes. Our mortgage book has performed very well. It grew 9% last year as a book, expected to grow further out over the next 3 years.

But of course, in support of that infrastructural lending is hugely important to us, and we are an active player in that market. There are different components to it. For example, on the housebuilding side, we hit a target last year to support the development of 25,000 homes. That's really important because we typically support the building of affordable and efficient homes. and that's the right thing to do from a societal perspective but also plays in very nicely to our mortgage business.

And beyond that, the infrastructure spend, that EUR 275 billion by 2035, about EUR 105 billion, I think, over the next 5 years or thereabouts. So we're very well poised to support that. And so that spend is going to focus on roads, infrastructure, energy. And I should say we've built up capability in that regard and that team over the last 18 months. And so we're well positioned to support that growing part of the market as well. And on IRB, Mark?

Yes, so that relates to scalers applied pending the approval of certain IRB models, about EUR 2.7 billion of RWA, 40 basis points CET1 net of some capital buffers that we held, primarily U.K. mortgages, expect to at least partially recoup that over time. That is not built into our guidance. So that's actually upside.

We're going to see if we can get Borja in Citi.

So I would like to ask 2 questions, please. Firstly, the capital generation target of over EUR 3.75 billion, it seems conservative in my view. So I did a back of the envelope estimate, and I get to like EUR 600 million of higher net profit cumulative over the 3 years. If I use the P&L targets compared to the capital generation.

So I think in my view, there's maybe EUR 600 million of upside cumulatively. And then linked to this, I think that -- I mean, there's also upside to your distribution compared to consensus. So I think if we assume like a payout of around 100%, there's still around, I think, 10% upside to consensus distributions for the next 3 years.

And I think that's interesting because you -- with your EPS target growth, which does not include the share buybacks, you're already going to be towards the better -- the higher end of the European banks in terms of EPS growth. So I think that's very, very interesting.

And then my second question would be on cost of risk. I understand that you are deleveraging in those portfolios that have a higher cost of risk like US Direct Finance, CIB and U.K. corporate book. And also, I guess you -- macro is very supportive with the stimulus. So I understand there's maybe also some potential to surprise positively in the cost of risk in the medium term. That would be my second question.

Thanks, Borja, and good that we were able to patch you in. I'll ask Mark to take those questions. I mean, other than to offer an overarching comment, which is that to the extent that there is an ability to outperform any of the targets that we set out today. We'll always push ourselves hard to outperform. And certainly, if we do, that offers opportunities to reward shareholders more to invest in our business model indeed to grow our business. Mark, over to you.

Yes. So maybe a couple of thoughts on the capital generation question or observation, I would say. So one is, I agree, we're upgrading our guidance today over the cycle, particularly for 2028 from the emerging consensus, I can see for 2028. I think we're upgrading by 3% or 4% relative to that. And then if I think about the cap gen specifically, so we do have higher net profit, you're right, over the period.

You also have to think about other moving parts in getting from profit to cap gen. So for example, the changes in the expected loss allowance would be one that would be within that as well. And as I mentioned earlier, about 25% of that strong organic capital generation we need to invest in growing our business. So we factored all of that in. We factored in the delta between the 15.1% and the 14.5% and arriving at the EUR 3.7 billion.

But as Myles said, absolutely, if we can outperform that, we will absolutely do it. And we think we've, I think, made realistic assumptions overall, but we'll obviously look to outperform those. And then the cost of risk, actually a really good performance in the second half of last year. So our NPE ratio down to 2.2%. That's the lowest level over the last 15 years. So we're in really good shape.

That reflects a lot of hard work, I'd say, on the ground in the second half of the year, particularly strong last quarter to the year. So we're really pleased with that. And if I think about the low to mid-20s guidance for 2026 then, and I think it's a similar level beyond, actually, by the way. I think that's an appropriate level.

One of the things we've done actually looking back over the last sort of 5 or 6 years is testing the cost of risk over that cycle. And you're right, we have made decisions during that time in terms of strategic reallocation of capital, most recently on U.S. Life. That does support a lower cost of risk. But I'd say that at this point, low to mid-20s is an appropriate level.

Okay, Borja was the last online. So we'll just come back to analysts in the room. Fatima?

So your forward-looking guidance that you have for 2028 NII was a lot better than what people were expecting. And a big part of that is you growing the size of your structural hedge. And for that, you assume a swap rate of 2.5%. Is there any risk of the long end of the yield curve coming down?

What would the risk be on that NII guidance? I think swap rates today are 10 basis points lower than what you'd guided to. Would that maybe incentivize you to change your hedging behavior so perhaps ramp up a bit more slowly or think about increasing your duration at all?

Mark, do you want to take that one.

Yes, absolutely. Fatima, You're right. I mean the structural hedge is a key part of our revenue outlook. And if I think about we've given the details in the presentation, a lot of the benefit is locked in, certainly for 2026, more than 90%, more than 70% next year. While I think the other piece that came up in the question earlier is you think about the maturing yields.

So the maturing yields here are closer to 1% over the period. So yes, of course, there's an impact, and you can think about EUR 9 billion a year rolling off. So you can sort of do the math in terms of if there's any delta in terms of the reinvestment rate, but we think getting to 2.5% even on today's curves, is absolutely reasonable and realistic.

Any more questions from analysts in the room. We've one at the back on the phone.

It looks like the Irish government are going to introduce sort of tax-free investment wrappers like there are in the U.K. with the ISA type structure. I was just wondering if you've embedded anything in your targets in actual years for that.

The backdrop of that, of course, is, if I understand the question correctly, it's a European initiative on savings and investment union, which is about empowering customers with better tools for wealth growth and retirement. And so I would say that it's entirely aligned with Bank of Ireland's strategic objective to grow our wealth business. As Ireland's National Champion Bank, our job is to offer choice, whether that's a simple deposit account, whether that's a passive wealth account or whether it's a more discretionary approach to it.

And certainly, I will be very supportive of the introduction of the ISA type product that would be a progressive step, and we'll be very happy to support that. And in many ways, the products that we're developing are, in essence, that for affluent and mass affluent market. So it's aligned with our strategy, and we would support it.

Okay. Any more questions in the room? Okay. Okay, folks. Look, thanks, everybody, for your participation this morning. For those of you here with us in the room, you're welcome to stay for refreshments and to meet the members of the group executive who are here in the front rows. We look forward to also meeting as many of you as possible on our road show. And if you have any follow-up questions, obviously, please reach out to us in Investor Relations as well. So thanks again. Have a great day.

It's a busy day in the market, guys, and thank you for being here today.

Thank you so much.

Ladies and gentlemen, thank you for standing by. Welcome to the Bank of Ireland Q3 IMS Analyst Call. Please note that the call will be recorded. [Operator Instructions] I would now like to turn the call over to Chief Executive Officer, Myles O'Grady. Please go ahead.

Thank you, Olivia, and good morning, and welcome to Bank of Ireland's Q3 trading update. The group is reporting strong momentum and business performance as we near the end of our current 3-year strategy, with growth in Irish loans, deposits and wealth assets under management, alongside disciplined cost control and high levels of capital generation.

Irish loans and everyday banking deposits increased at an annualized rate of 5%, supported by a 41% market share in new mortgages, while flow to term evolved in line with our expectations. Wealth assets under management reached a record EUR 58 billion with net inflows of EUR 1.6 billion, representing 4% of opening AUM. Net interest income modestly exceeded expectations and we delivered 5% year-on-year rise in business income supporting 185 basis points of net organic capital generation and a strong CET1 ratio of 16.2%.

Last week, the group announced a potential increase in its provision relating to U.K. motor finance to EUR 350 million, which will impact capital by circa 25 basis points. Costs were in line with guidance, and we are comfortable with asset quality across the group with the NP ratio of falling 10 basis points to 2.5%.

I am reaffirming our positive outlook to 2027, where we target a return on tangible equity of above 17%, supported by expected CAGR for deposits and loans of 3% to 4% with AUM CAGR of 7% to 8%, and we will maintain costs at around EUR 2 billion. I expect strong momentum into 2026, and we will share our Refresh strategy in quarter 1 starting to add the building blocks for growth and capital generation of 250 to 270 basis points in 2026 and 2027 and indeed, a range of targets beyond this period.

All of this supports balance sheet expansion, business model investment, progressive dividend per share and the return of surplus capital to shareholders.

I'll now hand back to Olivia and open the call to questions. Thank you.

[Operator Instructions] The first question is from Sanjena Dadawala at UBS.

Two, please. The first on NII. So the '25 number upgraded to greater than EUR 3.3 billion implies the second half NII flat on the first half broadly. So in that context, how should we think about '26 and '27 where you said greater than EUR 3.3 billion and greater than EUR 3.5 billion before? And second, on -- just around asset quality and credit risk. If you could give color on how that's been trending and any areas to call out and also around your comfort regarding the U.S. exposure?

Thank you, Sanjena. Let me take the asset quality question. I'll ask Mark to take the NII evolution. So that's the quality again, per my opening remarks, we remain comfortable with overall asset quality across the group and very encouraged by the NP ratio at 2.5%, down 10 basis points and reaffirming our overall guidance of the impairment charge in the region of 30 basis points.

When I think about the -- some of the evolving private credit issues that are coming out of U.S., but I guess is at the heart of your question, Sanjena, the group has no lending exposures to [indiscernible]. We remain very vigilant to international developments, 70% of our lending is in the Irish economy, which has proven to contribute both grow and be resilient and of course, the vast majority of our lending that we do is secured, including our average mortgage book. So sitting here today, very comfortable about overall asset quality. Mark, about NII.

Yes, Sanjena, maybe standing back, I'd say the key drivers of our positive NII outlook to 2027, asset performed very well year-to-date. So our loan deposit growth in Ireland, our structural hedge program and also the bond purchases that we've executed as well, and that supports our confidence there. NII growing to greater than EUR 3.5 billion by 2027. Of course, that's a key contributor to our ROTE growing to greater than 17% by 2027 as well.

Just on 2025, we have upgraded our guidance to greater than EUR 3.3 billion. That follows the previous upgrade we made in the insurance some momentum there. And I think you're right, actually I think H2 is going to be partly similar now to H1 and looking into 2026 and 2027, so assuming that the ECB remains at 2% and doesn't call again, which is our assumption now and also reflecting the pause momentum, particularly that we've seen this year in our Irish franchise, we expect our NII in 2026 to be in the high EUR 3.3 billion.

And then if we look into 2027, our previous guidance actually upgraded to EUR 3.5 billion, that was based on the 2% ECB assumptions. So no change there, but I think it's probably the deposit momentum that we see building into 2027. So probably in the EUR mid-3.5s billion for 2027.

Just can I follow up there on the '26 number that you said, so high EUR 3.3 billion, so maybe 1% higher than what you're expecting '25, is what I get. I'm just wondering what are some of the headwinds? Because I think earlier ECB was at 1.75% in your outlook, and we have 4%, 5% volume growth expectations benefits from the hedge. So what are some of the offsets to that, please, in the next year?

Yes. I'd say maybe it's a couple of percent. I mean, if H2 this year is similar to H1, I'd say it's a couple of percent higher again next year, Sanjena. But you can think about the moving parts on that. So rates are lower year-on-year. So ECB 2.25% this year, it would be 2% next year. BOE also, we assume 3.75 versus 4.25 this year. So it's about a EUR 90 million impact from rates. Also, we're obviously deleveraging our GB corporate book as well as about EUR 25 million headwind from that. So those are the headwinds, but against that, you've got the bonds, structural hedge program, deposit loan growth, more offsetting that, actually, they're probably broadly equal contributors to the NII growth next year.

The next question is from Diarmaid Sheridan at Davy.

Two as well, if I may. Maybe first of all, just following up on maybe the very last comment there, Mark talked about deleveraging. I mean just think about loan growth more generally. As you look through the next 6, 9, 12 months, at that point, the GB loan book, maybe the U.S. CRE book, they should substantially be done. So they start to come out. I guess, then you look at the very strong lending growth that you see in Ireland, in particular. What is kind of like maybe a normal kind of loan growth that we should expect for you going forward? Is 5% a little bit too high, just given that there are other moving parts in the balance sheet as well?

And then secondly, maybe just on capital return. Obviously, a very strong quarter for capital generation again, indicating a reasonably good quarter in Q4 as well. So your capital position should be very, very strong at the end of the year. We have great clarity around both finance, we arguably have great clarity around tariffs. So two of the big uncertainties at this point, maybe we've got great clarity but not fully finalized. So just in terms of getting back down towards that 14% CET1, going to greater than 14% CET1 target. How should we think about by the timing of achieving that and kind of quantum of kind of distributions with full year and maybe slightly beyond that?

Yes, thank you very much for those questions. On overall loan book growth, I would just refer back to the outlook to 2027 that we shared back in February, and which I referenced in my opening remarks, so Bank of Ireland will continue to be a very strongly capital-generative business. And the key component of that is both loan book growth and deposit book growth and we're expecting a loan book and deposit growth CAGR of 3% to 4% out to '27. At that level, they're very supportive of capital generation. And that takes a kind of a range of items, the ongoing deleveraging of those books that we are progressing with.

And of course, it also captures a competitive market as well. The 3% to 4% growth out over the next 3 years, that will be the outlook that we would see for loan book growth. On capital returns, [indiscernible] right. Again, capital generation of 185 basis points year-to-date, CET1 ratio of 16.2%, very strong, but it will continue to grow into the last quarter. And therefore, as we progress towards the end of our 3-year strategy, the distribution strategy will also continue, which is a progressive dividend per share for the full year.

And of course, our payout ratio, our policy allows us to operate within a 40% to 60% range. That's particularly helpful in ensuring that our dividend is progressive with an overall capital position comfortably above -- well above our requirement to be above 14% that offers the opportunity for a share buyback as well. That's a decision that we will take as the quarter comes to a conclusion. This is a reference point. Since 2022, Bank of Ireland has returned EUR 3 billion of distributions accounting for 26% of our market cap. And so we remain as committed as we always are to return capital back to shareholders. Thanks very much, Diarmaid.

The next question is from Chris Cant at Autonomous.

Hello. Can you hear me okay?

Yes, Chris, go ahead.

Sorry, having problems with the Newpark. I had one key one, I think, on NII. Just trying to read between the lines in terms of what you've said to us on the 9-months NII, the slight bump to the '25 NII guidance. Thinking about that scenario you set out where rates are relatively steady from here. In that world, is 3Q the trough for your NII run rate? And is it just building from this point starting into 4Q and then into next year? So how have we hit the trough? I think that's quite a significant point of contention for many investors. So if you could speak to that, that would be appreciated.

And in terms of the loan growth looking out, the core loan growth in Ireland running at 5%. I understand you've got the U.K. book running off into '26, but once that has leveled out, do you expect loan growth to be sequentially increasing as you look out, say, '27, '28? So is it -- your 3% to 4% commentary was obviously over a planning period where you had a runoff book and understand you're reiterating that guidance. But in terms of the phasing, do you expect that sort of core Irish loan growth strength to be coming through more in the group number as we move further on in time?

Thank you, Chris. Let me take the loan growth question and Mark, will take the NII trough piece after that, please. I think that's probably right, Chris, on loan book growth. So if you look at how the Irish loan book has performed in recent reporting period just running at a growth of about 5% per annum. And of course, the two big building blocks to that are a very strong mortgage book with that book that's continuing to grow, supported by the increased supply of new homes into Ireland is usually important for that.

So an increasing size of the mortgage market is going to be hugely supportive of the growth in our book, and of course, very strong market shares in that as well. And also, we're seeing a positive growth in our Irish Corporate and Commercial book, and that's also been growing a little bit more modestly this year. I guess, against a geopolitical backdrop, but nonetheless farther up in the sense, I think is growing. And we assume to '27 as part of our outlook that supports returns above 17% loan book and the deposit growth between 3% and 4%. And it could be higher. I mean one of the reasons why we pitched at that level is because we do expect competition to increase in the Irish market.

And of course, we will compete. We will compete based on pricing discipline. We will compete based on quality of service and of course, enhancing our digital capability. But that assumption of 3% to 4% acknowledges that competition is going to increase. Mark?

Yes. On NII, Chris, I would say I'm not going to have a huge amount to you here but 2025 will be trough year. So 2026 will be higher than 2025 and obviously based on the assumptions that we're setting out today and based on the positive dynamics that we're seeing. Between quarters, I'd say it's flattish and rolling into next year.

The next question is from Aman Rakkar at Barclays.

I actually just had one broad question, please. One for Myles. In terms of what new we might expect you guys to kind of come back to the market with the first quarter of next year. You kind of indicated or signaling that you'll kind of give us a strategy refresh and an update of the medium-term targets. But I guess you have actually sign-posted quite nicely out to '27 already. So I guess I'm curious as to what new qualitatively we might expect. Are there additional kind of strategic levers that you think you might be able to execute on? Or is it kind of tightening up of some of the existing guidance that you might give us?

I guess, at the heart of your question, anyways, is the momentum that we are seeing in our business model beyond the current strategic horizon. And that's -- I guess that's one of the most important points that I would make on this call this morning and hence, the reason why we are comfortable to offer an outlook to '27. And the work that we're doing at the moment as expected we work on our strategy. We look forward to bringing that to the market in quarter 1 and we're certainly thinking about our business model out to 2030. What does that look like? And of course, we will share updated targets beyond '27 when we bring that Refresh to the market in quarter 1.

But thematically, the areas that I think about is what is -- how do we protect and grow our pole Irish franchise market? Two, how do we go after exponential growth in our wealth business? We see against the backdrop of the Irish economy, against the backdrop of the demographic profile in Ireland, we see a real opportunity there. How do we ensure that we offer unrivaled support to our business customers? How do we ensure that our international businesses are complementary and supportive of overall returns? And really importantly, particularly as we go to the longer term, we've talked about having a cost base in the region of EUR 2 billion. I and Mark are particularly focused on how we ensure operating leverage productivity into the longer term.

And of course, making sure that all of that translates into sustainable and strong returns which in turn supports our distribution strategy and indeed supports investments in our business model of loan growth. So thematically, there are many items that we are thinking about, and we certainly look forward to sharing that long term goal in quarter 1.

If you don't mind me asking -- if you don't mind me asking just a quick follow-up there, then just around, I guess, the U.K. seemingly absent from that list in terms of your assessment of the U.K. business from here. Has the heavy lifting been done in terms of the reshaping, the deleveraging or restructuring of that business? Are you kind of pretty happy with that footprint as it stands?

Yes, sorry, when I referenced our international business in complementary, I did include the U.K. in that. Yes, we are happy with that business. A lot of hard work is done in the recent years to get that business working well. It's generating returns that are consistent with overall group returns. That was the ambition. It's a highly competitive market. We know that, but we have a business model that's working there.

And of course, with what looks like the conclusion in substance of the motor finance issue that also gives us clarity on the future as well. So the U.K. businesses, it's holding its own on the overall big returns, and we're pleased with its progress so far.

The next question is from Perlie Mong at Bank of America Merrill Lynch.

Just a couple of follow-ups on loan growth. So it looks like the biggest driver is mortgages. So I suppose if I look at housing delivery, it seems to be lagging a little in terms of where the government is aiming for. And so -- but obviously, the government is spending a lot of money on infrastructure and try to unlock some of the bottlenecks. But in terms of the timing of the loan growth, do you expect mortgages to remain the driver into next year? Or would you expect corporate lending to pick up a little bit, maybe benefiting from some of the infrastructure spending from the government? So that's number one.

And number two, on margins. So there seems to be some competition, both on the deposit side and on the mortgage side. So some of -- especially the new entrants have been putting out quite attractive deposit offers and your largest peer have reduced mortgage rates recently as well. So how do you see margin competition going forward?

Thank you, Perlie, for those questions. So I mean firstly, on loan book growth, in some ways just reiterating some of my earlier responses. For an Irish franchise, the two most dominant factors that will support growth clearly is the mortgage market. And in relation to the housing supply, for sure, plenty of, I guess, political commentary on housing output. From my perspective, what I'm encouraged by is that the increasing supply of new homes year-on-year, that's the most important metric that I look at, and that is supporting an increase in the overall size of the mortgage market and it's growing by about 5% per annum and that will be a source of value for Bank of Ireland.

And of course, we're very well positioned with our product offering, particularly in the context of our EcoSaver mortgage but also the value we offer to customers from our fixed rate product offering, [indiscernible] of our business in mortgage have been in the fixed rate market, and that's been particularly helpful to managing Bank of Ireland's revenue traction but also in supporting our customers as well.

So plenty of noise about housing output, the most important data point to look at is that the increase in supply is likely to continue this year. Different estimates, some have 34,000 units, but mindful that there is a demand for comfortably above 50,000 and certainly, I can say with confidence that it is an absolute priority for the Irish government to ensure that its infrastructure investment and that it's focusing very carefully on will continue and will be supportive of a broader infrastructure investment that actually also offers an opportunity for lending on the corporate side, but also supports housing supply as well.

And on margins, Mark may have specific comments on the evolution of margins over the course of the year, but from a competitive position and what has served Bank of Ireland well over recent years is maintaining pricing discipline and to be able to do that whilst also growing both our lending book, deposit book and that will continue both in the context of disciplined pricing with supporting that [indiscernible] with high quality of service and also increasing functionality. I mean, we've got a platform more than up to roll out towards the end of the year and into quarter 1. That's one example of how we're enhancing our services to support our average customer franchise. Mark?

Yes. I mean, Perlie, one sort of metric we keep an eye on is the non-asset spread, which is the difference between the rate charged to customers and funding costs. And certainly, that is something that's trending in a positive direction. So again, I think that overall positive NII could actually, let's say, I think about our net interest margin overall that has performed in line with our NII due to [indiscernible] and if we look out again, I would expect the net interest margin to grow as our NII increased.

The next question is from Sheel Shah at JPMorgan.

If I look at the deposit growth year-to-date, particularly in the Irish business, it's running at around 4%. It's slightly slower compared to system trends on sort of an Irish level. So can I get a sense of the competition -- maybe following up on the previous question as well. A sense of the competition that you're seeing. Are you seeing some slippage in deposits to maybe some of the fintechs out there? Is that now coming through into numbers maybe earlier than expectations?

And then secondly, on the wealth business, I think there's an interesting proposition. I think it's a great avenue for growth going forward. But how can you persuade the Irish public, who have 85% of sort of the total deposit base sitting in overnight accounts, into wealth products? Are there regulatory initiatives? What are you doing on the ground maybe to help drive the flows?

Okay. Sheel, thank you very much for those questions. On the deposits, so we're not seeing slippage to fintechs. That's the first response. Overall we're comfortable with the growth in our deposit book and also comfortable with flow into term as well, both of those factors offering value captured in our overall performance. I do think I referenced it earlier, the competition is likely to increase. And of course, we will compete on that basis. And I know I am repeating my point, but that's one of the reasons why we assume that deposits could grow between 3% to 4% over the next number of years, which might be a little bit less than overall system growth but captures the potential for greater competition.

And of course, not just from fintechs, but also from some of the more traditional banks that are operating in the Irish market as well. On the wealth piece, we know that the business case for growth here is very strong. We saw a 9% growth in overall AUM valuations year-to-date. So that's I guess, proving the business case so far. We've got two very strong businesses within our Wealth division, New Ireland Insurance, it's a life and protection business, and very well supports, for example, for every 10 mortgages we write, six take on a life product offering. And we also know that there's a real opportunity given the demographic backdrop.

So for example, for the population under 25 and also pension, auto, railroad coming in. So we noted an opportunity in the corporate pension space to support private workers. On the Davy and from a high net worth customer perspective, that book continues to perform very strongly, again demographically supported with the level of wealth in Ireland increasing. And of course, probably for the first time on a mass scale receiving intergeneration [indiscernible] occurring.

So those two businesses continue to perform well. And maybe to the heart of your question, how do we offer these wealth products to a wider customer cohort? And there probably is an educational piece here, but we do see an opportunity to take our wealth product offering to our affluent customer base, both within Bank of Ireland and, of course, in the general system. Part of that to do that well, in part is a technology solution, and we're working on that, but we do see a real opportunity to grow that business and hence our confidence on setting out an AUM CAGR of 7% to 8% over the next number of years.

The next question is from Rob Noble at Deutsche.

I just wanted to ask on the bond portfolio. So I see it's increased another EUR 3.5 billion this quarter. I think you said EUR 5 billion to EUR 6 billion for the year, if I'm not mistaken. So is there any change in thinking around that? And why it couldn't be more whether you plan to do more into next year as well? And just operationally, do those bonds form part of the fixed leg of a structural hedge? Or do you -- are you thinking about that separately?

Good morning, Rob, I think this continues our conversation from the interim results on the bond portfolio. So a completely separate structural hedge. So that's the second part of your question. It's over EUR 18 billion now. We've grown just under EUR 15 billion at the half year, expected to be around EUR 20 billion or so by the end of the year. And we'll probably go a little bit further in the first part of next year. All those bonds are house-connect, so only changes -- market changes insulated from the company and earnings perspective from that has amortized costs and they're all [indiscernible].

The next question is from Fatima Ghaznavi at KBW.

For the first one, I appreciate your comments on the housing budget and the benefits from that on mortgage, but just wondering if you've already included some tailwind from that in your guidance for 2026 and 2027 or whether that will evolve, as you start hearing a bit more [indiscernible] from your clients around this? And secondly, on the U.K. corporate book run down, it looks like you did another EUR 300 million in the third quarter which is what we thought you would do for the second half. And so would we expect you to increase the run rate in the second half of the U.K. corporate book run down if you do a similar sort of amount in the fourth quarter? And does this also include U.S. CRE? Or is this just the U.K. corporate bank?

Thank you, Fatima. Let me take the loan book infrastructure question and Mark with take on the runoff, please. So Fatima, when we set out our target for loan book growth of 3% to 4% over the next number of years, included in that is the continuation of the positive growth in the Irish Corporate and Commercial book and certainly Bank of Ireland is very well positioned with our team to support infrastructure lending, and that is an area that we do want to participate in.

I think when we look at the profile of the government spend on infrastructure, it's likely to gather momentum out into the medium term. Of course, there will be short-term spends as well. But I say that in the context that I think it is a medium-term piece, it does represent a further growth in our Corporate and Commercial business I think in the medium and longer term. And that's an opportunity. We'll always be very disciplined on ensuring we can generate the right kind of returns in that business, but that is an opportunity for us to participate in. And certainly, I look forward to offering more on that when we share our strategy beyond '27 and -- sorry, quarter 1 next year. Mark?

Yes, just so actually split out in the IMS, the Corporate and Commercial exiting portfolios, you'll see that's reduced to EUR 2.4 billion December '24 to EUR 2.1 billion in September. So what's in there is the Corporate GB book and also the U.S. CRE book, so to your question. If we look in Q3, but we have some FX thesis there or the U.S. CRE book along down about EUR 100 million in terms of repayments in Q3. And I'd say, if I think about that what we've spoken about in previous calls, that stand by about 50% from when we started deleveraging is we're ahead of our internal plan on that. I'd say we're reducing that with [indiscernible].

Maybe finally, if I were to ask and linking to the question earlier on NII, I mentioned that there's NII headwind next year of EUR 25 million or so in relation to those [Technical Difficulty].

The next question is from Denis McGoldrick at Goodbody.

Just one, please, in relation to the Ireland mortgage market share. So 41% year-to-date, I think, implies you were at 43% again in Q3 which would be in line with Q2. Just interested on your thoughts on that. Are you surprised to still be up at that level? And is that a number that we should continue to think about into 2026, please?

Denis, thank you for that question. We don't have a mortgage market share target. Our objective is to grow our mortgage book and to do that against the backdrop of maintaining strong pricing discipline and leveraging back to my comments on [indiscernible] that the most important source of value to the mortgage book in some ways is less about market share and more about the evolution of the mortgage market itself and the fact that, that mortgage market is growing supported by the increase in supply of the loans.

So from a value creation perspective, I'd say that's the most dominant factor, a growing mortgage market. The outcome of our market share has been consistent since the year-to-date 41%. So quarter 3 is probably about right. And of course, we're very happy to be there to support our customers who want to acquire mortgage. But again, we don't have a target market share, but I am highly confident that, that mortgage focus is going to continue to grow in line with our overall outlook of growing levels by between 3% and 4%, but again, I think it reflects the overall participation, not share, the overall participation in the Irish market today.

The next question is from Seamus Murphy at Carraighill.

So I just want to just run through some math, if you don't mind, just in terms of the NII into 2020 -- for next year. I mean if we're flat year-on-year and you've told us at the half year stage we got EUR 150 million from the hedge. Plus we have 3% to 4% deposit growth, let's say, 125 basis points margin and loan growth coming through lower margins, but still that kind of gives us another EUR 40 million to EUR 50 million. And we have two negatives. Obviously, we have lower U.K. base rate, and we have 25 in digital mentions U.K. deleveraging. I'm really struggling even adding the EUR 150 million alone and assuming everything else nets to get high EUR 3 billions into 2026.

I mean, is there something really wrong with my math? Or is there -- what part is the other big negative that's coming through into next year? And you're right, we're at higher now 2.1% of Euro relative to where we were in Q2. I'm really struggling to understand how we're getting only just to EUR 3.3 billion, high EUR 3 billions in '26. I mean, math just don't think add up.

Seamus, yes, absolutely. So the moving parts are, as you say, so rates lower both euro and sterling, bit of dollar there as well and then deleveraging portfolios. The structural hedge, fixed leg. You're right on your math there. But also remember that our fixed rate Irish loans are also spot back as well. So that will be another factor, which maybe you allow for [indiscernible] the deposit growth. The lending growth and a portfolio positives that gets us in that the EUR 3.3 billion or so next year.

The next question is from Borja Ramirez at Citi.

I have two, please, on the NII. Firstly, if you could please remind me what was the NII in Q3 and also the expectations for Q4? And then my second question would be on the U.S. acquisition finance portfolio, which I understand is quite small and you've covered mostly with [indiscernible]. So -- and you have a very cautious approach on deleveraging. I would like to ask if you plan to run that portfolio down in the future, please?

Okay. Borja, thank you for the questions. Let me take the U.S. acquisition book question first of all in the Q3 and Q4. Borja, you recall at the half year, we took [indiscernible] impairment charge for a U.S. acquisition book. And most of that was a preemptive assessment of the potential credit risk, i.e., very little actual losses. And I make that point to you because as we work our way through the second half of the year, the team -- the U.S. acquisition team are spending the majority of their time on ensuring that, that credit position is managed as well as it possibly can be. So that's where the focus is on, as you would expect.

And therefore, very little deals being written over the course of this year, certainly since the half year. And of course, that in the context of the broader U.S. market backdrop and some of those uncertainties. So the focus of the team right now is to make sure that we have our arms fully around the credit risk that we work through those loans and that we certainly are very mindful of the position we took in the half year and sure we work our way through that very carefully, that's focus of the U.S. acquisition team. Mark?

Yes. On NII, so, Borja, we don't disclose the actual figures in Q3, but maybe let me try and help you. Our performance in the 9 months year-to-date were down 7% year-on-year. That's largely rate-driven and then offset by the loan deposit growth structural hedge and bond portfolio. That performance in the 9 months, us running ahead of our internal expectations, so about 1% ahead of what we expected. That's largely due to stronger deposit performance in our Irish franchise. And then if we look at the full year, we had previously expected the ECB to cut to 1.75% in H2 that we no longer expect. That based upgrading our guidance for the full year for NII to be greater than EUR 3.3 billion now. And I think in answer to one of the earlier questions, the H2 NII being probably similar to H1 NII.

The next question is from Jordan Bartlam at Mediobanca.

Just one for me on Irish CRE, if I may. So it looks like maybe some of the inflection we saw in the Irish CRE market last quarter has gone backwards, but again, when I look at 3Q data, so investment in our series dropped back down again, rate expectations perhaps a little bit higher than previously thought. Maybe they saw some lag investment decisions, particularly by multinationals given what we've seen geopolitically around the trade uncertainties. So just I wonder what the situation is like on the ground there? If you see any kind of new emerging pressures at the margin there? Or is it broadly the same as last quarter on kind of an asset quality front, Irish CRE?

Thanks, Jordan. Let me take the broad question, and then I'll ask Mark to comment on the asset quality. The -- if you look at the components of Irish CRE and certainly Bank of Ireland's participation in that homebuilding is usually important. And from our perspective, we're encouraged by the increasing supply of homebuilding. That's important to us. We have -- we target to support the supply of up to 30,000 homes and to help the funding of that and we're currently at 25,000. So that's an area of business that we feel very comfortable with and confident to support.

On the office piece from a market perspective, the observation would be that much of the developments that are coming online now were commenced pre-COVID. And that's important because if you play that through out over the next number of years, and you combine that with a greater population coming back to work in offices, and that offers a positive outlook on office space in Ireland. Of course, it has to be in the right location. That's totally key but they will be the two big factors that I would call out. And our overall asset quality, Mark?

Yes, maybe I will add on that and say, Jordan, so just in terms of on the range, we've spoken previously in calls that caution, good pipelines, not comparing actually, we had a pretty good Q3 from a CRE lending perspective. So maybe going deeper [indiscernible] that from an overall asset quality perspective on Irish CRE it is in very good shape. [indiscernible] are below 60%. So [indiscernible] still in the game. And I would say that asset quality is out playing out very much in line with our expectations.

As there are no more questions, I will now hand back to Myles O'Grady for closing remarks.

Okay. Guys, thank you very much. Thanks for joining the call today and indeed your interest at our quarterly updates. Just to reiterate, seeing a very strong positive momentum into 2026, bringing together a strong strategy execution and those key equity story points of Bank of Ireland, a differentiated business model and operating in attractive markets. And so we look forward to seeing you all again as part of our full year results and strategy refresh in quarter 1. Thank you very much again.

Thanks, everyone.

This concludes today's call. Thank you, everyone, for joining. You may now disconnect.