AIB Group 2025 results: big profit, bigger payout, and a confident 2026 guide
AIB has posted a bumper set of 2025 numbers: profit after tax of €2,139m, a 25.0% return on tangible equity (RoTE – a profitability measure on shareholders’ tangible capital) and a Common Equity Tier 1 (CET1 – core capital strength) ratio of 16.2%. The headline for income investors is clear – total shareholder distributions of €2.25bn, combining a sharply higher cash dividend with a €1.0bn share buyback launching today.
Under the bonnet, deposit momentum stayed strong, loans crept higher, and costs were kept tightly managed. Net interest income (the spread AIB earns on lending vs funding, or NII) declined as expected with lower rates, but management is guiding to stability in 2026. The bank also reconfirmed its through-cycle focus on capital strength and simplification.
Key 2025 numbers investors should know
| Profit after tax | €2,139m |
| EPS | 93.3c |
| RoTE | 25.0% |
| CET1 ratio | 16.2% (Dec 2024: 15.1%) |
| Net interest income (NII) | €3,748m (-9%) |
| Other income | €756m (-3%); net fee and commission income €692m (+4%) |
| Operating costs | €1,992m (+1%); cost-income ratio 44% |
| Credit charge | €172m; cost of risk 24bps; ECL cover 1.6% |
| Gross loans | €72.3bn (+2% headline; +3% underlying) |
| New lending | €14.7bn (+2%); 43% green and transition (€6.3bn) |
| Customer deposits | €117.2bn (+7%) |
| Liquidity | LDR 61%, LCR 204%, NSFR 163% |
| Distributions | €2.25bn total; payout ratio 105% |
Income engine: rate headwinds, volume tailwinds
NII of €3,748m fell 9% as lower rates took hold, with net interest margin (NIM) at 2.73% and a Q4 exit NIM of 2.69%. AIB cites a deposit beta of about 20% – in plain English, that is how much deposit rates move when base rates fall – which helped cushion the impact. Volumes did their part too: gross loans grew to €72.3bn and customer deposits rose 7% to €117.2bn.
Other income came in at €756m, down 3% as higher fees were offset by lower equity gains and the absence of a one-off from 2024. Net fee and commission income rose 4% to €692m, helped by card, wealth and insurance activity.
Costs and credit: disciplined opex, normalising impairments
Operating costs were well controlled at €1,992m, up just 1% despite inflation and higher investment spend, with full-time equivalents down 3% to 10,207. The cost-income ratio ticked up to 44% from 40% in 2024 – still healthy, but a reminder that the peak-rate tailwind is fading.
Credit quality remains robust. The expected credit loss (ECL) charge was €172m, or a 24bps cost of risk (CoR), mainly from wholesale lending, partially offset by a €52m writeback from improved macro assumptions. Non-performing exposures (NPEs) fell 20% to €1.6bn, now 2.2% of gross loans.
Capital and distributions: 105% payout and a €1bn buyback
CET1 sits at 16.2%, comfortably above requirements. Strong organic capital generation of around 370bps funded a generous payout: total ordinary cash dividends of €1.25bn (58.585c per share) plus a regulatory approved €1.0bn on-market share buyback launching today.
- Final ordinary dividend proposed: €988m at 46.257c per share, subject to AGM approval on 30 April 2026.
- Interim dividend paid in November 2025: €263m at 12.328c per share.
- Total distributions: €2.25bn, equating to a 105% payout ratio.
Other capital movements included a Basel IV reduction in RWAs, DTA utilisation, and the cancellation of IPO warrants. The bank’s MREL ratio is 35.2% versus a 28.5% 2026 requirement, underpinned by 2025 issuances including green senior non-preferred and Tier 2.
Lending and deposits: steady growth with a green tilt
New lending rose 2% to €14.7bn. Mortgages in Ireland were €4.3bn (market share 30%), with green mortgages now 60% of new originations. Personal lending grew 4% to €1.4bn, and SME lending was stable at €1.6bn, aided by digital origination and a 44% reduction in ‘time to cash’.
Capital Markets delivered €4.6bn of new lending (+5%), with some recovery in real estate from a low prior year base. Climate & Infrastructure Capital added €1.6bn, 65% in Europe and the UK. UK new lending was £1.7bn, focused on corporate and residential investment. Customer deposits climbed to €117.2bn, with a loan-to-deposit ratio of 61% reinforcing balance sheet resilience.
Digital and simplification: fewer moving parts, faster delivery
On customer experience, five of six key Net Promoter Score (NPS) journeys improved, and the sixth held a record level. “Abi”, AIB’s AI-powered assistant, handled an average 5,208 calls per day across 66 customer journeys. Operationally, the bank invested in cloud architecture and delivered over 99.99% IT availability across critical services.
It also simplified the organisation: a 40% reduction in legal entities, 12 legacy applications decommissioned, and about a 25% cut in postal correspondence – all completed on time. The sale of the minority stake in AIB Merchant Services generated an exceptional gain, contributing to a €156m net exceptional benefit in 2025.
2026 guidance: strong RoTE despite lower rates
Management expects NII of about €3.8bn in 2026, other income above €750m, costs up around 2%, and cost of risk in the 20-30bps range. Loans are expected to grow by about 5% and deposits by 2-3%. Crucially, AIB guides to RoTE above 20% in 2026 – a confident marker given assumptions of an ECB deposit rate at 2.00% throughout 2026, a BOE rate of 3.25% at December 2026, and a deposit beta of about 20%.
My take: why this update matters
Positives first: profitability is high, capital is robust, and cash returns are substantial. The 58.585c per share ordinary dividend plus a €1.0bn buyback is shareholder-friendly, and the RoTE >20% guidance suggests AIB expects to stay highly profitable even as rates normalise. Deposit growth of 7% and a 61% LDR point to ample funding capacity for loan growth.
What to watch: NII fell 9% in 2025 and the cost-income ratio rose to 44% as the rate tailwind eased. The credit charge moved higher to 24bps, still low but up from 8bps in 2024. Guidance leans on a low deposit beta – if competition for deposits heats up, that could squeeze margins. And while wholesale impairments drove the 2025 charge, that line will remain sensitive to macro and sector-specific shocks.
2026 watchlist: the metrics that will move the dial
- NIM and deposit beta discipline – does the Q4 2025 exit NIM of 2.69% stabilise or improve?
- Loan growth delivery – c. 5% target with continued green and UK momentum.
- Cost control – keeping the cost growth to c. 2% and investing c. €400m p.a. without bloating the CIR.
- Credit cycle – CoR within 20-30bps and NPEs staying near 2.2% of gross loans.
- Capital deployment – execution of the €1bn buyback and the proposed 46.257c final dividend post-AGM.
Overall, this is a strong, shareholder-friendly update. AIB exits 2025 with high returns, thick capital buffers and a clear plan for 2026. If management lands the margin, cost and credit targets, the story should remain compelling for income-focused investors and those hunting for resilient bank returns.
