Bank of Ireland Group Reports €1.4bn Profit in 2025 and Unveils Growth Strategy to 2028

Bank of Ireland 2025 results: big profit, bigger payout, clear plan

Bank of Ireland Group has posted a strong 2025, with profit before tax of €1.4 billion and a full-year payout to shareholders of €1.2 billion. That equates to a 100% total payout ratio for FY25, up from 80% in FY24. Management is leaning into its momentum in Ireland, targeting higher returns and sustained capital generation through 2028.

Under the bonnet, net interest income (NII) held up well despite lower rates, fee income grew, and asset quality stayed robust. There was a chunky non-core charge tied largely to UK motor finance redress and restructuring, but guidance for 2026-28 points to earnings growth, rising returns and ongoing distributions.

Key FY25 numbers at a glance

Profit before tax	€1.4bn
Adjusted RoTE	13.9% (16.3% excluding UK motor finance provision)
Statutory RoTE	10.9% (12.8% excluding UK motor finance provision)
Net interest income (NII)	€3.37bn
Fee income	€816m (+7%)
Operating expenses	€2.03bn
Non-core items	€430m (primarily UK motor finance redress and restructuring)
Net credit impairment charge	€193m (23bps)
NPE ratio	2.2%
Loans	€82.5bn
Customer deposits	€107.5bn
CET1 ratio	15.1%
Total distributions	€1.2bn
Dividend per share	70 cents (+11% year-on-year)
Approved share buyback	€530m

Dividend, buyback and capital – why 100% payout matters

Shareholder returns are front and centre. A €667 million cash dividend (70 cents per share) and a €530 million buyback together deliver a 100% payout of FY25 earnings. The Common Equity Tier 1 (CET1) capital ratio is a healthy 15.1%, helped by strong organic capital generation of 270bps.

Looking ahead, the Board is targeting a progressive dividend with a circa 50% payout ratio of attributable profits and expects “significant surplus capital generation” across 2026-28. Management has updated CET1 guidance to around 14.5% and will consider distributing capital above that level on at least an annual basis.

What drove FY25: income resilience, fee growth, and tight costs

NII of €3.37 billion slightly exceeded expectations. Growth in Irish lending and deposits, plus the benefits of the structural hedge and bond purchases, helped offset lower rates and planned deleveraging outside Ireland. The loan asset spread widened by 26bps to 311bps – a useful marker of pricing discipline.

Fee income rose 7% to €816 million, powered by Wealth and Insurance (Davy and New Ireland) where fees climbed 12%. Assets under management increased 9% to a record €60 billion. Operating expenses were €2.03 billion, up 3% and in line with guidance, with a 49% cost-income ratio.

Non-core items of €430 million mainly reflect UK motor finance-related customer redress and restructuring costs. Statutory RoTE was 10.9%, or 12.8% excluding the UK motor finance impact. Asset quality remains robust: the non-performing exposure (NPE) ratio is 2.2%, and the net credit impairment charge of €193 million equates to 23bps.

Balance sheet and liquidity: Irish engine humming, liquidity strong

Total loans ended the year at €82.5 billion, flat overall. The Irish book grew by €3.2 billion, Retail UK by €0.1 billion, offset by planned deleveraging in International Corporate (-€1.6 billion) and an FX/impairment impact of -€1.7 billion. Customer deposits rose €4.4 billion to €107.5 billion, led by a 6% increase in Irish Everyday Banking and a 4% increase in Retail UK (driven by Northern Ireland).

Liquidity remains a strength. The liquid asset portfolio is €46 billion, the liquidity coverage ratio is 191%, the loan-to-deposit ratio is 77%, and the net stable funding ratio is 156%. The Group purchased €12 billion of bonds during 2025, supporting the structural hedge – which is expected to see around 10% fixed-leg income growth in 2026.

Strategy to 2028: higher returns, disciplined growth, and capital firepower

The plan for 2026-28 is built around three themes: grow in Ireland (mortgages, wealth and everyday banking), optimise capital in the UK and internationally, and keep investing in digital, data, AI and people. Bank of Ireland highlights leading #1 or #2 positions across retail, business and corporate banking and says it is #1 in Ireland’s fast-growing wealth sector.

Financially, the Group is targeting statutory RoTE to build to more than 16% by 2028 (equivalent to more than 19% on the prior Adjusted RoTE basis), mid to high teens reported EPS CAGR, and total income above €4.75 billion by FY28. NII guidance is upgraded to circa €3.4 billion in FY26, more than €3.6 billion in FY27 and more than €3.85 billion in FY28.

Costs are guided to stay stable at around €2.2 billion across FY26-28, driving the cost-income ratio down by about 6 percentage points to the mid-40s by FY28 (on the new basis). Capital generation is expected to average roughly 260bps per year, with projected cumulative net capital generation of about €3.7 billion over the cycle – described as equivalent to around 25% of end-2025 market capitalisation. The Group is also exiting its US Leveraged Acquisition Finance business, with a €1.2 billion book expected to run down over roughly three years.

2026 guidance in one glance

• NII of circa €3.4 billion; structural hedge fixed-leg income growth of around 10%.
• Deposit growth about 3%; loan growth about 4% (Ireland strong, UK stable; run-down of GB Corporate and US LAF, circa €1.7 billion remaining).
• Fee income growth of about 4%, led by Wealth & Insurance.
• Total costs of €2.2 billion (operating expenses plus restructuring), with circa 2% growth in operating expenses.
• Cost-income ratio flat versus 52% in FY25 on the new basis (which includes restructuring costs and JVs/associates income).
• Cost of risk in the low to mid-20bps, assuming no material change in the outlook.
• Statutory RoTE of about 12.5% (equivalent to circa 15.5% on the prior Adjusted RoTE basis).
• CET1 guidance around 14.5%; capital generation circa 250bps, with approximately 25% for RWA investment.
• Progressive ordinary DPS with around 50% payout of attributable profits; surplus capital may be considered for further distributions.

My take: positives, pressure points, and what to watch

Positives first. Ireland is doing the heavy lifting and looks set to keep doing so – loan and deposit growth, record AUM, and pricing discipline (311bps loan spread) underpin revenue. The capital story is strong: 270bps organic generation in 2025, 100% payout now, and a plan to average circa 260bps p.a. to 2028 while still targeting CET1 around 14.5%. If management delivers the mid-40s cost-income ratio by 2028, operating leverage should push returns up and cash back to shareholders.

Now the pressure points. Non-core charges tied to UK motor finance and ongoing restructuring are a drag – they subdued statutory RoTE in 2025. The 2026 RoTE guide of about 12.5% is solid but implies a step up is needed in 2027-28 to hit more than 16%. NII remains sensitive to the rate backdrop, even with the structural hedge, and credit costs are guided to the low-to-mid 20bps region, which is a normalisation from ultra-low levels. CET1 guidance is lower than the year-end position, so discipline on risk-weighted asset growth will matter.

Watch-fors in 2026: delivery on the €2.2 billion cost ceiling, Irish lending momentum, fee growth from Wealth & Insurance, and capital returns above the circa 50% dividend payout if surplus capital builds. The run-down of GB Corporate and US LAF reduces complexity and risk but will dampen loan balances – the Irish engine needs to keep purring.

Quick jargon buster

• RoTE: Return on tangible equity – profit as a percentage of shareholders’ tangible equity. A key bank profitability metric.
• NII: Net interest income – interest earned on loans and securities minus interest paid on deposits and funding.
• CET1: Common Equity Tier 1 – the core capital buffer regulators focus on for bank resilience.
• NPE ratio: Non-performing exposures – the share of loans that are in default or close to it; lower is better.
• Cost-income ratio: Operating costs divided by income; falling ratios indicate efficiency gains.
• Structural hedge: A treasury setup using fixed-rate assets (like bonds) to smooth and support NII through rate cycles.
• bps: Basis points – 100bps equals 1 percentage point.

Where to read more

You can find the full annual results and strategy materials in the Bank of Ireland Results Centre: https://investorrelations.bankofireland.com/results-centre/