Bank of Ireland Group (LON:BIRG) reported first-half 2026 profit before tax of €960 million, with earnings per share rising 36% and reported return on tangible equity reaching 14.4%, as growth in Irish lending, deposits and wealth assets supported higher full-year guidance.
Chief Executive Officer Myles O’Grady said the bank was “meeting or beating” its strategic targets and cited combined 6% growth in loans, deposits and assets under management. The group declared an interim dividend of €0.39 per share, up 56% from a year earlier and equal to half of first-half earnings.
Irish franchise drives balance-sheet growth
Bank of Ireland’s loan book increased by €1.5 billion, or 4%, during the first half. Irish lending grew 7%, supported by mortgages and commercial lending, while group customer deposits rose 2%. Everyday banking deposits in Ireland increased 3%.
The Irish mortgage book grew 6% in the first half, according to O’Grady, who said the bank maintained pricing and risk discipline while retaining a market-leading market position. He expects the mortgage book to grow by an average of 5% in coming years, supported by housing demand and an increasing supply of homes.
Corporate and commercial lending in Ireland rose 14%, while the U.K. retail division focused on returns rather than volume. Retail U.K. total income rose 8%, its lending book declined 2%, and margins improved by 8 basis points.
Wealth assets under management reached a record €65.5 billion, up 18%, including €1.6 billion of net inflows. O’Grady said the group’s Davy Wealth and New Ireland Assurance brands provide an opportunity to serve mass-affluent, high-net-worth and life-protection customers.
The bank said it is preparing for a potential Irish government savings and investment account initiative. O’Grady said Bank of Ireland would be ready to introduce a product once the government sets its terms, and that the initiative aligns with its plans to broaden its affluent customer offering.
Net interest income outlook raised
Chief Financial Officer Mark Spain said first-half net interest income rose 2%, as balance-sheet growth and structural hedge rollovers more than offset lower interest rates and planned deleveraging. The bank raised its 2026 net interest income outlook to about €3.5 billion from €3.4 billion previously.
The group also upgraded its longer-term guidance, projecting net interest income of around €3.75 billion in 2027 and more than €3.95 billion in 2028. The forecasts assume the European Central Bank rate reaches 2.5% by September and remains at that level through the end of 2028.
Spain said Bank of Ireland increased its structural hedge by €8 billion in July after reviewing the performance of its Irish deposit base. The additional hedge was put in place at a yield of 2.96% and has the same three-and-a-half-year duration as the existing hedge. The move reduced the bank’s interest-rate sensitivity by about one-third.
“From here, the hedge really will grow in line with deposits,” Spain said. He added that about 40% of the projected increase in net interest income from 2025 through 2028 is expected to come from balance-sheet growth, with about 60% coming from hedge repricing.
Costs, credit quality and capital
Total income increased 7% in the first half, while fee income rose 6%, driven by wealth and insurance and supported by investment gains in corporate and commercial banking. Total costs rose 2%, in line with the company’s expectations, as inflation and investment spending were partly offset by efficiency initiatives and lower restructuring costs.
Bank of Ireland achieved €41 million in cost efficiencies during the half, equivalent to about 4% of first-half costs, and reduced full-time-equivalent employee numbers by 2%. O’Grady said the company remains on track to target a mid-40% cost-income ratio by 2028, supported by roughly €1.5 billion of investment over three years and a planned €250 million of gross cost reductions.
The investment program includes digital products, a new U.K. savings platform, wealth and insurance propositions, and corporate and commercial digital capabilities. O’Grady also cited early benefits from artificial intelligence in customer onboarding, know-your-customer processes, software development and contact-center handoffs, while noting continued cybersecurity investment.
Spain said asset quality remained strong, with the nonperforming exposure ratio falling to 2.0% at the end of June from 2.2% in December. The impairment charge was €32 million, or 8 basis points. The first-half result included a €30 million benefit from credit insurance mechanics and roughly €30 million of recoveries, primarily in corporate portfolios.
The bank improved its full-year cost-of-risk guidance to the mid-to-high teens in basis points, from a previous range of low-to-mid 20s basis points. Spain said the outlook applies the prior full-year guidance to the second half, reflecting a cautious approach amid external uncertainty despite healthy customer conditions.
Organic capital generation totaled 135 basis points in the first half. After risk-weighted asset investment and dividends, the common equity tier 1 ratio stood at 15.5%. The company said more than 40% of its €530 million share buyback announced in March had been completed.
Higher returns targets reaffirmed
For 2026, Bank of Ireland now expects statutory return on average equity above 14%, compared with previous guidance of 12.5%, and earnings-per-share growth of more than 35%. Capital generation guidance was raised to about 270 basis points from approximately 250 basis points.
Management reaffirmed its objective of a return on average equity above 16% in 2028. O’Grady said the group was two quarters into its 12-quarter strategy and that investments, operational efficiencies and growth in Ireland are intended to support returns through 2028 and beyond.
About Bank of Ireland Group (LON:BIRG)
Bank of Ireland Group is one of the largest financial services groups in Ireland, with total assets of €162 billion at 30 June 2025. We provide a broad range of banking and other financial services. We are organised into four trading segments (Retail Ireland; Wealth & Insurance; Retail UK; and Corporate & Commercial) and one support division (Group Centre) to effectively serve our customers.
