AIB Group PLC (Holding Company) Allied Irish Banks (Lead Bank)

The positive outlook on AIB Group PLC and its operating company, Allied Irish Banks, factors in our expectation that the group's risk-adjusted profitability will remain solid, despite declining interest rates, while AIB implements its strategy, and expands and diversifies its businesses. We could raise our ratings on the group in the next two years if in our view AIB closes gaps with higher rated peers. AIB could achieve this if it continues to deliver on all aspects of its strategy; remains committed to sound risk management on all risk types, including emerging ones; and at the same time, maintains solid profitability metrics while attaining a stronger franchise and more efficient operations from advancing digital capabilities. We could revise the outlook

...We expect AIB will maintain solid risk-adjusted profitability over the next two years, despite declining interest rates. We estimate that the group's return on S&P Global Ratings-adjusted risk-weighted assets will range between 1.8% and 2.0% at year-end 2026, above the historical level of 1.0%-1.2% over the past 10 years. To achieve such a level, AIB will continue to leverage its dominant position in Ireland as competitive environment remains supportive. We also expect AIB to further advance its digital capabilities, ramp up efforts to contain costs, revenue diversification, and customer first focus....

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