EU FINANCIALS: AIB Group (AIB) - Q4 Results
Mar-05 09:14
Small credit positive. A good set of results.
- NII increased to €4.1bn, up from €3.8bn, but is expected to fall back to €3.6bn in 2025. Fee and commission income grew by 5% in 2024 to €666m. Other income was lower as 2023 included the Goodbody income.
- Cost of risk fell to 8bps in 2024, but this was flattered by macroeconomic assumption changes. Credit performance from impaired credits were similar to 2023 - which looks likely an underlying CoR of c12bps In both years.
- Operating expenses grew 8% during the year.
- PBT is up to €2.7bn from €2.4bn in 2023
- CET1 decreases from 15.8% to 15.1% - remains well ahead of >14% target. Capital generation was 400bps through the year. SRT's and other moves added a further 50bps.Dividends were -350bps, and buybacks were -80bps. RWA growth detracted a further 90bps.
2025 Targets
- Cost of risk 20-30bps
- RoTE >15% - which is medium term target
- 5% loan growth
Performance
- Irish banks in general saw their sr non-prefs outperform QoQ, following the positive outlook for BKIR and AIB from S^P on Feb 24rth. They rallied c.20bps, compared to the index at -14bps. Tier 2's were more in line with both irish banks and the index c30bps tighter.
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EUROZONE DATA: Upward Revision To Jan Manufacturing PMI, Employment Signals Weak
Feb-03 09:11
The Eurozone manufacturing PMI saw a five tenth upward revision to 46.6 (vs 46.1 flash, 45.1 prior), driven by a notable upward revision in Germany to 45.0 (vs 44.1 flash).
- Both new orders and production saw smaller declines than in December, helping the EZ aggregate tick higher. Spain and Greece continued to outperform Eurozone peers.
- Downticks in industrial employment were noted across the four major Eurozone economies. From the EZ release: “Employment levels were cut further at the start of 2025, with the rate of job shedding accelerating fractionally. This marked a twentieth successive month that factory staffing numbers have declined”.
- There was an acceleration in input cost price pressures in January, and business “refrained from passing on higher costs to their customers”, bringing a “four-month sequence of discounting to an end”.
- December industrial production data is due from France (Weds), Germany (Fri) and Spain (Fri) this week.
BUNDS: Curves Steepen Towards Next Upside Levels
Feb-03 09:08
The dovish repricing linked to tariff-related growth worry promotes bull steepening on the German curve this morning.
- 2s10s within 0.5bp of the October 21 ’22 high (36.7bp).
- 5s20s ~3bp off the ’24 treble top area (~51.1bp).
- Levels above are based on closing prices.
EURIBOR OPTIONS: More Call Flow
Feb-03 09:03
Continued flow in Euribor calls, although a little more mixed this time around:
- ERM5 97.9375/98.1875 call spread 4K given at 7.25.
- ERU5 98.25/98.4375 call spread paper paid 4.25 on 7K vs 98.035, 13% delta.
