AIB, Bank of Ireland, and PTSB may yet 'sustain most of outstanding' profit drivers

Credit ratings firm said Irish banks benefitted from the fact their customer deposits had not yet incorporated most of the interest rate hikes, resulting in an average deposit beta rate that is one of the lowest across Europe

AIB, Bank of Ireland, and PTSB passed on the ECB rate increases by charging customers more for their loans, but not necessarily passing on much of the rate increases for customer deposits.

The three main Irish banks could still sustain most of the factors that helped drive profits to record levels in 2023, including benefitting from the exits of Ulster Bank and KBC Bank and paying out relatively little compared with European peers to customers for their deposits, a major credit ratings firm has said.

In their commentary, Morningstar DBRS senior analysts María Jesús Parra and Elisabeth Rudman also said AIB, Bank of Ireland, and PTSB had delivered "outstanding" performances in terms of the profits they made in 2023 and that the lenders have set aside sufficient provisions, despite early signs of deterioration in some loan books.