Aib Group Plc · EURONEXT:A5G

Aib — The Irish Economic November 2021

16 slides from Aib's investor presentation, November 2021

  1. Slide 1: The Irish Economic Update: Very strong rebound in activity continuing

    The Irish Economic Update: Very strong rebound in activity continuing November 2021 Oliver Mangan Chief Economist AIB 1

  2. Slide 2: Economy rebounds strongly post Q1 lockdown

    Economy rebounds strongly post Q1 lockdown Construction Output  % (Volume, YoY% Change) GDP grew by 5.9% in 2020, with GNP up 3.4% 40  30 Modified final domestic demand fell by 4.9% and 20 modified gross national income down 3.5% in 2020 10  Third lockdown saw GNP contract by 3% in Q1 2021 0 -10

  3. Slide 3: Robust recovery evident across the economy

    Robust recovery evident across the economy  Restrictions started to be lifted during Q2 after long third lockdown imposed in Q1  Indicators point to very strong rebound in activity in Q2 and Q3 after lockdown ended  Mfg PMI hit record high of 64.1 in May, and has stayed above 60 since then  Serv

  4. Slide 4: Indicators pick up strongly as economy reopens

    Indicators pick up strongly as economy reopens AIB Irish Mfg and Services PMIs Ulster Bank Construction PMI 70 70 60 60 50 50 Manufacturing 40 40 30 30 Services 20 20 10 10 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 0 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Source: Markit via Refinitiv Sourc

  5. Slide 5: Unemployment declining rapidly, inflation rising sharply

    Unemployment declining rapidly, inflation rising sharply % Employment (YoY, %) Unemployment Rate 12 32 28 9 Covid-19 Adjusted Rate Private 24 6 20 3 Total 16 0 Public 12 Traditional Rate -3 8 -6 4 -9 0 Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020 Q2 2021 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20

  6. Slide 6: Exports perform impressively throughout the pandemic

    Exports perform impressively throughout the pandemic  Ireland a very open economy – exports, driven Exports as % of GDP by large scale FDI, are a huge part of economy Finland  UK Exports rise strongly in recent years, helped by Germany large FDI inflows France  Pharma, medical care products, IT e

  7. Slide 7: House building holds up, while commencements rebound

    House building holds up, while commencements rebound  Total completions amounted to 20,535 in 2020, just Irish Housing Activity 2.6% down on 2019 level despite a 6-week lockdown 40,000 35,000  Big jump in planning permissions in past couple of years 30,000  25,000 Commencements fell by over 17% t

  8. Slide 8: House prices on sharp upward trend

    House prices on sharp upward trend % National House Price Inflation %  House prices declined sharply, by 55% over 2007-13 2.5 15.0 2.0 12.0  Prices have recovered strongly- still 9% below 2007 peak 1.5 9.0  CSO data show house prices little changed over 2019- 1.0 0.5 6.0 3.0 20, until starting to

  9. Slide 9: AIB Model of Estimated Housing Demand

    AIB Model of Estimated Housing Demand  Rising headship rates added circa Calendar Year 2019 2020 2021 2022 2023 8,000 per year to housing demand in 2002-2011 period Household 31,000 22,500 20,500 23,000 24,000  Shortage of housing, high rents, Formation tighter lending rules saw average of which h

  10. Slide 10: Private sector deleverages, Gov. debt ratios to resume downtrend

    Private sector deleverages, Gov. debt ratios to resume downtrend Irish Household Debt Ratio Irish Private Sector Credit (Inc Securitisations) as % GNI* % (% of Disposible Income) % 220 350 200 300 250 180 200 160 150 140 100 120 50 100 0 Q1 2003 Q1 2005 Q1 2007 Q1 2009 Q1 2011 Q1 2013 Q1 2015 Q1 201

  11. Slide 11: Budget deficit in sharp decline as economy recovers

    Budget deficit in sharp decline as economy recovers  Budget deficit fell sharply during last decade, 2 General Government Balance (% GDP) with small surpluses recorded in 2018 and 2019  General Gov budget deficit of €18.4bn in 2020, or 0 -2 5% of GDP, as Covid-19 hit public finances  Strong rebou

  12. Slide 12: Elements in place for period of strong economic growth

    Elements in place for period of strong economic growth  Key ingredients in place for a strong rebound by Irish OECD Global GDP Forecasts (Sept 2021) economy from 2021 onwards % Vol 2020 2021 2022  Rollout of vaccines allows economies to reopen here World -3.4 5.7 4.5 OECD -4.8 5.3 3.8 and elsewher

  13. Slide 13: AIB Irish Economic Forecasts (Planning July 2021)

    AIB Irish Economic Forecasts (Planning July 2021) % change in real terms unless 2019 2020 2021 (f) 2022 (f) 2023 (f) stated GDP 4.9 5.9 8.0 5.5 4.0 GNP 5.0 3.4 5.5 5.0 3.5 Modified Final Domestic Demand 1.7 -4.9 4.0 5.3 3.7 Personal Consumption 3.3 -10.4 3.7 7.5 4.0 Government Spending 7.1 10.9 1.7

  14. Slide 14: Brexit: The EU-UK Trade & Cooperation Agreement

    Brexit: The EU-UK Trade & Cooperation Agreement The Trade Deal:  EU and UK finally agreed on a trade deal before end 2020, thereby allow for continuing tariff-free and quota-free trade in goods  However, the FTA is much inferior to the EU Single Market, involves a lot of extra admin costs and dela

  15. Slide 15: Changes to Corporate Tax Regime Agreed

    Changes to Corporate Tax Regime Agreed Importance of FDI: Some 1,600 multinational companies are based in Ireland, accounting for over 250,000 in direct employment or about18% of total jobs in terms of direct and indirect employment. Corporation tax receipts of €12bn in 2020 or circa 20% of total

  16. Slide 16: Reprise of risks to the Irish economy

    Reprise of risks to the Irish economy  Main near term risk is still Covid-19 – high case numbers, concerns about new variants  Virus could leave lasting scarring effects – rising business failures & bad debts, job losses  Very open Irish economy so vulnerable to any global slowdown  Changed EU-U

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