AIB Group plc · EURONEXT:A5G

AIB — Corporate Update (February 2022)

16 slides from AIB's corporate update, February 2022

  1. Slide 1: The Irish Economic Update: Very strong rebound in activity set to continue in 2022

    The Irish Economic Update: Very strong rebound in activity set to continue in 2022 as Covid restrictions end February 2022 Oliver Mangan Chief Economist AIB 1

  2. Slide 2: Economy rebounded strongly in 2021

    Economy rebounded strongly in 2021  GDP grew by 5.9% in 2020, with GNP up 3.4%, but modified final domestic demand fell by 4.9%  Domestic economy picked up strongly in 2021  MFDD fell by 5% in Q1’21but rebounded strongly thereafter as economy re-opened.  It rose by 9.4% in Q2 and further 1.4% in

  3. Slide 3: Robust recovery evident across the economy

    Robust recovery evident across the economy  Indicators show very strong rebound in activity from Q2’21 onwards after third lockdown ended  Mfg PMI hit record high of 64.1 in May. Remained very high 59.9 in Nov and 58.3 in December  Services PMI jumped to 20-year high of 66.6 in July. Fell to 55.4

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

    Indicators pick up strongly as economy rebounds Source: Markit via Refinitiv Source: Refinitiv 4

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

    Unemployment declines rapidly, inflation rising sharply % 5

  6. Slide 6: Exports perform impressively throughout the pandemic

    Exports perform impressively throughout the pandemic  Ireland a very open economy – exports, driven by Exports as % of GDP large scale FDI, are a huge part of economy Finland  Exports have risen strongly in recent years, helped UK Germany by large FDI inflows – though growth overstated France  Ph

  7. Slide 7: House building holds up, commencements surged in 2021

    House building holds up, commencements surged in 2021 Irish Housing Activity  Total completions amounted to 20,535 in 2020, just 2.6% down on 2019 level despite a 6-week lockdown  Commencements fell by over 17% to 21,700 in 2020  They rebounded very strongly from last Spring and commencements rea

  8. Slide 8: House prices on sharp upward trend

    House prices on sharp upward trend  House prices declined sharply, by 55% over 2007-13  Prices have recovered strongly; 5% below 2007 peak  CSO data show house prices little changed over 2019-20  Strong rise in house prices in 2021, especially from June- November, with average monthly rise of 1.

  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 Private Sector Credit (Inc Securitisations) as % GNI* 350 300 250 200 150 100 50 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20202021(F) Sources: Central Bank, CSO, AIB ERU Calculation

  11. Slide 11: Budget deficit fell sharply in 2021 as economy rebounded

    Budget deficit fell sharply in 2021 as economy rebounded  Budget deficit fell sharply during last decade, with small surpluses recorded in 2018 and 2019  General Gov budget deficit of €18.4bn in 2020, or 5% of GDP, as Covid-19 hit public finances  Strong rebound in tax receipts in 2021 – up 20% &

  12. Slide 12: Strong economic growth to continue as restrictions end

    Strong economic growth to continue as restrictions end  Key ingredients in place for continued strong growth by Irish economy, following sharp rebound in 2021  Very high Irish vaccination rates against Covid-19, with all restrictions on activity lifted in late January  World economy rebounding st

  13. Slide 13: AIB Irish Economic Forecasts

    AIB Irish Economic Forecasts % change in real terms unless 2019 2020 2021 (f) 2022 (f) 2023 (f) stated GDP 4.9 5.9 14.0 6.0 4.0 GNP 5.0 3.4 8.0 5.0 3.5 Modified Final Domestic Demand 1.7 -4.9 5.5 6.3 3.8 Personal Consumption 3.3 -10.4 6.5 8.5 4.0 Government Spending 7.1 10.9 2.5 -1.5 1.5 Fixed Inves

  14. Slide 14: Residual Brexit Issue Remains over NI Protocol

    Residual Brexit Issue Remains over NI Protocol  UK has not ruled out triggering Article 16 in dispute with EU over operation of NI Protocol  EU has offered concessions on Protocol. Discussions with UK continuing, which is a positive sign  Triggering Article 16 would effectively suspend operation

  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 jobs in direct employment  Corporation tax receipts of €15.3bn in 2021 or 22.5% of total tax revenue – over 80% comes from MNCs Changes to Corporate Tax R

  16. Slide 16: Risks to the Irish economy outlook

    Risks to the Irish economy outlook  Covid-19 remains a risk – still high case numbers, concerns about new variants  Restrictions could be re-imposed if there was a new virulent, vaccine resistant variant  Persistent high inflation could trigger sharp tightening of monetary policy globally  Very

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