Aib Group Plc · EURONEXT:A5G

Aib — The Irish Economic Update:

15 slides from Aib's investor presentation, June 2023

1. Slide 1: The Irish Economic Update

   The Irish Economic Update: Economy continues to perform well despite headwinds and capacity constraints June 2023 Oliver Mangan Chief Economist AIB 1

2. Slide 2: Economy rebounded very strongly from COVID

   Economy rebounded very strongly from COVID  A further very strong rise in GDP in 2022 of 12%, % Consumer Spending (Volume, 3 QTR Moving Average, YoY% Change) 15 following the 13.6% increase seen in 2021  10 Surging inflows of foreign direct investment a key factor 5 in rapid growth of economy duri

3. Slide 3: Survey indicators point to slower growth this year

   Survey indicators point to slower growth this year AIB Irish Mfg and Services PMIs BNP Paribas Irish Construction PMI 70 70 60 60 50 50 Manufacturing 40 40 30 30 Services 20 20 10 10 May-17 May-18 May-19 May-20 May-21 May-22 May-23 0 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 Apr-22 Apr-23 Source: Markit vi

4. Slide 4: Data on domestic economy have been strong in H1 2023

   Data on domestic economy have been strong in H1 2023  Domestic data stronger than expected in 2023, but GDP fell in Q1 on sharp decline in mfg. output  Mfg PMI fell sharply in H2 2022 to below 50. Remains weak in 2023 at 48.6 in April and 47.5 in May  Services PMI solid in 2022. Picks up strongly

5. Slide 5: Unemployment rate falls to historic low, inflation now easing

   Unemployment rate falls to historic low, inflation now easing % Employment (YoY, %) Unemployment Rate 15 8.0 Private 12 7.5 7.0 9 Total 6.5 6 6.0 3 5.5 0 5.0 Public -3 4.5 -6 4.0 -9 3.5 May 2017 May 2018 May 2019 May 2020 May 2021 May 2022 May 2023 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1

6. Slide 6: Export growth slows in Q1'23 after very strong 2021-22

   Export growth slows in Q1’23 after very strong 2021-22  Ireland is 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 Germany UK by very large FDI inflows  France IDA reported record

7. Slide 7: House completions jump, but commencements fall back

   House completions jump, but commencements fall back  Completions amounted to 20,500 in 2020 & 2021, 35,000 Irish Housing Activity just 2.6% down on 2019 level despite lockdowns 30,000  Completions then jumped sharply to 30,000 in 2022, 25,000 20,000 and hit 31,000 in Q1 2023 for previous 12 months

8. Slide 8: House prices level off

   House prices level off  House prices declined sharply, by 55% over 2007-13. Prices have fully recovered - back above 2007 peak level % National House Price Inflation % 3.0 18.0  Low supply, remote working, strong public/institutional 2.5 15.0 2.0 12.0 demand, enhanced help-to-buy scheme, rising pe

9. Slide 9: AIB Model of Estimated Housing Demand

   AIB Model of Estimated Housing Demand  Rising headship rates added circa Calendar Year 2020 2021 2022 2023 2024 8,000 per year to housing demand in 2002-2011 period Household 26,000 29,000 28,000 25,000 24,500  Shortage of housing, high rents, Formation tighter lending rules saw average of which h

10. Slide 10: Household savings surge, Gov. debt ratios fall to low levels

    Household savings surge, Gov. debt ratios fall to low levels Irish Household Debt Ratio Irish Household Savings Ratio % (% of Disposible Income) % 220 35 205 30 190 25 175 160 20 145 15 130 10 115 100 5 85 Q4 2002 Q4 2006 Q4 2010 Q4 2014 Q4 2018 Q4 2022 0 Q4 2002 Q4 2004 Q4 2006 Q4 2008 Q4 2010 Q4 2

11. Slide 11: Strong economy leads to large and rising budget surpluses

    Strong economy leads to large and rising budget surpluses  Budget deficits in 2020 and 2021 owing to COVID General Government Balance (% GNI*)  Tax revenues rose very strongly across the board in 8 6 2021-22; up 21.5% in 2022 and 20% in 2021 4  Budget target was a deficit of €8bn for 2022, but a

12. Slide 12: Good growth likely despite headwinds & capacity issues

    Good growth likely despite headwinds & capacity issues  Mounting headwinds and capacity constraints, but solid growth expected by Irish economy in 2023-24 IMF Global GDP Forecasts (April 2023)  Strong data in H1 2023 – tax receipts, car sales, jobs % Vol 2021 2022 2023 2024  FDI inflows continuin

13. Slide 13: AIB Irish Economic Forecasts

    AIB Irish Economic Forecasts % change in real terms unless 2020 2021 2022 2023 (f) 2024 (f) stated GDP 6.2 13.6 12.0 4.0 3.7 GNP 2.7 14.7 6.7 3.5 3.3 Modified Final Domestic Demand -6.1 5.8 8.2 3.0 2.8 Personal Consumption -10.9 4.6 6.6 3.0 3.0 Government Spending 11.6 6.5 0.7 2.3 2.0 Fixed Investme

14. Slide 14: Changes to Global Corporate Tax Regime

    Changes to Global Corporate Tax Regime Importance of FDI:  Some 1,800 multinational companies are based in Ireland, accounting for over 300,000 jobs in direct employment  Corporation tax receipts of €22.6bn in 2022 or 27% of total tax revenue – well over 80% comes from MNCs Changes to Corporate Ta

15. Slide 15: Risks to the Irish economy

    Risks to the Irish economy  Very open Irish economy vulnerable to weaker global outlook, including FDI inflows  Concentration risk from heavy reliance of economy on a small number of multi-national dominated sectors in terms of output, employment, investment, exports and tax receipts  High inflat

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