Aib Group Plc · EURONEXT:A5G

Aib — Corporate Update (October 2023)

15 slides from Aib's corporate update, October 2023

  1. Slide 1: The Irish Economic Update

    The Irish Economic Update: Sharp slowdown in growth this year, but economy still performing quite well October 2023 Oliver Mangan Chief Economist AIB 1

  2. Slide 2: Irish growth slows sharply in 2023 after buoyant 2021-22

    Irish growth slows sharply in 2023 after buoyant 2021-22  GDP increased by 15.1% in 2021 and 9.4% in 2022  Domestic economy grew by 7.3% in 2021, 9.5% in 2022 % Modified* Final Domestic Demand (3 QTR Moving Average, % Yr-on-Yr) as it rebounded strongly from COVID 12  GNI* (volume) up by 13.9% in

  3. Slide 3: Survey indicators consistent with slower growth this year

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

  4. Slide 4: Mixed data on economy in 2023, labour market very strong

    Mixed data on economy in 2023, labour market very strong  Mfg PMI data weak in 2023 - at 47.0 in July, but picked up to 50.8 in August as orders rose  Services PMI performs strongly this year; at 56.7 in July and 55.0 in August  Housing commencements fell back to a low of 26.5k last October, but

  5. Slide 5: Unemployment rate falls to very low level, inflation easing

    Unemployment rate falls to very low level, inflation easing % Employment (YoY, %) 15 Unemployment Rate 8.0 Private 12 7.5 9 7.0 Total 6 6.5 3 6.0 0 5.5 Public -3 5.0 -6 4.5 -9 4.0 Q2 2017 Q2 2018 Q2 2019 Q2 2020 Q2 2021 Q2 2022 Q2 2023 Aug 2017 Aug 2018 Aug 2019 Aug 2020 Aug 2021 Aug 2022 Aug 2023 S

  6. Slide 6: Exports weaken sharply in 2023 after very strong 2021-22

    Exports weaken sharply in 2023 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  IDA reported record FDI in 2021 and again in 2022, Germany UK with continuing strong inflows in H1 2023  France Ph

  7. Slide 7: House completions running at around the 30k level

    House completions running at around the 30k level  Completions amounted to 20,500 in 2020 & 2021, just 35,000 Irish Housing Activity 2.6% down on 2019 level despite lockdowns  30,000 Completions then jumped sharply to 30,000 in 2022, 25,000 and at 30,500 in year to Q2 2023, so steady in 2023 20,00

  8. Slide 8: Marked deceleration in house price inflation

    Marked deceleration in house price inflation  House prices declined sharply, by 55% from 2007-2013. % National House Price Inflation % 3.0 18.0 Prices have fully recovered - back above 2007 peak level 2.5 15.0  Low supply, remote working, strong public/institutional 2.0 12.0 demand, enhanced help-

  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: High household savings, while Debt ratios fall to low levels

    High household savings, while Debt ratios fall to low levels Irish Household Savings Ratio Irish Household Debt Ratio % % (% of Disposible Income) 35 220 30 205 190 25 175 20 160 15 145 130 10 115 5 100 0 85 Q2 2003 Q2 2005 Q2 2007 Q2 2009 Q2 2011 Q2 2013 Q2 2015 Q2 2017 Q2 2019 Q2 2021 Q2 2023 Q1 2

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

    Strong economy leads to large 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 2 surplus o

  12. Slide 12: Economy moves to slower growth path, but in good shape

    Economy moves to slower growth path, but in good shape  Mounting headwinds and capacity constraints, but Irish economy is well underpinned by many positive factors OECD Global GDP Forecasts (Sept. 2023)  FDI inflows continuing, boosting investment, exports % Vol 2021 2022 2023 2024 World 6.3 3.3 3

  13. Slide 13: AIB Irish Economic Forecasts

    AIB Irish Economic Forecasts % change in real terms unless 2021 2022 2023 (f) 2024 (f) 2025 (f) stated GDP 15.1 9.4 3.5 3.7 4.0 GNP 13.9 3.9 3.0 3.3 3.5 Modified Final Domestic Demand 7.3 9.5 3.3 2.8 3.0 Personal Consumption 8.4 9.4 4.5 3.5 3.3 Government Spending 6.3 3.5 0.5 1.5 2.0 Fixed Investmen

  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 investment, output, employment, exports and tax receipts  High inflat

AIB Group — Corporate Update (October 2023) on 6ix