Monthly update: curveball

  • Sectors : Banks
  • Companies : AIB Group | permanent tsb Group | Bank of Ireland


Ratings and price correct at time of issue

Company Rating Date Previous Rating Date Closing Price
AIB Group OUTPERFORM 23/01/19 Neutral 14/08/18 362c
Bank of Ireland OUTPERFORM 11/03/13 Neutral 14/08/12 468c
permanent tsb Group NEUTRAL 06/03/19 Outperform 01/08/18 126c


The seismic shift in the interest rate outlook fundamentally challenges all banks’ core business models as lower-for-longer interest rates impair profitability from maturity transformation. We reduce our earnings forecasts to reflect the negative impact of lower reinvestment rates on Treasury portfolios and structural hedges, the pass-through to business lending rates and a flat outlook for tracker mortgage rates with only modest liability offsets. Downside risks remain from unchartered interest rate territory such as possible cuts to tracker mortgage rates and mortgage competition. In addition, it is too early to consider offsets from either lower impairments or operating costs.

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Jun 28 2019, 07:30 IST/BST