Banks

New analysis of Ireland’s high mortgage capital requirements

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

Ratings

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 163c
Bank of Ireland OUTPERFORM 11/03/13 Neutral 14/08/12 341c
permanent tsb Group OUTPERFORM 04/02/21 Neutral 06/03/19 92.6c

DAVY VIEW

It is well known that capital requirements for Irish mortgages are materially elevated (and this is the primary driver of higher cost mortgages versus other European countries). We now know that not only are capital requirements on impaired loans extremely high but performing mortgages do not benefit from lower requirements. In addition, requirements provide no benefit on new lending originated since stricter lending regulations were enforced. The construct of capital models, incorporating the last house price fall as a key assumption, means this is likely to persist.

Download full report with analyst certification and important disclosures

Feb 16 2021, 06:50 GMT

Download