Davy Morning Equity Briefing
Jan 30, 2026
Irish banks
Positive liability dynamics
We retain a constructive outlook on the Irish banks into 2026. The Irish economy is set for ongoing growth, while bank balance sheets are also well primed. In the report, we assess the liability side of balance sheets, with a particular focus on deposits and the structural hedge. We modestly increase our net interest income (NII) forecasts, based upon better trends in deposit growth and modestly higher rates. This should continue to support valuations, as should higher than sector average distributions. We increase our price targets to €10.95 (from €10.10) and €19.10 (from €18.30) for AIB Group (AIBG) and Bank of Ireland (BIRG) respectively and retain our ‘Outperform’ ratings.
Stelrad Group plc
Operational excellence ensures a commendable performance in 2025
That Stelrad has confirmed further adjusted operating profit growth last year, with an improvement in its underlying operating margin while lowering net debt, is impressive. It represents a highly commendable performance in demanding trading conditions and underscores the strength of the group’s operating model.
Irish economy
Housing output jumped 20% last year, meeting our forecast
Completions came in ahead of consensus and in line with Davy forecasts after a very strong seasonal Q4. Our approach takes the commencements profile of houses and apartments separately into account, and our Q4 forecast for each was very accurate. This, along with wider indicators of strength for the new housing pipeline, gives us confidence that housing output will continue to increase in 2026 and 2027. We also note that the impact of the Government’s supportive policies in 2025 have yet to fully take effect; these remain essential for sustaining necessary higher completions.
