Davy Morning Equity Briefing
Jun 30, 2026
Irish banks
Banks monthly: Capital - strong growth, returns and insulation
In recent years, Irish banks have delivered attractive organic capital generation, above that of European peer levels. Sustainable capital generation is key to increased capital returns, which are a key element of investment cases. This has been achieved against an ongoing backdrop of higher capital buffer requirements and higher risk weighted densities in Ireland. Over time, opportunities remain for risk weighted density (RWD) optimisation, including from significant risk transfers (SRTs). The outlook for strong capital generations and returns remains firmly intact.
Grafton Group
New share buyback highlights financial strength
Grafton has announced a fresh share buyback of up to £25m. This is a testament to the group’s financial strength given it recently invested circa £200m on two acquisitions. Share buybacks are an important component of Grafton’s capital allocation policy. Along with what should be operating profit growth, we believe they will help Grafton meet its stated target of annual EPS growth of 10%+ out to 2030.
UK economy
Revisions imply downside risks to 2026 UK GDP growth
This morning’s UK GDP revisions show an unchanged pace of quarterly growth in Q1 2026, but downward revisions to Q3 and Q4 2025 mean a lower annual pace of 0.9% to begin this year. Services output was also weaker than previously estimated, implying a weaker quality of growth took place coming into 2026, putting our forecast for 0.9% growth under pressure. However, it also weakens the case for Bank Rate hikes, and we continue to expect the next change will be a cut; since we made this call in early May, market pricing has moved steadily in this direction.
