Davy Morning Equity Briefing
Nov 30, 2020
Ireland relaxes restrictions as retail sector open for Christmas
Ireland has relaxed COVID-19 restrictions, allowing the retail and services sectors to re-open from December 1st. Hence, GDP will rebound but, crucially, firms can through trade the important Christmas season – helping their finances and ability to service debt. This morning’s Bank of Ireland Pulse surveys of business and consumer sentiment have bounced back to eight-month highs on the back of the positive news on COVID-19 vaccines. This will encourage retail spending over Christmas and has already led to house price inflation expectations for 2021 being revised up.
A new route to achieve targets
AIB’s end returns target may not change but, understandably, the route to achievement has. The upcoming investor update will provide further details – we expect costs, capital targets and capital returns to be the main focus, while the timeline for achievement may also be extended to 2023 (from 2022). Despite the recent rally, AIB continues to be valued on 2021 earnings – ignoring surplus capital and increases in forecast earnings in 2022 and beyond.