Aib Group Plc · EURONEXT:A5G

Aib — The Irish Economic Update:

16 slides from Aib's investor presentation, April 2021

  1. Slide 1: The Irish Economic Update

    The Irish Economic Update: Tough start to 2021, but prospects brighten with vaccines roll out to ramp up in Q2 April 2021 Oliver Mangan Chief Economist AIB 1

  2. Slide 2: Export led growth in 2020, but back in lockdown in H1'21

    Export led growth in 2020, but back in lockdown in H1’21  Irish GDP grew by 3.4% in 2020, with GNP up 0.6%, as exports increased by 6.2%  Domestic economy contracted by 5.4%, with consumer spending down 9% and fixed investment falling by 8.5%, partially offset by 9.8% rise in government expenditur

  3. Slide 3: Goods exports up strongly in 2020, services exports flat

    Goods exports up strongly in 2020, services exports flat  Ireland a very open economy – exports, driven Exports as % of GDP by large scale FDI, are a huge part of economy Finland  UK Exports rise strongly in recent years, helped by Germany large FDI inflows France  Total exports rose 10.4% in 201

  4. Slide 4: Strong economic rebound followed big Covid hit in H1'20

    Strong economic rebound followed big Covid hit in H1’20 Construction Output % (Volume, YoY% Change)  Modified final domestic demand up by 18.8% in Q3, 30 20 with small fall of 2.2% in Q4, after big H1’20 decline 10  Overall, modified domestic demand contracted by 0 -10 5.4% in 2020. It was running

  5. Slide 5: Domestic recovery interrupted in Q4, with second lockdown

    Domestic recovery interrupted in Q4, with second lockdown % Modified* Final Domestic Demand Employment (YoY, %) % (% Yr-on-Yr) 8 10 Private 6 5 4 0 2 -5 Total Public 0 -10 -2 -15 -4 -20 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4 2018 Q4 2019 Q4 2020 -6 Source: CSO (*Excludes imports of I.P. & Aircraft Leasi

  6. Slide 6: Third lockdown sees activity weaken again at start to 2021

    Third lockdown sees activity weaken again at start to 2021 AIB Irish Mfg and Services PMIs Ulster Bank Construction PMI 80 70 Services 60 70 60 50 50 40 40 30 Manufacturing 30 20 20 10 10 0 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Source: Refi

  7. Slide 7: House building held up in 2020, but large fall likely in 2021

    House building held up in 2020, but large fall likely in 2021  Completions down by 32% yoy in Q2’20 on Irish Housing Activity 40,000 lockdown, but recovered strongly in Q3 and Q4 35,000  Total completions amounted to 20,676 in 2020, just 30,000 25,000 2% down on 2019 level of 21,087 20,000  Comme

  8. Slide 8: House prices are moving higher again

    House prices are moving higher again  House prices declined by very sharp 55% over 2007-13 % National House Price Inflation % 6 24  Prices have since recovered strongly; 86% above trough 5 20 by end 2020, but still some 16% below 2007 peak 4 16  3 12 CSO data show house prices little changed in 2

  9. Slide 9: AIB Model of Estimated Housing Demand

    AIB Model of Estimated Housing Demand  Rising headship rates added circa Calendar Year 2017 2018 2019 2020 2021 8,000 per year to housing demand in 2002-2011 period Household 28,000 32,000 31,000 25,000 25,000  Shortage of housing, high rents, Formation tighter lending rules saw average of which h

  10. Slide 10: Private sector deleverages, Gov. debt ratios rising again

    Private sector deleverages, Gov. debt ratios rising again Irish Household Debt Ratio Irish Private Sector Credit (Inc Securitisations) as % GNI* % (% of Disposible Income) % 220 350 200 300 250 180 200 160 150 140 100 120 50 100 0 Q3 2002 Q3 2004 Q3 2006 Q3 2008 Q3 2010 Q3 2012 Q3 2014 Q3 2016 Q3 20

  11. Slide 11: Large budget deficits in 2020 and 2021

    Large budget deficits in 2020 and 2021  Budget deficit declined sharply in last decade, 2 General Government Balance* (% GDP) with small surpluses recorded in 2018 and 2019 0  However, Covid-19 and efforts to mitigate it saw -2 the public finances deteriorate during 2020 -4  Tax receipts were dow

  12. Slide 12: Key points about EU-UK Trade & Cooperation Agreement

    Key points about EU-UK Trade & Cooperation Agreement  EU and UK finally agreed on a trade deal in late December 2020, thereby allowing for continuing tariff-free and quota-free trade in goods  However, the FTA is much inferior to the EU Single Market, involves a lot of extra admin costs with delay

  13. Slide 13: Economy was in very strong shape ahead of Covid shock

    Economy was in very strong shape ahead of Covid shock  Economy was in very strong shape ahead of being hit by very deep 2020 Covid recession  Well balanced, robust underlying growth of circa 5% per annum over 2013-19 period  Large inflows of FDI and strong export growth remain key features of the

  14. Slide 14: Key medium-term Irish growth drivers remain in place

    Key medium-term Irish growth drivers remain in place  Favourable medium-term drivers of strong Irish growth remain in place IMF GDP Forecasts  House building to pick up from still low output % Vol 2020 2021 2022 levels – big focus of government policy World -3.5 5.5 4.2  Government spending suppo

  15. Slide 15: AIB Irish Economic Forecasts

    AIB Irish Economic Forecasts % change in real terms unless 2019 2020 2021 (f) 2022 (f) 2023 (f) stated GDP 5.6 3.4 3.0 5.5 4.0 GNP 3.4 0.6 2.5 5.0 3.5 Modified Final Domestic Demand 3.3 -5.4 2.8 5.5 3.5 Personal Consumption 3.2 -9.0 3.0 7.5 4.0 Government Spending 6.3 9.8 1.5 -3.0 1.0 Fixed Investme

  16. Slide 16: Risks to the Irish economy

    Risks to the Irish economy  Main near term risk is still Covid-19 – continues to weigh heavily on growth & employment  Persistence of virus could see scarring effects – high business failures & bad debts, job losses  Very open nature of Irish economy means it is exposed to weakness in global trad

AIB Group — The Irish Economic Update: on 6ix