Aib Group Plc · EURONEXT:A5G

Aib — The Irish Economic Update:

16 slides from Aib's investor presentation, April 2022

  1. Slide 1: The Irish Economic Update: Economy makes strong start to 2022, but inflation rising sharply

    The Irish Economic Update: Economy makes strong start to 2022, but inflation rising sharply April 2022 Oliver Mangan Chief Economist AIB 1

  2. Slide 2: Economy rebounded very strongly during 2021

    Economy rebounded very strongly during 2021 Consumer Spending % (Volume, 3 QTR Moving Average, YoY% Change)  GDP grew by 5.9% in 2020, with GNP up 3.4%, but 15 10 modified final domestic demand fell by 4.9%  Domestic economy picked up strongly in 2021 5  0 MFDD fell by 4% in Q1’21 but rebounded s

  3. Slide 3: Strong recovery continues in early 2022, though inflation surging

    Strong recovery continues in early 2022, though inflation surging  Indicators show the very strong rebound in activity in 2021 is continuing in early 2022  Mfg PMI remained at strong levels at start of this year; 59.4 in January, 57.8 in February  Services PMI rose to very high 61.8 in February,

  4. Slide 4: Activity indicators pick up strongly in past year

    Activity indicators pick up strongly in past year AIB Irish Mfg and Services PMIs Ireland Construction PMI 70 70 60 60 50 50 Manufacturing 40 40 30 30 20 Services 20 10 10 0 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Feb-22 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Feb-22 Source: Markit via Refinitiv

  5. Slide 5: Unemployment declines rapidly, inflation rising sharply

    Unemployment declines rapidly, inflation rising sharply % Employment (YoY, %) Unemployment Rate 12 32 Private 9 28 Covid-19 Adjusted Rate Total 24 6 Public 20 3 16 0 12 -3 Traditional Rate 8 -6 4 -9 0 Q4 2015 Q4 2016 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Source: CSO via Refinitiv Feb-17 Feb-18 Feb

  6. Slide 6: Exports perform impressively throughout the pandemic

    Exports perform impressively throughout the pandemic  Ireland is a very open economy – exports, driven Exports as % of GDP by large scale FDI, are a huge part of economy Finland  Exports have risen strongly in recent years, helped Germany UK by large FDI inflows – though growth overstated France 

  7. Slide 7: House building held up in 2020-21, commencements surge

    House building held up in 2020-21, commencements surge  Total completions amounted to 20,500 in 2020, just 40,000 Irish Housing Activity 2.6% down on 2019 level despite a 6-week lockdown 35,000  Commencements fell by over 17% to 21,700 in 2020, 30,000 25,000 but rebounded strongly last year to 33,

  8. Slide 8: House prices on sharp upward trend since end 2020

    House prices on sharp upward trend since end 2020 % National House Price Inflation %  2.5 18.0 House prices declined sharply, by 55% over 2007-13 2.0 15.0  Prices have now recovered; just 3% below 2007 peak 1.5 12.0 9.0 1.0  CSO data show house prices little changed over 2019-20 0.5 6.0 3.0  Str

  9. Slide 9: AIB Model of Estimated Housing Demand

    AIB Model of Estimated Housing Demand  Rising headship rates added circa Calendar Year 2019 2020 2021 2022 2023 8,000 per year to housing demand in 2002-2011 period Household 31,000 22,500 20,500 23,000 24,000  Shortage of housing, high rents, Formation tighter lending rules saw average of which h

  10. Slide 10: Private sector deleverages, Gov. debt ratios to resume downtrend

    Private sector deleverages, Gov. debt ratios to resume downtrend Irish Household Debt Ratio Irish Private Sector Credit (Inc Securitisations) as % GNI* % (% of Disposible Income) % 215 350 195 300 250 175 200 155 150 135 100 115 50 95 0 Q3 2003 Q3 2005 Q3 2007 Q3 2009 Q3 2011 Q3 2013 Q3 2015 Q3 2017

  11. Slide 11: Budget deficit in sharp decline as economy rebounds

    Budget deficit in sharp decline as economy rebounds  Budget surpluses recorded in 2018 and 2019 2 General Government Balance (% GDP)  General Gov budget deficit of €18.4bn in 2020, or 0 5% of GDP, as Covid-19 hit public finances  -2 Strong rebound in tax receipts in 2021 – up 20% -4 & 15% higher

  12. Slide 12: Good economic growth to continue despite inflation surge

    Good economic growth to continue despite inflation surge  Key ingredients in place for continued strong growth IMF Global GDP Forecasts (Jan 2022) by Irish economy, following sharp rebound in 2021 % Vol 2021 2022 2023  Very high Irish vaccination rates against Covid-19, with World 5.9 4.4 3.8 all

  13. Slide 13: AIB Irish Economic Forecasts

    AIB Irish Economic Forecasts % change in real terms unless 2019 2020 2021 2022 (f) 2023 (f) stated GDP 4.9 5.9 13.5 6.0 4.0 GNP 5.0 3.4 11.5 5.0 3.5 Modified Final Domestic Demand 1.7 -4.9 6.5 6.3 3.8 Personal Consumption 3.3 -10.4 5.7 8.5 4.0 Government Spending 7.1 10.9 5.3 -1.5 1.5 Fixed Investme

  14. Slide 14: Residual Brexit Issue Remains over NI Protocol

    Residual Brexit Issue Remains over NI Protocol  UK has not ruled out triggering Article 16 in dispute with EU over operation of NI Protocol  EU has offered concessions on Protocol. Discussions with UK continuing, which is a positive sign  Triggering Article 16 would effectively suspend operation

  15. Slide 15: Changes to Corporate Tax Regime Agreed

    Changes to Corporate Tax Regime Agreed Importance of FDI:  Some 1,600 multinational companies are based in Ireland, accounting for over 250,000 jobs in direct employment  Corporation tax receipts of €15.3bn in 2021 or 22.5% of total tax revenue – over 80% comes from MNCs Changes to Corporate Tax R

  16. Slide 16: Risks to the Irish economy outlook

    Risks to the Irish economy outlook  Covid-19 remains a risk – still high case numbers, concerns about new variants  Restrictions could be re-imposed if there was a new virulent, vaccine resistant variant  Persistent high inflation could trigger very sharp tightening of monetary policy globally 

AIB Group — The Irish Economic Update: on 6ix