Bank of Ireland Group plc (BIRG) Earnings Call Transcript & Summary

We'll get started. Thank you very much for coming this session with Bank of Ireland. I'm thrilled to introduce Mark Spain, CFO of the group. Thanks very much for coming. We also got my colleague, [ Kerry George ] many of you know, which we look after Ireland together. So in between the 2 of us, if that's all right, Mark, we'll ask you some questions, and then there'll be time for all of you to ask if you want to. Maybe we start -- you reported full year results a couple of weeks ago. Part of the share price reaction, I would argue, it was around your NII guidance. So maybe we can start there. What did you see in Q4, which was weaker than expected and why so cautious for this year?

Okay. And I might take that question a bit broader as well, Alvaro, but in terms of 2023 performance, maybe first, I would say, from an NII perspective, played out actually really exactly as we planned and in line with our guidance. We are exiting a line in the U.K. or U.K. person's loans line, which that impacted our reported figure. But actually, if I look through that, actually, we're absolutely in line with our plan. And I would say one reflection is that although we announced that exit in December, and we had an RNS at the time, the market probably didn't fully appreciate that. So there's probably a little bit of a reflection on that. But it's a very good commercial decision. That was a portfolio that was generating low single-digit RoTE. If I look at 2024, then our guidance in 2024, the key factor underpinning that guidance is our rate assumption. Our rates, we set at the beginning of market expectations at the beginning of February. So we assume the ECB gets to 2.75% by the end of the year. That's a key factor underpinning our guidance, which is 5% to 6% lower than our Q4 run rate of EUR 3.65 billion. If we use up-to-date market views on that, there's a positive delta of about EUR 70 million. So in other words, if I was to give the guidance today on the basis of latest rate expectations, we'd be guiding 3% to 4% lower. But Alvaro, maybe stepping right back from the specifics of that question, I think maybe the question that our sense is most on investors' minds is sustainability of returns through the cycle when interest rates are going lower. And maybe just to touch on that for a second. So our guidance for 2024 is a RoTE of greater than 15%. We think that will be closer to 16%, the way things play out. And then if I think about that in 2025, we've got a target of 15% in 2025, we're in a good place in terms of delivering on that. And there are really 4 key ingredients that are behind that. So -- and we can explore these a little bit, but maybe just to go through them at a high order level. One is relative NII stability. We can get into the factors behind that. Secondly, is our fee income growing our guidance for 2024 is mid-single digits. We expect that to continue into 2025 wealth and insurance, a key driver on that. The third element is the cost of risk which our guidance for 2024 is in the early 30s. We think that's not a bad way to think about 2025, possibly even some upside as rates come lower, but let's call it early 30s. And the fourth aspect is capital efficiency. So although our loan book would grow, our RWAs won't grow at the same rate, which has both a returns benefit and clearly, there's a capital release benefit as well. And those factors which are obviously underpin our confidence in 2025, we see those being supported beyond 2025 as well. And then if I take that and think about how that translates into capital and capital generation, so for 2024, that greater than 15%, we expect capital generation in the 260 to 280 basis points range. We need about 20% of that to support our growth, that's lending growth, up risk growth, things like that. The balance of 80% is effectively part of the distribution decisions and discussion. And 2023 was a big year for us. We knew that the market was looking closely at Irish banks at Bank of Ireland in terms of the decisions that we would make. And we think we've delivered very strongly against that. So again, to recap in 2023, EUR 1.15 billion distributions 3x the level of 2022, and we paid down to a CET1 ratio of 14.3% with a significant regulatory approved buyback as part of that. And we see that as a good template in terms of how we will approach these decisions as we go forward.

Before we got into the -- to drill down to your guidance, I guess it might be a good time to ask a polling questions to engage the mood of the room. Where do you see the biggest risk to Bank of Ireland's 15% RoTE guidance, 23% to 25%? Number one, competition increasing in deposits; number two, ability to sustain NIM if rates start to come down; number three, cost growth, given the inflationary environment, number 4 recession fears and asset quality; and number 5, ability to distribute capital down to 14%. Mix, but it looks like competition in deposits obviously recent, -- maybe that gives some food for thought for the discussion.

Yes. for sure. And I think actually, if I look at 2 and 1, they're probably somewhat interlinked. So it really comes back that sustainability of NII as rates go lower and obviously, depositor behavior in the mix of that. But if I just maybe Alvaro, maybe just to go there for a second because I did refer to that relative stability in NII between 24% and 25%. And on the face of it, if we take our rate assumptions for a second, so an average ECB rate of somewhere around 3.5% in 2024, the market is probably expecting a little bit higher than that as we said earlier, and 2.5% in 2025, let's say. So on the face of that's an immediate headwind. If you look at our NII sensitivity, that's a headwind of about EUR 300 million or so. But there are 3 offsetting factors against that. The most important sort of an order size loan growth in Ireland. So we're seeing our loan books grow in Ireland. Today, our mortgage book in Ireland last year on an organic basis. That's excluding the KBC acquisition, grew by 8%. So it's book growth of 8% last year. We see that loan growth in Ireland continuing and that will support NII certainty as we go from '24 and 2025, We think that's about 40% of the -- offsetting that 40% of that circa EUR 300 million headwind. The second factor is, as a structural hedge matures, those maturities will get reinvested at higher rates. That's about EUR 100 million impact between '24 and '25. So that's a second offsetting factor. And the third factor then is primarily around deposit growth and on deposit growth in Ireland, what we've seen in 2024 -- 2023, system growth has been a little bit lower than recent years. We've also seen in Ireland that over time, that deposits grow largely in line with the domestic economy and our deposit growth grows largely in line with the overall system given our market share. So as we go into 2025 and 2026, we see that being a contributor to NII development as we go forward.

Okay. Great. I guess maybe just to go back on the comments that you made on the structural hedge. How do you think about the evolution of the quantum of that? Do you expect that it will grow in itself? Or how are you thinking about that?

Yes. So our guidance, [ Kerry ], for 2024 is that we expect the structural hedge to reduce slightly. And really, that is the flip side of our flow to term assumption in Ireland. So maybe we can explore that a little bit, maybe subsequently. So if those flow to term assumptions prove to be, let's say, conservative that will have an impact on the structural hedge. But as we go out, as we go out beyond the current year, as rates go lower in any event, we'd see flow to term moderate just at lower absolute rates, lower customer pay rates. And against that backdrop then, if deposits are growing overall in line with the domestic economy and some of that's in the form of current accounts. I'd see that maybe as we look out over the next 2 or 3 years, the hedge probably stabilizes and maybe slightly grows.

Okay. So I mean, we have seen that there has been a lot of debate around that issue of how deposits will react to lower rates. You did see that pickup in migration to term in the fourth quarter. So is that something that you are then factoring in into the coming quarters as well?

Yes it is. We are factored in. It's not a huge factor, to be honest, the biggest factor is that the interest rate assumption that I called out. And as I say, we're certainly conservative in our assumption versus where the market is currently at. But if we just maybe explore that flow to term, experience and assumption for a second, what we've seen in 2023 is we've got about an EUR 80 billion or so Irish current account and deposits base. And the proportion of that, that is in term or similar products was 5% at the end of 2022 and 6% at the end of 2023. So from a low level, it has moved. Most of the movement occurred in the back part of the year because we changed the pricing and products in September. What our assumption then for 2024 is that rate of movement or rate of migration will probably even be slightly higher than the Q4 rate during 2024. But -- so for 6% at the end of 2023, we maybe start -- our assumption will be, say, circa 10% by the end of 2024. From an NII perspective, if we're too conservative by 1%, it's about EUR 10 million NII impact. So it's again, it's important, but not hugely material in the overall NII journey.

Maybe one thing that we've explored in previous meetings in previous sessions, and also think about the confidence in achieving the 15% that we've already touched on. But when we think -- because it sounds you're pretty confident on the 2025 proven resilient. But I guess is there any difference between the first 100 basis points of rate cuts sensitive and the second 100 basis points, is the rates going below 2.5% the main risk? How do you -- what's the confidence around that 15%?

Yes. I mean, actually, it's interesting, Alvaro, and we were just chatting just ahead of the -- before we came on stage. My view is the sweet spot for rates is not actually where rates currently are at. And somewhere in the 2% to 3% even in the low 2s, if you think about that, why is that? So one it supports lending growth. Now we're seeing that already anyway, but that's given our balanced approach to pricing and on. So that 8% growth in mortgages. But certainly, if I think about, let's say, business customers whose rates are more tied to your IBORs as rates come lower, it certainly supports volume development there. It addresses, let's say, credit risk or affordability concerns, obviously, at lower rates. I think the third piece is lower rates is just the risks around depositor behavior are mitigated. And I think finally, just looking at the overall P&L, the reason rates are higher is inflation is higher, and that does has an impact in terms of cost development. So again, those threats are mitigated. So somewhere, I'd say, in the early mid-2s not a bad place to be.

And if we think about sort of the other sort of revenue lines that come into play in noninterest income, I would be very interested to hear how from Wealth and Insurance revenues perform as rates come down and the textbook says that it should do better. But also you've got new capabilities with daily. What does that give you? And how -- what should we be looking forward to there?

Yes. So this is actually a business that we're really, really excited about. And to be frank, we probably don't think the market fully appreciate it. And of course, we have to reflect on our own sort of presentation in that regard as well. But maybe just to bring it to life when we set our strategy a year ago, we 3 key growth drivers as part of the strategy, 3 key pillars in wealth and insurance was 1 of those. So we've had a very good first year in that regard. The backdrop here is really important, and it's very favorable. So we have a robust Irish economy, which is growing domestically with record employment levels, et cetera. The demographics in our second youngest country in Europe. So again, when we think about pension provision and things like that, that's important. And then it's a country supported by that economic backdrop, a country that's getting well here. And if we think about the number of households who greater than EUR 1 million in wealth today, 3x what it was 10 years ago. And you look at Ireland's prospects and outlook, that's going one way. So with that backdrop, then we have a really unique business offering, which is unique in an Irish context. We've Davy, which is the #1 wealth player in Ireland, #1 high net wealth manager in Ireland. We have our New Ireland Life and Pensions business. That's the #2 player in the life and pensions market. And we've got a further opportunity when we think about those offerings and the bank's broader customer base to play strongly in the mass affluent space. So that's the opportunity. If we then think about how is that translating? It's already translating in performance in 2023. And I'd say a good start in 2024, bring that to life. Again, if we look at assets under management, that's 1 of the key metrics we would have called out a year ago, and we set the strategy up 18% year-on-year, clearly supportive markets in that regard, but also strong inflows. If I look at our fee income in our wealth and insurance business, Davy was bought in the middle of 2022. So if I just look at the second half of the year for a second to get a like-for-like comparison, fee income at 8% year-on-year in the second half versus second half. And then maybe just another metric again to bring it to life is if we look again into Davy from a high net worth perspective, so that's discretionary managed funds, charging a fee to clients for that and if I look at the recurring revenue on that January '24 versus January '23 of about 10%. So again, like strong momentum there. And to your question in terms of interest rates, we'd see that, to your point, in terms of customer conference or client confidence around investing, let's say, into higher-return products. That is definitely supported by lower interest rates. So we see that as a positive driver as we go forward. And just I mean to bring it back into our fee income overall, I talk about mid-single-digit growth in 2024 and seeing that continue in 2025, wealth and insurance circa the biggest -- not the only, but the biggest driver of that.

And beyond wealth, because one thing that's definitely emerged from this conference is the corporate -- sort of corporate in general and the pickup in investment banking activity in your context, and what are you seeing among your clients in terms of cyclical recovery in that corporate activity? Is that going to be -- could that be a big driver as well?

Well, it picks up, I think what we said earlier about at lower interest rates that particularly for business customers, making that marginal investment decision becomes easier. So if we think about our loan book growth in Ireland in 2023, so we had EUR 2 billion of organic growth in Ireland in 2023, predominantly mortgages, also a little bit of consumer. If we look at our SME and corporate books in Ireland, there was a very slight growth. But I think as we go forward over the next couple of years and supported by those lower interest rates, we would see that the -- let's say, the risk appetite of those customers will improve, and we see those books being greater contributors to our overall loan book and NII development.

Great. You also had quite a few questions at results around asset quality.

Yes.

And you saw a bit of a pickup in provisioning in the fourth quarter. Maybe you could talk to us a little bit around what drove that lift in your provisions in the fourth quarter.

Yes, for sure. And I'd say maybe at an overarching level, again, our asset quality is in very good position. Our asset quality has improved year-on-year. So our NPE ratio is down to 3.1% from 3.6% last year and 5.5% 2 years ago, so -- and we will continue to drive that down further. And I'd say maybe more, let's say, anecdotally or qualitatively, there's no evidence of any material stress right across our portfolio. So that's just really important backdrop. We had a charge for the year of EUR 400 million. That was higher than our guidance during the year. but we need to look at -- break that into 2 parts. So if you look at our actual loan loss experience in the period, that was actually slightly higher than 2022 levels, but not materially different, which is referencing that asset quality and the improved asset quality. The second part, though, or the delta and that really the delta versus our guidance was in the form of additional management adjustments, which we made to address potential future risks. So we want to obviously make sure we're addressing all known risks, but also address potential future risks in our charge. And if I bring that to life then there's about EUR 140 million of those additional management adjustments. About EUR 80 million of that related to CRE and about EUR 20 million of that would have related to more cautious forward-looking information, macroeconomic assumptions. So those have been 2 key aspects of that. The philosophy was, as I say, to address all known and potential future risk. And clearly, we're given the returns that we are generating, we're in a strong financial position to be able to make that decision. And then maybe if I just move forward for a second then and look at our guidance. So our guidance in the early 30s, I'd say we have very high conviction around that guidance.

Okay. And maybe then on your CRE exposure. So you have dropped down by 12%. I suppose, a sign that clients can't pay you back. But maybe you could give us a bit more clarity around regional exposures in the sector. For example, how much that you have in office versus residential and other?

Yes, for sure. And again, maybe on an overall level, I would say, [ Kerry ], the message on our CRE book is asset quality stable there. Our NPE ratio is flat year-on-year. The book is down, as you say, that's not by accident. That is, I'd say, proactive management interventions and reflecting a degree of caution, just given the overall dynamics. But notwithstanding the asset quality is stable, we've actually increased our provisioning levels. So again, to bring that to life our overall coverage in the book, has increased from 2.4% to 3.4%, and we've increased coverage on Stage 2 loans from 1.4% to 4.1%. And I would see those interventions as being in the category of addressing those potential future risks in reference to the earlier question. If we look at the mix of the book then by geography, so 70% of the book in Ireland, supported by that, I got to say, robust economic backdrop in Ireland, 20% U.K., 10% U.S. And then if we look by sector, 35% office, 30% resi, which is -- there's a shortage of resi in Ireland, so that's a very strong sector. About 20% in retail and then 15% in industrial and other. If I step back from all of that, I'd say the overarching message as I said, asset quality overall is when we engage with our customers on individual loans in the vast majority of cases, not of course every case it never is like that. But customers are behaving in a constructive manner. And the reason for that is that they still have plenty of skin in the game. So if you look at the LTVs in the early 60s across the portfolio, we're quite proactive in terms of how we managed, for example, upcoming refi pipelines. So we're speaking to customers 9, 12 months ahead of refi dates where we believe or can see that this potential issue and engaging with the customer around a solution that's going to work for the customer and work for the bank. And I'd say in the vast majority cases, those are delivering outcomes that are working for both of those.

Okay. And then maybe separately on your presence in the U.K. motor finance sector where you have around a 2.5% share. Could you discuss the type of lending that you're doing there? What's new versus secondhand and what the growth is that you've seen in that book over recent years?

Yes. So again, to bring it to life for those who aren't close to it. So we're about a 2% market share player in car finance in the U.K., mostly in the in the former secondhand car financing. Let's say, the conduct issues in relation to potential conduct issues in relation to car finance they have been, let's say, emerging for some time. There's been a series of [indiscernible], preliminary rulings. There have been some court cases, et cetera. And so actually, against that backdrop to have the FCA doing Section 166 review actually, we welcome that. And that's a good thing. It just provides clarity and order, I'd say, to sort of a lot of moving parts. From our perspective, well ahead of the Section 166 FCA piece against that backdrop, we've done our own work in terms of looking at discretionary commissions. And effectively, the question was not only from a legal or regulatory perspective, but from a customer fairness perspective, could we see evidence of material harm and the answer to that was no, when we did that work. Of course, that exercise -- an internal exercise is not going to be exactly the same form or frame of reference of the FCA. But certainly, it was important for us as we made a decision at the end of the year, was there any basis for taking a provision. So we haven't taken a provision. We have continued liability disclosure. The FCA piece, we understand is going to play out over the next sort of 6 months or so. So expecting some clarity in that in Q3. And obviously, we consider that at that stage. But given our size in the U.K. market, I would see this in the manageable space. And I think about that 260, 280 basis points of capital generation that I spoke about earlier. But as we stand today, there is no exposure on the [indiscernible] basis, for taking a provision.

Maybe you mentioned capital, maybe we can touch on that. On the capital return front, you paid out [ EUR 1.15 billion ] last year 75% payout. You called out mid-single-digit RWA growth. Does that mean the 75% payout is kind of the run rate we should think about as sustainable going forward? How do you about that?

Yes. So maybe a couple of intro firstly, from an RWA perspective, just to dive into the [indiscernible] lower it will be pretty low single digits rather than mid-single digits. And maybe a couple of factors there. One, we'll have our loan books growing, that will drive RWA growth, assuming a relatively constant mix against that, we're coming out of our U.K. personal loans portfolio. So there's EUR 900 million of RWA benefit once we exit that. And the second piece is that Basel IV holds Basel IV changes are due to come in 1 January next year, if they are implemented as proposed, we see that as a modest positive in terms of RWA. So maybe a couple of percent in terms of an order [indiscernible] offset they need to get to final, let's say, approval and also the date has to be confirmed, but that's our best view as we can see it today. So that's from an RWA perspective. Then bring it back to the question around distributions and that. I'd come back and maybe want to say and answer to the opening question that we have the 260, 280 basis points of capital generation needing 20% of that to support balance sheet growth and effectively the balance being part of the discussion on distributions. So that's probably the framework of which -- within which I would think about that. And I know we can explore maybe the different elements you already did and share buyback as part of that. But that's very much how we think about that.

And how does the Board and how do you think about the mix between buybacks and dividends if we think about the medium term because you're always very capital generative. So would that evolve? How do you think about -- how should we think about it?

Yes. So that's an active decision by the Board every year. But if we just take the different components, we set out our distribution policy a year ago, we said, a, there was going to be significant capital distributions over the current cycle, and we're seeing that obviously play out 2023 is obviously very strong evidence in that regard. And one can do the extrapolation on that. We don't think about it in a different way, internally, the proportion of the market cap that potentially gets distributed on a sort of 3- to 4-year view is obviously quite significant. But looking into the individual aspects, from an ordinary dividend perspective, our policy allows us to pay between 40% and 60%. We had originally expected for 2023 that we have a payout of 33%. So building to 40% by 2024, in fact, as we reflected in our financial performance for 2023. And we also reflect on investor preference, which is important as well because we've got a range of different holders, some prefer buybacks, some preferred dividends. when we reflected on that, we moved to 40% for 2023. So we're already at 40%. We've said that over the rest of the cycle, we expect our dividend per share to grow and be progressive in absolute terms or DPS for 2023, $0.60. So over the next couple of years, we see that growing. And we've obviously flexibility in that 40%, 60% range to facilitate that as well. So that's one leg. And then the second leg is that excess capital will be dealt with true share buybacks, and we've seen a very significant share buyback at the end of 2023, and when we spoke at the interim results, we said our ambition was to have that approved. So last year, at 2022, we had a buyback which we announced, but haven't been approved, and we actually didn't start buying back shares until May 2023. This year, we've come on a EUR 520 million share buyback regulatory approved and we're in the market the second day after results, and that buyback program is ongoing. So that it will be 2024 will be a mix of both ordinaries and share buybacks. The big decision, the main decisions at the end of the year, but we've also said that we will commence interim distributions this year as well. And while the Board needs to finally sanction the approach here, my expectation is that uncertainty in the form of an interim ordinary dividend, and we'll be mindful of the U.K. precedent in that regard, which typically has interim dividend of somewhere about 1/3 of the previous year's final.

Maybe a follow-up on that. Is the engagement with supervisors has it changed over time because getting buybacks have proved historically quite difficult. It sounds like things have been streamlined. How's the approach to capital distribution in your experience?

Yes. I would say that the engagement regulators are regulators of this decision, from our perspective is a JST decision, which is made at Frankfurt, is the primary decision. The CBI contributes into that, but ultimately, it's a Frankfurt decision. That's an important decision for the regulator. We were conscious, I would say, in terms of coming up to this set of results. That was something that the market was looking at quite closely. So I think the outcome that we've delivered having that buyback approved by the regulator ahead of the results is really important, really important for the market. We were confident on that always. We've got an ongoing constructive dialogue with the regulator. Of course, there are, as you would expect, the normal range of challenges because of the regulators will and that they would be doing their job otherwise. But that's an open -- that's a transparent relationship. And in fairness, I would say -- and I told you Brooke spoke earlier at the conference, but certainly our experience dealing with our own team who are very savvy is they've got the responsibility as a regulator, but they also recognize that their regulated clients also need to have the confidence of their investors as well. So that's something that's that they recognize is important. And I think that's -- to me, that's quite a, I'd say, a savvy and indeed understanding approach.

We've got more questions, but I'm going to give the audience an opportunity to ask if there's any questions.

I have 2 questions. The first one on the IT issue that you had. What can you say about that in terms of fixing this issue and potential impact on your cost. And the second question is on the loan on the competition in the Irish market in a lower rate than [indiscernible].

Okay. Good -- so we had we had an IT issue, I think, back in August is probably the -- I think the one that you're referring to. Banks have IT issues were not unusual in that regard, they happen from time to time. I think what differentiated that was probably the response and probably media, which probably got probably didn't develop probably the way that we would like. From a financial perspective, the impact is captured for 2023 financials. So the impact is very modest, let's say, but there were some costs except associated with it. There is a piece in that in terms of what worked well and things that we can improve on. And for example, we participated in the ECB cyber stress test at the beginning of this year. And I would say we brought those learnings and studies to ECBs cyber stress tests. So maybe on competition in the Irish market then, as rates go lower. If I maybe just bring that to life for a second. So Irish market is quite competitive. If I think about the mortgage market today, there are probably 4 players who are quite active in that. There are a couple of players who are less active, who we expect to become more active as rates go lower. So our front book share and mortgages in 2023 was 41%. That's the highest we've ever had, but I wouldn't necessarily extrapolate that forward and our plans don't assume effectively that same level going forward. And we do expect that some of the players who are currently a little bit less active, will become more active as rates go lower.

Next question at the [indiscernible]

Just curious, let's say, in the next couple of years, there is a Europe recession, rates classically drop to like 1% of your IBOR. Do you feel pretty confident that, that interest sensitivity that you talked, you disclosed, you adhere to that just because of the structural hedge? How do you think your NII would perform in that classic recessionary environment that will happen at some point down the road. I don't know when.

Yes. So I would say, as rates go lower, there will be some mechanical effects on that on both the asset side and on the liability side as well, whether they're mechanical or, let's say, more in the management decision space. The structural hedge is a key offset on that. And again, the purpose of the structural hedge is obviously smooth out NII over the cycle. And if we think about it today, if we didn't have a structural hedge in place, if we decided to just go with no hedge, we'd be reporting materially higher NII in 2023 and indeed in 2024 as well. So that stock of value or store of value is effectively there to provide an offset against our interest rate sensitivity as rates go lower. So I think we're in a good position. Clearly, there are rate at which the structural hedge provides an offset, can't fully offset. But it's a significant mitigant to rates going lower.

Next question? Another one, yes.

Can you give us a thought -- you said your sweet spot, you thought for interest rates 2% to 3%. Where do you think that would be to your kind of NIM stabilize? And do once again, we use your sensitivity? Interest in that? And then I actually have another question on digital and customer service, but we'll see if there's more questions.

Okay, thanks. So on NIM, we exited 2023 about 3%. And based on our guidance, our 5% to 6% guidance we expect NIM in 2024 to follow that trajectory during 2024. NII, H1 a little bit stronger than NII H2, just reflecting our rate assumptions. Clearly, as I said earlier, if a rates play out as the market currently expects that provides upside on both an NII and NIM perspective. As we go out then, again, it's picking up my earlier comments around our assumption in 2025 is ECB gets [ 225 ] by the end of 2025, so an average of [ 250 ] for the year. And I've talked about that relative NII stability, so that comes through in terms of NIM as well.

Do you want to go ahead and ask your follow-up -- your next question?

Just curious how you think about where you are in your -- on the digital journey and on the customer service app -- like where are you? Where do you want to go? What kind of investment does it require? Are you already there? Do you think you're one of the best -- how do you stack up?

Well, I won't say that we're there. I think that would be a step too far. I think we've made significant improvements, interventions, our shop windows as our mobile app and -- if we look at ratings in the mobile app, for example, in the Android space, we'd be the top rated Irish bank from an Android perspective. But still, if I look at some fintech competitors, I'd say they're ahead of us. So -- and therefore, further investment is required. That's built into our plans, built into our targets, our RoTE of 15%, our cost income ratio of less than 50%. And at an industry level, we've looked at developing an Instant Pay app which is something that isn't progressing in the way that we originally envisaged for a variety of reasons. So we are looking in cooperation with some of the other banks in Ireland about alternative ways of delivering on that. So I think -- but overarching piece, a lot on absolutely more to do and something that we're quite focused on but allowed for our investment plans.

Next question? Maybe that gives me time to follow up on capital deployment of capital to be more.

Yes.

You've done a couple of -- well, portfolio acquisitions, then obviously, Davy probably acquisitions that weren't sort of anticipated. But as you look forward, is there anything more that you could contemplate potentially to complement the portfolio? What would you do? What would you not do?

Yes. So I think the acquisition today the KBC portfolio acquisitions, those were really good deals with. And I think deals I think, particularly by Davy in that regard because KBC was a book at loan off over time. But from the Davy perspective, it just builds out that wealth and insurance franchise we spoke about earlier and that very much plays into the opportunity that exists from an Irish economic perspective or economy perspective. There aren't any gaps that we're really focused on today. And what I would say is we will -- there's a high bar say, in terms of acquisitions, there isn't any assumed acquisition in our strategy over the 3 years. And indeed, I talked about the capital generation and use of capital earlier, we're not assuming any acquisitions in that. Having said that, of course, if something comes along that does feel in that space, something comes along, which really takes the box from a strategic perspective and from a financial perspective, we would consider it and there is some element of opportunities on deals. For example, on the acquisition of Davy, you wouldn't have anticipated that would have happened when it did. It actually came along at exactly the same time, we're seeing the KBC acquisition actually. So I would say the bar is higher outside Ireland than in Ireland as well. So I think that's probably something that's very much in our minds. And as we meet our investors, we've got our U.K. business is in good shape. It's actually the performance there is significantly improved, reflecting the strategy we've implemented over the last 3 years. But I think material further deployment of capital into the U.K. I wouldn't see that as part of the -- any realistic option as we think about that question.

Is there any last question -- it's here.

Just a quick question. I mean, obviously, part of the plan going forward for both for Irish banks is to compensate the margin decline and volume growth and that comes to mortgages mostly. How much is the current restrictions, regulatory restrictions on the amount of borrow that people can take. I mean, I'm doing the prep here. I just noticed it's about EUR 40,000 or EUR 45,000 gross average income in Ireland, while the house prices are about the average of EUR 340,000 so I think you limited the 3.5x, actually, the average house price is higher than the maximum you can afford to borrow. And so how do you come out of this equation, I guess -- is there any regulatory efforts that you see to unwind this? Or how do you think about it?

Yes. So the question of concern is the Irish macroprudential rules, which impose those limits. I would say we could always debate around the fringes of those. But actually, from our perspective, we welcome the macro potential rules, but 2/3 of our book has been originated under those rules and the credit quality of that book, which is they come in 2015 is absolutely exemplary. It's really, really strong. From our perspective, as Bank of Ireland, we're going to be in Ireland forever, that's our core market. It really takes out the risk around a competitor competing on credit quality and clearing the market. So at a macro level, I would say the macro prudential rules are a good thing. And obviously, there from a borrower -- individual borrower perspective, they are preventing borrowers getting themselves into financial situations, which they would potentially regret. So it works from an individual perspective as well. I'd say the bigger question is around supply of housing in Ireland, that's actually the driver ultimately in terms of meeting, let's say, consumer demand. And we are seeing a positive trend there. So completions in 2023 were 32,000. So we expect to be in the high 30s this year. Our assessment is that we need to be -- pardon me. Yes, exactly. So we need about 50,000 or so to meet supply. And that is, again, speak with the opportunities elsewhere, there are opportunities, for example, back to the pressure around CRE and residential development. support and developers, building houses, not on spec basis. This is on planned zone land, but that's an area where we would see our footprint and exposure expanding supported by those attractive sort of dynamics.

I think we need to leave it here. I want to say a couple of things. First of all, Mark, thanks for coming this year again. And thanks for closing this conference, which this session brings it to a close, and I'm glad to report that this year has been an optimistic conference and nothing to regret. And we look forward to another great conference next year, but I thought this was a fitting end to our 20th anniversary. So thank you, Mark, and thank you, everyone, for coming. Thank you.