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

Ladies and gentlemen, thank you for standing by. Welcome to the Bank of Ireland Q3 IMS Analyst Call. Please note that the call will be recorded. [Operator Instructions] I would now like to turn the call over to Chief Executive Officer, Myles O'Grady. Please go ahead.

Thank you, Olivia, and good morning, and welcome to Bank of Ireland's Q3 trading update. The group is reporting strong momentum and business performance as we near the end of our current 3-year strategy, with growth in Irish loans, deposits and wealth assets under management, alongside disciplined cost control and high levels of capital generation. Irish loans and everyday banking deposits increased at an annualized rate of 5%, supported by a 41% market share in new mortgages, while flow to term evolved in line with our expectations. Wealth assets under management reached a record EUR 58 billion with net inflows of EUR 1.6 billion, representing 4% of opening AUM. Net interest income modestly exceeded expectations and we delivered 5% year-on-year rise in business income supporting 185 basis points of net organic capital generation and a strong CET1 ratio of 16.2%. Last week, the group announced a potential increase in its provision relating to U.K. motor finance to EUR 350 million, which will impact capital by circa 25 basis points. Costs were in line with guidance, and we are comfortable with asset quality across the group with the NP ratio of falling 10 basis points to 2.5%. I am reaffirming our positive outlook to 2027, where we target a return on tangible equity of above 17%, supported by expected CAGR for deposits and loans of 3% to 4% with AUM CAGR of 7% to 8%, and we will maintain costs at around EUR 2 billion. I expect strong momentum into 2026, and we will share our Refresh strategy in quarter 1 starting to add the building blocks for growth and capital generation of 250 to 270 basis points in 2026 and 2027 and indeed, a range of targets beyond this period. All of this supports balance sheet expansion, business model investment, progressive dividend per share and the return of surplus capital to shareholders. I'll now hand back to Olivia and open the call to questions. Thank you.

[Operator Instructions] The first question is from Sanjena Dadawala at UBS.

Two, please. The first on NII. So the '25 number upgraded to greater than EUR 3.3 billion implies the second half NII flat on the first half broadly. So in that context, how should we think about '26 and '27 where you said greater than EUR 3.3 billion and greater than EUR 3.5 billion before? And second, on -- just around asset quality and credit risk. If you could give color on how that's been trending and any areas to call out and also around your comfort regarding the U.S. exposure?

Thank you, Sanjena. Let me take the asset quality question. I'll ask Mark to take the NII evolution. So that's the quality again, per my opening remarks, we remain comfortable with overall asset quality across the group and very encouraged by the NP ratio at 2.5%, down 10 basis points and reaffirming our overall guidance of the impairment charge in the region of 30 basis points. When I think about the -- some of the evolving private credit issues that are coming out of U.S., but I guess is at the heart of your question, Sanjena, the group has no lending exposures to [indiscernible]. We remain very vigilant to international developments, 70% of our lending is in the Irish economy, which has proven to contribute both grow and be resilient and of course, the vast majority of our lending that we do is secured, including our average mortgage book. So sitting here today, very comfortable about overall asset quality. Mark, about NII.

Yes, Sanjena, maybe standing back, I'd say the key drivers of our positive NII outlook to 2027, asset performed very well year-to-date. So our loan deposit growth in Ireland, our structural hedge program and also the bond purchases that we've executed as well, and that supports our confidence there. NII growing to greater than EUR 3.5 billion by 2027. Of course, that's a key contributor to our ROTE growing to greater than 17% by 2027 as well. Just on 2025, we have upgraded our guidance to greater than EUR 3.3 billion. That follows the previous upgrade we made in the insurance some momentum there. And I think you're right, actually I think H2 is going to be partly similar now to H1 and looking into 2026 and 2027, so assuming that the ECB remains at 2% and doesn't call again, which is our assumption now and also reflecting the pause momentum, particularly that we've seen this year in our Irish franchise, we expect our NII in 2026 to be in the high EUR 3.3 billion. And then if we look into 2027, our previous guidance actually upgraded to EUR 3.5 billion, that was based on the 2% ECB assumptions. So no change there, but I think it's probably the deposit momentum that we see building into 2027. So probably in the EUR mid-3.5s billion for 2027.

Just can I follow up there on the '26 number that you said, so high EUR 3.3 billion, so maybe 1% higher than what you're expecting '25, is what I get. I'm just wondering what are some of the headwinds? Because I think earlier ECB was at 1.75% in your outlook, and we have 4%, 5% volume growth expectations benefits from the hedge. So what are some of the offsets to that, please, in the next year?

Yes. I'd say maybe it's a couple of percent. I mean, if H2 this year is similar to H1, I'd say it's a couple of percent higher again next year, Sanjena. But you can think about the moving parts on that. So rates are lower year-on-year. So ECB 2.25% this year, it would be 2% next year. BOE also, we assume 3.75 versus 4.25 this year. So it's about a EUR 90 million impact from rates. Also, we're obviously deleveraging our GB corporate book as well as about EUR 25 million headwind from that. So those are the headwinds, but against that, you've got the bonds, structural hedge program, deposit loan growth, more offsetting that, actually, they're probably broadly equal contributors to the NII growth next year.

The next question is from Diarmaid Sheridan at Davy.

Two as well, if I may. Maybe first of all, just following up on maybe the very last comment there, Mark talked about deleveraging. I mean just think about loan growth more generally. As you look through the next 6, 9, 12 months, at that point, the GB loan book, maybe the U.S. CRE book, they should substantially be done. So they start to come out. I guess, then you look at the very strong lending growth that you see in Ireland, in particular. What is kind of like maybe a normal kind of loan growth that we should expect for you going forward? Is 5% a little bit too high, just given that there are other moving parts in the balance sheet as well? And then secondly, maybe just on capital return. Obviously, a very strong quarter for capital generation again, indicating a reasonably good quarter in Q4 as well. So your capital position should be very, very strong at the end of the year. We have great clarity around both finance, we arguably have great clarity around tariffs. So two of the big uncertainties at this point, maybe we've got great clarity but not fully finalized. So just in terms of getting back down towards that 14% CET1, going to greater than 14% CET1 target. How should we think about by the timing of achieving that and kind of quantum of kind of distributions with full year and maybe slightly beyond that?

Yes, thank you very much for those questions. On overall loan book growth, I would just refer back to the outlook to 2027 that we shared back in February, and which I referenced in my opening remarks, so Bank of Ireland will continue to be a very strongly capital-generative business. And the key component of that is both loan book growth and deposit book growth and we're expecting a loan book and deposit growth CAGR of 3% to 4% out to '27. At that level, they're very supportive of capital generation. And that takes a kind of a range of items, the ongoing deleveraging of those books that we are progressing with. And of course, it also captures a competitive market as well. The 3% to 4% growth out over the next 3 years, that will be the outlook that we would see for loan book growth. On capital returns, [indiscernible] right. Again, capital generation of 185 basis points year-to-date, CET1 ratio of 16.2%, very strong, but it will continue to grow into the last quarter. And therefore, as we progress towards the end of our 3-year strategy, the distribution strategy will also continue, which is a progressive dividend per share for the full year. And of course, our payout ratio, our policy allows us to operate within a 40% to 60% range. That's particularly helpful in ensuring that our dividend is progressive with an overall capital position comfortably above -- well above our requirement to be above 14% that offers the opportunity for a share buyback as well. That's a decision that we will take as the quarter comes to a conclusion. This is a reference point. Since 2022, Bank of Ireland has returned EUR 3 billion of distributions accounting for 26% of our market cap. And so we remain as committed as we always are to return capital back to shareholders. Thanks very much, Diarmaid.

The next question is from Chris Cant at Autonomous.

Hello. Can you hear me okay?

Yes, Chris, go ahead.

Sorry, having problems with the Newpark. I had one key one, I think, on NII. Just trying to read between the lines in terms of what you've said to us on the 9-months NII, the slight bump to the '25 NII guidance. Thinking about that scenario you set out where rates are relatively steady from here. In that world, is 3Q the trough for your NII run rate? And is it just building from this point starting into 4Q and then into next year? So how have we hit the trough? I think that's quite a significant point of contention for many investors. So if you could speak to that, that would be appreciated. And in terms of the loan growth looking out, the core loan growth in Ireland running at 5%. I understand you've got the U.K. book running off into '26, but once that has leveled out, do you expect loan growth to be sequentially increasing as you look out, say, '27, '28? So is it -- your 3% to 4% commentary was obviously over a planning period where you had a runoff book and understand you're reiterating that guidance. But in terms of the phasing, do you expect that sort of core Irish loan growth strength to be coming through more in the group number as we move further on in time?

Thank you, Chris. Let me take the loan growth question and Mark, will take the NII trough piece after that, please. I think that's probably right, Chris, on loan book growth. So if you look at how the Irish loan book has performed in recent reporting period just running at a growth of about 5% per annum. And of course, the two big building blocks to that are a very strong mortgage book with that book that's continuing to grow, supported by the increased supply of new homes into Ireland is usually important for that. So an increasing size of the mortgage market is going to be hugely supportive of the growth in our book, and of course, very strong market shares in that as well. And also, we're seeing a positive growth in our Irish Corporate and Commercial book, and that's also been growing a little bit more modestly this year. I guess, against a geopolitical backdrop, but nonetheless farther up in the sense, I think is growing. And we assume to '27 as part of our outlook that supports returns above 17% loan book and the deposit growth between 3% and 4%. And it could be higher. I mean one of the reasons why we pitched at that level is because we do expect competition to increase in the Irish market. And of course, we will compete. We will compete based on pricing discipline. We will compete based on quality of service and of course, enhancing our digital capability. But that assumption of 3% to 4% acknowledges that competition is going to increase. Mark?

Yes. On NII, Chris, I would say I'm not going to have a huge amount to you here but 2025 will be trough year. So 2026 will be higher than 2025 and obviously based on the assumptions that we're setting out today and based on the positive dynamics that we're seeing. Between quarters, I'd say it's flattish and rolling into next year.

The next question is from Aman Rakkar at Barclays.

I actually just had one broad question, please. One for Myles. In terms of what new we might expect you guys to kind of come back to the market with the first quarter of next year. You kind of indicated or signaling that you'll kind of give us a strategy refresh and an update of the medium-term targets. But I guess you have actually sign-posted quite nicely out to '27 already. So I guess I'm curious as to what new qualitatively we might expect. Are there additional kind of strategic levers that you think you might be able to execute on? Or is it kind of tightening up of some of the existing guidance that you might give us?

I guess, at the heart of your question, anyways, is the momentum that we are seeing in our business model beyond the current strategic horizon. And that's -- I guess that's one of the most important points that I would make on this call this morning and hence, the reason why we are comfortable to offer an outlook to '27. And the work that we're doing at the moment as expected we work on our strategy. We look forward to bringing that to the market in quarter 1 and we're certainly thinking about our business model out to 2030. What does that look like? And of course, we will share updated targets beyond '27 when we bring that Refresh to the market in quarter 1. But thematically, the areas that I think about is what is -- how do we protect and grow our pole Irish franchise market? Two, how do we go after exponential growth in our wealth business? We see against the backdrop of the Irish economy, against the backdrop of the demographic profile in Ireland, we see a real opportunity there. How do we ensure that we offer unrivaled support to our business customers? How do we ensure that our international businesses are complementary and supportive of overall returns? And really importantly, particularly as we go to the longer term, we've talked about having a cost base in the region of EUR 2 billion. I and Mark are particularly focused on how we ensure operating leverage productivity into the longer term. And of course, making sure that all of that translates into sustainable and strong returns which in turn supports our distribution strategy and indeed supports investments in our business model of loan growth. So thematically, there are many items that we are thinking about, and we certainly look forward to sharing that long term goal in quarter 1.

If you don't mind me asking -- if you don't mind me asking just a quick follow-up there, then just around, I guess, the U.K. seemingly absent from that list in terms of your assessment of the U.K. business from here. Has the heavy lifting been done in terms of the reshaping, the deleveraging or restructuring of that business? Are you kind of pretty happy with that footprint as it stands?

Yes, sorry, when I referenced our international business in complementary, I did include the U.K. in that. Yes, we are happy with that business. A lot of hard work is done in the recent years to get that business working well. It's generating returns that are consistent with overall group returns. That was the ambition. It's a highly competitive market. We know that, but we have a business model that's working there. And of course, with what looks like the conclusion in substance of the motor finance issue that also gives us clarity on the future as well. So the U.K. businesses, it's holding its own on the overall big returns, and we're pleased with its progress so far.

The next question is from Perlie Mong at Bank of America Merrill Lynch.

Just a couple of follow-ups on loan growth. So it looks like the biggest driver is mortgages. So I suppose if I look at housing delivery, it seems to be lagging a little in terms of where the government is aiming for. And so -- but obviously, the government is spending a lot of money on infrastructure and try to unlock some of the bottlenecks. But in terms of the timing of the loan growth, do you expect mortgages to remain the driver into next year? Or would you expect corporate lending to pick up a little bit, maybe benefiting from some of the infrastructure spending from the government? So that's number one. And number two, on margins. So there seems to be some competition, both on the deposit side and on the mortgage side. So some of -- especially the new entrants have been putting out quite attractive deposit offers and your largest peer have reduced mortgage rates recently as well. So how do you see margin competition going forward?

Thank you, Perlie, for those questions. So I mean firstly, on loan book growth, in some ways just reiterating some of my earlier responses. For an Irish franchise, the two most dominant factors that will support growth clearly is the mortgage market. And in relation to the housing supply, for sure, plenty of, I guess, political commentary on housing output. From my perspective, what I'm encouraged by is that the increasing supply of new homes year-on-year, that's the most important metric that I look at, and that is supporting an increase in the overall size of the mortgage market and it's growing by about 5% per annum and that will be a source of value for Bank of Ireland. And of course, we're very well positioned with our product offering, particularly in the context of our EcoSaver mortgage but also the value we offer to customers from our fixed rate product offering, [indiscernible] of our business in mortgage have been in the fixed rate market, and that's been particularly helpful to managing Bank of Ireland's revenue traction but also in supporting our customers as well. So plenty of noise about housing output, the most important data point to look at is that the increase in supply is likely to continue this year. Different estimates, some have 34,000 units, but mindful that there is a demand for comfortably above 50,000 and certainly, I can say with confidence that it is an absolute priority for the Irish government to ensure that its infrastructure investment and that it's focusing very carefully on will continue and will be supportive of a broader infrastructure investment that actually also offers an opportunity for lending on the corporate side, but also supports housing supply as well. And on margins, Mark may have specific comments on the evolution of margins over the course of the year, but from a competitive position and what has served Bank of Ireland well over recent years is maintaining pricing discipline and to be able to do that whilst also growing both our lending book, deposit book and that will continue both in the context of disciplined pricing with supporting that [indiscernible] with high quality of service and also increasing functionality. I mean, we've got a platform more than up to roll out towards the end of the year and into quarter 1. That's one example of how we're enhancing our services to support our average customer franchise. Mark?

Yes. I mean, Perlie, one sort of metric we keep an eye on is the non-asset spread, which is the difference between the rate charged to customers and funding costs. And certainly, that is something that's trending in a positive direction. So again, I think that overall positive NII could actually, let's say, I think about our net interest margin overall that has performed in line with our NII due to [indiscernible] and if we look out again, I would expect the net interest margin to grow as our NII increased.

The next question is from Sheel Shah at JPMorgan.

If I look at the deposit growth year-to-date, particularly in the Irish business, it's running at around 4%. It's slightly slower compared to system trends on sort of an Irish level. So can I get a sense of the competition -- maybe following up on the previous question as well. A sense of the competition that you're seeing. Are you seeing some slippage in deposits to maybe some of the fintechs out there? Is that now coming through into numbers maybe earlier than expectations? And then secondly, on the wealth business, I think there's an interesting proposition. I think it's a great avenue for growth going forward. But how can you persuade the Irish public, who have 85% of sort of the total deposit base sitting in overnight accounts, into wealth products? Are there regulatory initiatives? What are you doing on the ground maybe to help drive the flows?

Okay. Sheel, thank you very much for those questions. On the deposits, so we're not seeing slippage to fintechs. That's the first response. Overall we're comfortable with the growth in our deposit book and also comfortable with flow into term as well, both of those factors offering value captured in our overall performance. I do think I referenced it earlier, the competition is likely to increase. And of course, we will compete on that basis. And I know I am repeating my point, but that's one of the reasons why we assume that deposits could grow between 3% to 4% over the next number of years, which might be a little bit less than overall system growth but captures the potential for greater competition. And of course, not just from fintechs, but also from some of the more traditional banks that are operating in the Irish market as well. On the wealth piece, we know that the business case for growth here is very strong. We saw a 9% growth in overall AUM valuations year-to-date. So that's I guess, proving the business case so far. We've got two very strong businesses within our Wealth division, New Ireland Insurance, it's a life and protection business, and very well supports, for example, for every 10 mortgages we write, six take on a life product offering. And we also know that there's a real opportunity given the demographic backdrop. So for example, for the population under 25 and also pension, auto, railroad coming in. So we noted an opportunity in the corporate pension space to support private workers. On the Davy and from a high net worth customer perspective, that book continues to perform very strongly, again demographically supported with the level of wealth in Ireland increasing. And of course, probably for the first time on a mass scale receiving intergeneration [indiscernible] occurring. So those two businesses continue to perform well. And maybe to the heart of your question, how do we offer these wealth products to a wider customer cohort? And there probably is an educational piece here, but we do see an opportunity to take our wealth product offering to our affluent customer base, both within Bank of Ireland and, of course, in the general system. Part of that to do that well, in part is a technology solution, and we're working on that, but we do see a real opportunity to grow that business and hence our confidence on setting out an AUM CAGR of 7% to 8% over the next number of years.

The next question is from Rob Noble at Deutsche.

I just wanted to ask on the bond portfolio. So I see it's increased another EUR 3.5 billion this quarter. I think you said EUR 5 billion to EUR 6 billion for the year, if I'm not mistaken. So is there any change in thinking around that? And why it couldn't be more whether you plan to do more into next year as well? And just operationally, do those bonds form part of the fixed leg of a structural hedge? Or do you -- are you thinking about that separately?

Good morning, Rob, I think this continues our conversation from the interim results on the bond portfolio. So a completely separate structural hedge. So that's the second part of your question. It's over EUR 18 billion now. We've grown just under EUR 15 billion at the half year, expected to be around EUR 20 billion or so by the end of the year. And we'll probably go a little bit further in the first part of next year. All those bonds are house-connect, so only changes -- market changes insulated from the company and earnings perspective from that has amortized costs and they're all [indiscernible].

The next question is from Fatima Ghaznavi at KBW.

For the first one, I appreciate your comments on the housing budget and the benefits from that on mortgage, but just wondering if you've already included some tailwind from that in your guidance for 2026 and 2027 or whether that will evolve, as you start hearing a bit more [indiscernible] from your clients around this? And secondly, on the U.K. corporate book run down, it looks like you did another EUR 300 million in the third quarter which is what we thought you would do for the second half. And so would we expect you to increase the run rate in the second half of the U.K. corporate book run down if you do a similar sort of amount in the fourth quarter? And does this also include U.S. CRE? Or is this just the U.K. corporate bank?

Thank you, Fatima. Let me take the loan book infrastructure question and Mark with take on the runoff, please. So Fatima, when we set out our target for loan book growth of 3% to 4% over the next number of years, included in that is the continuation of the positive growth in the Irish Corporate and Commercial book and certainly Bank of Ireland is very well positioned with our team to support infrastructure lending, and that is an area that we do want to participate in. I think when we look at the profile of the government spend on infrastructure, it's likely to gather momentum out into the medium term. Of course, there will be short-term spends as well. But I say that in the context that I think it is a medium-term piece, it does represent a further growth in our Corporate and Commercial business I think in the medium and longer term. And that's an opportunity. We'll always be very disciplined on ensuring we can generate the right kind of returns in that business, but that is an opportunity for us to participate in. And certainly, I look forward to offering more on that when we share our strategy beyond '27 and -- sorry, quarter 1 next year. Mark?

Yes, just so actually split out in the IMS, the Corporate and Commercial exiting portfolios, you'll see that's reduced to EUR 2.4 billion December '24 to EUR 2.1 billion in September. So what's in there is the Corporate GB book and also the U.S. CRE book, so to your question. If we look in Q3, but we have some FX thesis there or the U.S. CRE book along down about EUR 100 million in terms of repayments in Q3. And I'd say, if I think about that what we've spoken about in previous calls, that stand by about 50% from when we started deleveraging is we're ahead of our internal plan on that. I'd say we're reducing that with [indiscernible]. Maybe finally, if I were to ask and linking to the question earlier on NII, I mentioned that there's NII headwind next year of EUR 25 million or so in relation to those [Technical Difficulty].

The next question is from Denis McGoldrick at Goodbody.

Just one, please, in relation to the Ireland mortgage market share. So 41% year-to-date, I think, implies you were at 43% again in Q3 which would be in line with Q2. Just interested on your thoughts on that. Are you surprised to still be up at that level? And is that a number that we should continue to think about into 2026, please?

Denis, thank you for that question. We don't have a mortgage market share target. Our objective is to grow our mortgage book and to do that against the backdrop of maintaining strong pricing discipline and leveraging back to my comments on [indiscernible] that the most important source of value to the mortgage book in some ways is less about market share and more about the evolution of the mortgage market itself and the fact that, that mortgage market is growing supported by the increase in supply of the loans. So from a value creation perspective, I'd say that's the most dominant factor, a growing mortgage market. The outcome of our market share has been consistent since the year-to-date 41%. So quarter 3 is probably about right. And of course, we're very happy to be there to support our customers who want to acquire mortgage. But again, we don't have a target market share, but I am highly confident that, that mortgage focus is going to continue to grow in line with our overall outlook of growing levels by between 3% and 4%, but again, I think it reflects the overall participation, not share, the overall participation in the Irish market today.

The next question is from Seamus Murphy at Carraighill.

So I just want to just run through some math, if you don't mind, just in terms of the NII into 2020 -- for next year. I mean if we're flat year-on-year and you've told us at the half year stage we got EUR 150 million from the hedge. Plus we have 3% to 4% deposit growth, let's say, 125 basis points margin and loan growth coming through lower margins, but still that kind of gives us another EUR 40 million to EUR 50 million. And we have two negatives. Obviously, we have lower U.K. base rate, and we have 25 in digital mentions U.K. deleveraging. I'm really struggling even adding the EUR 150 million alone and assuming everything else nets to get high EUR 3 billions into 2026. I mean, is there something really wrong with my math? Or is there -- what part is the other big negative that's coming through into next year? And you're right, we're at higher now 2.1% of Euro relative to where we were in Q2. I'm really struggling to understand how we're getting only just to EUR 3.3 billion, high EUR 3 billions in '26. I mean, math just don't think add up.

Seamus, yes, absolutely. So the moving parts are, as you say, so rates lower both euro and sterling, bit of dollar there as well and then deleveraging portfolios. The structural hedge, fixed leg. You're right on your math there. But also remember that our fixed rate Irish loans are also spot back as well. So that will be another factor, which maybe you allow for [indiscernible] the deposit growth. The lending growth and a portfolio positives that gets us in that the EUR 3.3 billion or so next year.

The next question is from Borja Ramirez at Citi.

I have two, please, on the NII. Firstly, if you could please remind me what was the NII in Q3 and also the expectations for Q4? And then my second question would be on the U.S. acquisition finance portfolio, which I understand is quite small and you've covered mostly with [indiscernible]. So -- and you have a very cautious approach on deleveraging. I would like to ask if you plan to run that portfolio down in the future, please?

Okay. Borja, thank you for the questions. Let me take the U.S. acquisition book question first of all in the Q3 and Q4. Borja, you recall at the half year, we took [indiscernible] impairment charge for a U.S. acquisition book. And most of that was a preemptive assessment of the potential credit risk, i.e., very little actual losses. And I make that point to you because as we work our way through the second half of the year, the team -- the U.S. acquisition team are spending the majority of their time on ensuring that, that credit position is managed as well as it possibly can be. So that's where the focus is on, as you would expect. And therefore, very little deals being written over the course of this year, certainly since the half year. And of course, that in the context of the broader U.S. market backdrop and some of those uncertainties. So the focus of the team right now is to make sure that we have our arms fully around the credit risk that we work through those loans and that we certainly are very mindful of the position we took in the half year and sure we work our way through that very carefully, that's focus of the U.S. acquisition team. Mark?

Yes. On NII, so, Borja, we don't disclose the actual figures in Q3, but maybe let me try and help you. Our performance in the 9 months year-to-date were down 7% year-on-year. That's largely rate-driven and then offset by the loan deposit growth structural hedge and bond portfolio. That performance in the 9 months, us running ahead of our internal expectations, so about 1% ahead of what we expected. That's largely due to stronger deposit performance in our Irish franchise. And then if we look at the full year, we had previously expected the ECB to cut to 1.75% in H2 that we no longer expect. That based upgrading our guidance for the full year for NII to be greater than EUR 3.3 billion now. And I think in answer to one of the earlier questions, the H2 NII being probably similar to H1 NII.

The next question is from Jordan Bartlam at Mediobanca.

Just one for me on Irish CRE, if I may. So it looks like maybe some of the inflection we saw in the Irish CRE market last quarter has gone backwards, but again, when I look at 3Q data, so investment in our series dropped back down again, rate expectations perhaps a little bit higher than previously thought. Maybe they saw some lag investment decisions, particularly by multinationals given what we've seen geopolitically around the trade uncertainties. So just I wonder what the situation is like on the ground there? If you see any kind of new emerging pressures at the margin there? Or is it broadly the same as last quarter on kind of an asset quality front, Irish CRE?

Thanks, Jordan. Let me take the broad question, and then I'll ask Mark to comment on the asset quality. The -- if you look at the components of Irish CRE and certainly Bank of Ireland's participation in that homebuilding is usually important. And from our perspective, we're encouraged by the increasing supply of homebuilding. That's important to us. We have -- we target to support the supply of up to 30,000 homes and to help the funding of that and we're currently at 25,000. So that's an area of business that we feel very comfortable with and confident to support. On the office piece from a market perspective, the observation would be that much of the developments that are coming online now were commenced pre-COVID. And that's important because if you play that through out over the next number of years, and you combine that with a greater population coming back to work in offices, and that offers a positive outlook on office space in Ireland. Of course, it has to be in the right location. That's totally key but they will be the two big factors that I would call out. And our overall asset quality, Mark?

Yes, maybe I will add on that and say, Jordan, so just in terms of on the range, we've spoken previously in calls that caution, good pipelines, not comparing actually, we had a pretty good Q3 from a CRE lending perspective. So maybe going deeper [indiscernible] that from an overall asset quality perspective on Irish CRE it is in very good shape. [indiscernible] are below 60%. So [indiscernible] still in the game. And I would say that asset quality is out playing out very much in line with our expectations.

As there are no more questions, I will now hand back to Myles O'Grady for closing remarks.

Okay. Guys, thank you very much. Thanks for joining the call today and indeed your interest at our quarterly updates. Just to reiterate, seeing a very strong positive momentum into 2026, bringing together a strong strategy execution and those key equity story points of Bank of Ireland, a differentiated business model and operating in attractive markets. And so we look forward to seeing you all again as part of our full year results and strategy refresh in quarter 1. Thank you very much again.

Thanks, everyone.

This concludes today's call. Thank you, everyone, for joining. You may now disconnect.