Last Update22 Oct 25Fair value Increased 1.41%
Bank of Ireland Group's analyst price target has edged higher, rising from €14.09 to €14.29. Analysts cite resilient profit margins and continued positive momentum in recent research updates.
Analyst Commentary
Recent Street research indicates that analysts are revising their expectations upward for Bank of Ireland Group, with several firms raising their price targets. These adjustments reflect evolving views on the bank's valuation, earnings momentum, and market positioning.
Bullish Takeaways
- Bullish analysts have consistently raised their price targets. Some now project levels as high as EUR 15.50, signaling increased confidence in the bank’s valuation.
- Upward revisions are attributed to robust profit margins along with the expectation of resilient earnings growth despite a challenging macroeconomic backdrop.
- The persistent upward trend in targets highlights strong execution by management. This is especially noted in the context of navigating market headwinds and sustaining positive momentum.
- Optimism is also supported by the bank’s ability to defend its market position. This is viewed as contributing to long-term franchise stability and improved growth prospects.
Bearish Takeaways
- Bearish analysts have maintained more neutral or cautious ratings. They suggest that recent share price appreciation may already reflect much of the positive outlook.
- Concerns remain regarding the sustainability of current profit margins if economic headwinds intensify or if interest rate benefits diminish in the future.
- Some caution that further upside may be limited unless Bank of Ireland can continue delivering operational improvements beyond what is currently expected by the market.
What's in the News
- The company completed the repurchase of 38,830,000 shares, representing 3.87% of share capital, for €437.2 million as part of the buyback announced in February 2025 (Key Developments).
- An interim dividend of 25.00 cent per share has been proposed for June 2025, to be paid on October 30, 2025, to shareholders on the register as of October 3, 2025 (Key Developments).
Valuation Changes
- The consensus analyst price target has risen slightly, moving from €14.09 to €14.29.
- The discount rate increased marginally, from 7.47% to 7.48%.
- Revenue growth projections edged lower, declining from 3.37% to 3.21%.
- The net profit margin has improved modestly, rising from 34.77% to 35.06%.
- Future P/E expectations have increased slightly, up from 9.69x to 9.80x.
Key Takeaways
- Growth in the Irish economy and strategic market positioning are driving loan, deposit, and AUM growth, supporting revenue and earnings increases.
- Focus on digital innovation and operational efficiency, alongside capital distribution, emphasizes boosting shareholder value and improving net margins.
- Heightened uncertainty and competition, alongside financial challenges and cost-cutting needs, may pressure Bank of Ireland's revenue, margins, and operational efficiency.
Catalysts
About Bank of Ireland Group- Engages in the provision of banking and other financial services.
- Bank of Ireland is experiencing loan and deposit book growth driven by a stronger Irish economy and its market position, which is expected to support revenue increases and robust earnings growth.
- The bank anticipates a significant rise in assets under management (AUM) especially in its Wealth and Insurance business, with expectations for 30% growth in AUM over the next three years, which should boost fee income and earnings due to the capital-light nature of this income stream.
- The bank plans to achieve a return on tangible equity (RoTE) of over 17% by 2027 through continued operational efficiencies and effective cost management, impacting net margins positively.
- Continued investment in digital innovations and a new customer lending platform for small businesses and agricultural customers are expected to enhance revenue and customer satisfaction while potentially reducing operational costs, supporting higher net margins.
- Capital distribution plans, including share buybacks and dividends leveraging a growing CET1 ratio, indicate an emphasis on shareholder returns, which could contribute to an increase in earnings per share (EPS).
Bank of Ireland Group Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Bank of Ireland Group's revenue will grow by 3.3% annually over the next 3 years.
- Analysts assume that profit margins will increase from 29.4% today to 34.9% in 3 years time.
- Analysts expect earnings to reach €1.5 billion (and earnings per share of €1.82) by about September 2028, up from €1.2 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €1.4 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.4x on those 2028 earnings, down from 10.4x today. This future PE is lower than the current PE for the GB Banks industry at 10.4x.
- Analysts expect the number of shares outstanding to decline by 3.86% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.41%, as per the Simply Wall St company report.
Bank of Ireland Group Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The potential risk of heightened uncertainty and evolving international trade policies could impact Ireland's economic growth, potentially affecting Bank of Ireland's ability to maintain strong loan and deposit growth, impacting revenue and earnings.
- Non-core charges, including provisions for U.K. motor finance and software intangible impairments, demonstrate underlying financial challenges which could strain future profits.
- The expectation of a decrease in net interest income due to lower average interest rates and ongoing corporate portfolio deleveraging may hinder revenue growth.
- Increasing competition in the Irish mortgage and banking market may pressure margins, impacting net margins and revenues if the competitive environment intensifies.
- The necessity for substantial operational cost reductions, including potential headcount reductions and restructuring, introduces execution risks which could affect net margins and operating efficiencies.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of €13.737 for Bank of Ireland Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €15.6, and the most bearish reporting a price target of just €11.6.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €4.4 billion, earnings will come to €1.5 billion, and it would be trading on a PE ratio of 9.4x, assuming you use a discount rate of 7.4%.
- Given the current share price of €12.84, the analyst price target of €13.74 is 6.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.