Irish Banks FY22 Results: Strong NII Growth but Varying Profitability; Improved Asset Quality

DBRS Morningstar released a commentary on Irish Bank’s 2022 results. Summary highlights from the commentary include:

• Irish Banks rated by DBRS Morningstar reported strong growth in operating income in FY22, reflecting the impact from interest rate hikes on net interest income.
• Net results were mixed due to the evolution of cost of risk.
• Asset quality significantly improved Year on Year aided by asset sales and organic cures.
• In 2023, Irish Banks will continue to benefit from higher rates as the full repricing of their loan books is still underway because of the high proportion of fixed interest rate loans, as well as higher asset volumes after the full integration of the portfolios acquired from Ulster Bank and KBC.

DBRS Morningstar considers that Irish Banks' profitability will further benefit from higher interest rates in 2023 as the full repricing of their loan books is still underway as well as higher loan volumes after the integration of the portfolios acquired from Ulster Bank and KBC,” said María Jesús Parra, Vice President from the DBRS Morningstar Global Financial Group team. “For 2023, key areas for monitoring include a possible increase in cost of risk because of weaker economic growth in the Republic of Ireland and the evolution on the increase of the deposit costs”