AIB Group Placed on J.P. Morgan's Positive Catalyst Watch on NII Outlook

J.P. Morgan has placed AIB Group on its Positive Catalyst Watch, citing potential upside for the bank's net interest income (NII). The investment bank's analysts believe market concerns regarding increased competition and an evolving interest rate outlook, which have contributed to Irish banking shares underperforming the SX7P index over the past month, are overstated.

Competitive Threats Seen as Limited

According to a note from J.P. Morgan analyst Sheel Shah, fears of a changing competitive landscape have been a key driver of the sector's recent underperformance. While new entrants like Monzo and Marcus have joined Revolut in the Irish market, the bank's analysis suggests that the impact on incumbent banks has been minimal so far.

J.P. Morgan's feedback from a tour of Irish banks indicated that deposit leakage to competitors remains limited. The analysts pointed to "behavioural anchors" such as customer trust and a preference for liquidity over term deposits as factors keeping deposit migration low. Incumbent banks are also reportedly unwilling to compete on price, particularly on rate-led savings products favored by new entrants.

Data Shows Low Deposit Outflow

J.P. Morgan supported its thesis with data from Ireland's Central Bank. Despite Revolut amassing 3.4 million customers in a country with a 4 million adult population, the data shows a different picture for deposit holdings.

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• As of March 2026, Irish households held just €4.20 billion in deposits across all non-Irish banks.
• This figure represents only 2% of total household deposits and approximately 4% of deposit flow.

Given these figures, J.P. Morgan stated it sees few near-term catalysts for a significant shift in deposits away from established Irish banks like AIB.

Market Outlook

The investment bank concluded that the market's current narrative of "deposit terminal value erosion" for AIB Group and Bank of Ireland Group is too conservative. While acknowledging that a generational shift toward neobanks is a long-term trend to watch, J.P. Morgan believes Irish banks have time to defend their market share through improved digital capabilities and increased investment, a trend it notes has already begun this year.