Exane upgrades Bank of Ireland and PTSB, downgrades AIB

Investment company Exane has upgraded its view on Bank of Ireland and Permanent TSB (PTSB) while downgrading AIB.

In her note to clients, Alicia Chung outlined how the journey of Irish banks to rebuild balance sheets appeared to be nearing its end, and said "reassurance on capital should allow investors to focus on an attractive, normalising environment".

Ms Chung upgraded both Bank of Ireland and PTSB to “outperform” and downgraded AIB to “neutral”.

For Bank of Ireland, Exane noted there was now a clearer capital path and solid core earnings, while for PTSB the investment company suggested that its major headwinds were receding and the non-performing loan sales had caused limited damage.

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AIB’s downgrade comes on the back of uncertainty associated with the European Central Bank’s “targeted review of internal models”, an exercise that aims to bring consistency to banks using internal models to calculate risks.

In terms of outlook, Ms Chung said she estimated €3.7 billion in excess capital across the three banks in 2020 earnings, which accounts for around 15 per cent of market capitalisation.