Moody's Upgrades Bank of Ireland's Ratings Following Strong Performance

Strategic Insights -

Moody's Investors Service has upgraded Bank of Ireland's (BOI) long-term deposit and senior unsecured debt ratings to Aa3 from A1, reflecting the bank's strong asset quality, high levels of capitalisation, and significantly stronger core profitability. The upgrade also includes the standalone Baseline Credit Assessment (BCA) and Adjusted BCA to a3 from baa1, as well as the bank's long-term issuer rating and senior unsecured medium-term note (MTN) programme rating. BOI's subordinate MTN programme rating was upgraded to (P)Baa1 from (P)Baa2, and the junior subordinate ratings were upgraded to Baa2(hyb) from Baa3(hyb). The bank's preferred stock non-cumulative rating was upgraded to Baa3(hyb) from Ba1(hyb). The outlook on BOI's long-term deposit, issuer, and senior unsecured debt ratings has been changed to stable from positive.

Key Takeaways:

  • The upgrade of BOI's BCA reflects its strong and improved asset quality, high capitalisation levels, and significantly stronger core profitability.
  • BOI's large volume of stable deposits and high levels of liquidity are key factors supporting its BCA upgrade.
  • The bank's asset risk has improved significantly in recent years, with a problem loan ratio of 2.6% as of June 2025, versus an average of 4.9% between 2018-2022.
  • BOI's solvency is supported by its high levels of capital, solid loan growth in less risky assets, and strong retail funding franchise.
  • The upgrade of BOI's and BOIG's long-term ratings reflects the upgrade of BOI's BCA and unchanged loss-given-failure assumptions under Moody's advanced LGF analysis.
  • The assessments of government support and stability of outlook on BOI's long-term ratings are moderate and stable, respectively.

Statistics:

  • BOI's problem loan ratio decreased from an average of 4.9% between 2018-2022 to 2.6% as of June 2025.
  • Net income on an annualized basis was 0.72% of tangible assets in the first half of 2025.
  • Liquid assets represent 29% of tangible banking assets.
  • BOI's deposits represent over 85% of its total funding.
  • The bank's preferred stock non-cumulative rating was upgraded to Baa3(hyb) from Ba1(hyb).

Sources:

  • "Rating Update: Bank of Ireland Group plc" (Moody's Investors Service, November 2024)
  • "Rating Methodologies: Banks" (Moody's Investors Service, November 2024)
  • "Moody's Ratings Rationale" (Moody's Investors Service, November 2024)