Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
It's very specific to the Irish banks - the European bank index is up over 2% today and the US banks did well yesterday. The volumes are not very high so it's probably just some fund reducing their holdings. There has been mainly small trading volumes in both banks today with a few larger (but not huge) sells.
Agreed - the market can now assess BIRG with most of the known uncertainties resolved. On paper everything looks very positive for the business to thrive in the coming years . Of course the external environment is unpredictable and financial stocks are always very susceptible to global shocks. My main concerns however would be the future Irish political landscape with the potential for reckless economic policies and political interference with the banking sector.
I agree that £10 is not out of the question- most of the analysts are starting to up their targets to reflect the opportunity here. BIRG has everything going for it at present - private ownership, minimal bad debt, great loan/deposit ratio, new customers handed to them on a plate, interest rates rocketing etc. AIB is currently lagging in performance as there are the obvious issues with the government holding, however it's also a great buy at current prices - plus there is always the possibility of a dividend windfall at AIB as they are rolling in cash at present.
Interesting day - usually AIB and BIRG roughly track the European bank indexes but with slightly larger moves (both up and down). Today both banks diverged significantly from the main euro bank stocks so this would seem to imply specific target buying of the Irish banks rather than the usual ETF action - probably some institution(s) buying into the Irish bank story.
The European banks index is up about 3.5% today based on the ECB actions. BIRG has a much better deposit/loan ratio than the majority of EU banks so it deserves a premium for it's sensitivity to rate increases. Also BIRG is the primary bank in an open, agile economy with the fastest growth rate in Europe - not to mention additional growth from thousands of new accounts based on circumstances. The government are within weeks of closing out their position which also adds to its attractiveness. BIRG will thrive over the next few years as a standalone operation but they would also be a great bolt on acquisition for any large global banking group.
The article really shows how interest rate moves are so significant for BOI and AIB:
"..Brian Hayes, chief executive of the Banking and Payments Federation of Ireland, the main voice of the industry, said 80 per cent of their income was generated from interest rate moves, while 20 per cent comes from fees. This compares with a 60-40 split in the EU. As inflation continues to soar, more rate rises are on the cards. BOI expects €435mn in additional net interest income if rates rise by 1 percentage point, while AIB has pointed to a €369mn uplift, based on their forecasting models.
Nice ~10% gain for anyone brave enough to buy in this morning! The conference call transcript is worth a read, especially for the analysts questions - looks like the momentum should build into 2023