KBC Ireland deposits and loans fall ahead of sale to Bank of Ireland

KBC Bank Ireland saw its deposits slump 43 per cent on the year to September while its loans declined 9 per cent as the Belgian-owned lender prepares to exit the market.

Although KBC Group has agreed to sell its Irish deposit book to Bank of Ireland as part of a deal to also transfer its performing loans, some 130,000 current account holders are not part of that transaction and are being pressed to find a new home for their banking. The first wave of forced current account closures is set to begin in December, after a six-month notice period.

KBC Group told analysts on Wednesday after it reported quarterly results that there was a pickup in loans redemptions here in advance of the planned transfer of loans to Bank of Ireland early in 2023. KBC Bank Ireland’s loan book stood at €9 billion at the end of September, down 9 per cent on the year and 5 per cent on the quarter.

Meanwhile, customer deposits at the Irish unit dropped 43 per cent on the year and 25 per cent on the quarter to €3 billion. It did not give a breakdown of how much of the deposit movements related to money in current accounts.

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The Irish unit reported a €21 million net profit in the third quarter, compared to a €2 million loss for the previous three months. However, the earnings performance had little underlying meaning, as it was driven by one-off effects relating to the ongoing sale transaction with Bank of Ireland.

Brussels-based KBC Group, which is focused on banking and insurance in Belgium and a number of eastern European markets, reported that its third-quarter total net income rose 30 per cent on the year to €776 million, which beat the market consensus estimate for a figure of €696.4 million.

While the bank released some €24 million of provisions for bad loans, this was more than offset by €103 million that it set aside for potential losses arising from “geopolitical and emerging risks”. The total such reserve has increased as a result to €400 million.

“Almost nine months have now passed since Russia invaded Ukraine and, unfortunately, there is no sign of an end to the war. The tragedy in Ukraine is causing immense human suffering and our heartfelt solidarity goes out to all victims of this conflict,” said group chief executive Johan Thijs. “The war in Ukraine, alongside other geopolitical uncertainties, is also sending shockwaves throughout the global economy, resulting in high inflation and weighing on economic growth.”