KBC Ireland net profit drops 16% in first quarter

Increase in house prices frees up €43m in bad loan provisions

KBC Bank Ireland’s net profit fell by 16 per cent in the first quarter as it freed up less money that had previously been set aside for bad loans.

Net profit dropped to €59 million for the three months, from €70.4 million for the same period a year earlier, the bank said in a statement.

The Belgium-based KBC Group said in a separate analyst presentation published on Thursday that the Irish unit had released €43 million of bad loan provision in the first quarter. It reported a €50 million such release in the first quarter of last year.

The freeing up of provisions was “mainly because of the increase in house prices and – to a lesser extent – improved portfolio performance,” the KBC Group said in its latest report, reiterating that it expects full-year loan impairment releases to ease to between €100 million and €150 million, down from €215 million last year.


Meanwhile, KBC Bank Ireland said it had refunded and paid compensation to 76 per cent of the 2,773 customers who were caught up in an industry-wide tracker mortgage overcharging scandal. The number of affected customers is down from a previous figure of 2,974 as outlined in March, following detailed testing and review of individual files.

The bank, which had set aside €120.3 million in the past two years to deal with the tracker issue, said that it is on course to have completed redress and compensation by the end of June.

Mortgage lending

KBC Bank Ireland also reported on Thursday that its new mortgage lending rose by 60 per cent in the first quarter to €198 million. Its parent affirmed its commitment to the Irish market in February 2017, ending years of speculation.

The unit’s impaired loans fell to 36.6 per cent of its loan book at the end of March from 44.3 per cent a year earlier, though the pace of improvement slowed from the end of December.

Chief executive Wim Verbraeken told The Irish Times that while the bank has not ruled out non-performing loan sales, it has no plans to carry out such a transaction.

Almost 20,000 new customer accounts were added in the first three months of the year, bringing total customers to more than 267,000.

The wider KBC Group ended the first quarter of 2018 with a net profit of €556 million, compared with €399 million in the last quarter of 2017 and €630 million in the first quarter of 2017. The company also unveiled plans to buy back up to €220 million of its own stock.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times