KBC’s Irish tracker mortgage scandal costs rise to €58.8m

KBC Bank Ireland’s profits fell in the third quarter as it set aside €54.4 million to cover refunds, compensation and other costs relating to overcharging of tracker mortgage customers going back as far as almost a decade.

The figure, contained in the latest results from the lender, published on Thursday, is in addition to a €4.4 million initial provision taken last year to cover tracker-mortgages cases – bringing the total to €58.8 million.

KBC Bank Ireland’s net profit fell to €2.6 million in the third quarter from €44.4 million for the same period last year as a result of the latest charge.

KBC Bank Ireland disclosed last month that as many as 1,661 of its customers may have been affected by overcharging, including 571 customers that had been "rectified" in 2010 and 490 that had been found under an industry-wide review that began in 2015. It also said that it anticipated that a further 200-600 cases may be identified.

Dutch group Achmea to extract €220m from Friends First sale to Aviva

---

UK banks urge deal to keep EU access as ECB slams Brexit plans

---

Ulster Bank to close 11 branches in Northern Ireland

---

Aircraft leasing group may take claim against former executives

---

“KBC continues to engage with the Central Bank in relation to the identification of impacted customers and KBC expects to have concluded this identification process for the vast majority of customers impacted by the end of the year,” the bank said in a statement on Thursday.

“All customers identified so far as being impacted have been/are in the process of being contacted individually and redress and compensation payments have commenced.”

Figure expected to rise

Eleven current and former Irish mortgage lenders have acknowledged up to 27,527 cases of overcharging stemming from an examination ordered by the Central Bank two years ago. The figure, which has risen sharply in recent months as a result of regulatory and political pressure on banks, is expected to rise as lenders complete their reviews and regulators go over their figures.

Meanwhile, KBC said that its Irish division has released €162 million that had previously been ringfenced to deal with bad loans for the first nine months. The bank said that its level of soured loans continued to decline in 2017 amid a recovering economy, with rising house prices also serving to reduce the amount of provisions it needs to hold.

It reiterated that it expects to release as much as €200 million of impaired-loan provisions for the full year.

Net profit at KBC Bank Ireland stood at €175.7 million for the first nine months of the year, up from €57.6 million for the corresponding period last year and driven by the release of loan-loss provisions. The wider KBC Group’s net profit rose 25 per cent in the first nine months to €2.18 billion.