Business Irish

Monday 22 September 2014

KBC Bank says losses down, customers up

Published 08/08/2014 | 02:30

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KBC chief Wim Verbreaken with Minister for Jobs, Enterprise and Innovation, Richard Bruton TD

KBC Ireland will launch a new asset management unit here later this year as it goes head to head with the main banks and stockbrokers for a share of the fee-generating investment market.

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Belgian lender KBC Group's Irish unit attracted 20,000 new customer accounts in the first six months of the year thanks to aggressive marketing and pricing.

Losses, including provisions for historic loans, declined to €34m in the first half of 2014 from €38m a year earlier, KBC said.

The bank said it remains on course to return to profit in 2016, well behind its main, larger rivals.

KBC has radically restructured its Irish operations in recent years, shifting out of business and commercial property lending and into the retail market in an effort to recover from boom-era loan losses.

Financial results yesterday show retail deposits at the bank increased to €3.2bn from €2.7bn between the end of December and the end June.

New mortgage lending increased to €200m in the period, and its share of new lending is now close to its traditional 10pc of the market, chief executive Wim Verbraeken said.

"We are quite satisfied with the results which confirm our plan to return to profit in 2016," he said. The bank's share of the current account market is much smaller at less than 4pc but growing, he said.

Earlier this week KBC piled pressure on AIB and Bank of Ireland by cutting variable interest rates for mortgage customers who open a current account with the bank.

The bank has also opened three new 'hubs' or outlets this year, all in Dublin, at Grand Canal Plaza, Swords and Stillorgan - and expects to open another two in the next three months.

It plans to ramp up its Irish income by launching a fee-generating asset management unit here that would work with customers to manage investments and savings.

KBC Bank has recruited 100 new employees in the first six months of the year, a mix of new entrants to the labour force and experienced staff from other banks, and plans to hire a further 80 people this year.

Boom era lending remains a drag, however, full-year loan-loss provisions for Ireland are expected to come in at the high end of its previous guidance of €150m to €200m, KBC said.

Meanwhile. parent KBC Group's profit fell by less than expected in the second quarter even after taking a provision related to a new law on retail loans in Hungary, which KBC hopes to challenge.

KBC still owes €2bn of €7bn in state aid it received during the financial crisis. Results on Thursday were overshadowed by a €231m provision for Hungary, after a court there ruled in June that banks had previously overcharged customers for some loans. A new law will force banks to repay customers for charges and interest hikes on loans that turned sour in the crisis. (Additional reporting Reuters)

Irish Independent

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