KBC Ireland chief says mortgage lending levels unclear
Mortgage lending in the second half of this year may come in below expectations, hit by Central Bank restrictions and the lack of supply, according to the head of Belgian-owned KBC Bank Ireland.
Yesterday, the bank reported a third-quarter profit of €25m after tax and impairment costs. That reversed a €14m loss made in the same period in 2014 and puts KBC on course to return to a full year profit in 2016.
The return to profit is within its targeted timeframe. KBC Group in Brussels has said it will look at possible options for the Irish unit once it is back profit in 2016. Options could include retaining a stand-alone Irish bank, a sale, or partnership.
KBC Ireland chief executive Wim Verbraeken said he could not say whether any of those options is being actively looked at ahead of the scheduled review.
Its latest results show KBC has grown its retail business here, adding 59,000 new customer accounts in the first nine months of 2015. The bank, which also offers insurance and wealth management, sees its current account as the primary driver of new customer acquisition.
Deposits of €5bn at the end of the period, are up €200m in three months. KBC also said a it had a 20pc reduction in the number of mortgage arrears cases in the first nine months of 2015 compared to the same period in 2014. Loan impairment costs of €9m for the third quarter of the year, compared to €47m for the same period in 2014.
In the closely watched mortgage space, KBC Ireland said the business was responsible for 14.2pc of new lending in the year to date - up from 12.3pc.
While market share is up, Mr Verbraeken said the overall mortgage segment remains challenging due to a lack of housing supply and new Central Bank rules. "There is no doubt the macro-puduential criteria introduced abruptly this year have created a different dynamic. The second half of the year is traditionally strong for mortgages, especially so last year. We now have to see if that is true for 2015."
The rules cap home loans at 80pc of a property's value and three and a half times borrower income. In recent weeks some customers complained that KBC had withdrawn previously approved mortgages made outside the lending caps, but the bank said all offers will be honoured.
The minority of mortgages KBC can offer outside the limits are being made at no additional cost to borrowers, and without any geographic restrictions, he said.