KBC says loan losses will outstrip recent estimates
Published 10/08/2011 | 05:00
BELGIAN banking giant KBC yesterday did an about-face on its optimistic Irish view, admitting that loan losses here would "probably" overshoot estimates given just three months ago.
The comments from KBC finance boss Luc Popelier came as the Irish offshoot experienced a "strong increase" in homeowners falling behind on mortgage payments in recent months.
The higher homeloan losses helped push KBC's loan-loss provisions for the second quarter of the year to €49m -- just within guidance of quarterly losses of €40-€50m.
"What is a point of attention is that, particularly from June onwards and into July, there was a strong increase in arrears for residential mortgages," Mr Popelier told analysts. "That leads us to say that probably we could experience a higher run rate of loan-loss provisions going forward than what we initially gave as guidance last time."
KBC's €16bn loan book makes it one of Ireland's smaller lenders, but the bank has become more prominent in recent months after a massive ad campaign designed to grow its mortgage and deposits business.
KBC has also marked itself out as one of our most upbeat banks, declaring in May that the economy was set for "marginally positive" growth this year and "progressive improvement" thereafter.
"We see that the economy is actually performing less (well) than we expected," Mr Popelier admitted yesterday, adding that "austerity measures" had "impacted consumer incomes more heavily than we expected".
In a presentation to analysts, KBC also took aim at the introduction of new consumer protection legislation, which the bank said had "impacted operationally, delaying communication with borrowers, slowing restructuring of mortgages and affecting lenders from being able to react appropriately to the situation".
The Central Bank brought in new guidelines for dealing with mortgage arrears on January 1, requiring banks to put in place a host of structures and policies.
The detail of KBC's second-quarter accounts shows some 8.8pc of its €9.7bn mortgage book was in arrears of more than 90 days at the end of June.
The arrears rate rose to 13.7pc for KBC's €3.2bn buy-to-let mortgage portfolio, 13.8pc for its €2.2bn corporate book and 20.8pc for its €1.3bn of real estate investment loans.