Challenger bank KBC posts €16m profit for Q1
New mortgages arrears cases at KBC Ireland have slowed "to a trickle", the bank's chief executive said yesterday.
KBC Bank's Irish arm made a profit after tax of more than €16m or the first three months of the year, the first profits at the Belgian-owned lender since 2010.
KBC Ireland recorded an operating profit of €26.1m before tax and impairment costs for the first quarter of 2015 and a profit of €16.2m after tax.
Wim Verbraeken, who took over as head of KBC Ireland in 2013, said he was "very happy with the result".
KBC held a 12pc market share for new mortgage lending at the of the first quarter, the bank said.
KBC added 15,000 new customer accounts in the first three months of the year, pushing deposits to €3.6bn, including by discounting home loans for customers with a KBC account.
The pace of mortgage lending remained strong in the period but the bulk of those loans were approved before new Central Bank lending caps kicked in in February, Mr Verbraken said.
It is too early to gauge the impact of the new rules, he said.
The Belgian banker defended the interest rate charged by his bank on standard variable rate home loans ahead of upcoming talks between banks and the Minister for Finance Michael Noonan.
KBC loans are competitively and appropriately prices for the Irish market, where costs are relatively high including because of the cost of operations including debt collection here and the higher amount of capital Irish lenders must hold against customer loans, the KBC chief said.
Prices have been pushed down since KBC re-entered the markets, and interest paid to KBC savers here is higher than in Europe, Mr Verbraeken said.
His bank's first-quarter results were boosted by a one-off "write-back" on previously discounted loans, according to Mr Verbraeken.
The overall trend, including reduced costs, increased new lending and a reduction in the number of cases of mortgages arrears means the bank is on course to return to profitability by 2016, the chief executive said.
Despite a 23pc fall in arrears cases since 2013, problem loans will take years to fully resolve, Mr Verbraeken said.
However, new arrears cases have slowed to "a trickle" as the economy recovers, he said. Of customers already in arrears, 90pc have had a debt proposal from KBC and 70pc of those deals have concluded, he added.