The head of KBC Ireland says that bank does not have to slash its stock of bad loans to meet a directive set by European regulators, because the Irish arrears are part of a wider Belgian group which already beats the target.
The bank also rejected suggestions made during the general election campaign that banks don't pay tax here.
KBC Bank said its effective tax rate in Ireland is 51pc - including bank levy and corporation tax, despite it having so-called deferred tax assets that allow crash era losses to shield some profits from tax, the head of KBC Ireland, Peter Roebben, said.
He admitted his bank's 16pc non-performing loan (NPL) ratio is increasingly out of step with Irish peers and with the push from European regulators to cut stocks of crash era bad loans to below the eurozone average - which is less than 5pc.
Bank of Ireland and AIB have launched sales of non-performing home loans to meet that target.
KBC Ireland has not, and Mr Roebben argued that the lower NPL ratio at Belgium-headquartered KBC Group allowed for that. He rejected the idea that the bank was under pressure to change tack.
"So far our way of working though it organically has worked and been accepted," he said.
KBC Group's NPL ratio is just 3.5pc - including the Irish mortgages.
"So, we are well in line with the overall regulatory obligation," he said.
Working through bad loans has proven a better option for KBC than sales but the option to sell non-performing home loans should remain in banks' "toolkits" for dealing with arrears, he said.
"And then we have so far steered away from selling family homes to third parties. Our position today hasn't changed. But we've always said, look, we do believe that sale to investment funds has to be a legitimate part of the potential toolbox."
KBC Ireland has previously sold portfolios of non-performing corporate and buy-to-let investment loans but not so-called primary dwelling home (PDH) mortgages.
"Our approach has always been focused on restructuring, try to find a way to put people in a position that they can potentially return to a normal repayment scheme.
"That's worked out quite well. If you look last year, we had €33m of write-back provisions that is reflecting people coming off restructurings. That benefits all parties, that's the best outcome you have," Mr Roebben said.
But he said borrowers are entitled to expect their bank to seek to work with them when they fall into arrears, he said.
"It has proven a good strategy for a substantial number of customers."
KBC Bank Ireland has reported a net profit after tax and impairments of €32.3m for last year - down massively on the €162m in profit reported in 2018 due to a combination of factors, including losses on a portfolio sales, impairments and a higher bank levy.
Mr Roebben said claims during the general election that banks paid no tax were incorrect. KBC Bank does have some deferred tax assets that can be used to reduce its tax bill, but not hugely, he said.
"We paid €11.6m corporation tax last year, we paid €31.8m in bank levy. That puts our corporation tax figures at 51pc. That is, I think, quite a sizable contribution to the Treasury," he said.
Meanwhile, the Irish retail bank issued €1.2bn in new mortgages last year - up almost a fifth on 2018 and the strongest year since the launch of its retail bank in 2013.
Its share of the mortgage market here increased to 11.8pc in 2019 from 10.8pc the prior year.
The bank's total number of customers increased 6pc to 303,000.
Mr Roebben said KBC's retail banking engine - based on a predominantly digital offering supplement by hubs and call centres - is "humming very favourably".
KBC was better placed to navigate the market between digital-only banks and traditional branch-led lenders, he said.