Business Irish

Monday 11 December 2017

KBC Ireland chief says it can scale up without M&A

KBC Ireland CEO Wim Verbraeken
KBC Ireland CEO Wim Verbraeken
Donal O'Donovan

Donal O'Donovan

KBC Bank doesn't need to do M&A deals to scale up in the Irish market, but is looking opportunistically at potential acquisitions, the lender's Irish chief insisted.

He was speaking after the Belgian lender's Irish arm reported a doubling of net profit to €70.4m after tax and impairments for the first three months of 2017, compared to a profit of €34.2m in the same period last year.

The parent, KBC Group, ended the first three months of 2017 with a net profit of €630m.

The Irish result was driven in significant measure by write-backs on loans previously classed as soured, though new lending is also rising, the bank said.

After a lengthy review KBC Group in Belgium announced last February that it was committed to Ireland as a core market, and was looking to build scale here.

The bank said it would look at takeovers. "With (KBC) Group we are looking at opportunies that would emerge, but our success is not dependent on that," KBC Ireland CEO Wim Verbraeken said.

"We see a lot of scope to grow organically."

The bank said it added almost 17,000 new customer accounts in the first three months of the year.

"Consumers typically are not happy with their bank, and we are positioned as a challenger," he said. KBC has a smaller physical presence than the other main lenders, with just 15 'hubs' or branches in mainly urban areas.

Wim Verbraeken said the bank would add one more hub, but no more in the immediate term, relying on digital channels for growth.

KBC was the first Irish bank to introduce mobile payments system Apple Pay, earlier this year, having previously launched Android Pay.

And 15pc of KBC Ireland mobile app customers have activated either Apple or Android Pay so far, the bank said.

During the first quarter KBC established an innovation hub to drive the digital strategy and ensure the roll-out of transformative customer products and services.

The bank is also embarked on a €100m multi-year investment technology investment programme to upgrade both core banking and digital capabilities.

The bank saw an 83pc year-on-year increase in digital activity, while the number of customers opening an account online increased by 37pc in the first three months of the year, the company said. The shift to digital reflects customer preference, Mr Verbraeken said, adding: "The customer chooses the channel."

In the mortgage market KBC lowered fixed mortgage rates during the early part of the year. Mortgage lending is growing in line with the market, Wim Verbraeken said. The bank's traditional share of the market is around 10pc.

However, lack of new housing is constraining growth, he said, with the number of mortgage drawdowns lagging approvals. Progress in resolving mortgage arrears was maintained during the first quarter.

Irish Independent

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