Monday 11 December 2017

KBC Ireland in court move to restore dividend as profits rise

KBC Ireland chief executive Wim Verbraeken
KBC Ireland chief executive Wim Verbraeken
John Mulligan

John Mulligan

KBC Ireland, which has reported a net profit of €44m for the third quarter of the year, has sought permission from the High Court to reduce its share capital.

The move will free up the lender to pay dividends to its Belgian parent for the first time since the Crash.

The move comes ahead of a decision KBC Group has said it will take at the end of 2016 on whether to remain in the Irish market long term.

That may come in the New Year, KBC Ireland chief executive Wim Verbraeken told the Irish Independent.

Options could include retaining KBC Ireland as a stand-alone brand, putting the business up for sale, or looking to merge with one or more rivals.

The chairman of Ulster Bank parent RBS, Ross McEwan, said recently that it would look at possible Irish bank tie-ups from next year, leading to speculation of a KBC Ireland merger.

"We are not wasting any headspace speculating about any combination in the Irish market," said Mr Verbraeken.

Profits at the Irish business have now been sustained over more than a year, making the decisions about the future of the Irish unit, once a major headache for KBC, relatively easier for the bank

The petition to the High Court is to create distributable reserves - which will make it possible to pay dividends from the Irish business.

KBC Ireland wants to cut its share capital from over €2.5bn to €2bn, and its undenominated company capital by cutting its share premium account by €16.1m.

Yesterday, the bank reported that profits in Ireland had surged by nearly €20m to €44.4m in the three months to the end of September.

So far this year KBC has added 49,900 customer accounts as the bank targeted students with a €100 incentive for opening a new current account.

The bank said its share of new mortgages was running ahead of its overall 10pc market share, but that growth was constrained by lack of housing supply.

Operating profits slid to €17.1m down from €33.9m in the same period last year.

Over the last 12 months KBC has moved to reduce its amount of impaired loans, falling by 13pc, or €900m to €6bn.

Its still a huge share of the €13bn loan book and will take years to work through, Mr Verbraeken said.

Group-wide profits rose at the Brussels headquartered bank by €29m to €629m. Its Irish arm also moved to lower its fixed and variable mortage rates for mortgage customers.

The deposit base rose by €300m to €5.3bn across both its retail and corporate sectors.

Mr Verbraeken said he was pleased to report "strong profitability" across all areas of the business.

"Looking ahead, we remain firmly focused on meeting customers' needs for innovative, competitively-priced banking products and growing market share across our business.

"It is encouraging to note our significant progress in offering resolutions to some 95pc of our distressed customers," he said.

Irish Independent

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