Business Irish

Monday 20 November 2017

KBC pumps €100m into Irish unit to tackle lossesOver a fifth of bank's loans here are defaulting

Donal O'Donovan

Donal O'Donovan

THE Belgian parent of KBC Bank has been forced to pump an additional €100m into its Irish unit to cope with losses.

KBC Group said it has increased capital levels at its subsidiary here as loan performance continued to worsen.

Last month the global head of KBC, Johan Thijs, ruled out selling its Irish arm, saying the bank plans to stay and wants to make more income from retail banking here.

KBC Ireland set aside €129m to cope with losses over the three months to the end of September, down from €136m in the previous three months.

More than a fifth of the bank's Irish loans -- 22.5pc -- are classed as "non-performing", meaning the debts have been defaulted on, the bank said yesterday. The figure was 21.4pc at the end of the second quarter.

Among home loans, almost 17pc of owner-occupier mortgages and 28pc of buy-to-let loans are regarded as "non-performing".

Nine out of 10 property loans to developers are in default.

KBC hit the headlines this year when it played a central role in forcing the liquidation of property giant Treasury Holdings.

The bank was later joined by the National Asset Management Agency in forcing the final collapse of Johnny Ronan and Richard Barrett's property empire.

The Belgian parent of KBC Ireland is that country's biggest bank and insurer.

Yesterday it reported profits that beat analyst estimates across the mainly European group.

Net profits in the third-quarter were €531m, compared with analysts' expectations of €470m.

The bank had suffered a €1.58bn loss in the same period last year.

"Earnings were better than anticipated on almost every line," Marc Leemans, an analyst at Bank Degroof in Brussels, wrote in an investor note.


"Total income exceeded expectations on strong fee and commission income and results from marking to market financial instruments."

Shares in KBC were up as much as 4.3pc on the news yesterday.

They have risen 93pc since the start of the year.

The bank said it has cut its investment in the government debt of riskier euro area countries.

It sold €500m of it at a loss of €12m over the three months to the end of September.

The bank disposed of all of its Spanish regional government bonds at a loss of €13m. (Additional reporting, Bloomberg)

Irish Independent

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