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KBC turns small profit as exit talks with Bank of Ireland continue


KBC Bank Ireland CEO Peter Roebben

KBC Bank Ireland CEO Peter Roebben

KBC Bank Ireland CEO Peter Roebben

KBC Bank continued to grow in Ireland in the first three months of the year even as it engaged in talks with Bank of Ireland to sell its performing assets and exit the market.

The bank significantly increased mortgage lending, opened nearly 10,000 new current accounts and even turned a modest profit of €8m in the first quarter, underlying the improving trajectory of the business.

Loan impairments also reduced by €43m, or 3pc, to just under €1.4bn, representing around 13pc of the portfolio. Mortgage market share increased to 13.8pc, reflecting a long-standing growth trend for KBC.

KBC Bank Ireland chief executive Peter Roebben had no substantive update on the progress of talks with Bank of Ireland, which the two institutions announced in mid-April, two months after NatWest confirmed that Ulster Bank was withdrawing from Ireland.

“KBC Bank Ireland Q1 2021 performance was strong as demand for mortgage products increased. New mortgage lending was up 54pc year on year to €296m,” he said. “The volume of lending in the first quarter is reflective of the demand among first time buyers, movers and switchers.

“While the discussions with Bank of Ireland are ongoing, we remain fully committed to offering quality retail banking, investment and insurance services and there is no immediate impact for customers. We are fully conscious of our responsibilities to our customers and colleagues, and we will provide material updates as the process develops.”

KBC signed a memorandum of understand with Bank of Ireland on April 16 for the takeover of KBC’s roughly €9bn in performing assets. KBC is also exploring options for the sale of its non-performing loans, probably to a private equity or hedge fund buyer.

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The bank said that the successful completion of those transactions would result in KBC’s exit from the Irish market.

With the likelihood that Ulster Bank’s loan books will be carved up between AIB, Permanent TSB and possibly some smaller specialist lenders, like Finance Ireland, Ireland’s retail banking sector is set for the most radical shake-up since then-finance minister Michael Noonan devised the “pillar bank” strategy in 2011.

Analysts have pointed out that further concentration in the market will give AIB, Bank of Ireland and PTSB more scale, operating leverage and higher profits, but their success will inevitably come at the expense of Irish businesses and households.

KBC Group, the Belgian owner of KBC Bank Ireland, reported a profit of €577m in the first quarter.

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