Tuesday 24 April 2018

No decision on future of KBC until end of year

KBC chief executive Wim Verbraken
KBC chief executive Wim Verbraken

Donal O'Donovan and Michael Cogley

The future of KBC Bank Ireland is now unlikely to be decided by its Belgian parent until early 2017, its chief executive has told the Irish Independent.

The bank had flagged that a decision would be taken in 2016 - the target date for the Irish unit's return to profit.

In fact KBC returned to profit in 2015, but a decision on its future won't now be taken until the end of this year or early 2017, said KBC Ireland chief executive Wim Verbraeken.

"The bank will want to see how the full 2016 results shape up, it's the first full year of normal existence (since the crash)," he said.

When a decision is made, options on the table are for KBC to retain the Irish unit and seek to organically grow it as a retail bank, to build a captive bank-insurance group, or to sell the profitable Irish bank, KBC managers in Brussels told analysts yesterday.

Wim Verbraeken declined to comment on whether a fourth option - to merge KBC Ireland with another Irish bank - was being considered.

Results released yesterday show profits at KBC Bank Ireland more than doubled in the first three months of the year, to €34.2m.

The bulk of that was generated from interest margins and fees, Mr Verbraeken said, with an additional €3m booked as a result of gains on previously written down commercial property assets.

In the mortgage market, a targeted marketing push in Dublin and Cork helped generate a significant lift in mortgage applications, Mr Verbraeken said.

The bank maintained its share of the home loan market in quarter one, though growth in the market overall had been a bit disappointing, he said.

Earlier this week KBC announced several new variable lending rates for new customers, and reduced fixed rates for new and existing customers on two, three, and five year home loans.

KBC is working within the Central Bank lending rules, and would provide its insights ahead of this year's review of the mortgage caps "if asked", Mr Verbraeken said.

The bank boss declined to comment on plans to potentially tackle the high cost of Irish home-loans included in the Programme for Government, and said the bank had not seen the proposals.

KBC has focused on current accounts as the core of its push into the retail market - with cross-selling of mortgage and investment products.

In the three months to the end of March, the bank added 16,800 new customers.

KBC said its deposit base in both its retail and corporate businesses grew to €5.4bn from €5.1bn at the end of 2015.

The bank said 95pc of customers in long-term arrears had now been offered a debt deal, and that it does not anticipate a spike in repossessions this year.

Irish Independent

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