KBC in no rush to sell further €2.6bn loans

By Eamon Quinn 

KBC Ireland is in no rush to sell more of its soured mortgage loan book when it completes the existing disposal, its chief executive Wim Verbraeken has said.

The sale to Goldman Sachs which it expects to complete in the next few weeks will leave it with €2.6bn in non-performing loans, or around a quarter of its total €10bn loan book.

Irish banks have bowed to ECB pressure and effectively secured the green light of the Central Bank and the Department of Finance for a massive sell-off of their non-performing mortgage loans to vulture funds.

But Mr Verbraeken said that unlike its Irish-based rivals, its larger Belgian group was not judged as having a large soured loan burden. KBC Ireland, therefore, had time to work through the rest of its non-performing book “organically”.

Asked whether the 25% NPL ratio was still far too elevated and that new sales were inevitable, he said the bank was determined to lower its NPLs and that there was “still good momentum to bring it down over the next two or three years” by working through the loans.

“We are currently not working on any transaction.

"We will continue our organic workout of distressed loans and specifically to bring our customers back to financial stability,” he said.

KBC Ireland posted €33.6m in after-tax profits in the three months to the end of September. It followed a net write-back of €15m “which came about mainly because of the positive effect of increased house prices on the mortgage loan portfolio”, said KBC Group.

Mr Verbraeken said it sold €660m in new mortgages in the first nine months of the year and the mortgage market would grow next year.

Some analysts have said that shortages of new homes, the surge in house prices at rates well above wage increases, and Central Bank rules mean Irish banks face a slowdown in the rate of growth in the mortgage market.

Mr Verbraeken said he would not be joining some consumer advocates in calling for a ban on controversial cash-back mortgages for buyers. He said the bank “had no teasers that turn out to be more expensive in the long run” but that all players in the markets had “a role to play”.

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