KBC predicts Irish profit

ALMOST one-in-10 loans at KBC Bank in Ireland is non-performing.

However, the bank said it believed its Irish unit would be profitable this year adding it is probably the only bank in the country that is profitable now.

KBC suffered higher loan-loss provisions than in the second quarter in Ireland. It said it believed loan losses for the full year 2010 would be below 2009 levels.

Chief financial officer Luc Philips said he feels “uneasy” about loans to real-estate developers that Irish banks have transferred to NAMA because the country’s so-called bad bank could start “dumping” the loans at distressed prices in the market.

KBC, which had €2.15 billion worth of real-estate loans outstanding in Ireland as of September 30, didn’t transfer any loans to NAMA.

Provisions increased to €53 million in Ireland, where 9% of KBC’s €17.4bn loan book is at least three months in arrears. Ireland is KBC’s third-biggest region by assets, after Belgium and the Czech Republic.

The Belgian bank forecasts its Irish banking unit and K&H Bank in Hungary will remain profitable this year, even taking into account the €57m pre-tax levy in the central European country.

Meanwhile, on a group level KBC, which is Belgium’s biggest bank and insurer by market value, has reported third- quarter profit that beat analyst estimates after gains in trading income.

Net income rose 3.2% to €545m. Profit for common stockholders, after accounting for interest on €7bn of government rescue funds, fell 25% to €1.17 a share.

KBC said it won’t need to raise additional capital to meet Basel III requirements, forecasting an 8% common equity ratio by the end of 2013. The Belgian bank has accumulated about €4.3bn of surplus capital to repay state aid.

In August, KBC hiked interest rates, increasing its standard variable mortgage rate by 0.2%. The bank said the average monthly rise in loan repayments for a house owner with a €200,000 mortgage over 20 years will be €20.82.