Banks report losses of over €1bn

Two foreign-owned Irish banks have reported losses between them of over €1bn during 2011, according to accounts released yesterday by KBC and NIB banks.

National Irish Bank, which is owned by Danske Bank, said its pre-tax losses for 2011 came to €805m as it set aside €850m for loan impairment charges.

The Danish-owned bank had reported pre-tax losses in 2010 in Ireland of €618m, when it set aside €667m for bad debts.

However, NIB reported an operating profit before impairment charges of €45m, down 7% on 2010. Income fell 13% to €141m due to reduced customer demand and impaired loans.

NIB’s total loan book was down 9% to €8.6bn. Its commercial property loans came to €3.1bn, accounting for most of its loan impairment charges. The bank said the quality of its €3.3bn mortgage book “remained satisfactory”.

CEO Andrew Healy said: “Impairment charges remained disappointingly high due primarily to continued falls in property values. That said, we’re making progress in implementing our strategic plan. With a further 15% reduction in costs last year, total cost savings from our restructuring programme now amount to 29%. Deposits continue to perform well.”

Belgian-owned KBC Bank Ireland reported a loss of €269m after tax and impairment costs for 2011 following a further year of heightened credit costs.

KBC explained its losses by a rise in residential mortgage arrears coupled with the effects of a stagnant commercial property market. At the same time, the bank has expanded its retail banking presence in the market.

The overall loan portfolio reduced to €16.7bn at year end from €17.3bn in 2010, reflecting limited new business demand and loan repayments and redemptions.

KBC Ireland chief executive John Reynolds said: “We remain optimistic about the prospects of economic stability returning to Ireland by 2013 followed by recovery signs offering both the bank and its customers better medium-term prospects.

“Reflecting the expansion of our retail banking activities and continuing commitment to support our customers, KBC Bank Ireland employee numbers increased from 452 to 521 during the year.”

Overall, the KBC group reported profits of €161m for 2011. However, its solid performance in Belgium and most of eastern Europe was offset by hits in Ireland, Greece and Hungary and for certain retail bonds.