KBC sets aside €129m for losses

KBC Bank Ireland set aside €129m to cover loan losses in the third quarter of this year.

While this figure marks an ongoing improvement on the year’s previous quarters — impairment charges of €195m and €136m being taken in the first and second quarters, respectively — the Belgian banking group still foresees its Irish business taking a loan loss hit of between €500m and €600m for 2012, as a whole.

This would largely be in line with last year’s total charge of €510m for KBC Ireland.

The group issued third quarter results yesterday. These showed an overall return to profitability, with a net profit of €531m being recorded for the three months to the end of September.

This was up from a net loss of €539m for the second quarter and from a net loss of €1.58bn for the same period last year. Similarly, the first nine months of 2012 generated a group net profit of €372m, as opposed to a net loss of €424m for the first nine months of last year.

The group said total group impairments for loan losses — for the third quarter — amounted to €283m.

While down from a charge of €475m for the same quarter last year; the figure was up on the €198m provision recorded in the second quarter of this year. That increase was solely down to the impairments seen in the Irish operations; also taking in a €49m provision at corporate finance arm, KBC Finance Ireland.

KBC Ireland’s third quarter after-tax losses amounted to €71m and the percentage of its non-performing loans amounted to 16.9% (owner-occupier mortgages), 28% (buy-to-let mortgages), 17.8% (SME loans), and 28.6% (real estate investment loans).

“There are indications that the housing market may have bottomed out, in terms of prices and transaction levels.

“However, the Irish domestic market remains a challenging environment for commercial customers,” the group said regarding Ireland.

It also, however, noted “an emerging stabilisation in parts of the domestic economy and an improvement in financial sentiment towards Ireland”.