Bank narrows losses as loan charges fall

KBC Ireland narrowed its losses over the second quarter of the year as the impairment charge for loan losses fell by almost a third compared with the same period in 2012.

The after-tax loss for the three months to the end of June was €69m compared to €96m for the second quarter of last year. Impairment costs from €136m to €88m over the same timeframe.

“Conditions remain challenging in the Irish market, but our year-on-year losses have decreased and our retail business continues to grow at an encouraging rate,” chief executive John Reynolds said.

KBC Ireland has shipped heavy losses over the past few years on the back of its exposure to the property market. It said there was a mild increase on commercial and residential mortgage arrears over the quarter.

KBC Ireland is one of the banks covered by the Central Bank’s strategy on dealing with mortgage arrears, which was issued in March. This year, KBC Ireland has to offer solutions to customers in mortgage arrears and over the course of 2014 it must put in place sustainable solutions.

“Dialogue is the key factor to ensure that solutions can be found and I would encourage any customers who are experiencing difficulties to talk to us at the earliest stage,” Mr Reynolds said.

The bank is a subsidiary of the Belgian-owned KBC Group, which made a group net profit of over €1bn for the first half of this year.

There was an improvement across some of KBC Ireland’s key metrics. The cost of credit fell to 2.35% at the end of June compared with an average of 3.34% over 2012. There was a €600m increase in deposits to €2.7bn between last December and the end of June, while 6,000 customers were added.

“Looking ahead, the remainder of the year will see further investment by KBC Bank Ireland with new branches in Limerick and Galway and continued expansion of our product portfolio including a current account offering. We are excited by the opportunities within the banking sector in Ireland and as we expand we are focused on bringing innovation, choice and value to consumers,” Mr Reynolds said.

KBC Bank Ireland employs over 700 people in Ireland and has offices in Dublin, Cork, Limerick, Galway and Belfast.