KBC Ireland makes loss of €864m

KBC Ireland made a loss of €864m last year as it ramped up loan impairments over the fourth quarter.

KBC Ireland makes loss of €864m

The Belgian-owned bank made an operating profit of €159m for 2013, however, it made total loan loss provisions of €1,059m for the 12-month period compared with loan loss provisions of €547m for 2012.

Over the last three months of 2013 it increased provisions by €671m for the year in order to take a more conservative approach to non-performing loans.

It predicts that it will return to post-provision profit by 2016.

“Financial results are in line with the projection issued in November 2013 including a significant effort to evolve the credit grading and the provisioning levels for impaired loans. This is in light of an assessment of assumptions related to the macro-economic environment, customer behaviour and changes in regulatory guidelines.

“As a result, KBC Bank Ireland is on track to return to profit by 2016. With the strength and support of KBC Group, we continue to successfully implement our retail banking strategy and expand our presence in Ireland,” said Wim Verbraeken, chief executive, KBC Bank Ireland.

This year, KBC Ireland said loan loss provisions will be in the range of €150m-€200m. Then next year and the year after provisions are expected to fall to €50m-€100m. Its core tier one capital position at the end of last year was 12.23%.

It increased deposits by €2.9bn in 2013 and added another 34,000 customers.

KBC has made huge losses over the past five years through its exposure to the Irish property market. Unlike other foreign-owned banks in a similar position that have decided to exit the market, KBC has plans to increase its network over the next few years.

“We have grown our employee base by 150 people in the last 12 months and expect to increase the number of employees by 200 in 2014. The combination of our investment in online and mobile platforms and our retail hubs allows us to be fast-moving and responsive to customers’ modern banking needs working off a highly efficient cost base,” added Mr Verbraeken.

KBC Group reported a net profit of €1,015m for 2013 which is an increase on the €612m in 2012.

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