KBC Ireland posts €91m post-tax loss

KBC Bank Ireland lost €91m last year as impairment costs continued to weigh on its financial performance.

KBC Ireland posts €91m post-tax loss

Despite the loss, the bank’s performance marked a substantial improvement in 2014 as after tax losses declined 89.5% from €864m the previous year.

In its Q4 results released yesterday, KBC Bank Ireland reported loan impairment costs of €198m for 2014, including €41m for the final quarter of the year.

The charges on loan impairments fell dramatically last year, however, constituting an 81% reduction on 2013 when large final quarter impairments took their toll on the business.

Commenting on the results, KBC Bank Ireland chief executive Wim Verbraeken said the group is on track to turn a profit next year adding that its change of emphasis as a business is ongoing.

“Our financial performance for the year was in line with forecasts and we remain on track to return to profit by 2016… We are completing our transition to becoming a full-service retail bank and we now offer a full range of competitive products, leading rates and flexible services to suit how modern consumers want to bank,” said Mr Verbraeken.

Customer deposits increased 21% year-on-year to €4.2bn with the loan-to-deposit ratio now standing at 281% for 2014, while retail deposits grew to €3.4bn.

Guidance for Ireland is maintained with loan loss provision at €50m to €100m in 2015 and 2016 with profitability in 2016.

With a decrease in losses and increase in customer deposits, the bank demonstrates the progress it has achieved in repositioning itself as a retail bank, analysts at Davy Stockbrokers said.

Goodbody, however, highlighted the challenges still facing the business saying that its guidance for further loan impairments, while lower than previous years, illustrates the headwinds for the business in the years ahead.

Similarly, a 94% cost income ratio also highlights the difficulty the franchise is facing with its largest peers operating nearer a 50% ratio in the medium term.

The bank also opened more than 50,000 new customer accounts in 2014 while €455m of new mortgage lending helped it to an increased share of the market.

The bank claims that a new mortgage product which rewards existing customers could be worth more than €500m on average per year to homeowners, based on a €250,000 mortgage over a 20 year period with a rate of 4.3%.

KBC employs almost 1,000 workers in Ireland with retail banking hubs in Dublin, Cork, Limerick, Kildare and Galway.

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