It comes as the Irish unit reported its best financial figures since the banking crash as it wrote back €50m in loan impairment releases, mainly because the house prices have recovered faster than anticipated. That helped boost net profits to €70.4m in the first quarter.
It expects to release loan impairments of €120m to €160m during the year. Its Belgian parent, which since the crash had injected €1.5bn into the Irish bank, formally dispelled this year any lingering doubts it planned to close up in Ireland.
Chief executive Wim Verbraeken said though still some time away that the chances of an ECB rate rise have risen, adding it was an opportune time for customers to fix their mortgage costs. Last month, KBC cut its fixed rate mortgage rates.
“Events could happen”, but the risks are still higher for a rate rise, Verbraeken said. KBC forecasts house prices could rise 8% this year, “still driven by an imbalance between supply and demand”. There was no single “silver bullet” to solve the shortages of starter homes and “this imbalance could persist for some time”, Verbraeken said. With deleveraging, KBC Ireland’s loan book has contracted to €11.5bn.
Its level of non-performing has also fallen, but remains at an elevated level. It would continue to work through its non-performing loans which at €5bn, including €4bn in mortgage and retail loans, was “comparatively high” but Verbreaken said it hasn’t ruled out completely selling off loans if the right deal were to emerge. The success of the long-term resolutions for mortgage customers in distress were better than the industry average, he said.
KBC had no new update on the exposure the bank faces from the industry-wide tracker mortgage investigation supervised by the Central Bank. Most other lenders have disclosed the multi-million euro provisions they have set aside as part of the scandal. KBC said it hoped to conclude the investigation this year.