KBC profits hit by tracker scandal

By Pádraig Hoare

KBC profits hit by tracker scandal

By Pádraig Hoare

KBC Ireland has put 2,500 tracker customers back on the correct rate, just weeks after it admitted they remained on the wrong one despite the €1bn tracker mortgage scandal causing widespread outrage.

In its annual results, the bank said “rates have been rectified on all impacted tracker mortgage customer accounts” and that redress and compensation “continues to be paid to affected customers as soon as possible but no later than end of June 2018”.

Net profits fell to €183m in 2017 from €227m the year before as it set aside more than €120m for its part in the tracker mortgage scandal.

KBC has been identified by many experts as one of the biggest sinners of the tracker scandal, considering its smaller market share in mortgages in Ireland compared to the other banks in the “big five”.

Approximately 3,000 customer accounts are affected. Despite this number, only 501 have been redressed and compensated, the bank said.

Sinn Féin spokesperson on finance, Pearse Doherty, said KBC had to be “shamed” by the Oireachtas Finance Committee and the public outrage in order to put all customers back on the proper rate.

The tracker fiasco occurred when almost customers were wrongly put on more expensive loans by 15 lenders, including the five biggest in Ireland.

The Central Bank is conducting a review of 2m mortgages, with almost 34,000 customers now identified as affected, including dozens who lost their homes under many lenders.

KBC said its net profit for the fourth quarter of 2017 stood at €7m after tax and impairments, down from €109m on the same quarter in 2016.

More than 262,000 customers have now joined KBC, a 10% growth year-on-year, it said.

CEO Wim Verbraeken claimed customers affected by the tracker scandal were the bank’s “highest priority”.

He said: “As we restore impacted customers to the correct tracker rate, make redress and compensation payments, respond to customers and facilitate the independent appeals process, our focus is on achieving a fair and expedient outcome for customers. Again, I would like to convey my apologies to all impacted customers for the harm and distress caused by the bank’s error or failure.”

The bank said its impaired loans stock reduced by 25% to €4.2bn in 2017. It said mortgage cases in arrears were down 17% in 2017, and that 90% of customers in difficulty were “offered a range of solutions”. It said new mortgage lending for 2017 was €888m, a 45% increase on same period last year.

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