The chief executive of KBC Bank Ireland has said its mortgage loan book is in better shape than may at first appear, and that a sizeable pile of impaired loans won’t stop it from eyeing Irish acquisitions.

Wim Verbraeken was speaking after the Irish operation posted €99m in net profits for the three months to the end of June, an outsized contribution to the €855m in profits earned by the Belgian group, whose operations also include the Czech Republic, Slovakia, Hungary, and Bulgaria.

But the Irish profits were driven by huge write backs of loan loss provisions due to the surge in Irish house prices, and from successful cures applied to its restructured mortgages.

Reflecting probable future house price increases, KBC also earmarked future releases of loan losses in Ireland of up to €200m. After suffering huge losses when the property crash took hold 10 years ago, the Belgian group committed this year to stay here. It also signalled it would look at opportunities for growth in assurance and banking. Asked about potential acquisitions, Mr Verbraeken refused to speculate about targets and said its €12.7bn loan book, of which 40% is still categorised as impaired, would not stop it making acquisitions.

He added there was no live prospect for any deal at the moment. Its €5.1bn in impaired loans has “a significant stock” of provisions, and includes €1.1bn in corporate and SME loans which it has been winding down.

At €2.4bn, over half of the more than €4bn in impaired residential mortgages has been restructured. Almost all those customers, at an above-industry average of 95%, were sticking to the new terms, KBC said. Asked about future house price rises, Mr Verbraeken said there was no “silver bullet” to rectify the acute shortages but said it was “quite clear” price hikes were not being fuelled by credit. Refusing to comment on the direction of interest rates, he repeated his belief these were favourable times for customers to lock in with fixed rates.


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