Belgian financial group KBC recorded €136m in loan loss provisions in its Irish business, down from €195m in the first quarter.
KBC yesterday posted a better-than-expected underlying net profit, driven by a good performance in its core domestic and central European banking and insurance businesses.
KBC employs around 600 people in Ireland, with offices in Dublin, Cork, Limerick, Galway, and Belfast.
KBC repeated its guidance that Irish loan loss-provisions should be between €500m-€600m for 2012.
Irish house prices declined by 1.1% in June after posting their first rise since 2007 in the previous month, data showed in late July, dampening hopes that the market had finally hit bottom.
KBC said it reduced its exposure to sovereign debt in the peripheral eurozone countries to €2.3bn from €4.4bn at the end of the first quarter.
In central and eastern Europe, KBC said loan loss provisions fell, sending underlying net profit up 60% from the first three months of the year.
In Belgium, KBC said customer deposits increased 5% compared to the previous quarter and mortgage loans boosted loan volumes.
Underlying net profit in the second quarter was €372m, down from the €455m recorded in the first quarter but above the €354m expected in a Reuters poll of four analysts.
The group said it made an overall net loss of €539m in the second quarter, caused by a €1.2bn impairment on its businesses that are currently in the process of being sold.
Though KBC has made all of the main divestments it agreed to with European regulators in exchange for the financial aid it received from Belgium at the height of the credit crisis, it still needs to sell smaller units in Belgium, Germany, Russia, and Serbia.
KBC said that the negative capital impact would be reversed entirely once the divestments are closed.
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