Cantillon: KBC back in two fetching shades of black

Bank is back in profit in Ireland after a number of years of losses

The eagle-eyed among you might have wondered why KBC Bank Ireland reported a profit after tax and impairment costs of €25 million for the third quarter in a local press release – when a detailed group presentation by its Belgian parent put its net profit here for the period at a more modest €10 million.

The Irish subsidiary is a net borrower from the parent company, being in receipt of about €4 billion, which is charged at market rates.

At group level, KBC deducts the cost of funds when calculating the net profit of its Dublin-based unit for reporting purposes.

By contrast, KBC Bank Ireland is not required to deduct this funding charge in terms of producing its statutory accounts here.

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Hence the higher profit figure. It’s a technical or accounting quirk.

Either way, KBC is back in the black in Ireland after a number of years of losses post the crash, and on target to produce a full year profit in 2016 . . . at group level.

For the record, the cost of funds for KBC Bank Ireland was €16.7 million in the third quarter.

Year to date, it was €55.4 million. There really is no such thing as a free lunch.