KBC reports increase in problem loans

The percentage of non-performing loans on the books of KBC Bank Ireland accelerated in the second quarter of this year with just under one-in-four now in arrears of 90 days or more.

This was in spite of an improved financial performance from the Irish offshoot of the Belgian bank, which saw its losses narrow and the level of loan impairments improve significantly.

Results published yesterday show that 24.9 per cent of KBC Bank Ireland’s loans were classed as non-performing for the three months to the end of June. This compared with 24 per cent for the previous quarter and 20 per cent for the same three-month period in 2012.

Just under one-in-three of its €3.1 billion buy-to-let mortgage book is in arrears and 18.8 per cent of its €9.2 billion book of owner-occupied home loans.

Speaking to The Irish Times yesterday, KBC Bank Ireland chief executive John Reynolds said the rate of increase in arrears has slowed considerably from last year and the bank now expects it to peak in early 2014. "The arrears issue continues to be choppy and difficult," Mr Reynolds added.

The bank said it was “working efficiently” to increase the number of customers availing of its restructuring initiatives and it has met the Central Bank of Ireland’s end-June target to provide 20 per cent of those in arrears with sustainable solutions to deal with their loan problems.

KBC’s loan book was valued at €15.6 billion at the end of June, down from €16 billion at the end of 2012 as the level of matured loans surpassed new issues.

KBC Bank Ireland’s losses in the second quarter narrowed to €69 million from €95 million a year earlier.

Its loan-loss provisions reduced to €88 million compared with €137 million for the second quarter of 2012. The bank has maintained its guidance for full-year provisions of €300-400 million.

It also boosted its retail deposit base here by €600 million in the first six months to bring the total to €2.7 billion. It added 11,000 new deposit customers during this period.