KBC's losses widen by 13.7% as loan costs worsen
KBC Bank Ireland’s after-tax losses widened by 13.7 per cent last year to €306 million as the impairment costs on its loans here worsened.
The Irish subsidiary of the Belgian bank booked loan impairment costs of €547 million last year, up from €510 million in 2011. The bank said the loss, “while disappointing”, was not “unexpected” given the difficult credit environment in Ireland.
KBC Bank Ireland’s chief executive John Reynolds told The Irish Times yesterday it expected to return to profitability next year. “We will have reduced losses in 2013 and hopefully get back to moderate profitability in 2014. That’s the game plan,” he said. “We’ve been through the horrors for a couple of years but we think 2013 will be less bad.”
Non-performing loans accounted for 17.5 per cent of its €9.3 billion portfolio of owner-occupied mortgages.
In buy-to-let, 29.2 per cent of the €3.2 billion loan book is non-performing while the ratio is 19.4 percent for its €1.7 billion in SME/corporate loans.
KBC said the pace of increase in commercial and residential mortgage arrears and non-performing levels continues to slow. Its loan loss provisions in the fourth quarter amounted to €87 million compared with €129 million in the previous three months.
The bank said it is working “day by day to increase the number of customers availing of restructuring initiatives” that it is offering.
More than 200 of its 700 staff are working on arrears with customers.
The bank’s overall loan portfolio reduced to €16 billion from €16.7 billion in 2011, reflecting muted economic activity and limited new business demand, as well as increased loan repayments and redemptions.
The bank’s tier-1 ratio stood at 11.14 per cent at the end of the fourth quarter following a capital increase of €155 million.
On a more positive note, KBC Bank Ireland doubled its retail deposits to €2.1 billion while new customer accounts increased to 22,000 by the end of the fourth quarter.
KBC has operated in the Irish market for 40 years and Mr Reynolds said it plans to increase its retail presence here this year.
“We want to increase our number of mortgages, improve our deposits and also introduce current account facilities,” he said.
He said KBC issued less than €100 million in mortgages in Ireland last year. Its “natural share” should be about 10 per cent, or about €200 million, when lending normalises, he added.
Mr Reynolds said KBC plans to add more retail branches in urban locations, having recently opened in Baggot Street, Dublin. The bank had a cost-income ratio last year of 27 per cent, which was up four points on 2011.
At group level, KBC reported a net profit of €612 million for full-year 2012.