Focus on professionals as KBC Ireland targets ‘micro SMEs’

Belgian financial giant KBC said on Wednesday its Irish unit, traditionally a retail lender focused on mortgages, plans to “launch an appealing proposition” for “micro” businesses later this year, as the group uses Ireland as a base to try new digital applications.

The Dublin-based unit, KBC Bank Ireland, aims to almost double its number of customers to 425,000 in the four years to the end of 2020.

"KBC Bank Ireland is a digital frontrunner for our group, in a market where consumers are among the most digitally savvy and open to new ways of banking," group chief executive Johan Thijs said ahead of the Belgian company holding an international investor and media day in Dublin.

Brussels-based KBC Group affirmed its commitment to Ireland in February, drawing a line under more than two years of speculation about its future in the market. The group, which has more than 1,000 employees in the Republic, also signalled its interest in bank and insurance acquisitions in Ireland to expand its footprint.

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New mobile app

The bank also outlined at the time that it would strive for at least a 10 per cent share of Irish retail banking and the “micro” segment of the small- to medium-sized enterprise (SME) markets, where the focus will be on professionals such as doctors, dentists and solicitors practices.

The Irish division will unveil a new mobile app on Wednesday, reducing the number of steps a customers have to take from 26 to five.

KBC Ireland returned to profit in 2015 for the first time since the financial crisis and saw its net income jump the more than 200 per cent €227 million last year.

The unit aims to increase the number of products to each customer from 1.6 times to 2.2, KBC Group said.

“KBC’s Irish strategy looks to make it a more serious player in time, with its revenue targets implying market share gains vs our existing forecasts for the main banks, supplemented by the benefits of the group’s investment in digital,” said Goodbody Stockbrokers analysts Eamonn Hughes, Cian Harty and John Cronin in a note.

“In relation to mergers and acquisitions , we would suggest its Irish strategic focus on digital is unlikely to make it a potential acquirer of a physical branch presence, though its drive for fee income may keep it interested in the insurance sector,” they said, noting that Ireland is the group’s only core market without an insurance presence.