Future of KBC to be decided by Belgian parent this year

Bank returned to black in 2015 with €75 million profit

The bank reported profits after tax and impairment costs of €75 million for 2015, compared with a €91 million loss the year before

The bank reported profits after tax and impairment costs of €75 million for 2015, compared with a €91 million loss the year before

 

A decision on the future of KBC Bank Ireland is likely to be made public in late 2016, according to its chief executive Wim Verbraeken.

Mr Verbraeken was speaking after the publication of the bank’s full year results for 2015, which showed the Irish subsidiary of the Belgian financial services group recorded an after-tax profit of €75 million.

This return to the black came a year ahead of schedule and effectively triggers a strategic review of the business by its parent company.

In a presentation to investors yesterday, KBC said it would look at “all available options” for the Irish bank, including organically growing a profitable retail bank, building a captive bankinsurance group, or selling the bank.

Speaking to The Irish Times, Mr Verbraeken said his “expectation” was that it would “take most of 2016” to reach a decision on its future. “I wouldn’t expect any public announcement too early in 2016,” he said. “I think it’s going to be at the back end of that [year] at the earliest.”

“The primary objective is to be standalone profitable bank, potentially combined with an insurance activity if the opportunity arises. It’s only then that the group would look at other options.”

Mr Verbraeken said the review would begin “in due course”.

KBC’s results show that it achieved an operating profit of €119 million before tax with impairment costs totalling €48 million. A year earlier the bank posted an operating profit of €107 million but impairment costs of €198 million dragged it into the red. It closed the year with a Tier 1 capital ratio of 13.3 per cent.

The bank said it experienced strong growth in Ireland last year, adding more than 74,000 new customer accounts. Its home loans business grew substantially, giving it 14 per cent market share while mortgage arrears cases declined by 26 per cent year-on-year, compared to a 15 per cent reduction in 2014.

Mr Verbraeken said new mortgage lending amounted to about €670 million, up from around €450 million in 2014. “The general expectation is that the mortgage market will be bigger in 2016 and we expect to maintain our share of the market or potentially increase it,” he said.

Retail and corporate deposits grew to €5.1 billion, having been €4 billion a year earlier.

KBC, which has expanded its physical presence to 15 banking hubs nationwide in recent years, said digital channels now account for 40 per cent of daily banking sales. Mr Verbraeken said it has no immediate plans to add any more branches here.

“Looking ahead, our focus is to grow our retail business and give customers the best banking experience in the market through our digital and physical channels,” Mr Verbraeken added.

KBC Bank Ireland’s parent reported a net profit of €2.63 billion for the full-year, up from €1.76 million in 2014. Profit was boosted by the liquidation of KBC Financial Holding, but tempered by impairment on goodwill.