KBC Ireland has returned almost third of €1.4bn bailout

Irish division released €12m of loan-loss provisions in first-quarter due to rising house prices and improvement in the quality of its portfolio

KBC Bank Ireland paid €183m back by way of a dividend to its Brussels-based parent last year. That is in addition to an initial €227m  handed over in 2017

KBC Bank Ireland paid €183m back by way of a dividend to its Brussels-based parent last year. That is in addition to an initial €227m handed over in 2017

 

Belgian financial services giant KBC Group has recouped nearly a third of the €1.4 billion it injected into its Irish unit during the financial crisis to rescue the business as it grappled with mounting bad loan losses.

KBC Bank Ireland, which returned to profit in 2015, paid €183 million back by way of a dividend to its Brussels-based parent last year, a spokeswoman for the unit said. That is in addition to an initial €227 million handed over in 2017 – bringing the total to €410 million, or 29.3 per cent of its total rescue bill following the crash.

“No dividend as of yet has been decided for 2019,” the spokeswoman said.

The Belgian group reaffirmed its commitment to the Irish market two years ago, ending years of speculation over its future after a number of other overseas lenders, including Lloyds Banking Group, Dankse Bank and Rabobank Group, retreated from retail lending in the Republic in the wake of Europe’s biggest property market implosion.

Ulster Bank, the other remaining foreign-owned retail bank in the State, has returned €3 billion in special dividends to its parent, Royal Bank of Scotland (RBS), in recent years. It received a €17 billion parental bailout during the financial crisis.

Ulster Bank executives said in February that they expected to pay a third large dividend to RBS this year as it is holding too much capital on its balance sheet.

AIB and Bank of Ireland have returned to paying dividends in recent years to shareholders, including the government. Of the five remaining banking groups in the Republic, Permanent TSB is alone in not having paid a dividend in more than a decade.

Bad loans

First-quarter results published by KBC Group last week showed that the Irish unit contributed €14 million of net income to the group for the period, down from €57 million a year earlier, as it freed up less money tied up against bad loans than the same period last year.

The Irish division released €12 million of loan-loss provisions in the reporting quarter due to rising house prices and an overall improvement in the quality of its portfolio, but this was down from €43 million that was freed up for the corresponding three months in 2018.

Net interest income declined to €65 million from €75 million, mainly due to the sale of €1.9 billion of non-performing loans, mainly comprised of buy-to-let mortgages, late last year to Wall Street banking giant Goldman Sachs.

Long-standing KBC executive Peter Roebben took over as chief executive of KBC Bank Ireland in March.