KBC Ireland has ‘no plans’ to sell further soured debt

KBC Bank Ireland has "no plans" to sell further soured debt, after the group agreed in August to dispose of €1.9 billion non-performing loans (NPLs) to Goldman Sachs, according to its chief executive, Wim Verbraeken.

Speaking to The Irish Times after the company reported third-quarter results, Mr Verbraeken said that about two-thirds of the loans that will continue to be classified as NPLs on its balance sheet, after the Goldman deal, have been restructured. Many of these will be recategorised as performing loans over the coming years as borrowers prove that they can stick to their new terms.

The bank’s Belgian parent said on Thursday that the Irish unit contributed a net profit of €32 million to the group, compared with a €1 million loss for the year-earlier period, when it took a €54 million provision for refunds, compensation and other costs relating to the tracker issue.

KBC Bank Ireland saw its third-quarter earnings boosted by the release of €15 million of provisions previously set aside for bad debt, as the economy and house prices improved. However, this was less than half the amount of money freed up during the second quarter.

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Corporate loans

For the year as a whole, KBC still sees the Irish unit writing back between €100 million and €150 million of loan-loss provisions.

KBC Bank Ireland has previously said that its planned sale of non-performing buy-to-let mortgages and corporate loans to Goldman Sachs, expected to conclude by the end of the year, will reduce its NPLs ratio to about 25 per cent. The ratio dipped naturally to 35 per cent – or a total of €4.3 billion of loans – in the third quarter from 35.6 per cent for the previous three months.

"Recent indicators suggest positive momentum in the Irish economy remains strong," KBC Group said, adding that it expects the State's gross domestic product (GDP) to expand by about 7 per cent his year.

KBC reaffirmed its commitment to the Irish market early last year, ending two years of speculation about its future, and flagged that it would be interested in acquiring Irish insurance or banking assets to build a business of scale.

Mr Verbraeken said that there are no transactions currently being considered at the moment.

KBC Bank Ireland’s number of customers rose by almost 20,000 in the third quarter, bringing its total to 278,000. The company has is targeting a level of 425,000 customers by 2020.