KBC Bank Ireland quarterly losses narrow

Thursday 16 May 2013 16.56
KBC Bank made loan loss provisions of €99m in first quarter of 2013
KBC Bank made loan loss provisions of €99m in first quarter of 2013

KBC Bank Ireland has reported a first quarter after-tax loss of €77m compared with a loss of €148m the same time last year as the bank continued to be hit by the high level of loan loss impairments here.

The bank said that it made loan loss provisions in Ireland of €99m for the first three months of the year.

This compared to a figure of €195m the same time last year as it said that the pace of increase in non-performing loans continues to moderate.

KBC's non-performing loans on its owner occupier mortgages here increased to 18.1% from 17.5% at the end of last year and buy-to-let mortgages increased to 30.6% from 29.2%.

On the Irish housing market, KBC said it was showing signs of stabilisation but it warned that this is likely to be ''an uneven and lengthy process''. It also noted that commercial property market conditions continue to demonstrate signs of improvement.

''The ending of mortgage interest relief and the introduction of a residential property tax will weigh on housing transaction levels and prices through the coming year and counter the influence of improving conditions in the broader Irish economy,'' the bank said in its results statement today.

The bank said that it was seeing positive results from its mortgage arrears resolution strategy, which has restored a ''significant'' number of customers back to financial stability. It also welcomed the new insolvency service.

KBC said that its gross retail deposit levels rose by €0.3 billion since the end of last year €2.4 billion by the end of March as about 5,000 new customer accounts were opened in the three month period.

In a research note, Davy said that the bank's results provide further evidence of the emerging stability reported by foreign banks operating in Ireland with the pace of increase in NPLs moderating and impairment provisions in line with guidance.

''It follows RBS' recent statement that Irish credit trends are 'turning a corner' and Danske's prediction that Irish impairment losses should be significantly lower in 2013/2014 relative to 2012,'' the stockbrokers added.