KBC Bank Ireland’s new chief executive, Peter Roebben, has said he does not “envisage” the lender selling problem owner-occupier loans, even as other banks in the Republic prepare to sell such debt as they seek to deal with the most difficult cases on their books.
The bank’s non-performing loans (NPLs) ratio stood at 22.7 per cent at the end of March, down from 39.2 per cent a year earlier, the Belgian-owned company said on Thursday as it reported first-quarter figures. This was driven by the sale in December of €1.9 billion of soured corporate and buy-to-let mortgages to Wall Street banking giant Goldman Sachs.
While the ratio is the highest among Irish banks, it employs the strictest classification of impaired loans in the State. The figure for the wider KBC Group stood at 4.3 per cent at the end of March.
“We decided to live with that figure and to take a long-term approach to working with clients through that situation,” Mr Roebben said. “At the moment we don’t envisage any sale of PDH (private dwelling home) loans.”
Elsewhere, Ulster Bank executives confirmed last week that they plan to sell owner-occupier loans in a disposal of an impaired portfolio later this year, while Permanent TSB has flagged further mortgage sales, after offloading €3.4 billion of such loans last year.
AIB has hinted at owner-occupier loan sales as banks consider what to do with their most difficult cases more than a decade after the property crash. Bank of Ireland has also said that it may sell further problem loans after shifting €375 million of NPLs off its balance sheet last month by refinancing them in the market. It has refused to rule out the sale of PDH loans.
Profit contribution
Meanwhile, KBC Bank Ireland’s net profit contribution to its Belgian parent fell in the first quarter as the lender freed up less money tied up against bad loans than in the same period last year.
KBC Group’s first-quarter results showed that it received a €14 million net profit contribution from the Irish unit for the period, down from €57 million a year earlier. However, the Irish business reported a figure of €15 million for the first three months, excluding group costs for the provision of funding to Dublin.
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. This was down from €43 million for the corresponding three months in 2018.
Net interest income declined to €65 million from €75 million, mainly due to the portfolio sale last year to Goldman Sachs. Last month, the company agreed to sell €260 million of corporate loans to Bank of Ireland as it focuses on retail customers and small firms.
KBC Bank Ireland’s customer number grew by 18,000 in the first quarter, bringing its total number to 292,000. New mortgage lending increased 9 per cent to €216 million, giving it an 11.5 per cent stake of new home loan lending for the period, according to Mr Roebben, who has worked with the Belgian group for 27 years.
Roscommon
Mr Roebben declined to comment on news this week that the bank has issued High Court proceedings against the Co Roscommon family at the centre of a controversial eviction last year.
The McGann family returned to their home at Falsk near Strokestown after a gang violently removed security personnel who had occupied the house after the residents had been evicted on foot of a court order issued last August.
“Going into a legal process is the very, very last thing as a bank that we want to do. It’s really highly exceptional,” he said. “We have a very intensive process of engaging with clients. In nine out of 10 cases of people being in arrears , it results in an agreement and a solution.”
