KBC Bank Ireland PLC, Financial Results for H1 2019


KBC’s 2 and 10-year fixed mortgage rates reduced by between 0.20% and 0.55% providing customers with better long term value and lower mortgage repayments

“At KBC, we’re transforming how banking is done in Ireland and providing the competition which people expect and deserveIn the first half of this year, we added 38,000 new customer accounts and saw a 18% year on year increase in new mortgage lending. This shows that people are seeking out KBC as their alternative banking choice. Our digital offer and approach to customer relationships are providing people with the ease and convenience they deserve from their bank, so they can get on with their lives. I would like to take this opportunity to thank the almost 300,000 KBC customers in Ireland who have already joined us.”
Peter Roebben, Chief Executive, KBC Bank Ireland

Key Financial Highlights

  • Strong performance with H1 mortgage applications and drawdowns outperforming the mortgage market with applications up 19% and drawdown up 18%
  • New mortgage lending in H1 of €495 million, an increase of 18% compared to H1 2018
  • 20,000 new customer accounts were added in the second quarter of 2019, bringing total number of new customer accounts added in H1 2019 to 38,000
  • Total number of customers has increased 9% year on year now standing at 298,000
  • Net profit of €24.9 million for H1 2019 (after tax and impairment); following recognition of a one off restructuring cost related to the sale of the legacy performing corporate loan portfolio
  • H1 2019 Operating profit of €16.8 million (before tax and impairment)
  • Impaired loans stock reduced by c.23% in H1 2019 to €1.9 billion
  • Successfully closed sale of legacy performing corporate loan portfolio of approximately €260 million to Bank of Ireland
  • Capital Position at end of H1: CET 1 Capital Ratio 16.4% fully loaded
  • KBC Group ended H1 2019 with a net profit of €1,175 million

Creating Value for Irish Consumers

  • From August 6th, 2 and 10-year fixed mortgage rates reduced by between 0.20% and 0.55%
  • Free day-to-day banking introduced for KBC Extra Current Account holders who make a monthly lodgement of €2,000 with no requirement to maintain a minimum balance. Six out of 10 KBC current account customers currently avail of fee-free daily banking
  • Positive customer response to the launch of KBC Socially Responsible Investment (SRI) funds in H1 2019; now accounting for 10% of lump sum investments and 11% of all regular investment plans
  • Digital activity on the KBC mobile app rose by 51% year-on-year

Peter Roebben, Chief Executive, KBC Bank Ireland said: “We are bringing even more competition to the mortgage market by reducing our 2 and 10-year fixed rates by between 0.20% and 0.55%. This reduction is part of our ongoing commitment to provide customers with better long term value and lower mortgage repayments. Customers are looking for greater value and certainty in their repayments over longer periods and our new pricing reflects these needs. Combined with our highly competitive 1, 3 and 5-year fixed rate options, KBC is the obvious choice in the Irish market for mortgages.”
Financial Highlights
KBC Bank Ireland has reported a net profit of €24.9 million after tax and impairments for H1 2019 compared to a net profit of €115.9 million for H1 2018 (after tax and impairment). H1 2018 included exceptional impairment writebacks of €80.8 million (H1 2019 €11.6 million).

KBC Group ended the second quarter of 2019 with a net profit of €745 million, compared with €692 million in the second quarter of 2018, resulting in H1 2019 net profit of €1,175 million.

Digital Innovation
In January this year, KBC launched multibanking, providing customers with an overview of their AIB and Bank of Ireland accounts via the KBC app. As the only bank in Ireland to offer multibanking, customers were given early sight of the type of functionality that will become possible as part of the second Payment Services Directive (PSD2), which will come into effect in the European Union next month.

Over the coming months, KBC will leverage the opportunity that PSD2 provides to launch the second phase of multibanking, which will allow customers to view balances, transactions and account details from all providers in Ireland.

Competitive Mortgage Offering                                    
First time buyers, switchers and movers will have even more choice and better long-term value with a reduction in the bank’s 2 and 10-year fixed rates by between 0.20% and 0.55% effective from August 6th. The rate reduction means that KBC maintains its market leading position on 1 and 10-year fixed rates while offering some of the most competitive 2, 3 and 5-year fixed rate options.

Sustainability, at the Core of our Business Model
Across H1 2019, KBC continued to drive its sustainable development programme which aims to make a positive impact on the lives of employees, customers and communities under four important pillars of entrepreneurship, financial literacy, environmental responsibility and health and wellbeing. In H1 2019, KBC continued its successful sponsorship of WellFest for a third year running and began its 3 year sponsorship of the KBC Dublin Marathon, taking place in October.

In the first half of 2019, KBC launched two new socially responsible investment (SRI) funds, a first of it’s kind in Ireland, offering more investment opportunities to socially conscious consumers. Following the launch of the SRI funds in Belgium by KBC Group in November 2018, the funds were introduced to the Irish market in May. To date total investments in the two funds stand at €37m. Since May, KBC Bank Ireland has contributed 10% to the total gross sales into these funds.

A pioneer in this space, KBC Group has been offering a wide range of sustainable funds for over 20 years. Internationally, KBC now has 110 different SRI funds, totalling €10 billion assets under management.
KBC is also proud to be one of 33 companies in Ireland to be accredited with the Business Working Responsibly Mark which includes all KBC hubs around Ireland.

KBC Bank Ireland closes sale of legacy corporate loan portfolio to Bank of Ireland
In June, KBC successfully closed the transaction announced on 12 April 2019 to sell its legacy performing corporate loan portfolio of roughly €260m to Bank of Ireland. The completion of this further solidifies KBC Bank Ireland’s core business focus on retail and micro SME clients.