KBC Bank Ireland PLC, Financial Results for Q1 2020 (to 31st March)


Financial Results for Q1 2020 (to 31st March)

"At this very challenging time Irish people need their bank to step up and support them and we have moved rapidly to meet the needs of our customers and put a range of supports in place. 

COVID-19 is changing how people bank and is accelerating the adoption of digital products and services. Our unique digital-first model means we
 are ideally positioned to help people on that journey and we welcomed a significant number of new customers in March. We intend to continue to deliver ongoing, market-leading innovations following a transformative upgrade of our core banking platform, the first of its kind to be successfully completed by a retail bank in Ireland.

This will now enable us to
 introduce new digital products and services and become the alternative financial choice that people need and deserve, now more than ever and underlines our commitment to continue to invest in our business in Ireland. Today, we are also announcing a further step in our development transitioning to a bank-insurance model in Ireland and the launch of our new digital pension."
 Peter Roebben, Chief Executive, KBC Bank Ireland
Q1 Key Highlights

  • A range of measures in place to support our customers through COVID-19 crisis
  • KBC’s digital-first model drives increase in number of customers as trends in digital banking accelerate  
  • Major transformation of core banking platform complete paving the way for new digital products
  • KBC Bank Ireland transitions to Bank + Insurer with the launch of new digital pension

Q1 Financial Highlights 

  • Net profit of €12 million after tax and impairments
  • Capital Position: CET 1 Capital Ratio 16.85% (transitional and fully loaded)
  • Impaired loan stocks for the first quarter of 2020 reduced by €71 million to €1,585 million
  • KBC Group incurred a net loss of €5 million in the first quarter of 2020
  • 9,400 new current accounts opened – the strongest first quarter since launch of retail bank
  • New mortgage lending of €192 million with switcher mortgage applications up 20% YOY
  • Digital activity up 29% YOY
  • Total number of customers increased by 2% quarter on quarter to 309,000  

“I would like to acknowledge the determination of everyone at KBC Bank Ireland and thank the team for their work over the past number of weeks. It is a difficult time for everyone, and I appreciate the effort our team is putting in to ensure we continue to deliver for our customers. As these results show, we had a strong first quarter, with growth in mortgages and current accounts, and while I recognise that the landscape has changed, KBC Bank Ireland remains focused on bringing the business to scale as a leading digital end to end bank + insurer in Ireland, setting the pace of innovation in finance.”
Peter Roebben, Chief Executive, KBC Bank Ireland

As we navigate the rapidly evolving Covid-19 crisis, KBC Bank Ireland is focused on supporting employees and continuing to deliver the best outcomes for customers. Protecting employees has been a key focus for KBC whose digital focused platform ensured 90 percent of all employees have been working from home since the outset of the pandemic. KBC is working with the Central Bank of Ireland, Government and the Banking and Payments Federation of Ireland (BPFI) to deliver a range of measures to support customers who have been financially impacted by the pandemic. These include payment breaks on mortgages and loans for personal and SME Business customers and an increase of the contactless payment limit from €30 to €50. KBC offers customers free contactless payments on a range of digital wallets, enabling customers to tap and pay above the €50 limit.
A dedicated KBC Covid-19 response team is available 24/7 to help customers with any financial concerns or questions. KBC has redeployed staff from other parts of the business to support this team and the customer contact centre. KBC are providing additional supports to vulnerable customers having commenced a series of care calls to over 5,000 ‘cocooning’ customers who may be negatively impacted by Covid-19. KBC will continue to work with Government and all stakeholders including the BPFI to support the national effort and to help people as they adapt now, and in the future.
“The economic impact of the Covid-19 situation will become more and more visible over the coming months and will undoubtedly have a significant impact on the financial performance of the bank. We have the strength and support of one of the biggest financial groups in Europe, KBC Group, whose strength of capital and liquidity ensure that we can face the future with confidence. This confidence means we will continue to offer innovative financial solutions in the Irish Market.”
Peter Roebben, Chief Executive, KBC Bank Ireland
Digital-first model drives growth in Q1
KBC’s digital offer and its fee-free banking proposition, has led to a significant increase in current account openings in the first quarter. The bank added 9,400 new current accounts in Q1 2020, a five percent increase when compared to Q1 2019 and the strongest first quarter since the launch of the retail bank.
The bank saw a spike in account openings in mid-March, representing an uplift of 30 percent when compared to the first half of March, as customers looked for savings on their day-to-day banking. Over half of the new customers chose KBC’s Extra Current Account, which offers free banking to customers who lodge €2,000 into the account each month, with no requirement to maintain a minimum balance. Currently, six out of ten KBC current account customers avail of free day-to-day banking. Online and over the phone applications accounted for 70 percent of new current account openings in Q1.
KBC offers free contactless payments on all domestic and eurozone transactions and a market-leading range of digital wallets, including Apple Pay™Google Pay™Fitbit Pay™Garmin Pay™ and Wena Pay™.
Major Transformation of Core Banking System Complete
KBC successfully completed a major transformation of its core banking system in April, which marks the delivery of a key strategic pillar of KBC’s growth plan for Ireland. This project has been underway for two years and is one of the most significant system upgrades performed by a retail bank in Ireland. This new platform will enable the delivery of the next phase of the bank’s growth strategy and means that KBC will be unique in the range of new digital products and services it can deliver to the Irish market. The upgrade is a key element of KBC Group’s 5-year Digital Transformation plan.
Bank + Insurer  
Aligning with the overall KBC Group Strategy, today KBC announce the launch of a bank insurance proposition in Ireland. The bank has developed a simple to use innovative and differentiating life and pensions offer repositioning KBC as a bank and insurer in Ireland. The launch of KBC’s insurance business which is a branch of KBC Insurance NV in Belgium, will occur on a phased basis beginning with the market launch of KBC’s digital pension, followed with life insurance.
Supported by KBC’s digital capability, the new offer will deliver an all-in-one solution to customers, allowing them to manage their financial needs and plan for the future which is now of increased importance to customers. KBC Group has a proven track record in the life and pensions business in other regions across Europe and now, this wealth of experience and expertise will be available to customers in Ireland.