KBC Bank Ireland PLC, Financial Results for year ended 31st December 2018


“At KBC, we are constantly looking for ways to make banking easier and more efficient, and today’s strong results confirm that our customer-centric digital-first approach is really resonating with the public. We are committed to our business in Ireland and are determined to be a positive force for choice in the market, offering our customers the banking services they want and deserve.” Wim Verbraeken, Chief Executive, KBC Bank Ireland

Key Financial Developments  
KBC Bank Ireland reports net profit of €162 million for the year 2018 (after tax and impairment):

  • Operating profit of €76 million (before tax and impairment)
  • Capital Position at end of Q4 2018: CET 1 Capital Ratio 17.7% (transitional and fully loaded)
  • Impaired loans stock reduced 48% to €2.4 billion in 2018
  • On 30 November 2018, KBC closed the sale of a legacy loan portfolio of approximately €1.9 billion that was announced on 9 August 2018.

Customer and Market Developments

  • More than 19,000 new customer accounts were added in Q4 of 2018, bringing the total number of new customer accounts added to over 79,000 for the full year 2018
  • More than 24,000 customers joined KBC in 2018, bringing the total number of customers to 286,000, representing a growth of 9% year-on-year
  • New mortgage lending for the year stands at €942 million,
  • Mobile account activations for Q4 2018 are up 43%, when compared to Q4 2017, while digital activity on the KBC mobile app rose by 51% year-on-year
  • Increased digital engagement in 2018 was largely driven by the launch of KBC’s new innovative mobile banking app and enhanced digital wallet
  • A total of 3,737 accounts have now been identified as impacted as part of the Tracker Mortgage Examination. Customer redress and compensation falls within the €120 million provision previously allocated
  • KBC will continue to drive innovation in banking in 2019, following the successful launch of the in-app multi-banking facility earlier this year, and the recent introduction of Sony Pay to the KBC digital wallet

Wim Verbraeken, Chief Executive, KBC Bank Ireland said:  
“At KBC, we are constantly looking for ways to make banking easier and more efficient, and today’s strong results confirm that our customer-centric digital-first approach is really resonating with the public. I would like to thank our employees for their hard work and dedication in helping us to deliver on these results and ambition. Our newly enhanced digital wallet, which now includes ‘wena by Sony’, together with our revamped mobile banking app has helped drive digital engagement and strengthen KBC’s position as leader in retail banking. As a result, we have welcomed 24,000 new customers to KBC in 2018

“Going forward, we plan to build on our innovation story and continue to offer our customers more choice when it comes to banking. We also look forward to the launch of KBC’s new socially responsible investment fund, set to launch in Q1 of this year. The investment fund has been designed to offer customers the opportunity to invest in companies that are having a positive social impact – something which is very important to KBC and aligns with our own business goals. For 2019, we look forward to building on the momentum of 2018 as we continue to drive growth across the business and I’d like to thank our 286,000 customers for their trust and support and choosing KBC as their banking provider.”

Financial Highlights

KBC Bank Ireland has reported a net profit of €162 million after tax and impairments for the year 2018 compared to a net profit of €183 million in 2017 (after tax and impairment). Net profit for Q4 stood at €13 million, up from €7 million on the same quarter in 2017.

KBC Group ended the fourth quarter of 2018 with a net profit of €621 million. Combined with the €1,948 million reported in the first nine months of 2018, brings KBC Group’s net result for the full year 2018 to €2,570 million.

Customer acquisition—driven by customer centricity, choice, innovation and new products

More than 79,000 new customer accounts were added in the 12 months to 31st December 2018, with KBC ending FY 2018 with more than 286,000 customers, representing a year-on-year increase of 9%.Customer acquisition was largely driven by KBC’s competitive offering and value, unparalleled digital solutions and its ongoing commitment to innovation in product development, resulting in an enhanced customer experience. 
In August 2018, KBC re-launched its mobile banking app with a range of first-to-market features developed in direct response to customer feedback.

The new app provides an unrivalled banking experience, offering a range of digital capabilities designed to meet customers’ needs including an instant credit card service, digital personal loans and a unique lost/stolen instant digital card replacement service. In Q4 2018, mobile activations were up 43% when compared to Q4 2017, while digital activity on the KBC mobile app rose by 51% year-on-year.

The introduction of Garmin Pay in June 2018 also saw KBC become the first and only bank in Ireland to offer digital wallets from four of the world’s leading technology companies – Apple Pay, Google Pay, FitBit Pay and now Garmin Pay.

The recent launch of KBC’s in-app multi-banking facility in January 2019 will build on this momentum. The new, first-to-market multi-banking function allows KBC customers who hold an AIB or Bank of Ireland current account to view their balance through the KBC app, providing customers with a complete overview of their personal current accounts for the first time. In 2019, KBC will continue to provide customers with more choice on how they choose to pay for goods and services, starting with the addition of ‘wena by Sony’ to the KBC digital wallet which was announced earlier this week.

Alongside the market leading digital offering, KBC will respond to the changing needs and preferences of consumers in 2019, offering customers real choice and long term value across its products.
New Business Banking Offer

KBC introduced a new business banking proposition in 2018 co-designed with input from the professional sector. Specifically tailored to professionals and micro-SMEs, the new proposition offers a full-service business banking platform and provides KBC business customers with a dedicated KBC Business Partner and ongoing access to a dedicated KBC Business Support Team.

KBC will continue to roll out its new business banking offer in 2019 providing choice through innovation and new product development, changing the way businesses bank in Ireland. The business banking platform will be further enhanced across 2019, with the introduction of new products and services.

Competitive Mortgage Offering

New mortgage lending for Q4 2018 at €279 million, represented a 16% increase on Q3 and the strongest quarterly growth of 2018. Overall new mortgage lending by KBC stood at more than €942 million for the full year 2018, as first-time buyers, movers and switchers responded to attractive interest rate offers and better long-term value, which was recognised further by consumers last week as KBC was awarded best mortgage for switchers at the bonkers.ie awards. In September 2018, KBC lowered its 1, 2, 3 and 5-year fixed rates by between 0.25% and 0.55%, while maintaining its competitive 10-year fixed rates.

The new fixed rates, together with KBC’s competitive variable rate mortgages have provided further choice for a broader range of consumers.

Dara Deering, Executive Director, Retail Banking, KBC Bank Ireland, said:
KBC continues to lead the way in digital and new product innovation in the banking sector. One of the main highlights was the launch of our newly revamped mobile banking app last August – a huge milestone in our digital innovation story and we were delighted to receive the best mobile app award at the bonkers.ie awards last Thursday, which acknowledged our market leading app. The app provides an unrivalled customer experience, with a range of market first digital capabilities specifically designed in direct response to customer feedback. As a result, mobile activations have increased by 43% for Q4 2018 and we have added 79,000 new customer accounts to our books. The recent launch of our in-app multi-banking function in January of this year has also been a huge success, and we look forward to responding to the changing needs of our customers by developing new digital-first solutions that continue to exceed expectations and offer our customers with more choice.”

Tracker Mortgage Examination

The total number of mortgage accounts identified as impacted as part of the examination now stands at 3,737. As part of the ongoing tracker mortgage examination, KBC has recently notified the Central Bank of Ireland of an additional 661 impacted customers.

All previously identified cases received redress and compensation payments in 2018. The recently identified cases are on a tracker rate and will receive full redress and payments by the end of March 2019.

KBC reiterates its apology to all impacted customers for the distress caused by the bank’s errors and actions.
Customer redress and compensation for all identified cases falls within the €120 million provision previously allocated.

Wim Verbraeken, Chief Executive, KBC Bank Ireland said:  
“The tracker mortgage examination has been a top priority for KBC to ensure we right the wrongs experienced by our customers. We currently do not anticipate that further accounts will be identified, and continue our work to close a chapter on what has been a distressing experience for customers affected and one that has damaged trust in the banking sector. We would like to again acknowledge the bank’s errors that occurred in relation to the rate administration of tracker mortgages and apologise to those affected.”

Sustainability Programme

KBC’s sustainability programme aims to make a positive impact on the lives of employees, customers and communities across Ireland. In keeping with this aim, KBC signed up to the Low Carbon Pledge with Business in the Community Ireland in November 2018. The Low Carbon Pledge is a conscious effort by Irish businesses to lower carbon emissions, with the overall aim of reducing carbon emissions intensity by 50% by 2030. KBC’s alliance with the pledge follows the bank’s re-accreditation of the Business Working Responsibly Mark which now includes all KBC hubs around Ireland.

KBC’s commitment to health and wellbeing was underpinned by the announcement of its three-year title sponsorship of the Dublin Marathon in October 2018 and KBC is working with the Dublin Marathon to prepare for the upcoming event in October 2019.

In 2018, KBC also announced its re-commitment to the sponsorship of WellFest and the introduction of the WellGood programme which has over 5,000 subscribers. Following on from the success of WellFest 2018, which attracted over 10,000 visitors to the Royal Hospital Kilmainham in May, KBC also rolled out the WellFest Summer Tour to communities across Ireland.