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KBC Bank Ireland PLC, Financial Results for H1 2017 (to 30th June)

10 August 2017

KBC Bank Ireland reaches milestone 250,000 customers

  • Over 250,000 customers have now chosen KBC as their bank of choice with almost 33,000 new accounts opened in H1 2017
  • KBC Bank Ireland reports net profit of €102.7 million for Q2 2017 (after tax and impairment) bringing profits for H1 2017 to €173.1 million
    • Operating profit of €30.7 million before tax and impairment in Q2 2017
    • Capital Position at end of Q2 2017: CET 1 Capital Ratio 14.1% (transitional) / 13.8% (fully loaded)
    • Impaired loans stock reduced by 16% to €5.1 billion
  • Mortgage cases in arrears down 18% compared to H1 2016 with 9/10 customers in difficulty offered a range of solutions
  • As announced during the Investor Event in Dublin on 21 June 2017, KBC Group investing €1.5 billion in group-wide digital transformation (between 2017 and end 2020) with KBC Ireland playing a leading role in digital transformation
  • 6 out of 10 Current Accounts in H1 2017 were opened via digital channels; with a 58% increase in digital activity compared to H1 2016
  • New mortgage lending up by 29% to €333 million in H1 2017 as KBC challenges market with competitive rates
  • KBC employees raised €100,000 for the Alzheimer Society of Ireland 
Thursday, 10th August 2017.
KBC Bank Ireland reached a new milestone of over 250,000 customers now banking with KBC, with the bank adding almost 33,000 new customer accounts in H1 2017. 

Financial Highlights 
The milestone comes as the bank reported a net profit of €102.7million after tax and impairments for Q2 2017. This compared to a profit of €39.5 million for the same period in 2016. Net profit for the first six months of the year stood at €173.1 million after tax and impairments, up €99.4m on the six months to June 2016.
KBC Group ended the second quarter of 2017 with a net profit of €855 million, combined with €630 million in the first quarter of 2017, this brings the net result for the first half of 2017 to €1,485 million, a 33% increase on the €1,113 million reported in the first half of 2016.

Digital & Innovation
KBC Bank Ireland is the digital frontrunner for KBC Group, which is investing a further €1.5 billion group-wide in digital transformation between 2017 and year end 2020. KBC will leverage its digital capabilities through the investment to benefit customers in Ireland. From its Innovation Hub in Dublin, the bank will continue to lead the way in delivering innovative firsts providing always-on banking solutions for customers, having already been first to market with Android Pay and Apple Pay. In the coming weeks the bank will launch a new mobile onboarding app which will be unique to the Irish Market.
New figures released today show customers are embracing digital banking at KBC Bank Ireland:
  • 6 out of 10 Current Accounts opened in H1 2017 via digital channels, up 58% from the same period last year
  • Customers migrating to mobile; total mobile transactions are nearly 10 times greater than total online transactions
  • 78k customer payments made via Android Pay and Apple Pay in H1 2017
KBC Group’s Investor Visit was hosted by KBC Bank Ireland in Dublin in June 2017. As well as updates on the Group’s strategy, capital deployment plan and financial guidance to 2020, the digital transformation of banking was a key theme. KBC was recently awarded World’s Best Bank Transformation, Best Bank Transformation in Western Europe and Best Bank in Belgium at the Euromoney Global Awards for Excellence.
In Ireland the open architecture of the bank’s core banking system allows for it to engage with fintechs as it anticipates digital change. Ireland is one of six core markets central to KBC Group’s wider digital transformation

Wim Verbraeken, Chief Executive, KBC Bank Ireland said: “We are pleased to report strong organic growth and continued profitability across all areas of KBC’s business, underscoring our position as Ireland’s leading digital bank with products and services that enable customers to bank in a new way, for a new era. The milestone of 250,000 customers is testament to that. Our Innovation Hub is part of KBC Group’s overall €1.5 billion investment in digital. It will deliver local transformation in how consumers bank, while benefitting other KBC core markets within the Group. It’s an exciting time for customers and KBC Bank Ireland. We have a scalable business model to deliver on ambitious targets, and the drive to achieve these.” 

Market-Leading Products
KBC’s digital-first customer centric strategy underpins the bank’s competitive product offering, which is showing strong organic growth across current accounts, mortgages, personal loans, savings and investments, as well as insurance together with KBC’s partners Zurich and Irish Life.
KBC’s Current Account remains the key driver for new business, with evidence of customer switching during the quarter as customers sought out digital features such as Apple Pay & Android Pay, in addition to fee-free banking with KBC’s Extra Current Account.
New mortgage lending increased by 29% year-on-year to €333 million in H1 2017 as first-time buyers, movers and switchers sought out KBC’s competitive mortgage rates including its 2.9% 1 Year Fixed Rate (incl. Current Account discount) for LTV mortgages of less than 90%, as well as a contribution of €3,000 towards professional fees for switchers, and 50% off home insurance in year one for new residential mortgages.
The bank’s personal loan offering continues to offer great value to customers, with 6.3% APR on loans over €10,000 with a KBC Current Account and later this year, KBC Bank Ireland will provide professionals in the micro-business sector with tailored products and services. 

Dara Deering, Executive Director, Retail Banking, KBC Bank Ireland, said: “KBC will capture increased market share across the retail banking market, whether for current accounts, mortgages or personal loans. We will achieve this through organic growth and competitive offerings – our mortgages are some of the most competitive in the market today. There is greater scope for switching, and we are challenging consumers to find better value at KBC and benefit from our digital-first approach. Innovative and intuitive banking products and services like our new mobile onboarding app and 24/7 customer contact will transform how customers bank.”

New Appointment
During the quarter KBC Bank Ireland appointed Barry D’Arcy as Chief Risk and Compliance Officer. The former Director of Finance at the bank will oversee the risk, compliance and regulatory activity of the bank as it grows in Ireland, particularly in the areas of digital and product innovation. 

Sustainability Programme
KBC’s Sustainability programme aims to make a positive impact on the lives of employees, customers, communities and society at large. The banks programme has already exceeded expectations with staff raising €50,000 for the Alzheimer Society of Ireland through a charity run, with the bank matching the donation, taking it to €100,000. The money was raised by employees who took part in a non-stop 600km Hub2Hub relay across Ireland. The event also saw employees dedicate over 800 volunteering hours to the cause. The funds raised will support vital life-changing services offered by the charity to the 55,000 people with dementia across Ireland, and their carers.

In May, the bank was the primary sponsor of WellFest, Ireland’s only health, fitness and wellness festival. WellFest encapsulates the bank’s aim to support customers towards achieving good health and wellbeing.
Judging for this year’s Bright Ideas and Bright Business Ideas competition is currently underway, with a €200,000 fund set to be distributed between local community charities and businesses, that address social needs. The winning projects will be announced in Q3 2017. 

Mr Verbraeken said: “We recognise and respect the importance of our role in society and through our sustainability programme we share our vision for better, brighter communities, support innovation, and strive for long-term sustainable impact. The success of KBC Bank Ireland’s sustainability programme is a tribute to our staff and management who have dedicated their time and talent to important causes across entrepreneurship, financial literacy, environmental responsibility, and health & wellbeing. We are particularly proud of our colleagues who took part in Hub2Hub, running 600km to raise €100,000 for the Alzheimer Society of Ireland. The proceeds will make a real difference to the work of the charity, and those it supports.”

KBC Bank Ireland employs over 1,000 people in Ireland and has retail banking hubs in Dublin, Cork, Galway, Limerick, Kildare, Waterford, Wicklow and Kilkenny, where staff play a positive and active role in the communities where they live and work.