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KBC Bank Ireland PLC, Financial Results for H1 2020 (to 30th June)

06 August 2020

Financial Results for H1 2020 (to 30th June)

‘In a few short months, the world changed suddenly for both our customers and  society. We are in an extremely challenging economic environment and the material provision taken in our H1 Results reflects this. However, our capital position remains robust and meets all regulatory standards and despite these challenges, we continue to grow our business and market share as consumers increasingly avail of  mobile and digital banking and insurance services that are in step with people’s real lives. Those seeking value and service continue to be attracted to KBC as we see our customer numbers grow for both our mortgage and current account product offering.’
 
Peter Roebben, Chief Executive, KBC Bank Ireland
 

H1 Financial Highlights 
  • Net Loss of €55 million after tax and impairments
  • Impairment P&L charge of €95 million almost entirely relating to the impact of Covid-19
  • KBC has processed circa 6,400 payment breaks on mortgages and loans for personal and SME customers who have been impacted by Covid-19
  • New mortgage lending of €370 million for H1
  • Impaired loan stock for the first half of 2020 reduced by €129 million (8%) to €1,527 million
  • Capital Position: CET 1 Capital Ratio 18.1% (transitional and fully loaded), remaining well above regulatory requirements
  • KBC Group ended the first half of 2020 with a net profit of €205 million
 
H1 Key Highlights
  • H1 mortgage applications remain broadly stable year-on-year following a strong pick up in June
  • Customers availing of online and digital solutions with 75% of accounts opened online and over the phone
  • Contactless payments made through KBC’s market-leading range of digital and mobile wallets increased by 38% year-on-year in June
  • Number of customers increased 5% year on year to 314,000
  • KBC signals move to 100% Socially Responsible Investment funds, as the trend toward SRI investing accelerates and plan to launch digital investment tool - ‘Tap to Invest’
 
Strong mortgage growth in H1
 
KBC saw a stronger than expected growth in new mortgage applications towards the end of the second quarter as people were increasingly attracted to KBC for new mortgages and to make savings on existing ones.
 
H1 mortgage applications remain broadly stable year-on-year following a strong pick up in June. KBC also saw total drawdowns rise by 66% month-on-month in June with drawdowns by FTBs up 67% and switchers up 50% as restrictions eased and homebuyers returned to the market. Currently, mortgage holders who switch their mortgage to KBC can avail of €3,000 cash back if they drawdown their mortgage with KBC before 30th September 2020.
 
Consumer Demand for more Digital and Mobile Banking and Insurance
 
In the first half of the year, KBC continued the systematic rollout of its digital-first strategy in Ireland, further cementing its  commitment to the Irish market, with 18,000 new customers joining the bank in H1. As part of its strategy, KBC successfully completed a major upgrade to its core banking system in April. This will enable the acceleration of online and mobile innovations ensuring consumers can manage money in a transparent and seamless way and take the complexity out of banking and insurance. These innovations include the launch of a new first to market digital pension which will now be followed by a digital investment tool, ‘Tap to Invest’, available to KBC customers in the coming months.
 
KBC also launched a market first risk profiler which recommends investment funds that meet both customers financial and emotional appetite for investment risk. Using this unique innovation KBC customers can remain in their investment comfort zone and have a better investor experience.
 
KBC’s daily fee-free banking and simple current account set up process on the KBC app continued to attract new customers, with 17,000 current accounts opened in the first six months of the year, of which 7,000 of these were opened in Q2. Three in four of these accounts were opened online or over the phone highlighting the growing trend towards digital and mobile banking.

KBC also recorded a significant increase in customers using its leading range of digital and mobile wallets (Apple Pay™, Google Pay™, Fitbit Pay™, Garmin Pay™ and Wena Pay™). Contactless payments increased by 38% year-on-year in June, and also marked a 27% month-on-month increase when compared to figures recorded in May.
 
In June, KBC partnered with Mastercard on an initiative to deliver increased security to KBC customers who use their KBC issued debit or credit card when shopping online. When customers use their KBC card online, with this latest convenient and secure digital payments technology, a token is submitted to the accepting merchant for authorisation, rather than the customer’s card details. This reduces the risk of online card fraud while also supporting continuity of service in instances where repeat payments are required, such as monthly subscription services.
 
“We have invested heavily in our digital transformation and continue to drive innovation, creating a unique model that can quickly respond to the changing needs and expectations of our customers. In the first half of this year, we have seen a significant increase in digital and mobile wallet transactions by customers highlighting the increasing shift in banking behaviours towards digital. The investment in digitising our Pensions and Investments products offers customers control and real time information to demystify banking and insurance, with more customer focused innovation to come."
 
 Peter Roebben, Chief Executive, KBC Bank Ireland
 
 
Sustainability, at the core of our business
 
Sustainable finance is a key element of the bank’s strategy and KBC currently offers two Socially Responsible Investment (SRI) funds. These ‘first of a kind’ funds in Ireland, which launched in 2019, allow people to invest in companies and countries that have a positive impact on society and the environment.

KBC recognises that at a societal level environmental challenges will continue and the bank is committed to addressing these challenges. In response to the growing trend toward sustainable investing and aligning to KBC Group, and supporting the Government’s framework for sustainable development, KBC Bank Ireland is today further cementing its commitment to a more sustainable future, with a move to 100% SRI funds later this year.
 
KBC continued its commitment to health and wellbeing in the first six months of the year positively impacting on the lives of employees, customers and communities through a number of initiatives including the launch of the KBC Virtual Dublin Marathon. The virtual marathon will take place on the October bank holiday weekend, marking the date when thousands of runners traditionally hit the streets of Dublin. Despite the cancellation of this year’s marathon, the virtual race will ensure runners still have a goal and can participate by completing the distances safely in their local area while being supported by the KBC Dublin Marathon app, which will record their distance and upload their time automatically.
 
“Covid-19 has not deterred us from delivering on our strategy for Ireland and we will continue to offer market leading and innovative financial solutions for consumers. I would like to take this opportunity to thank the 314,000 KBC customers in Ireland for banking with us and to reassure them that we are here to provide support, particularly to those who are vulnerable or find themselves in financial difficulty.”
 
 Peter Roebben, Chief Executive, KBC Bank Ireland