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KBC Bank Ireland PLC, Financial Results for Q1 2019 (to 31st March)

16 May 2019


“We are living in a new era of openness and transparency, not just in banking, but across society. Following in the footsteps of my predecessor, and as the new CEO of KBC Bank Ireland, it is my intention to embrace the opportunity this presents and to provide the kind of leadership necessary for KBC Bank Ireland to make a difference in the lives of our customers.

Success can be measured in a number of different ways, but at KBC, our customers are our success story and I would like to take this opportunity to thank the almost 300,000 KBC customers in Ireland who have already joined us. KBC Bank Ireland is the Bank of You quite simply because we like, value and invest in the same things our customers do, delivering more flexibility, convenience and offering a real alternative in the Irish market.”
   
Peter Roebben, Chief Executive Officer, KBC Bank Ireland


Key Financial Developments
  • KBC Bank Ireland reports net profit of €15 million for Q1 2019 (after tax and impairment)
  • Operating profit of €5.4 million (before tax and impairment)
  • Sale of legacy performing corporate loan portfolio of approximately €260 million to Bank of Ireland with the transaction expected to close in the coming months
  • Capital Position at end of Q1 2019: CET 1 Capital Ratio 17.4% (transitional and fully loaded)
  • Impaired loans stock reduced to €2.4 billion in Q1 2019
  • KBC Group ended the first quarter of 2019 with a net profit of €430 million.
Customer and Market Developments
  • New customer accounts for Q1 2019 stand at 18,000, bringing the total number of customers to 292,000 and representing a year-on-year growth of 10%
  • Six out of 10 KBC current account customers currently avail of fee-free daily banking. From the end of June, KBC Extra Current Account holders who make a monthly lodgement of €2,000 will also be able to avail of fee-free banking with no requirement to continually maintain a minimum balance
  • Q1 2019 saw new mortgage lending of €216 million, an increase of 9% compared to Q1 2018
  • Since the launch of the first phase of KBC Multibanking, over 2,500 customers have added other bank accounts to their KBC App
  • Digital activity on the KBC mobile app rose by 50% year-on-year and ‘Wena Pay’ by Sony launched making KBC the only bank in Ireland to offer digital wallets from Wena Pay, Apple Pay, Google Pay, FitBit Pay and Garmin Pay.
Mr Peter Roebben appointed as Chief Executive Officer of KBC Bank Ireland in March following executive roles at KBC Group’s Head Office in Brussels and international assignments over his 27-year career with KBC.

Peter Roebben, Chief Executive, KBC Bank Ireland said:
“As a core market of KBC Group, KBC Bank Ireland is committed to making banking as easy as possible for Irish people. As a digital-first, customer centric challenger bank, we want to be a positive force for choice in the market, offering our customers the banking services they want and deserve. At every turn, we strive to listen and respond to the changing needs and preferences of customers and as these results show, this approach is resonating with 18,000 new customer accounts opened with KBC in the first quarter of the year.
“We want to fall into step with people’s lives in an ever evolving society, providing the kind of convenience, value and transparency that people need in their everyday banking lives. Which is why from the end of June, KBC Extra Current Account holders who make a monthly lodgement of €2,000 will also be able to avail of fee-free banking, with no requirement to continually maintain a minimum balance. This reduction in the monthly lodgement amount will no doubt increase the number of KBC customers who avail of free day to day banking, which is currently six in every 10 KBC customers today.

“We are living in a new era of openness and transparency, not just in banking, but across society. Following in the footsteps of my predecessor, and as the new CEO of KBC Bank Ireland, it is my intention to embrace the opportunity this presents and to provide the kind of leadership necessary for KBC Bank Ireland to make a difference in the lives of our customers. Success can be measured in a number of different ways, but at KBC, our customers are our success story and I would like to take this opportunity to thank the almost 300,000 KBC customers in Ireland who have already joined us. KBC Bank Ireland is the Bank of You quite simply because we like, value and invest in the same things our customers do, delivering more flexibility, convenience and offering a real alternative in the Irish market.”  

Financial Highlights
KBC Bank Ireland has reported a net profit of €15 million after tax and impairments for Q1 2019.
More than 18,000 new customer accounts were added in the first three months of the year, bringing total customer numbers to more than 292,000.

KBC Group ended the first quarter of 2019 with a net profit of €430 million, compared with €621 million in the last quarter of 2018 and €556 million in the first quarter of 2018.

Digital Innovation
KBC’s unparalleled digital solutions and an ongoing commitment to innovation and product development has led to a number of announcements in Q1 2019, including the introduction of KBC Multibanking, which allows KBC customers who hold an AIB or Bank of Ireland current account to view their balance through the KBC app. Over the coming year KBC will add more features such as the ability to view transactions and initiate payments, making banking easier for customers.  

Building on this digital-first strategy, KBC recently announced the launch of its industry-standard open Application Programming Interfaces (APIs), providing trusted third parties such as fintech firms and alternative banking platforms access to its portal to provide new products and services to KBC customers. The launch of the portal marks another milestone in KBC’s innovation journey, further fuelling technological integration and collaboration, fostering continued creativity and innovation in the sector.

With the introduction of ‘Wena Pay’ by Sony, KBC is also the only bank in Ireland to offer digital wallets from five of the world’s leading technology companies; Apple Pay, Google Pay, FitBit Pay, Garmin Pay and Wena Pay by Sony.
 
New Product Development
KBC’s ambition is to be the alternative choice in the market for professional micro businesses and SMEs and it has partnered with the Strategic Banking Corporation of Ireland (SBCI) to launch their Future Growth Loan Scheme which will see a roll out of €300 million in funding to eligible Irish SMEs, which KBC will be a part of. KBC is prioritising access to finance for professional businesses and when in operation the scheme, which will be delivered by the SBCI, will allow eligible businesses apply for a loan with KBC. The partnership comes following the launch of KBC’s new business banking offering, which provides specialised support and a suite of products for businesses including business current accounts, business loans, business deposits, professional fee finance, tax loans and business credit cards. The result is a full-service business banking offering for every customer, with a dedicated KBC business partner specialising in the professional sectors, a business support team, tailored products and digital banking platform.

The bank also launched two new socially responsible investment (SRI) funds offering more investment opportunities to socially conscious consumers in Ireland. A pioneer in this space, KBC Group has been offering a wide range of sustainable funds for over 20 years, launching their first SRI fund in 1992. Internationally, KBC now has 110 different SRI funds, totalling €8 billion assets under management. The first of its kind in Ireland, the new SRI funds are designed to balance environmental and social good in a way that brings about positive change, while also delivering a financial return to investors.
 
Dara Deering, Executive Director, Retail Banking, KBC Bank Ireland, said:
People want to see change in how their bank supports them. We understand this, which is why we are combining customer service with unrivalled digital capabilities to deliver a unique, innovative and transparent banking experience.

In the first three months of 2019 we added 18,000 new customer accounts, which brings our total number of customers to almost 300,000 representing a year on year growth of 10%.  As is evidenced by our growing customer numbers online and through our hubs, people are turning to KBC as a real alternative in the market.”

Competitive Mortgage Offering
New mortgage lending by KBC Bank Ireland reached over €216 million for Q1 2019, representing an increase of 9% on Q1 2018. Growth in new mortgage lending can be attributed to KBC’s leading mortgage offering which provides first-time buyers, movers and switchers with even more choice and better long-term value. In a highly competitive market, KBC currently offers one of the lowest mortgage lending rates on the Irish market, with qualifying customers able to fix their mortgage for as little as 2.50%. KBC also offers some of the best fixed rates in the market from 1 to 10 years, providing increased certainty for homebuyers and switchers.

Sale of Corporate Loan Book
KBC Bank Ireland reached an agreement to sell its legacy performing corporate loan portfolio of approximately €260 million to Bank of Ireland. The transaction, which is expected to close over the coming months, will have a negligible impact on KBC Group’s P&L and capital ratio. The deal solidifies KBC Bank Ireland’s core business focus on retail and micro SME clients.
 
Irish Banking Culture  
KBC is committed to the Irish banking industry, focusing on the best interests of customers and staff and ensuring that there is a long term sustainable banking sector for everyone that relies upon it. Rebuilding and maintaining trust is an integral part of that. The Irish Banking Culture Board (IBCB), an independent industry initiative funded by the five retail banks in Ireland including KBC, was established with the aim of rebuilding trust in the sector and promoting fair customer outcomes and Executive Director of KBC Bank Ireland, Dara Deering, has been appointed to the Board of the IBCB.

Peter Roebben, Chief Executive, KBC Bank Ireland said:
In building a sustainable and profitable bank for the future, KBC understands its responsibility to deliver fair customer outcomes and we welcome the establishment of the Irish Banking Culture Board, and its appointed Board members. KBC will continue to progress its internal culture programme, in tandem with the work of the IBCB Board. We are absolutely committed to playing an active role in this cultural transformation, fostering a stronger, more customer-focused environment that, we are convinced, will lead to increased trust in our industry”.

Sustainability
Across Q1 2019, KBC continued to drive its sustainable development programme which aims to make a positive impact on the lives of employees, customers and communities. The promotion of health and wellbeing is an important factor in delivering on this commitment, and in March of this year KBC announced the extension of its partnership with the Alzheimer Society of Ireland (ASI) for 2019.

KBC’s continued commitment to health and wellbeing initiatives was underpinned by its recent sponsorship of WellFest for a third year running. Over the coming months KBC will focus on its support of the KBC Dublin Marathon, taking place in October.