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KBC Bank Ireland PLC, Preliminary Results for year ended 31 December 2016

09 February 2017

KBC Group confirms long-term commitment to Ireland.

KBC Ireland: A Digital-First Customer Centric Bank and new Core Market of KBC Group
  • KBC Bank Ireland reports net profit of €227 million (after tax and impairment) for the year, up from €75 million in 2015.
    • Operating profit of €141 million before tax and impairment, up from €119 million in 2015
    • Net loan loss provisions release for 2016 of €45 million versus a net charge of  €48 million in 2015
    • Net profit after tax of €227 million in 2016, due in part  to a net release of loan loss provisions and the one-off benefit of the recognition of DTA
    • Capital Position at end of 2016: CET 1 Capital Ratio 12.5% (fully loaded)/13.4%(transitional)
    • Stock of impaired loans reduced by 14% to €5.7 billion from €6.6 billion since Q4 2015
  • Circa 20,000 new customer accounts in Q4 2016, bringing to 70,000 the total added in the year
  • Continued momentum in reducing number of mortgage arrears cases
  • KBC Group reports net profit of €2,427 million for 2016
KBC Bank Ireland reported a full year net profit of €227 million after tax and impairments for 2016, compared to a profit of €75 million in 2015, as KBC Group confirms its commitment to long-term investment in Ireland, making Ireland one of its core markets. KBC Group ended 2016 with a net profit of €2,427 million, compared with €2,639 million (€2,218 million excluding the two main one off items) for the same period last year.

KBC Group will pursue a fully-fledged sustainable growth strategy based on implementation of a ‘Digital First’ customer-centric strategy. To support this KBC Bank Ireland will accelerate its efforts and investments in expertise and resources to evolve fully into a digital-first customer-centric bank, facilitating ‘always-on 24/7 accessibility’ in terms of distribution and service. The decision follows a strategic review by KBC Group of the bank’s operations in Ireland actively involving senior management in Dublin.

Commenting on the financial results and 2017 outlook, Wim Verbraeken, Chief Executive of KBC Bank Ireland said: “I am pleased to report on a very successful 2016 – sustaining and building on our return to profitability in 2015  and adding 70,000 new customer accounts”.

 “I also welcome KBC Group’s decision to commit to the future of the Irish business and our customers here by making Ireland one of its core markets”.

“Today’s announcement is fantastic news for KBC customers and staff, and will result in more competition in Irish banking and better choice for customers. KBC has been here for over 40 years, we’ve invested heavily through the recent challenging period, built a strong and compelling retail bank, and are looking forward to becoming the main challenger bank here.”

Johan Thijs, KBC Group CEO commented: ‘KBC Bank Ireland will be the customer-centric bank of the future where digitalisation will support a great customer experience. The Bank managed to return to profitability as soon as 2015, earlier than we had anticipated and on the back of the encouraging turnaround they achieved strong results for financial year 2016. We believe Ireland is a sound and attractive market which presents opportunities and in which we wish to play a more active role. It provides diversification to our operations in Western and Central Europe. Going forward, Ireland will be a core market in which KBC will continue to invest. The Bank will be a frontrunner in the digital transformation of the KBC Group where digital solutions will be tested for further group-wide roll-out. We believe we have the people in Ireland with the right skills, the energy and determination to do this and we are ready to support them. In the medium and long-term this customer -centric approach  will result in a sustainable future-proof business model and financial results for KBC Bank Ireland, to the benefit of its customers, staff and all other stakeholders.’

The announcement comes as KBC Ireland revealed that 70,000 new customer accounts were added in the 12 months to 31st December 2016. Driving this continued growth are KBC’s innovative digital solutions and competitive current account, mortgage and personal loan offering. 

As part of its multi-year investment of over €100 million in digital channels, banking systems and the Bank’s physical presence in Ireland, KBC also became the first retail bank in Ireland to offer consumers digital mobile and desktop current account openings. As a result, 41% of KBC current account openings during the quarter occurred via digital channels, with customers embracing new ways to bank online.  KBC became one of the first banks in Ireland to offer Android Pay, giving customers the chance to pay for goods and services with their mobile phone like a contactless card.

Product developments in 2016 from KBC brought increased value to customers with the introduction of  the lowest personal loan rate of any bank on the market for over €10,000 at 6.3% APR. This offer coincided with the lowering of mortgage rates available for both new to bank and current KBC mortgage customers making KBC one of the most competitive mortgage providers on the market. 

Customer deposits (Retail and Corporate) were €5bn for Q4 2016 broadly in line with Q4 2015. The investment fund offering has expanded to include Start2Invest which gives customers the opportunity to regularly invest as little as €125 by direct debit from a KBC Current account. This compliments KBC’s Privileged PRO which offers one off larger lump sum investments.

Stock of impaired loans reduced by 14% to €5.7 billion from €6.6 billion since Q4 2015. KBC has also maintained progress in resolving arrears cases in its retail mortgage and corporate/SME loan book in 2016, and to date has offered a range of solutions to circa nine out of ten customers in difficulty and the Bank will continue over the year to work with engaged customers who are experiencing financial difficulty.

KBC Bank Ireland employs over 1,000 people in Ireland with retail banking hubs in Dublin, Cork, Galway, Limerick, Kildare, Waterford, Wicklow and Kilkenny and given growth plans will continue to create employment in Ireland.