KBC Bank Ireland PLC, Financial Results for Q3 2020 (to 30th September)


Financial Results for Q3 2020 (to 30th September)

“Despite the difficult economic environment, KBC Bank Ireland has continued to deliver a strong performance, particularly around new mortgage lending which saw sustained growth across the quarter.

The volume of new mortgage applications in Q3 were some of the strongest results since the launch of the retail bank and Q3 mortgage applications are up 66% quarter on quarter, reflecting the value and choice we are offering people.”
The trend toward KBC’s unique digital offer supported by our hub and customer service teams continues to accelerate. We are the choice for people who are seeking the convenience of digital banking and insurance, we are now also bringing digital innovation to the pensions market. I would like to take this opportunity to thank the 318,000 KBC customers in Ireland for banking with us, and also thank the KBC Bank Ireland team for their continued work and flexibility, ensuring we continue to deliver for our customers.
“As we continue to navigate Covid-19, many Irish people and businesses are managing unprecedented personal and financial difficulties and we are committed to helping our customers with the challenges they face at each stage of this pandemic. In response to this current phase of Covid-19 we have designed a range of tailored solutions to support customers who are vulnerable or find themselves in financial difficulty.”
 Peter Roebben, Chief Executive, KBC Bank Ireland


Financial Highlights

  • New mortgage lending of €297 million in 3Q20 following a record number of applications
  • Net loss of €41 million after tax and impairments year to date; driven primarily by the exceptional impairment loss recognised in H1 2020 due to the impact of Covid-19
  • Additional €4 million charge relating to the Tracker Mortgage Examination sanction
  • Impaired loan stock for the first 3 quarters of 2020 reduced by €187 million (11%) to €1,469 million representing c.14.4% of the total portfolio
  • Capital Position: CET 1 Capital Ratio 18.0% (transitional and fully loaded), remaining well above regulatory requirements
  • KBC Group ended the third quarter of 2020 with a net profit of €697 million
  • Capital Position of KBC Group: Common equity ratio 16.6% (transitional and fully loaded)
  • 6,900 payment breaks granted on mortgages and loans for personal and SME customers. To date, 76% have rolled off payment breaks.

Q3 Key Highlights

  • Strong quarter for mortgage applications up 66% quarter on quarter
  • New mortgage lending €297m in Q3, with Q3 mortgage completions up 67% quarter on quarter  
  • Mortgage completions of €667m YTD, down 16% YOY, compared to an overall market decline of 20%
  • YTD share of mortgage market for new mortgage sales increases to 12.3%
  • 8,000 new current accounts opened with 77% opened online and over the phone
  • Contactless payments up 65% year-on-year through KBC’s market-leading range of digital and mobile wallets
  • Customer accounts increased 6% year on year to 318,000
  • Unrivalled in the Irish market, KBC customers can start a personalised pension fund through the KBC app and in Q3 KBC launched a second pension product KBC Lifestyle Extra PRSA 

Strong mortgage performance in Q3
KBC saw a surge in mortgage applications in the quarter, with applications up 66 percent quarter-on-quarter in Q3, as people sought to make savings on new and existing mortgages. Mortgage drawdowns are up 67 percent quarter on quarter. New mortgage lending by KBC was €297m in Q3, with mortgage completions of €667m year to date down 16 percent year on year versus an overall market decline of 20 percent.
In the quarter, KBC launched a €1,500 cash incentive for first-time buyers and movers. Designed to support mortgage expenses such as legal and valuation fees, the offer is available to customers applying for fixed-rate mortgages over three, five or 10 years. Currently, mortgage holders who switch their mortgage to KBC can also avail of €3,000 cash back if they drawdown their mortgage with KBC before 31st December 2020.
Bringing Digital Innovation to The Pensions Market  
KBC’s digital platform is now providing radical transformation, choice and competition in the pension market with the introduction of thumb powered pensions. The unique digital pensions proposition puts the power in customers hands allowing them greater control over their financial investments. Customers can increase, decrease, pause, and top up their funds in real time, all through the KBC app bringing pensions to a new audience in the Irish market and giving customers complete control.  Since the product launched, 57% of customers have made changes simply in their app. One in four pensions are opened by customers under 30 years of age as KBC brings pensions to a younger cohort of customers.
In Q3 KBC launched its second pensions product. KBC Lifestyle Extra, a non-standard personal retirement savings account which offers customers a wide range of personalised investments and greater control all through KBC’s digital pension experience. The new product includes KBC’s risk profiler which will recommend investment funds to meet a customer’s financial and emotional appetite for investment risk allowing customers to remain within their own investment comfort zone, while enjoying a better, more transparent investor experience.
Digital-first banking and insurance model performing strongly
Customers now demand fast, digital, hassle-free, products and services and they are turning to KBC’s market-leading digital platforms to carry out their day-to-day banking and insurance. The change in banking behaviour and the trend toward digital continued in the third quarter.
KBC’s daily fee-free banking and simple current account set up process on the KBC app remains one of the most competitive and easy to use in the market.  KBC has welcomed almost 25,000 new current account this year. 8,000 current accounts were opened in Q3 of which 77% were opened online or over the phone.  
KBC has also recorded a 65 percent year on year increase in customers using its leading range of digital and mobile wallets (Apple Pay™, Google Pay™, Fitbit Pay™, Garmin Pay™ and Wena Pay™). 
Sustainability, at the core of our business

KBC’s Socially Responsible Investment (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. In the third quarter SRI funds accounted for 25 percent of all the bank’s investment trades, up 13 percent year on year compared to the same period in 2019.
KBC’s commitment to sustainability was also recently recognized at the Chambers Ireland Sustainable Business Impact Awards. KBC received the Excellence in Community award in recognition of the bank’s charity partnership with the Alzheimer Society of Ireland.
KBC’s ongoing commitment to health and wellbeing was demonstrated through the KBC Virtual Dublin Marathon which took place on the October bank holiday weekend. 13,000 people ran the race virtually and safely in their local area, while being supported by the KBC Dublin Marathon app, which recorded their distance and uploaded their time automatically.

 “At KBC, we understand that as a business, it is our responsibility to contribute positively to a more sustainable society. Like our adoption of digital banking, we were ahead of the curve with sustainability, setting ambitious sustainability targets back in 2015 , implementing strict policies and sustainability guidelines to reduce our environmental footprint. We expect to have achieved a 60% reduction in our carbon emissions in 2021.” 
Peter Roebben, Chief Executive, KBC Bank Ireland