KBC Bank taps financial boost from rising Irish house prices
KBC Bank Ireland got a huge financial boost from rapidly increasing house prices in 2018 but the outlook suggests Irish lenders will have fewer opportunities to tap this year.
In its annual earnings, KBC Ireland chief executive Wim Verbraeken said net profits of €162m for the year marked a “very strong” performance as the bank stepped up as a so-called challenger bank for mortgages and small company loans.
However, the financial results featured a writeback of provisions of €112m, mostly driven by house price increases in the early part of the year which may not be repeated as the rate of prices increases slows.
The latest figures from the CSO showed house prices rose at an annual rate of 6.5% in December. KBC’s own experts predict the price increases will slow to 4.5% this year.
Broker Investec said KBC’s impairment boost has implications for other Irish banks. The lender sold a large group of loans late last year and reiterated that selling off loans is still an option. Some 23% of a total loanbook of €10.6bn is categorised as non-performing.
Mr Verbraeken said that with a market share of over 10%, the bank was “very happy” with the levels of new mortgage business at a time when borrowers are coming to terms with the Central Bank’s lending rules.
He said the bank feels vindicated about not offering cashback incentives to attract new business. Cash incentives are coming under scrutiny from politicians and consumer advocates.
Mr Verbraeken would not be drawn on future mortgage pricing but referred to market observations that suggest ECB’s low rates will last for longer. He said he could not comment on the events surrounding the eviction of a bank customer in Roscommon late last year.
The bank left the 2017 provision of over €120m for its part in the industry-wide tracker-mortgage scandal unchanged even as it notified the Central Bank of 661 more cases.
