KBC BANK HAS lost €41 million in 2020 so far, despite a pick-up in new lending, mortgage drawdowns and applications in the third quarter of the year.
The loss is mostly driven by the bank’s decision to write down the value of its loan book by €95 million in anticipation of a potential pandemic-linked surge in bad loans, the Belgian-owned bank said in its third-quarter trading update.
The bank also took a €4 million charge as a result of an €18.3 million fine it received from the Central Bank in September over its role in the tracker mortgage scandal.
Like its competitors, KBC’s fortunes improved in the third quarter of the year as large parts of the economy reopened.
Mortgage applications jumped 63% quarter-on-quarter while drawdowns were up 67% from the second quarter of the year.
The bank reported new lending of €297 million on foot of what it described as “a record number of applications”.
Mortgage completions remained down 16% for the first nine months of 2020, at €677 million. This compared favourably with 20% decline observed across the broader Irish market.
“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,” said Peter Roebben, the bank’s chief executive.
“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.”
Tracker mortgages
KBC, the smallest of the five retail banks operating in Ireland, also took a €4m charge in the third quarter due to Central Bank sanctions over its role in the Tracker Mortgage scandal.
A Central Bank investigation found that in 2008 — when tracker mortgages were becoming less profitable for the Belgian-owned bank against the backdrop of the financial crisis — KBC began to withdraw its tracker products.
In the process, the Central Bank said that KBC failed to adequately warn customers who were moved from trackers to fixed-rate mortgages that they would be unable to return to their tracker rates.
KBC was also criticised for its “deeply unsatisfactory” engagement with the Central Bank’s investigation.
The regulator described the impact of KBC’s failings on its customers as “devastating and included significant overcharging and the loss of 66 properties” — including 11 family homes.
Central Bank investigations into Bank of Ireland, AIB and Ulster Bank are yet to be completed.
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