National economy remains a challenge for SMEs, warns KBC

KBC Ireland chief executive, Wim Verbraeken, warns that although the Irish economy is showing signs of improvement, trends have yet to be proven over the longer term.

Mr Verbraeken fears that any lender which prematurely writes back valuations on loans due to the recovering housing market risks being forced into costly reversals should prices drop again.

House prices in Ireland have risen faster than they were forecast in 2014; however the retail and hospitality sectors continue to struggle, according to Verbraeken.

KBC has opted to take a conservative approach to the impact of rising asset values, he added, with the bank taking €47m in impairments – money set aside to cover losses – on its boom-era business and home loans in Q3 2014.

That’s compared with €98m of impairments in the same period last year.

Mr Verbraeken said that two-thirds of the write downs were connected to business loans, with the other third connected to mortgages.

KBC Ireland plans to launch a new suite of personal investment products this week to broaden its retail offering, with the use of KBC’s existing network of branches, digital outlets and call centres to distributes services linked with parent KBC Group’s €100bn asset management business.

Around 30,000 new accounts were opened by KBC customers in the first three quarters of 2014, while retail deposits soared to €3.3bn from €2.7bn.

KBC confirmed it had €14.6bn of Irish loans and mortgages at the end of September 2014 – down from €15bn at the end of Q2 2014.

The bank said it anticipates loan losses of €150m to €200m in 2014, and of between €50m and €100m in 2015 and 2016.

Last updated: 17th November 2014