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KBC BANK HAS lost € 41 million in 2020 so far in 2020, despite a rebound in new loans, mortgage drawdowns and applications in the third quarter of the year.
The loss is mainly due to the bank’s decision to write off the value of its loan book by 95 million euros in anticipation of a potential pandemic-linked increase in bad loans, the Belgian-owned bank said in its commercial update of the third trimester.
The bank also took a 4 million euro charge as a result of a 18.3 million euro fine it received from the central bank in September for its role in the tracker mortgage scandal.
Like its competitors, KBC’s fortunes improved in the third quarter of the year as much of the economy reopened.
Mortgage applications increased 63% quarter-on-quarter, while reductions increased 67% from the second quarter of the year.
The bank reported new loans of 297 million euros on foot of what it described as “a record number of applications”.
The completion of mortgages remained 16% lower during the first nine months of 2020, with 677 million euros. This compares favorably with the 20% decline seen in the overall Irish market.
“Despite the difficult economic environment, KBC Bank Ireland has continued to deliver strong performance, particularly with regard to new home loans which experienced sustained growth during the quarter,” said Peter Roebben, CEO of the bank.
“The volume of new mortgage applications in the third quarter was one of the strongest results since the launch of the retail bank and third quarter mortgage applications increased 66% quarter-over-quarter, reflecting the value and options that we offer people. “
Follow-up mortgages
KBC, the smallest of the five retail banks operating in Ireland, also took a 4 million euro charge in the third quarter due to Central Bank sanctions for its role in the Tracker Mortgage scandal.
An investigation by the Central Bank found that in 2008, when follow-up mortgages became less profitable for the Belgian-owned bank in the context of the financial crisis, KBC began to withdraw its follow-up products.
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In the process, the Central Bank said that KBC failed to adequately warn clients who were moved from trackers to fixed-rate mortgages that they would not be able to return to their tracking rates.
KBC was also criticized for its “deeply unsatisfactory” engagement with the Central Bank investigation.
The regulator described the impact of KBC’s failures on its clients as “devastating and included significant overburden and the loss of 66 properties,” including 11 family homes.
The Central Bank’s investigations into the Bank of Ireland, AIB and Ulster Bank have yet to be completed.
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