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Beware risk of writebacks, says KBC boss

Banks that prematurely write back valuations on loans because of rising house prices risk being forced into damaging reversals if prices fall, the head of KBC Bank in Ireland has said.

Wim Verbraeken told the Herald that he agreed with a warning from the Central Bank's Sharon Donnery against so called "write backs".

Things are improving economically here but trends have yet to be proven over the longer term, Mr Verbraeken said.

House prices have risen faster than anticipated in 2014 but the retail and hospitality sectors are struggling, he added.

The bank took €47m in impairments - money set aside to cover losses - on its boom era business and home loans in the three months to the end of September.

That compared to €98m in the same period last year.

Two thirds of the write downs related to business loans and one third is connected to mortgages, Mr Verbraeken said.

KBC Ireland will launch a new suite of personal investment products on Monday, as the bank seeks to broaden its retail offering. The plan is to use KBC's existing network of branches, digital outlets and call centres to distribute products linked to parent KBC Group's €100bn asset management business.

KBC Ireland reported a loss after tax and impairments of €14m for the three months to the end of September, compared to a loss of €51m in the same period last year.

Mr Verbraeken said the new investment products are being introduced partly in response to low interest rates, which are pushing down returns on ordinary savings.

Belgium-based KBC Group reiterated yesterday that a decision on the future of its Irish unit will be taken after a return to profit, expected to be in 2016.


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