Dáil Éireann Debate, Tuesday - 3 December 2013
56. Deputy Pearse Doherty asked the Minister for Finance his views on the recent announcement by KBC Ireland that it expects to provide up to €775 million for loan losses in the fourth quarter of 2013, bringing its total 2013 provision for loan losses to €1.1 billion compared with €525m in 2010, €510 million in 2011 and €547 million in 2012. [51327/13]
View answerKBC released their third quarter financial performance statement and report on 14 November. In this report, KBC stated that, in light of a paper by the European Banking Association on forbearance and non-performing loans as well as the upcoming asset quality review in 2014, they are reassessing their Irish loan book and expect to add additional provisions due to the reclassification of €2 billion worth of restructured mortgage loans. They are also increasing provisions in the corporate loan book because of the slow recovery of the SME sector in Ireland. The expected impairment charge in Ireland is now up to 775 million euros in the fourth quarter of this year.
Their guidance for loan loss provisions in Ireland is 150 to 200 million euros for 2014 and 50 to 100 million euros for each of 2015 and 2016.
I think that it is important to bear in mind that the increased expected impairment charge is as a result of a reassessment of the KBC loan book and therefore the total for 2013 is not directly comparable to previous years. Obviously such a large impairment charge is not welcome but it is necessary that the bank recognises and provides for likely losses.
