KBC trading update on 4Q10 results
(Thomson Reuters ONE) -
Regulated information* - 6 January 2011 (08.00 a.m. CET)
KBC's underlying results in the fourth quarter of 2010 will be influenced by
increased provisioning for the Irish loan book and an isolated case of
irregularities at KBC Lease UK.
KBC will make additional one-off net provisions of between 315 and 330 million
EUR (depending on the exact tax impact) for these two events and wishes to
inform the market and all stakeholders about this impact in advance of the
publication of fourth-quarter earnings on 10 February 2011.
The above-mentioned events and moderate results from market activities will
impact the performance of the Merchant Banking Business Unit. However, the
underlying results from other businesses in the fourth quarter of 2010 are fully
in line with expectations. The effect of the above-mentioned events on reported
profit will not be substantial.
KBC Bank Ireland increases provisions for its loan portfolio.
Since the release of its third-quarter results on 10 November 2010, KBC has seen
a further deterioration in market conditions in Ireland.
Following the announcement of the 85 billion EUR European Union and
International Monetary Fund financial aid package for Ireland on 28 November
2010 and the consequent impact on the Irish economy, KBC Bank Ireland has
reassessed its required provisioning levels for 2010.
Although the financial aid package should reduce the risk of default by the
Irish Government, KBC also expects that the accelerated restructuring of the
Irish banks (Bank Recovery Plan) will have a negative effect on asset valuations
in the industry. Consequently, KBC has increased its provisions in respect of
its commercial lending portfolio, mainly in its relatively limited real estate
development and investment financing activities.
Moreover, any economic recovery will be slower than anticipated in November
2010 and is not expected to have a positive effect on employment levels in the
short term. The continuously high level of unemployment may cause higher arrears
and default ratios for mortgage loans to retail customers. As a result, KBC has
also increased its provisioning of its residential mortgage portfolio.
On account of these factors, KBC has decided to make additional impairments.
Fourth-quarter loan impairment provisions for Ireland will now amount to
approximately 263 million EUR net (300 million EUR gross).
KBC Bank Ireland remains a sufficiently capitalised bank.
KBC provisions for case of irregularities in KBC Lease UK
During the fourth quarter, internal controls at KBC Lease UK identified
irregularities in some of the contracts between that KBC entity and third
parties. A full and thorough review is being conducted by both the relevant
authorities and KBC's internal audit and compliance departments. At this stage
it remains premature to form final conclusions on the basis of the ongoing
investigation. KBC has appointed an external legal counsel to assist in the
investigation and is pursuing all available legal remedies against the third
parties involved in order to protect its interests.
Today, the maximum net (potential) amount of the irregularities has been
estimated at approximately 150 million EUR, depending on the exact tax impact. A
provision has been made. KBC has taken certain legal preventive measures deemed
necessary to protect its interests and to maximise its recovery and has also
filed an insurance claim aimed at recovering the amounts at risk.
KBC will announce its detailed full-year and fourth-quarter results for 2010 on
10 February, 2011.
* This news item contains information that is subject to the transparency
regulations for listed companies.
update4Q10_ENG:
http://hugin.info/133947/R/1477234/413548.pdf
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Source: KBC Groep via Thomson Reuters ONE
[HUG#1477234]
Unternehmensinformation / Kurzprofil:
Datum: 06.01.2011 - 08:01 Uhr
Sprache: Deutsch
News-ID 50242
Anzahl Zeichen: 4780
contact information:
Town:
Brussels
Kategorie:
Business News
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