Mr. Peter Roebben:

I thank the Chairman and members of the finance committee for the invitation to appear before it today. May I introduce our team, Ms Dara Deering, head of retail banking, Mr. Barry D'Arcy, our chief risk officer, Mr. Brendan Mahon, the head of our arrears solution team and myself, Peter Roebben, the chief executive officer, CEO, of KBC Bank Ireland.

We understand the importance of these hearings and of the role of members of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. As elected politicians, the members represent our customers and the people of Ireland and we appreciate this opportunity to engage with the committee. We will answer any questions following completion of my opening statement. If we do not have the answers immediately to hand, we will endeavour to secure a response in a timely manner.

I am delighted to have been appointed as CEO of KBC Bank Ireland. This country is vibrant, outward looking and ambitious for its people and places a premium on innovation, which is an exciting prospect for a bank like ours.

While I am new to Ireland and arrived at a good time, into a thriving economy and society, that does not mean I am unaware of events in Ireland’s recent banking past. I see it as essential to my mandate to show our customers that we have absorbed the lessons necessary for embedding positive change, ensuring that their needs stand at the centre of KBC’s way of doing business.

The process of change has already begun in KBC, with a comprehensive transformation plan being put into place step by step. This plan will be underpinned by the values we hold throughout KBC Group, for which we use the acronym "PEARL", which stands for performance, empowerment, accountability, responsiveness and local embeddedness. This means that in KBC, we embrace the diversity of our teams and customers in all our local markets. I recently had the pleasure of meeting the chairman of the Irish Banking Culture Board, the retired judge Mr. Justice John Hedigan, with whom I was extremely impressed. I am pleased to share with members that my colleague, Ms Dara Deering, will be representing KBC on that recently established board.

My experience has taught me that for cultural change to be credible and sustainable, it takes time, hard work and one must have a clear horizon to move towards. It starts at the top but must ultimately engage every last member of our staff. It also requires that all financial institutions work together towards that horizon with the common goal of rebuilding trust in the sector. It is my intention that KBC Bank Ireland fully embraces Irish society’s call for change.

KBC represents choice in Irish banking. We are committed to making banking as easy as possible for Irish people. Customer needs are changing rapidly. We understand this, which is why we are combining customer service with unrivalled digital capabilities to deliver an unique, innovative and transparent banking experience. We provide the kind of ease and convenience for which people are looking, so they can get on with living their lives.

We are building a model of banking of the future with customer ease at the heart of it. The recent launch of KBC multi-banking, means that customers of KBC can now check the balance of current accounts held with other Irish banks through their mobile app. We are the only bank to have opened our banking app to third parties through the digital walls of external providers. We were the first to the market with the recently launched two socially responsible investment funds, SRI. These funds are designed to balance environmental and social good and offer more investment opportunities to socially conscious consumers in Ireland. For customers seeking person-to-person interaction, our KBC hubs have longer, more customer friendly opening hours, and our contact centre is available 24-7, 365 days in the year. We are stepping up to extend this innovative approach with a KBC business banking service specifically designed for micro-SMEs in Ireland.

Our recently-published first quarter results tell a positive story about the choice we offer in the market. More than 18,000 new customer accounts were added in the first three months of the year, bringing total customer numbers to just under 300,000. We disbursed some €216 million in new mortgage lending, which represented an increase of 9% year on year. The digital mobile activity on our apps increased by 50% year on year. The model works. Overall KBC Bank Ireland reported a net profit of €15 million after tax and impairments for the first quarter of this year.

These results show that customers are seeking that alternative choice in the market. The remaining non-performing loans at KBC Bank Ireland now concern primary dwelling homes. Our approach here remains as it has been for some time to reduce these non-performing loans in an organic way. In this, communication is key and every effort is made to establish and keep open communication channels with every individual customer who is experiencing difficulties meeting his or her repayments.

In my first few weeks of arriving here, I visited our arrears solutions unit - which is headed by Mr. Mahon - to gain a clear understanding of what is happening on the front line. We have a special team that looks after the most sensitive cases and I sat down with them to look through some of the cases currently at hand. When it comes to the issue of non-performing loans and arrears, I believe that we should continue to tread carefully. In every case there is a person and a person's home. We must remain conscious of the vulnerability of those who find themselves in difficulty, and behave accordingly.

All arrears cases that are related to a borrower’s principal dwelling house are afforded the benefit of the mortgage arrears resolution process as set out under the Central Bank of Ireland’s code of conduct on mortgage arrears. The success of these mortgage arrears solutions at KBC is evident in the number of arrears cases where resolution options have been implemented. In some 90% of its arrears cases, borrowers have agreed a resolution option with KBC over the years.

Resolution options remain available at any time to the constructively engaging borrower, regardless of a borrower’s history, and at all stages of the legal process. The loss of a home is a significant trauma in someone’s life. That is why we insist on repossession being an action of last resort, coming at the end of an extensive process designed to identify a solution that keeps the occupant in their home.

The tracker mortgage examination has been a top priority for KBC and we are determined to right the wrongs experienced by our customers. We do not anticipate material changes to the number of cases for redress beyond the figures that we published at the end of the first quarter.

We would like to again acknowledge our errors in relation to the administration of tracker mortgages and as newly-appointed chief executive officer, CEO, I add my sincerest apologies to those of my predecessors to those affected. I also publicly commit us to taking on board the lessons learned on behalf of our customers.

The Irish economy has begun 2019 in good stead, with domestic economic activity underpinned by strong increases in employment and an improvement in household spending power. While an emerging weakening of global economic growth will restrain Irish activity, the UK and US economies have performed better than expected of late and this has supported Irish export growth. A young, well-educated and growing population, allied to encouraging trends in the public finances, an ambitious infrastructure programme and significant foreign direct investment suggest scope for the Irish economy to remain on a healthy path in coming years.

With regard to Brexit, we can only take note of the ambiguity around the whole process. To this point, we have seen no material effect on KBC activity or our customers' relationship with us. The nature and scale of the long-term impact of Brexit on Ireland will depend on a range of factors. We remain watchful but whatever happens, I believe KBC Ireland is as ready at it can be.

In summary, KBC Bank Ireland represents choice in banking in Ireland. It is my mandate to stay in tune with changing customer needs and to innovate for more convenience and transparency, thereby continuing to grow our customer base. At the same time we are very aware of the need to stay in tune with demand for change in Irish society. That is also part of my mission. I thank the Chairman.