16 Nov 2018
EU’s PSD2 payment services directive provides new opportunities in open-banking
KBC Bank's Irish subsidiary has said it will roll out the first open-banking app in the Irish marketplace next month, allowing users to manage bank accounts with multiple institutions via a single application, using the opportunity afforded by the EU's PSD2 payment services directive to appeal to customers of other banks.
KBC’s multi-banking app should give the challenger-style bancassurer offering which KBC operates via in Ireland a further boost after opening up 60,000 new customer accounts in the first nine months of 2018. KBC Ireland yesterday reported a net profit of €33.6m after tax for Q318, supported by new mortgage lending of €662m in the 9M18 period, this representing a c.11% market share of all new lending. The bank also said it has no plans to sell any further portfolios of NPLs in Ireland once the already announced €1.9bn BTL NPL disposal closes in Q418.
Irish Economy: Trade surplus slides in September
Goods Exports and Imports data released yesterday by the CSO show that the seasonally adjusted trade surplus fell to just below €3bn in September (a 15 month low) from August’s €3.6bn outturn. This was driven by imports, +9% m/m to €8.5bn, as exports were flat at c. €11.5bn. Of course, due to the nature of much of Ireland’s merchandise trade (expensive pharma-chemical products, aircraft), these data can be volatile on a monthly basis. Unadjusted data for the first nine months of the year show a trade boom, with exports (€103.4bn); imports (€65.4bn); the trade surplus (€38.0bn) all +12% y/y. In terms of regional trade, we note that year to date exports to Great Britain are -5% y/y in the first nine months of the year.
This is driven by the multinational sector (particularly pharmaceuticals), with underlying trade showing positive trends e.g. exports of food and manufactured goods are +1% y/y and +5% y/y respectively. Our sense is that the data will show a spike in headline Irish exports to its closest neighbour in Q4 and into the New Year due to precautionary Brexit-related stock building of items such as medicines. About 60% of Irish exports to GB are in the pharmaceutical and food & beverage headings. The double-digit rise in the trade surplus in the first nine months of 2018 is very welcome, albeit not a huge surprise. Helped by a strong contribution from net exports, we see Irish GDP +7% this year.
May fights on
Following yesterday’s political mayhem, overnight news has been relatively quiet. Theresa May remained defiant last night as she delivered a press conference defending the current deal and vowed to fight on. Note that she is set to speak again this morning at 8am on LBC radio. However the situation in government is likely to remain very uncertain, with question marks remaining over the possibility of further resignations and whether the number of letters held by Sir Graham Brady is nearing the 48 needed for a leadership challenge. On resignations, there were seven government members in total yesterday, including two Cabinet ministers. There remains a big question mark over Michael Gove, who has reportedly rejected the Brexit Minister role unless he is permitted to renegotiate the Withdrawal Treaty.
With regard to letters of no confidence in May’s leadership, we know that 17 have been submitted given public announcements but it remains to be seen how close we are to the 48 necessary to force a vote of confidence. But given previous rumours it would seem close and speculation remains as to whether more will be submitted over the weekend. As things currently stand, PM May will now push on with the draft Withdrawal Treaty and seek EU27 approval at the summit next Sunday (25 November), although with the very fluid situation in Westminster, we suspect that there will still be twists and turns to come. UK markets have been relatively steady overnight, with the benchmark EUR/GBP rate sitting steady in/around the 0.8850 level.
UK retail sales
Amidst the Brexit chaos yesterday, UK retail sales figures were weaker than expected in October, heaping further negative news on sterling. Headline retail sales witnessed a 0.5% fall month on month in October, against a market expectation of +0.2%. A positive upward revision to September offsets some of the miss, but nonetheless October’s reading is weak. Core retail sales also missed to the downside with sales recorded down 0.4% mom (consensus +0.2%). Sterling was slightly weaker following the release, but obviously there were larger influences on the market early yesterday morning, with the focus very much on Westminster and Brexit developments following the resignation of Dominic Raab.
09.00 IT Industrial Production
10.00 EC CPI
14.15 US Industrial Production
16.30 US Fed Evans speaks