Belgian bank KBC set aside €195 million in loan loss provisions for its Irish division in the first quarter of 2012.

This compares to loan-loss provisions of €228 million for the previous three-months.

Loan-loss impairment stood at €261 million in the first quarter, compared to €97 million for the same period a year ago but significantly down on the €599 million recorded in the previous quarter.

In it latest quarterly figures, the bank said it injected €75 million into its Irish business during the quarter as residential mortgage arrears worsened.

Total non-performing loans increased to 20.5 per cent at the end of March, it said with Non-performing loans that are than than 90 days overdue rising to 14.8 per cent.

The group kept its guidance for total Irish loan-loss provisions of between €500 million and €600 million for the full-year.

The group today announced better-than-forecast underlying profits for the first quarter.

KBC reported a net profit of €380 million for the quarter as against a net profit of €437 million in the preceding three-months and €821 million in the same quarter a year ago.

The group said its exposure to government bonds in the euro zone periphery was further reduced to €2.8 billion at the end of April 2012, from €4.8 billion at the end of 2011.

Underlying net profit fell 31 per cent in the first quarter to €455 million.

"Our underlying result has been driven by the good results generated by our strategic banking and insurance business model on our home markets in Belgium and Central and Eastern Europe. Net interest income remained solid and insurance results remained good. The dealing rooms, in particular, had an excellent quarter," said KBC chief executive Johan Thijs.

"The quarter was also characterised by low levels of impairment. However, the result was also affected by additional loan loss provisioning in Ireland, as well as by the additional and final losses recorded on our Greek government bond position," he added.

KBC said it remained committed to repaying €4.7 billion to the Belgian government for state aid it received, plus penalties, by the end of 2013. The group paid back €500 million in December.

Additional reporting: agencies