KBC Bank Ireland has reported a €864 million loss for 2013, compared to €306 million a year earlier as loan impairment costs rose.

The Belgian-owned bank said it had loan impairment costs of €1.06 billion last year, up from €547 million in 2012. In a statement the bank said it had taken a conservative approach to impairments by providing for an extra €671 million in impairment costs in the final quarter of 2013.

KBC said it currently expects loan loss provisions this year to be in the €150 million to €200 million range before reducing to between €50 million and €100 million in 2015 and 2016.

It said its Tier 1 Capital ratio stood at 12.2 per cent at the end of 2013.

The bank predicted a return to profit by 2016 as it continues to expand its retail operations. KBC said it attracted an additional 34,000 new customers last year, while deposits have risen by €2.9 billion.

KBC said it intends to increase employee numbers by 200 this year.

"Financial results are in line with the projection issued in November 2013 including a significant effort to evolve the credit grading and the provisioning levels for impaired loans. This is in light of an assessment of assumptions related to the macro-economic environment, customer behaviour and changes in regulatory guidelines," said Wim Verbraeken, chief executive of KBC Bank Ireland

"With the strength and support of KBC Group, we continue to successfully implement our retail banking strategy and expand our presence in Ireland. We have grown our employee base by 150 people in the last twelve months and expect to increase the number of employees by 200 in 2014," he added.

The KBC Group, which is head-quartered in Brussels, recorded an adjusted net profit of €960 million in 2013.