- Net interest income decreased by 2% quarter-on-quarter but was up 7% year-on-year. The net interest margin for the quarter under review amounted to 2.04%, down 7 basis points on the previous quarter and up 14 basis points on the year-earlier quarter. Loan volumes were up 1% quarter-on-quarter and 2% year-on-year. Deposits excluding debt certificates (and also excluding volatile low-margin short-term deposits at KBC Bank's foreign branches as they are driven by short-term cash management opportunities) were down 3% both quarter-on-quarter and year-on-year, due largely to the outflow of deposits caused by the issuance of a 1-year State Note in Belgium. Volume growth figures were calculated on an organic basis (excluding changes in the scope of consolidation and forex effects).
- The insurance service result (insurance revenues before reinsurance - insurance service expenses before reinsurance + net result from reinsurance contracts held) amounted to 138 million euros (compared to 122 million euros and 102 million euros in the previous and year-earlier quarters, respectively) and breaks down into 81 million euros for non-life insurance and 58 million euros for life insurance. The non-life combined ratio for the first nine months of 2023 amounted to an excellent 85%, compared to 87% for full-year 2022. Non-life insurance sales increased by 11% year-on-year, while life insurance sales were down 40% on the high level in the previous quarter and up 13% on the level recorded in the year-earlier quarter.
- Net fee and commission income was up 1% and 6% on its level in the previous and year-earlier quarters, respectively. Fees for our asset management activities were down slightly quarter-on-quarter (-1%), while banking services-related fees were up 2%, due largely to one-off securities-related fees received on the sale of the State Note in Belgium. Year-on-year, fees for both our asset management activities and our banking service activities increased by 5%.
- Trading & fair value income was down 50% on the high level recorded in the previous quarter but was up 65% year-on-year. Net other income was slightly below its normal run rate. Dividend income was down on the previous quarter’s level, as the second quarter traditionally includes the bulk of dividend income for the full year.
- Operating expenses including bank and insurance taxes were down 1% on their level in the previous quarter and up 6% on their year-earlier level. The cost/income ratio for the first nine months of 2023 came to 48%, compared to 49% for full-year 2022. In that calculation, certain non-operating items have been excluded and bank and insurance taxes spread evenly throughout the year. Excluding all bank and insurance taxes, the cost/income ratio for the first nine months of 2023 amounted to 41%, compared to 45% for full-year 2022.
- The quarter under review included a 36-million-euro net loan loss impairment charge, compared to a net release of 23 million euros in the previous quarter and a net charge of 79 million euros in the year-earlier quarter. The credit cost ratio for the first nine months of 2023 amounted to 0.00%, compared to 0.08% for full-year 2022. Impairment on assets other than loans amounted to 27 million euros in the quarter under review, compared to 31 million euros in the previous quarter and 23 million euros in the year-earlier quarter. Our liquidity position remained strong, with an LCR of 157% and NSFR of 139%. Our capital base remained robust, with a fully loaded common equity ratio of 14.6% (which already includes the full impact of the share buyback programme and the increase in net risk-weighted assets related to the ECB review, as announced in August 2023).
Johan Thijs, CEO KBC Group: We recorded an excellent net profit of 877 million euros in the third quarter of 2023. Compared to the result of the previous quarter, our total income benefitted from several factors, including better insurance results and a slightly higher level of net fee and commission income, though these were offset by lower levels of net interest income, trading and fair value income and dividend income (following the traditional peak in the previous quarter). Costs, including bank and insurance taxes, were down slightly quarter-on-quarter, while impairment charges went up. Consequently, when adding up the results for the first three quarters of the year, our net profit amounted to 2 725 million euros, up 30% year-on-year.
Our loan portfolio continued to expand, increasing by 2% compared to a year ago, with growth being recorded in each of the group’s core countries. Customer deposits were down 2% year-on-year, as they were largely affected by deposit outflows caused by the issuance of the retail State Note (‘Staatsbon’) in Belgium at the start of September 2023.
On 11 August 2023, we started implementing our share buyback programme of 1.3 billion euros, which we announced in the previous quarter. By early November 2023, we had bought back approximately 5 million shares for a total consideration of around 0.3 billion euros. The share buyback is planned to run until 31 July 2024. In line with our general dividend policy, we will also pay out an interim dividend of 1 euro per share on 15 November 2023 as an advance on the total dividend for financial year 2023.
Our solvency position remained solid, with a fully loaded common equity ratio of 14.6% at the end of September 2023, which already fully incorporates the effect of the share buyback programme of 1.3 billion euros and the net increase in risk-weighted assets following the ECB’s model review, as announced in August. Our liquidity position remained excellent, as illustrated by an NSFR of 139% and LCR of 157%.
Lastly, it gives me great pleasure to announce that the independent international research agency Sia Partners has once again named KBC Mobile the best mobile banking and insurance app in Belgium. KBC Mobile has further consolidated the leading position it held last year and secured a top-three position worldwide. And to top things off, Sia Partners also awarded our app with the title of best user experience for car and home insurance. In that respect, I’d like to sincerely thank all our employees for their contribution to our group’s continued success. I also want to thank all our customers, shareholders and all other stakeholders for their trust and support, and assure them that we remain committed to being the reference in bank-insurance and digitalisation in all our home markets.
In attachment you can find the full press release.
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