KBC Group: First-quarter result of 458 million euros
Outside trading hours - Regulated information*
Thursday, May 12, 2022
- Net interest income increased by 2% quarter-on-quarter and by 12% year-on-year. The net
interest margin for the quarter under review amounted to 1.91%, up by 6 basis points on the
previous quarter and by 13 basis points on the year-earlier quarter. Volumes continued to
increase, with loans up by 2% quarter-on-quarter and by 7% year-on-year, and deposits
excluding debt certificates growing by 3% quarter-on-quarter and by 5% year-on-year. These
volume growth figures were calculated on an organic basis (excluding the changes in the
scope of consolidation and forex effects).
- Technical income from our non-life insurance activities (premiums less charges, plus the
ceded reinsurance result) was up by 13% on the level recorded in the previous quarter and
only slightly below the year-earlier quarter’s result. The quarter-on-quarter increase was due
essentially to lower technical charges (despite the impact of the storms in the quarter) and a
better reinsurance result. Year-on-year, the higher earned premium income and reinsurance
result was fully offset by higher technical charges (caused by the above-mentioned storm
impact, and relatively low charges in the reference quarter related to the coronavirus
situation). The combined ratio for the first three months of 2022 amounted to an excellent
83%. Sales of our life insurance products were more or less in line with the level recorded
in the previous quarter, and up by 16% on their level in the year-earlier quarter.
- Net fee and commission income was up slightly (by 1%) on its level in the previous quarter,
and by as much as 9% on its year-earlier level. The latter increase was due mainly to higher
fees for our asset management activities and higher fee income related to our banking
- The trading & fair value result amounted to 143 million euros, as opposed to -39 million
euros in the previous quarter and 127 million euros in the year-earlier quarter. The large
quarter-on-quarter increase was mainly the result of significantly higher dealing room income
and the less negative market value adjustments of derivatives used for asset/liability
- Costs in the first quarter traditionally include the bulk of bank taxes (514 million euros) for the
full year. Excluding these taxes, costs were down 2% on their level in the previous quarter
and up 12% on their year-earlier level. The quarter under review included the booking of an
extraordinary staff bonus. The resulting cost/income ratio for the first three months of 2022
amounted to 53%. In that calculation, certain non-operating items have been excluded and
bank taxes spread evenly throughout the year. Excluding all bank taxes, the cost/income ratio
amounted to 48%.
- The quarter under review included a 15-million-euro net release of loan loss impairment,
compared to a net release of 62 million euros in the previous quarter, and a net release of 76
million euros in the year-earlier quarter. The net release in the quarter under review resulted
mainly from the reversal of a large portion of the remaining impairment for the coronavirus
crisis (-205 million euros) and of impairment for certain individual loans (-33 million euros),
offset to a large extent by provisioning for geopolitical and emerging risks following the
outbreak of the Ukraine crisis (+223 million euros). As a consequence, the credit cost ratio
for the first three months of 2022 amounted to -0.03%, compared to -0.18% for full-year 2021
(a negative sign implies a positive impact on the results).
- Our liquidity position remained strong, with an LCR of 162% and NSFR of 149%. Our
capital base remained equally as robust, with a fully loaded common equity ratio of 15.3%.
See the full press release in attachment.
Johan Thijs, Chief Executive Officer
‘Just when the pandemic-related concerns had started to ease in some countries thanks to the gradual abolishment of precautionary measures, Russia invaded Ukraine in February. The tragedy unfolding in Ukraine has caused immense human suffering and we express our heartfelt solidarity with all the victims of the conflict, both those in the region itself and the large number of refugees in various guest countries in Europe.
The brutal invasion is sending shockwaves throughout the global economy. Our direct exposure to Ukraine, Belarus and Russia (a mainly commercial exposure of some 55 million euros) is quite limited, but we are keeping a very close eye on the indirect macroeconomic impact, such as the effect of high gas and oil prices on inflation and economic growth, and on spillover effects for us, our counterparties and our customers, both financially and operationally, including a heightened focus on information security threats. In that respect, we decided to set aside a dedicated impairment amount to cover geopolitical and emerging risks (see below).
While the ongoing war in Ukraine still clearly commands our full attention, we have continued to manage our day-to-day business and also take further steps towards realising various strategic goals. At the beginning of February, for instance, we were able to finalise the sale of substantially all of KBC Bank Ireland’s non-performing mortgage loan portfolio. As regards sustainability, we again made further progress, including realising our goal of systematically rolling out responsible investing funds in all our core countries when we recently launched these solutions in Bulgaria. We would also invite you to read about our sustainability approach, our achievements and our commitments in our 2021 Sustainability Report, which we published in early April and is available at www.kbc.com. As far as new initiatives in the field of digitalisation are concerned, it is worthwhile mentioning that we took a first step in commercialising our in-house portfolio of Artificial Intelligence applications, with the launch via our fintech subsidiary DISCAI of an AI application designed to combat money laundering. DISCAI will pursue a gradual go-to-market approach and will work with partners for the distribution and integration of these applications.
As regards our financial results, the year got off to a strong start, with a net profit of 458 million euros being posted in the quarter under review. This is an excellent performance given that the bulk of bank taxes for the full year are recorded – as always – upfront in the first quarter of the year. All the main income items performed well. Our costs were kept under control and included a one-off extraordinary bonus for our staff to reward them for the very good 2021 results despite the difficult conditions caused by corona. We were also able to record a small net reversal of loan loss impairment in the quarter under review, as the amount we set aside to cover geopolitical and emerging risks was more than offset by the combination of a reversal of a large portion of the impairment recorded previously for the coronavirus crisis and by net reversals for other individual files. As a result, our combined reserves for the coronavirus crisis and for geopolitical and emerging risks now amount to 273 million euros. Our solvency position remained very solid with a common equity ratio of 15.3% on a fully loaded basis and our liquidity position was excellent, as illustrated by an NSFR of 149% and an LCR of 162%. As announced earlier, we will today pay out a gross final dividend of 7.6 euros per share, bringing the total gross dividend to 10.6 euros per share.
The last few years have also demonstrated that, even in continuously challenging circumstances, we can build on our solid foundations and policy decisions of the past and, perhaps even more importantly, build on the trust that our customers, employees, shareholders and other stakeholders place in us. That is something I would sincerely like to thank you for.’
* This news item contains information that is subject to the transparency regulations for listed companies.