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.