Johan Thijs, Chief Executive Officer
‘In the quarter under review, we were confronted with the outbreak and spread of the coronavirus, the long-term impact of which on the economy remains quite uncertain at this moment in time. As an employer and service provider, we reacted quickly to try to safeguard the health of our staff and clients, while ensuring that services continue to be provided. As many staff as possible are working from home and we are providing our clients with advice through a wide range of phone and digital channels. We have been working hard with government agencies of our core countries to support all customers impacted by coronavirus by processing loan deferral requests promptly, and efficiently instituting other relief measures. We are clearly benefiting from the efforts and investments we have made over the past few years on the digital transformation front. These efforts and investments, along with the expertise and motivation of our employees in all our home countries and the strength of our multichannel distribution network, allow us to provide our customers with a level of service that is very close to pre-coronavirus crisis levels.
As regards our financial results, we incurred a net loss of 5 million euros in the first quarter of 2020, caused mainly by the impact of the worldwide coronavirus outbreak on our trading and fair value result and the upfront booking of bank taxes.
In the quarter under review, our trading and fair value result came to a negative 0.4 billion euros, as a result of a number of marketdriven factors, such as sharply lower stock markets, widening credit spreads and lower long-term interest rates.
The impact of the coronavirus crisis on the other profit and loss lines in the quarter under review was less pronounced. Compared to the year-earlier quarter, our core income lines, i.e. net interest income, net fee & commission income and the technical insurance result,
performed quite well. Costs were kept well under control, too. They decreased slightly year-on-year after excluding the impact of the consolidation of ČMSS, bank taxes (the bulk of the full-year amount of these taxes is usually recorded in the first quarter) and some one-off items. Loan loss provisions increased in the quarter under review and included an additional 43 million euros specifically related to the coronavirus crisis, based on our exposure to sectors we believe will be affected most by the crisis. For full-year 2020, we estimate impairments to amount to roughly 1.1 billion euros (base scenario).
Generally speaking, volumes held up well year-on-year: on a comparable scope basis, loans and advances increased by 6%, deposits by 5% and earned non-life insurance premiums by 7%. On the other hand, sales of life insurance products fell by 17% year-on-year.
Our solvency position remained very strong, with a common equity ratio of 16.3% on a fully loaded basis, well above the current minimum capital requirement of 8.05%. This minimum requirement takes into account the various announced ECB and National Banks’ measures which have provided significant temporary relief on the minimum capital requirements. Our liquidity position remained solid too, with an LCR of 135% and an NSFR of 134% at the end of March 2020. We are especially pleased that the hard work in recent years has paid off in making our group strong and healthy. As a result, our current capital and liquidity buffers allow us to face today's challenges with confidence.
Ultimately, our goal remains the same: to ensure that our customers are at the centre of everything we do, something which our employees are committed to in their day-to-day work. I wish to express my utmost appreciation to all colleagues who have expended huge efforts to serve our customers and support the sound functioning of the group from home offices and other remote locations. In closing, I would also like to take this opportunity to explicitly thank all those stakeholders who have – in these challenging times - continued to put their trust in us.’
* This news item contains information that is subject to the transparency regulations for listed companies.