KBC Group: First-quarter result of 506 million euros

• Net interest income increased by 1% quarter-on-quarter and by 3% year-on-year. The net interest margin for the quarter under review amounted to 2.08%, up 9 basis points on the previous quarter and 4 basis points on the year-earlier quarter. Loan volumes were up 1% quarter-on-quarter and 4% year-on-year. Deposits excluding debt certificates were up 1% quarter-on-quarter and 1% year-on-year. 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 134 million euros (compared to 100 million euros and 110 million euros in the previous and year-earlier quarters, respectively) and breaks down into 94 million euros for non-life insurance and 41 million euros for life insurance. The non-life combined ratio for the first quarter of 2024 amounted to an excellent 85%, compared to 87% for full-year 2023. Non-life insurance sales increased by 9% year-on-year, while life insurance sales were up 12% on the level recorded in the previous quarter and by as much as 60% on the level recorded in the year-earlier quarter.

• Net fee and commission income was up 2% and 7% on its level in the previous and year-earlier quarters, respectively. Fees for our asset management activities were up 5% quarter-on-quarter, while banking services-related fees were down 2% mainly due to seasonal effects. Year-on-year, fees for our asset management activities increased by 11% and fees for our banking activities decreased by 1%.

• Trading & fair value income and insurance finance income and expense was down 15 million euros on the figure for the previous quarter and 79 million euros on the level recorded in the year-earlier quarter. Net other income was slightly above its normal run rate.

• Operating expenses excluding bank and insurance taxes were down 9% on their level in the previous quarter and 1% on their year-earlier level. The first quarter of the year traditionally includes the bulk of the bank and insurance taxes for the full year (518 million euros in the first quarter of 2024). The cost/income ratio for the first quarter of 2024 came to 46%, compared to 49% for full-year 2023. In that calculation, certain non-operating items have been excluded and bank and insurance taxes evenly spread throughout the year. Excluding all bank and insurance taxes, the cost/income ratio for the first quarter of 2024 amounted to 43%, the same level as for full-year 2023.

• The quarter under review included a 16-million-euro net loan loss impairment charge, as opposed to a net release of 5 million euros in the previous quarter and 24 million euros in the year-earlier quarter. The credit cost ratio for the first quarter of 2024 amounted to 0.04%, compared to 0.00% for full-year 2023. Impairment on assets other than loans amounted to 0 million euros in the quarter under review, compared to 175 million euros in the previous quarter (including a 109-million-euro impairment on goodwill in the Czech Republic) and 1 million euros in the year-earlier quarter.

• Our liquidity position remained strong, with an LCR of 162% and NSFR of 139%. Our capital base remained robust, with a fully loaded common equity ratio of 14.9% (not taking into account the extraordinary interim dividend of 0.70 euros per share, the ratio would have been 15.2%).

See full press release in attachment

Johan Thijs, Chief Executive Officer KBC Group:

We recorded a net profit of 506 million euros in the first quarter of 2024. Compared to the result of the previous quarter,our total income benefited from several factors, including higher net interest income, net fee and commission income and insurance revenues, though these items were partly offset by lower levels of dividend income and trading & fair value income. Costs were up, since the bulk of the bank and insurance taxes for the full year are recorded – as usual – in the first quarter of the year. Disregarding bank and insurance taxes, costs fell by as much as 9% quarter-on-quarter and 1% year-on-year. Impairment charges too were down significantly, as the previous quarter had included a sizeable one-off impairment on goodwill.

Our loan portfolio continued to increase by 1% quarter-on-quarter and 4% year-on-year, with growth being recorded in each of the group’s core countries. Customer deposits were up 1% quarter-on-quarter and 1% year-on-year, despite the outflow of deposits triggered by the issue of the retail State Note (‘Staatsbon’) in Belgium at the start of September 2023.

We have always been at the forefront of new digital developments, the most visible example of which being our personal digital assistant Kate, which we continuously develop further with the aim of ensuring maximum convenience for our customers. To date, around 4.5 million customers have already used Kate, up more than 40% on the year-earlier figure. Moreover, the proportion of cases resolved fully autonomously by Kate continues to improve and now stands at 65% in both Belgium and the Czech Republic, up from 57% and 54% respectively a year ago.

As regards our ongoing share buyback programme of 1.3 billion euros, we had already bought back approximately 15.3 million shares for a total consideration of approximately 0.9 billion euros by the end of April 2024. The programme is planned to run until 31 July 2024.

On 15 May 2024, we paid a final dividend of 3.15 euros per share, bringing the total dividend for full-year 2023 to 4.15 euros per share. In line with our announced capital deployment plan for full-year 2023, the Board of Directors has also decided to distribute the surplus capital above a fully loaded common equity ratio of 15% (approximately 280 million euros) in the form of an extraordinary interim dividend of 0.70 euros per share on 29 May 2024.

Our solvency position remained strong, with a fully loaded common equity ratio of 14.9% at the end of March 2024 (which already fully incorporates the effect of the ongoing share buyback programme of 1.3 billion euros and the extraordinary interim dividend of 0.70 euros per share). Not taking into account the extraordinary interim dividend, our common equity ratio would have been 15.2%. Our liquidity position remained very solid too, with an LCR of 162% and NSFR of 139%.

In closing, I would like to sincerely thank all our customers, employees, shareholders and other stakeholders for their trust and support. More than anything else, that trust and support is and remains fundamental to the success of our group, now and in the future.

*This news item contains information that is subject to the transparency regulations for listed companies.

video statement www.kbc.com