KBC Group: Fourth-quarter result of 621 million euros

Outside trading hours - Regulated information*

Thursday, February 14, 2019  

• Excellent performance delivered by the commercial bank-insurance franchises in our core markets and core activities.
• Lending volumes were up 1% quarter-on-quarter and 5% year-on-year (disregarding the sale of part of the Irish loan book). Deposits (excluding debt certificates and repos) were flat quarter-on-quarter and up 5% year-on-year, with year-on-year increases in all business units.
• Net interest income was up 3% quarter-on-quarter and 2% year-on-year (on a comparable basis). It benefited from a number of factors, including good loan volume growth, higher interest rates in the Czech Republic and lower funding costs, but continued to suffer from pressure on loan margins and low reinvestment yields in our euro area core countries.
• Technical income from our non-life insurance activities was up 31% compared to the year-earlier quarter, as higher earned premiums and lower technical charges were only slightly offset by the lower result from ceded reinsurance. The combined ratio for full-year 2018 amounted to an excellent 88%, fully in line with the figure recorded for full-year 2017. Sales of our life insurance products were up 33% on their level in the previous quarter but down 13% on their level in the fourth quarter of 2017.
• On a comparable basis, our net fee and commission income was down 4% quarter-on-quarter and 11% year-on-year due to a major downturn of the financial markets. In both cases, this came about mostly because of lower asset management-related fees, resulting from lower AuM volumes and a more defensive asset allocation.
• All other income items combined were down 37% quarter-on-quarter, owing to lower trading and fair value income, notwithstanding a higher level of other net income (the fourth quarter was positively impacted by the settlement of legacy legal cases) and slightly higher dividend income. On a comparable basis, all other income items combined were down 21% year-on-year, due primarily to lower trading and fair value income, which was partly offset by higher other net income as the reference quarter had been impacted by a provision of 61.5 million euros set aside for the industry-wide review of tracker rate mortgage products originated in Ireland before 2009.
• Costs excluding bank taxes were virtually stable quarter-on-quarter, because of reduced staff expenses and lower one-off costs, offset by seasonally higher ICT expenses, higher professional fees and higher depreciation and amortisation costs. There was even a decrease of 3% year-on-year, due mainly to lower marketing expenses. When certain non-operating items are excluded, the cost/income ratio amounted to 57% for full-year 2018, compared to the 55% recorded for full-year 2017.
• The quarter included a 30-million-euro increase in loan loss impairment, mainly in Belgium due to a number of corporate loans. Our cost of credit for full-year 2018 amounted to a very favourable -0.04% (a negative figure indicates a positive impact on the results), compared to -0.06% for full-year 2017. Excluding Ireland, the credit cost ratio would have been 0.03%, compared to 0.09% for full-year 2017.
• Our liquidity position remained strong, as did our capital base, with a common equity ratio of 16% (fully loaded, Danish compromise). Our leverage ratio amounted to 6.1% at year-end 2018.

See the full press release in attachment.​​