Johan Thijs, Chief Executive Officer
At the end of 2021, the macroeconomic and financial outlook remains challenging as the pandemic heads into its third year. However, progress in booster vaccination and antiviral treatment in many countries may mitigate extreme overburdening of the healthcare systems and hence avoid the need for comprehensive and long lasting lockdowns. From the start of this crisis, we have taken responsibility for safeguarding the health of our staff and customers, while ensuring that services continue to be provided (with our digital assistant Kate convincing and supporting more and more customers). We have also worked closely with government agencies to support all customers impacted by the coronavirus, implementing various measures such as loan payment holidays.
Meanwhile, we continued to implement our strategy, including the further optimisation of our geographic presence. In the fourth quarter of 2021, we reached an agreement to acquire the Bulgarian operations of Raiffeisen Bank International. This investment into a high-quality business with an excellent reputation will allow us to further strengthen our leading position in the Bulgarian financial market. Raiffeisenbank’s (Bulgaria) clear focus on innovation and digitalisation, combined with a high customer satisfaction rating, mirrors our own Digital First strategy. Acquiring Raiffeisenbank (Bulgaria) is another testimony to our commitment to the Bulgarian market and our support to the Bulgarian economy. Closure of the deal is subject to regulatory approval and will reduce our common equity ratio by approximately 1.0 percentage points upon closing, which is expected by mid-2022.
On the sustainability front, we continue to play an active role in the transition to a low-carbon economy by working together with all our stakeholders, also demonstrated by the extended assessment of our policy and performance. KBC wants to minimise its negative impact on society as much as possible by applying strict policies and guidelines and reducing our own environmental footprint. As announced at the end of October, KBC will no longer provide credit, advice or insurance for the exploitation of new oil and gas fields. We have also started offsetting our remaining greenhouse gas emissions to reach net-climate neutrality with respect to our direct footprint. At the same time, we are committed to gradually increasing the share of renewable energy sources in the total energy loan portfolio to at least 65% by 2030 at the latest. We continue to focus on activities with a positive sustainability and climate impact, and have, among other things, issued a third Green Bond at the beginning of December to finance projects that have a positive impact on the environment by reducing greenhouse gas emissions and promote the sustainable use of resources and land. Last but not least, KBC converted its two remaining Belgian pension savings funds into SRI funds, in accordance with the KBC in-house developed, well-proven and externally validated SRI framework.
As regards our financial results, we generated a net profit of 663 million euros in the last quarter of 2021. Total income benefited from higher net interest income, higher non-life insurance result and higher net fee and commission income, which was partly offset by the lower trading and fair value result, and lower net other income. Costs, excluding bank taxes, consolidation scope changes and one-offs ended in line with our full-year 2021 guidance of slightly below a 2% increase. Loan loss impairment contributed positively to the result, as previously recorded impairment charges for the coronavirus crisis were partly released. Adding the result for this quarter to the one for the first nine months of the year brings our net profit for full-year 2021 to 2 614 million euros.
For full-year 2021, our Board of Directors has decided to propose to the General Meeting of Shareholders in May of this year a final gross dividend of 7.6 euros per share, bringing the total gross dividend to 10.6 euros per share. This includes a dividend of 2.0 euros per share related to accounting year 2020 (already paid in November 2021), an ordinary dividend of 4.0 euros per share related to accounting year 2021 (of which an interim dividend of 1.0 euro per share was already paid in November 2021 and the remaining 3.0 euros per share is to be paid in May 2022) and an extraordinary dividend of 4.6 euros per share (to be paid in May 2022). If approved, it will lead to a fully loaded common equity ratio (after capital distribution) of 15.5%, in line with our announced capital deployment plan for full-year 2021. The pay-out ratio (including AT1 coupon) amounts to approximately 66% based on the proposed ordinary dividend of 4 euros per share related to accounting year 2021 and 139% based on the proposed total dividend of 8.6 euros per share (ordinary plus extraordinary dividend). As of full-year 2022, the pay-out ratio of at least 50% of consolidated profit will be maintained and capital above 15.0% fully loaded common equity ratio will be considered for distribution to the shareholders, at the discretion of the Board of Directors when announcing the full year results (fullyear 2022 results will be announced on 9 February 2023).
Lastly, we have also updated our three-year financial guidance. Between 2021 and 2024, we are aiming to achieve a compound annual growth rate of approximately 4.5% for total income and approximately 1.5% for operating expenses (excluding bank taxes). Furthermore, we also want to achieve a combined ratio below or equal to 92%.
In closing, I would like to take this opportunity to explicitly thank all stakeholders who have continued to put their trust in us. I also wish to express my utmost appreciation to all our staff, who have continued to serve our customers and support the sound functioning of the group in these challenging times.
* This news item contains information that is subject to the transparency regulations for listed companies.