KBC Group: Second-quarter result of 793 million euros

Outside trading hours - Regulated information*

  • Commercial bank-insurance franchises in our core markets performed very well in the quarter under review.
  • Net interest income increased by 2% and 1% compared to the previous and year-earlier
    quarters, respectively. The net interest margin for the quarter under review amounted to 1.79%, up 1 basis point on the previous quarter and down 3 basis points on the year-earlier quarter. Volumes continued to increase, with deposits including debt certificates growing by 4% quarter-on-quarter and 14% year-on-year, and loans up 2% quarter-on-quarter and 3% year-on-year. These figures were calculated on an organic basis (excluding the acquisition of OTP Banka Slovensko and any forex effects).
  • The volume of loans that were granted payment holidays under the various relief schemes amounted to 12.7 billion euros (including EBA-compliant moratoria and the no longer EBA-compliant scheme in Hungary). As a large part of the EBA-compliant moratoria have meanwhile expired, loans still falling under them decreased by 95% by the end of June 2021. For 97% of loans under meanwhile expired EBA-compliant moratoria, payments have resumed.
  • Technical income from our non-life insurance activities (premiums less charges, plus the ceded reinsurance result) was down 6% and 14% on the level recorded in the previous and year-earlier quarters, respectively, due essentially to higher technical charges. The combined ratio for the first six months of 2021 amounted to an excellent 82%. Sales of our life insurance products were up 5% on the level recorded in the previous quarter and down 12% on the high level recorded in the year-earlier quarter.
  • Net fee and commission income was up 2% on its level in the previous quarter and by as much as 16% on the year-earlier quarter. In both cases, this was accounted for by an increase in fees for our asset management activities and banking services.
  • The trading & fair value result was down 77% and 89% on its level in the previous and year-earlier quarters, respectively.
  • All other income items combined were 11% and 24% lower than the figure recorded in the previous and year-earlier quarters, respectively. Note that the second quarter traditionally includes the bulk of the dividend income received for the year.
  • Costs excluding bank taxes (the bulk of which are recorded in the first quarter of the year and hence distort the quarter-on-quarter comparison), were up 5% quarter-on-quarter and 7% year-on-year. The comparison is also distorted by a number of items, including the booking of an exceptional Covid-related bonus for staff in the quarter under review, forex effects and, for the year-on-year comparison, by the effect of the consolidation of OTP Banka Slovensko. The resulting cost/income ratio for the first half of 2021 amounted to 54%. In that calculation, certain non-operating items have been excluded and bank taxes spread evenly throughout the year. Excluding all bank taxes, the cost/income ratio amounted to 49% in the first half of 2021.
  • The quarter under review included a 130-million-euro net release of loan loss impairment, compared to a net release of 76 million euros in the previous quarter, and a net charge of 845 million euros in the year-earlier quarter (with the bulk of that figure relating to collective impairment charges for the coronavirus crisis). As a consequence, the credit cost ratio in the first half of 2021 amounted to -0.22%, compared to 0.60% for full-year 2020 (a negative sign implies a positive impact on the results).
  • Our liquidity position remained strong, with an LCR of 166% and NSFR of 152%. Our capital base remained equally as robust, with a fully loaded common equity ratio of 17.5% (under ECB rules, this does not include the interim profit for the first two quarters).
 See the full press release in attachment.​​

Johan Thijs, Chief Executive Officer

In many countries, the large-scale rollout of vaccines that started in the first quarter of 2021 is now running at full speed. While caution is still paramount, the general feeling is one of anticipation for a long-awaited, full resumption of social activities, and optimism for a worldwide economic recovery. From the start of this crisis almost a year and a half ago, we have taken responsibility in safeguarding the health of our staff and customers, while ensuring that services continue to be provided. We have also worked closely with government agencies to support all customers impacted by the coronavirus, implementing various measures such as loan deferrals. Besides the turmoil caused by the coronavirus crisis, various areas in Europe have been hit by recent extreme weather conditions. Parts of the Czech Republic were hit by a tornado in June, while a number of Belgian provinces recently suffered the devastating consequences of heavy flooding. Our thoughts are very much with the thousands of people who have been affected by these disasters.

More than ever, we believe that the world emerging from these crises has to be a more sustainable one and we are working tirelessly towards that scenario and are fully committed to put climate change at the top of our agenda. In that respect, following the gradual reduction in our direct exposure to the thermal coal sector since 2016, we completely eliminated our remaining direct exposure to coal in June 2021, a good six months ahead of our own schedule. At the same time, we are continuing our efforts to support investments in green energy infrastructure. In the past quarter, for example, we signed an important new project financing transaction for the first Belgian subsidy-free wind farm in Ghent. This fits into our overall target of expanding our share of renewables to 65% of our energy loan portfolio by 2030.

As regards our financial performance in the past quarter, we delivered an excellent net result of 793 million euros. Total income fell somewhat quarter-on-quarter, due primarily to a lower trading and fair value result. Net interest income and net fee and commission income, however, increased quarter-on-quarter, as did our earned non-life insurance premiums and life insurance sales. Costs decreased significantly, as the bulk of bank taxes for the full year had been recorded in the previous quarter. Lastly, we were able to reverse a significant amount of previously booked loan loss impairment charges. Our solvency position remained very strong, with a common equity ratio of 17.5% on a fully loaded basis. It is the intention of our Board to distribute, in November 2021, an additional gross dividend of 2 euros per share for financial year 2020 and – in line with our general dividend policy – pay an interim dividend of 1 euro as an advance on the total dividend for financial year 2021.

In closing, I would like to take this opportunity to thank all stakeholders who have continued to put their trust in us. I especially wish to express my appreciation to all our staff who have also ensured that our group has been able to operate solidly and efficiently in these challenging times and was able to continue providing high-quality services to our customers. We will reflect that appreciation by providing an exceptional Covid-related bonus to all staff as recognition of their unrelenting efforts in ensuring that our group remains the reference in bank-insurance in all our home markets.

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

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Viviane Huybrecht General Manager KBC Corporate Communication / Spokesperson
Viviane Huybrecht General Manager KBC Corporate Communication / Spokesperson
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