Johan Thijs, Chief Executive Officer
Five and a half months have now passed since Russia invaded Ukraine and unfortunately the war still shows no sign of ending. The tragedy unfolding in Ukraine is causing immense human suffering and sending shockwaves throughout the global economy. We express our heartfelt solidarity with all victims of this conflict and we hope that a respectful, peaceful and lasting solution can be achieved as soon as possible. While our direct exposure to Ukraine, Belarus and Russia is very limited, we are of course indirectly affected by the macroeconomic impact of this conflict and other geopolitical and emerging risks, including the effect of high gas and oil prices on inflation and economic growth, and the spillover effects for us, our counterparties and our customers. Given this situation, we have further increased our dedicated reserve for geopolitical and emerging risks, bringing it to 268 million euros at the end of the quarter under review.
Considering these adverse context developments, the past few months have also seen us make further progress in implementing our strategy. As regards the strengthening of our position in our core markets, for instance, we finalised the acquisition of the Bulgarian activities of Raiffeisen Bank International. Raiffeisenbank Bulgaria and our existing Bulgarian subsidiary UBB will merge their operations, allowing us to significantly expand the share of our Bulgarian core market to an estimated 19% in terms of assets. I would like to take this opportunity to warmly welcome all of the new Bulgarian customers and new colleagues who are joining our group. We also took important steps in our digitalisation journey. For example, a year and a half after the successful launch of Kate, the personal digital assistant, we are once again taking the lead in innovation by rolling out the Kate Coin, our proprietary digital coin based on blockchain technology. Private KBC customers in Belgium will soon be able to earn Kate Coins and use them through their Kate Coin wallet in KBC Mobile. Everything takes place in a closed-loop environment, outside of which the Kate Coin has no value. This initiative will initially be implemented within the KBC banking and insurance environment, but over time a whole world of possibilities will open up for application in the wider ecosystem. The first concrete steps are now being taken within KBC in Belgium, and we will eventually roll out the Kate Coin throughout the entire group.
As regards our financial results, we posted an excellent net profit of 811 million euros in the quarter under review. Quarter-on-quarter total income was more or less stable, with the increases in net interest income, technical insurance income, dividend income and net other income being offset by lower trading & fair value income and net fee and commission income. Costs decreased significantly due to the fact that the bulk of the bank taxes for the full year had been recorded in the previous quarter (apart from a new additional tax in Hungary that was booked in the quarter under review). We recorded a small net increase in loan loss impairment, as limited net charges for individual loans (virtually all of which related to the sale transaction in Ireland) and an increase in the reserve for geopolitical and emerging risks were almost entirely offset by the full reversal of the remaining reserve for the coronavirus crisis. Our solvency position remained very solid with a common equity ratio of 15.9% on a fully loaded basis, and our liquidity position was excellent, as illustrated by an NSFR of 142% and an LCR of 158%. In line with our general dividend policy, we will pay out an interim dividend of 1 euro per share in November 2022 as an advance on the total dividend for financial year 2022.
Lastly, our ultimate goal remains to be the reference bank-insurer in all our home markets, thanks to our customer-centric business model and, even more importantly, based on the trust that our customers, employees, shareholders and other stakeholders place in us. That continued trust is truly appreciated and something I wish to thank you for.’
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