Please read the attached full press release.
Financial highlights for the third quarter of 2016, compared with the previous quarter:
Both our banking and insurance franchises in our core markets and core activities continued to perform well.
Lending to our clients was up by 0.4%, with volumes going up in almost all countries. Deposits from our customers fell by 2%, as increased deposits in the Czech Republic, Slovakia and Bulgaria could not fully offset the decreases in Belgium (maturing term deposits), Ireland and Hungary.
Net interest income – our main source of income – was only marginally lower (less than 1%), thanks to support from lower funding costs, increased investments and credit volume growth. Our average net interest margin stood at 1.90% in the third quarter, down 4 basis points quarter-on-quarter.
The premium income we earned on our non-life insurance products increased by 2%, while claims fell by 7%. Consequently, the non-life combined ratio for the first nine months of the year ended up at a good 94%. However, following a strong second quarter, sales of life insurance products declined by 20%.
Our total assets under management stood at 209 billion euros, slightly up (+1%) on the level of the previous quarter, thanks to a positive price performance. Our net fee and commission income went up again, rising by 2% mainly on account of higher management fees.
Our operating expenses were down 1% on the previous quarter, due to lower bank taxes in the third quarter. The resulting cost/income ratio for the first nine months of the year stood at 57%.
The cost of credit in the first nine months of the year amounted to an excellent, but still unsustainably low 0.07% of our loan portfolio.
- Our liquidity position remained solid, and our capital base – with a common equity ratio of 15.1% (phased-in, Danish compromise) – remained well above the regulators’ target of 10.25% for 2016.
Johan Thijs, our group CEO, adds: ‘The persisting uncertainty on the financial markets together with the continuing low level of interest rates represent an increasingly unusual challenge for all financial institutions. In these uncommon circumstances, we continue to be the bank-insurer that puts its clients centre stage. They are continuing to entrust their deposits to us and count on us to help them realise and protect their projects. This quarter, lending increased again, as did the premium income earned in our non-life insurance business. We are grateful for the confidence our clients place in us and this yet again illustrates the success of our bank-insurance model.
The third quarter was characterised by an attractive level of net interest income and net fee and commission income, stable operating expenses and the continuing low cost of credit. We continue to invest in the future and are pro-actively rolling out our digitisation plans further in order to serve clients even better, while also keeping an eye on our cost/income ratio. Overall, we managed to generate a strong result of 629 million euros in this quarter.
Besides this performance, the already solid solvency and liquidity positions of our group strengthened further during the quarter, and our capital position allows us, as announced earlier, to pay an interim dividend of 1 euro per share on 18 November 2016 for the current financial year. This forms part of our new dividend policy for KBC Group, in which we will – barring exceptional or unforeseen circumstances – pay an interim dividend of 1 euro in November of each accounting year, as well as a final dividend after the Annual Meeting of Shareholders. This a reassuring signal to all the stakeholders that have put their trust in us.’
* This news item contains information that is subject to the transparency regulations for listed companies. Details of the ratios and terms used are provided at the end of the quarterly report.