KBC Group: Third-quarter result of 612 million euros

Outside trading hours - Regulated information*

  • Commercial bank-insurance franchises in our core markets performed well.
  • Lending volumes were up 1% quarter-on-quarter and 4% year-on-year, with year-on-year growth recorded in all business units. Deposits including debt certificates were up 3% quarter-on-quarter and 4% year-on-year. The figures have been calculated on a ‘comparable scope’ basis.
  • Net interest income increased by 4% compared to the previous quarter and was up 3% year-on-year. In general, net interest income continued to benefit from loan volume growth, the full consolidation of ČMSS since June 2019, the increase in shortterm interest rates in the Czech Republic and lower funding costs (year-on-year). These items managed to offset the negative impact of a number of factors, including the continued pressure on loan portfolio margins and low reinvestment yields in our euro-area core countries.
  • Sales of our non-life insurance products were up 9% year-on-year. Technical income from these non-life insurance activities (premiums less charges, plus the ceded reinsurance result) was down 4% on the result for the year-earlier quarter, with higher technical charges and a lower ceded reinsurance result more than offsetting the growth in earned premiums. The combined ratio for the first nine months of the year amounted to 92%, compared to 88% for full-year 2018. Sales of our life insurance products were up 5% year-on-year, but down 12% on the level recorded in the previous quarter.
  • Net fee and commission income was up 2% and 5% on the figure recorded in the previous quarter and year-earlier quarter, respectively. Items contributing to this growth were the full consolidation of ČMSS (since June 2019), increased bankingservices- related fees and (quarter-on-quarter) somewhat higher asset-management related fees.
  • The quarter under review included very weak trading and fair value income, due to poor dealing room income and the aggregate negative impact of various market value adjustments. Moreover, both dividend income (seasonal effect) and net other income were down on their level for the previous quarter (which had benefited from the positive 82-million-euro one-off effect of the revaluation of the 55% participation in ČMSS).
  • Costs were down 1%, both quarter-on-quarter and year-onyear. When non-operating items are excluded and bank taxes evenly spread throughout the year, the cost/income ratio amounted to 59% in the first nine months of 2019, compared to 57% for full-year 2018.
  • The quarter under review included a 25-million-euro loan loss impairment charge, compared to a 36-million-euro charge in the previous quarter and a net release of impairments of 8 million euros in the year-earlier quarter. The cost of credit amounted to a benign 0.10% in the first nine months of 2019, compared to -0.04% for full-year 2018 (a negative figure indicates a positive impact on the results).
  • Our liquidity position remained strong, as did our capital base, with a common equity ratio of 15.4%, or 15.9% when including the net result for the nine months of the year, taking into account the payout ratio of 59% (dividend + AT1 coupon) for full-year 2018. Our leverage ratio amounted to 6.0% at the end of September 2019.
See the full press release in attachment.​​  


Johan Thijs, Chief Executive Officer

We generated a net profit of 612 million euros in the third quarter of 2019. Compared to the previous quarter, the quarter under review was characterised by higher net interest income and net fee and commission income, a virtually stable level of technical income from our insurance activities and a decrease in both costs and loan loss impairments. On the other hand, trading and fair value income was very weak due mainly to poor dealing room income, dividend income was seasonally lower and there was a significant drop in net other income. The latter development came about because the previous quarter had benefited from an 82-million-euro gain related to the acquisition of the remaining 45% stake in the Czech building savings bank, ČMSS.

Adding the third-quarter result to the 1 175 million euros recorded in the first half of the year brings our result for the first ninemonths of 2019 to a solid 1 787 million euros.

On a comparable scope basis, our loans to customers increased by 4% year-on-year and deposits (including debt certificates) were up by 4%, as well. Sales of our non-life and life insurance products also went up year-on-year, by 9% and 5%, respectively.

Our solvency position, which does not include the profit for the first nine months of the year, remained strong too, with a common equity ratio of 15.4%. If we had included the profit for the first nine months of the year, taking into account the 59% dividend payout ratio of last year, our common equity ratio would have amounted to 15.9%. As already announced and in line with our dividend policy, we will pay an interim dividend of 1 euro per share on 15 November 2019 as an advance payment on the total dividend for 2019.

In the previous quarter, we had started a group-wide exercise to optimise our management governance model and, in early September, revealed the optimisation and efficiency measures for the other layers of our organisation. The goal of the exercise is to become a more agile company with a faster decision-making process, so that customer solutions can be delivered faster. As always, we plan to be respectful in how we implement the related changes for our employees. In Belgium, for instance, the related reduction in FTEs will be absorbed through natural outflow. In the Czech Republic, normal staff turnover and measures to promote the internal redeployment of staff will ensure that compulsory redundancies will also be kept to a minimum.

In September, we signed the Collective Commitment to Climate Action, an initiative of the United Nations Environmental Program Finance Initiative. By endorsing this initiative, we have committed ourselves – in cooperation with our customers – to stimulate the greening of the economy as much as possible and so limit global warming to well below 2°C, striving for 1.5°C, in line with the Paris climate agreement. In this way, we are building on previous policies and initiatives (such as phasing out the financing of coal-related activities) to help us fulfil our social role in a sustainable manner.

Ultimately, our goal is to ensure that our customers and all other stakeholders benefit from our activities, something which our employees are committed to in their day-to-day work. I would like to take this opportunity to explicitly thank all those stakeholders who have put their trust in us to help them achieve their goals and dreams.


* 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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