KBC Group: Third-quarter result of 868 million euros

• Net interest income increased by 1% both quarter-on-quarter and year-on-year. The net interest margin for the quarter under review amounted to 2.08%, down 1 basis point on the previous quarter and up 4 basis points on the year-earlier quarter. Customer loan volumes were up 1% quarter-on-quarter and 5% year-on-year. Customer deposits – excluding volatile, low-margin short-term deposits at KBC Bank’s foreign branches – were up 3% quarter-on-quarter and 5% year-on-year. In Belgium, the total inflow of core customer money (deposits, savings certificates, funds, insurance, bonds, etc.) after the state note matured totalled 6.5 billion euros and hence outpaced last year’s 5.7-billion-euro outflow to the state note by 0.8 billion euros.

• The insurance service result (insurance revenues before reinsurance - insurance service expenses before reinsurance + net result from reinsurance contracts held) amounted to 81 million euros (compared to 113 million euros and 138 million euros in the previous and year-earlier quarters, respectively) and breaks down into 45 million euros for non-life insurance and 36 million euros for life insurance. Our non-life insurance result was evidently impacted by Storm Boris in Central Europe. To date, we are helping some 10 000 customers alleviate the impact of the floods caused by this storm. We estimate the impact on the non-life result (after reinsurance) to be 33 million euros pre-tax in the quarter under review. The non-life insurance combined ratio for the first nine months of 2024 amounted to 89%, compared to 87% for full-year 2023. Non-life insurance sales increased by 8% year-on-year. Life insurance sales were excellent and were up 28% and 80% on the levels recorded in the previous and year-earlier quarters, respectively, due in both cases to higher sales of unit-linked and guaranteed-interest insurance products, thanks, among other things, to inflows from the maturing state note and a successful launch of structured emissions in Belgium.

• Net fee and commission income was up 3% and 9% on its level in the previous and year-earlier quarters, respectively. In both cases, the increase came about thanks to the higher level of fees for our asset management activities and our banking services. Assets under management were up 3% quarter-on-quarter and 18% year-on-year.

• Trading & fair value income and insurance finance income and expense was down 46 million euros and 34 million euros on the figures for the previous and year-earlier quarters, respectively. Net other income was slightly below its normal run rate. Dividend income was down on the previous quarter’s level, as the second quarter traditionally includes the bulk of dividend income for the full year.

• Operating expenses without bank and insurance taxes were up 6% and 3% on their level in the previous and the year-earlier quarters, respectively. The cost/income ratio for the first nine months of 2024 came to 47%, compared to 49% for full-year 2023. In that calculation, certain non-operating items have been excluded and bank and insurance taxes spread evenly throughout the year. Excluding all bank and insurance taxes, the cost/income ratio for the first nine months of 2024 amounted to 43%, fully in line with the figure for full-year 2023.

• The quarter under review included a 61-million-euro net loan loss impairment charge, compared to 72 million euros in the previous quarter and 36 million euros in the year-earlier quarter. The credit cost ratio for the first nine months of 2024 amounted to 0.10%, compared to 0.00% for full-year 2023. Impairment on assets other than loans amounted to 7 million euros in the quarter under review, compared to 13 million euros in the previous quarter and 27 million euros in the year-earlier quarter.

• The share in results of associated companies & joint ventures for the quarter under review included a 79-million-euros one-off  gain related to Isabel.

• Our liquidity position remained strong, with an LCR of 159% and NSFR of 142%. Our capital base remained robust, with a fully loaded common equity ratio of 15.2%.

See full press release in attachment

Johan Thijs, Chief Executive Officer KBC Group:

We recorded a net profit of 868 million euros in the third quarter of 2024. Compared to the result for the previous quarter, our total income benefited from several factors, including higher net interest income (despite significantly lower income on inflation-linked bonds), increased insurance revenues supported by commercial actions, and higher net fee and commission income driven by excellent business performance. These items were offset by a decrease in trading & fair value income and the drop in dividend income following its seasonal peak in the second quarter.

Our loan portfolio continued to expand, increasing by 1% quarter-on-quarter and by 5% year-on-year. Customer deposits – excluding volatile, low-margin short-term deposits at KBC Bank’s foreign branches – were up 3% quarter-on-quarter and 5% year-on-year. As regards Belgium, deposits grew by as much as 5% quarter-on-quarter and 8% year-on-year, owing to the successful recuperation of customer funds following the maturity of the Belgian state note issued a year earlier. In fact, thanks to our proactive, multi-phased and multi-product customer offering, the total inflow of core customer money after the state note matured amounted to 6.5 billion euros, outpacing last year’s 5.7-billion-euro outflow to the state note by 0.8 billion euros.

Operational expenses were up in the quarter under review but remained perfectly within our full-year 2024 guidance. Insurance service expenses were higher, partly as a result of the storms and floods in Central Europe, especially Storm Boris. To date, we are helping some 10 000 customers alleviate the impact of the floods caused by this storm. Next to that, we established a donation fund. Loan loss impairment charges, excluding the reserve for geopolitical and macroeconomic uncertainties, were up on the level recorded in the previous quarter, leading to a credit cost ratio of 16 basis points for the first nine months of 2024, substantially below the guidance. Including the reserve for geopolitical and macroeconomic uncertainties, the credit cost ratio stood at 10 basis points for the first nine months of 2024. In the quarter under review, we also booked a one-off 79-million-euros gain, under ‘share in results of associated companies & joint ventures’.

Our solvency position remained strong, with a fully loaded common equity ratio of 15.2% at the end of September 2024. Our liquidity position remained very solid too, as illustrated by an LCR of 159% and NSFR of 142%. As already announced earlier, we will – in line with our general dividend policy – pay an interim dividend of 1 euro per share on 14 November 2024 as an advance on the total dividend for financial year 2024.

The share of bank and insurance products sold digitally has continued to rise: based on a selection of core products, around 55% of our banking and 29% of our insurance products were sold through a digital channel, up from 51% and 26% a year ago. And Kate, our personal digital assistant, is making good progress too: to date, over 5 million customers have already used Kate, an increase of no less than 37% on the year-earlier figure, while the proportion of cases resolved fully autonomously by Kate continues to improve and now stands at 67% in Belgium and 69% in the Czech Republic. I’m also delighted to add that our successful digitalisation and innovation journey regularly receives recognition from external parties. I am particularly proud that, just a few weeks ago, the independent international research agency Sia Partners honoured us by naming KBC Mobile the best mobile banking app in the world.

Our ultimate aim is to be the reference bank-insurer in all our core markets. This ambition is fuelled by our customer-centric business model and, most importantly, by the trust our customers, employees, shareholders, and other stakeholders place in us. We appreciate and are deeply grateful for this continued trust.

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

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