KBC Group: KBC Group: First-quarter result of 4...

Press Release
Outside trading hours - Regulated information*

KBC Group: First-quarter result of 430 million euros

KBC Group - overview (consolidated, IFRS)	1Q2019	4Q2018	1Q2018
Net result (in millions of EUR)	430	621	556
Basic earnings per share (in EUR)	0.98	1.44	1.30
Breakdown of the net result by business unit (in millions of EUR)
Belgium	176	361	243
Czech Republic	177	170	171
International Markets	70	93	137
Group Centre	7	-3	5
Parent shareholders’ equity per share (in EUR, end of period)	43.1	41.4	40.9

We generated a net profit of 430 million euros in the first quarter of 2019. This is a good result, considering that we – as usual – recorded the bulk of the bank taxes for the full year in the first quarter (382 million euros in the first quarter of 2019). Excluding the bank taxes, the net result even surpassed the previous quarter’s net result by 9%, thanks to a slight increase in total income and lower costs (excluding bank taxes), despite somewhat higher loan loss impairment charges. Adjusted for the sale of a legacy portfolio in Ireland last year, lending to customers increased by 5% year-on-year, and deposits including debt certificates rose by 6%. Sales of non-life and life insurance products also went up year-on-year by 9% and 4%, respectively. Our solvency position, which does not include the profit of the first quarter of 2019, remained strong too, with a common equity ratio of 15.7%. Our dividend policy (payout ratio of at least 50%) remains unchanged.

As regards sustainability, we are in continuous dialogue with our customers and stakeholders, aiming to fully live up to society’s expectations. In March, for instance, we tightened up our policy towards tobacco and decided not only to exclude the tobacco industry from our lending, insurance and SRI activities, but also start the process to eliminate it from our conventional investment funds and proprietary investment portfolio. Besides that, we signed up to the United Nations charter for tobacco-free financing, which fits in perfectly with the two key focus areas of Health and Population Ageing in our sustainability strategy.

In line with our general strategy, we continued to focus on our core activities and markets. In the weeks following the quarter-end, for instance, we reached an agreement for the sale of our Irish subsidiary’s legacy performing corporate loan portfolio of roughly 260 million euros. The transaction is expected to close in the course of 2019, and further solidifies KBC Bank Ireland’s core business focus on retail and micro SME clients. A few days later, our Czech subsidiary CSOB reached an agreement to acquire the remaining 45% stake in the Czech building savings bank CMSS for 240 million euros. The transaction will have an impact of approximately -0.3 percentage points on KBC Group’s common equity ratio. Furthermore, the revaluation of our already existing 55% stake in CMSS will lead to a one-off gain of roughly 80 million euros on the closing date. As a result of this transaction, CSOB will hold 100% of CMSS and consolidates its position as the largest provider of financial solutions for housing purposes in the Czech Republic. The agreement is expected to close before the end of the second quarter of 2019.

Ultimately,our success is based on the trust that our clients continue to place in us. I’d like to explicitly thank each and every one of them for their long-standing confidence and to assure them that we’re more focused than ever in our efforts to become the reference in bank-insurance in all our core countries.

Johan Thijs
Chief Executive Officer

Full press release attached.

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

Attachments

• 1Q2019_pb_20190516_en
• 1Q2019_Quarterly_Report_en