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Thursday 15 November, 2018

KBC Groep

KBC Group: Third-quarter result of 701 million euros

KBC Group: Third-quarter result of 701 million euros

Press Release
Outside trading hours - Regulated information*

Brussels, 15 November 2018, (07.00 a.m. CET)

KBC Group: Third-quarter result of 701 million euros

KBC Group - overview (consolidated, IFRS)
(IFRS 9)
(IFRS 9)
3Q2017 (IAS 39)9M2018
9M2017 (IAS39)
Net result (in millions of EUR)7016926911 9482 176
Basic earnings per share (in EUR)1.631.611.624.545.11
Breakdown of the net result by business unit (in millions of EUR)     
  Belgium4094374551 0891 240
  Czech Republic168145170484534
  International Markets14116378440370
  Group Centre-17-53-12-6432
Parent shareholders’ equity per share (in EUR, end of period)40.639.940.640.640.6

We delivered a net profit of 701 million euros in the third quarter of 2018. An excellent result, thanks, among other things, to higher levels of net interest income, trading and fair value income and other net income, an outstanding combined ratio in our non-life insurance activities, and – yet again – a net release of some loan loss impairments, the bulk of which related to our Irish mortgage book. Adding this third-quarter results figure to the 556 million euros and 692 million euros earned in the first and second quarters of the year brings our result for the first nine months of 2018 to a solid 1 948 million euros. Loans increased by 5% year-on-year and deposits excluding debt certificates by 6%. Our solvency position remained strong too. At the end of September 2018, our common equity ratio was 16%, up again on the 15.8% recorded in the previous quarter and comfortably surpassing the regulatory minimum levels in this respect.As announced earlier, we will, in line with our dividend policy, pay an interim dividend of 1 euro per share on 16 November 2018, as an advance payment on the total dividend for 2018.

Early in the third quarter, we completed the buyback of 2.7 million own shares and subsequently cancelled them, reducing our total number of shares to 415 897 567. And as already announced, KBC Bank Ireland reached an agreement with Goldman Sachs to sell part of its legacy loan portfolio, which will significantly reduce that entity’s impaired loans ratio as well as lower the group’s ratio. We expect the deal to be completed in the fourth quarter of this year.

On the digital front, our focus is on developing innovative client-centric solutions that make our clients’ lives easier. To name just a few examples, we not only added multi-banking possibilities to our KBC Mobile app in Belgium, but also recently added new specific non-banking features to this app, including the ability to pay for car parking services and the possibility to use the app to buy digital tickets for public transport. In Ireland, we added a new feature to the mobile app that allows customers to easily mark a card as lost or stolen and moreover instantly receive a digital replacement. And in the Czech Republic, CSOB was crowned Best Internet Bank in that country by Capital Finance International, yet more proof of the success of our client-centric digital initiatives. 

On the broader economic front, European economic conditions remain attractive, although we believe that the growth peak is behind us. The risk of further economic de-globalisation with an escalation of ongoing trade conflicts, Brexit and political turmoil in Italy are the main factors that could impede European economic growth.

Lastly, I’m very proud to announce that we not only received top scores in the international Extel Awards, but that we were also recently honoured by the Belgian Association of Financial Analysts with the award for ‘Best Financial Communication’. This is especially gratifying since open and transparent communication to our stakeholders ranks very high on our priority list. To close, I would like to take the opportunity to explicitly thank all our stakeholders for the trust they put in us and to assure them that we are more focused than ever in our efforts to become the reference in bank-insurance in all our core countries.

Johan Thijs

Chief Executive Officer 

Important. As of 2018, we have started applying IFRS 9. In simplified terms, this means that the classification of financial assets and liabilities, as well as the impairment methodology, have changed significantly. As a result, some of the income statement and balance sheet figures are not fully comparable to the 2017 reference figures (which are still based on IAS 39, as KBC is making use of transition relief for comparative data). To enhance transparency, we have – as of 2018 and in line with IFRS 9 – also moved interest accruals for FX derivatives in the banking book from ‘Trading and fair value income’ to ‘Net interest income’. We have also shifted network income (i.e. income received from margins earned on FX transactions carried out by the network for our customers) from ‘Trading and fair value income’ to ‘Net fee and commission’. A short overview is provided in the annex. Furthermore, related to IFRS 9, we changed, as of 2018, the definition of our loan portfolio from outstanding to gross carrying amount (i.e. incl. reserved and accrued interests) and slightly amended the scope. In order to enhance comparability, we have added certain comparisons with pro forma (recalculated) figures for 2017 (unaudited) in the analysis below. When this is done, it is indicated by the words ‘on a comparable basis’.

Full press release attached.


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