IBOS member KBC Group reports strong result of €691m in Q3 2017.
KBC reported a strong performance in Q3 2017 with a net profit of €691m. In that quarter, KBC’s core activities also performed strongly, whilst the costs remained controlled and the write-downs on loans were very low.
Additionally, the recently acquired Bulgarian companies contributed positively to the net profit. KBC’s solvency and liquidity also remained strong.
If the third quarter result is added to the equally strong results for the first two quarters of 2017, this achieves a net result for the first nine months of 2017 of €2,175 million. This is significantly more than the €1,742 million within the same period in 2016, which is an increase of 25%.
Johan Thijs, CEO at KBC Group, commented:
“We again achieved a strong result in the third quarter. A number of factors were decisive, including the growth of net interest income, solid net fee income and high insurance income partly thanks to reversals of some provisions.
“We continued to work decisively on the execution of our strategy, which has proved very successful to this day. We are on track with our digital agenda and we continue to work on expanding our bancassurance activities and supporting the local economies and customers in the countries where we operate. We are ahead of our agenda on the operational integration of the recently acquired Bulgarian entities UBB and Interlease, and through that integration we are also becoming a top player in that core country.
“We are genuinely grateful for the trust our customers place in our company and our employees and we are fully committed to becoming the reference in customer-centric banking in all our core countries.”
Below are the financial highlights of Q3 2017:
- KBC’s existing banking and insurance franchises in its core markets continued to perform strongly, and the recently acquired Bulgarian companies UBB and Interlease also contributed to the net result of €14m. As a result, the Group result for the Q3 2017 was a strong €691m.
- Lending to KBC’s clients increased by 1% compared to Q2 2017 and by 6% year-on-year, with an increase in all divisions. The deposits of the bank’s customers remained stable compared to Q2 2017, but grew by 12% compared to a year ago with a further increase in all divisions. Of the year-on-year volume growth, approximately 1.4 percentage points (for lending) and 1.9 percentage points (for deposits) are related to the fact that UBB and Interlease were included for the first time in the figures.
- Net interest income increased by 1% compared to Q2 2017 and fell by only 2% compared to a year ago. This was largely due to the positive influence of the first consolidation of UBB / Interlease. The net interest margin was 1.83%, three basis points less than Q2 2017 and seven basis points less than a year earlier.
- Higher premium income, a better result from retired reinsurance and a one-off reversal of provisions in Belgium led to a 23% increase in the technical result of KBC’s non-life insurance activities. As a result, the combined ratio for non-life insurance for the first nine months of 2017 was an exceptionally good 83%. Sales of KBC’s life insurance products decreased slightly compared to the previous quarter, but decreased by 10% compared to a year ago.
- KBC’s net fee and commission income remained strong, up 11% year-on-year, mainly due to its asset management activities and the fact that UBB and Interlease were included in the figures for the first time. Compared with Q2 2017, however, there was a decrease of 5%, partly due to the holiday period.
- KBC’s operating expenses remained more or less the same as in Q2 2017 and increased by 2% year-on-year. Excluding UBB / Interlease they fell 2% quarter-on-quarter, and remained unchanged year-on-year. As a result, KBC’s cost-income ratio for the first nine months of 2017 was a solid 54%.
- At €15m, write-downs on loans remained very low in Q3 2017. They included a net reversal of €26m in Ireland and generally low additional impairments in all other core countries. As a result, KBC’s credit cost ratio was a very favourable -0.05% in the first nine months of 2017 (a negative number indicates a positive effect on the result).
- KBC’s liquidity position remained solid and so did its capital base, with a common equity ratio of 15.9% (fully loaded, Danish Compromise method).
Access the full report via KBC here.