KBC Group: strong result of 691 million euros in the third quarter

Against the background of sustained economic expansion, only moderately rising inflation, a stronger euro and stable low interest rates, KBC turned in a strong performance in the third quarter of 2017, posting a net profit of 691 million euros. In the quarter under review, our core businesses once again performed well, while costs remained under control and the level of loan loss impairment remained very low. Moreover, the recently acquired Bulgarian companies also contributed positively to net profit. Adding the third quarter result to the similarly very good results for the first two quarters of the year brings the net result for the first nine months of 2017 to 2 176 million euros, significantly up on the 1 742 million euros recorded in the corresponding period of 2016. Our solvency and liquidity positions remained strong too. In line with our dividend policy, we will pay an interim dividend of 1 euro per share on 17 November 2017.

Financial highlights for the third quarter of 2017
  •     Both our existing banking and insurance franchises in our core markets continued to perform well, while the recently acquired Bulgarian companies, UBB and Interlease, also contributed 14 million euros to the net result. Our group result for the quarter under review accordingly came to a strong 691 million euros.
  •     Lending to our clients went up 1% quarter-on-quarter and 6% year-on-year, with increases in all business units. Deposits from our clients remained flat quarter-on-quarter, but increased 12% year-on-year with growth in all business units. Of the year-on-year volume growth, some 1.4 percentage points (for lending) and 1.9 percentage points (for deposits) was attributable to the first-time inclusion of UBB/Interlease in the figures.
  •     Net interest income - our main source of income - was up 1% on the previous quarter and down just 2% on its year-earlier level, thanks largely to the positive effect of the first-time consolidation of UBB/Interlease. The net interest margin came to 1.83%, down 3 basis points quarter-on-quarter and 7 basis points year-on-year.
  •     Higher premium income, a better reinsurance result and a one-off release of provisions in Belgium boosted technical income from our non-life insurance activities by 23% year-on-year. Consequently, our non-life combined ratio for the first nine months of 2017 ended up at an exceptionally good 83%. Sales of our life insurance products dropped just slightly quarter-on-quarter, but were down 10% on their level  a year ago.
  •     Our net fee and commission income remained strong, increasing year-on-year by 11%, thanks mainly to our asset management activities and the first-time inclusion of UBB/Interlease in the figures. Compared to the previous quarter, however, there was a decrease of 5% which partly reflects the effect of the holiday season.
  •     All other income items combined fell 34% quarter-on-quarter, but were up 49% year-on-year. This was largely accounted for in both cases by variations in the level of trading and fair value income and a negative item of 54 million euros in the quarter under review (related to an ongoing industry wide review of the tracker rate mortgage products originated in Ireland before 2009).
  •     Our operating expenses were more or less flat quarter-on-quarter and up 2% year-on-year. Excluding UBB/Interlease, costs decreased by 2% quarter-on-quarter, but remained unchanged year-on-year. As a consequence, our cost/income ratio for the first nine months of 2017 stood at a solid 54%.
  •     At 15 million euros, loan loss impairment charges in the quarter under review remained very low. They included a net impairment release of 26 million euros in Ireland and generally low levels of additional impairment charges in all other core countries. Consequently, our cost of credit amounted to a very favourable -0.05% in the first nine months of 2017 (a negative figure indicates a positive impact on profit).
  •     Our liquidity position remained strong, as did our capital base, with a common equity ratio of 15.9% (fully loaded, Danish compromise).

Johan Thijs, our group CEO, comments:
'We have delivered yet another strong performance in the third quarter. A number of factors were instrumental in achieving this, including growth of net interest income, solid net fee and commission income and a high level of insurance income thanks in part to some releases of provisions. Moreover, our costs remained under control, and loan loss impairment charges continued to be very low. On top of that, our recently acquired Bulgarian entities UBB and Interlease contributed 14 million euros to this quarter's result.
Moreover, the quarterly result was also influenced by an ongoing industry wide review of the tracker rate mortgage products originated in Ireland before 2009, for which a negative 54 million euros in this quarter has been booked.
All this resulted in 691 million euros of net profit being posted in the quarter under review. Combined with the 630 million euros recorded in the first quarter, and the exceptionally strong 855 million euros in the second quarter, this brings our net result for the first nine months of 2017 to 2 176 million euros, up 25% on the figure for the corresponding period of 2016.
We continued to work relentlessly on executing our strategy, which has proven very successful to date. We are on track as regards our digital agenda, and are working on further developing our bank-insurance business and on supporting the local economies and clients in the countries in which we operate. We are ahead of our agenda on the operational integration of the recently acquired UBB and Interlease entities in Bulgaria, which will make us a leading player in that core country too.
We are truly grateful for the trust that our clients place in our company and our employees, and remain fully committed and focused in our efforts to become the reference in client-centric bank-insurance in all our core countries.'  

Read the full story

Related articles

GENERALI Group reports record annual operating result

GENERALI Group reported FY net profit of EUR 2.11 billion, up by 1.4% y-o-y, while its operating result amounted to a record of EUR 4.89 billion (2.3% more y-o-y) "thanks to the positive performance of the life segment and the Investments, Asset & Wealth Management business and to the cost reduction reached two years ahead of schedule (-EUR 200 million in mature markets)".


UPDATE: AXA to acquire XL Group for EUR 12.4 billion

The French insurer AXA announced that it has entered into an agreement to acquire 100% of XL Group, one of the largest global Property & Casualty commercial lines re/insurer with strong presence in North America, Europe, Lloyd's and Asia-Pacific.


UNIQA FY2017 consolidated net profit up to EUR 161.4 million

Austrian insurer UNIQA said its FY2017 Group GWP rose 4.9% y-o-y, to EUR 5.29 billion, while the combined ratio lowered to 97.5%. At the same time, the total amount of retained insurance benefits rose by 5.1% y-o-y, to EUR 3.56 billion.



New Head of Investor Relations at AEGON

Jan Willem WEIDEMA has been appointed as the new Head of Investor Relations at AEGON. He succeeds Willem van den BERG who has led the Investor Relations team over the past 7 years.


Robin SPENCER to leave NN Group

NN Group announced that Robin SPENCER will step down as Chief Executive Officer of International Insurance and member of the Management Board of NN Group, effective 1 June 2018.



"Insurance and Pensions reloaded" - the 7th EIOPA Annual Conference

The 7th EIOPA Annual Conference takes place today in Frankfurt am Main, Germany. A review of the current supervisory covergence issues and of the prospects of the Pan European Personal Pension Product are on the event's agenda, together with analyzing the ways in which regulation may enable innovation.



"IIF2017 - Insurance in the DIGITAL World" Conference took place in Vienna

"IIF2017 - Insurance in the DIGITAL World" conference brought together in Vienna well-known insurance professionals from all over the world who analyzed the latest digital trends in the industry, taking into account the fast digitalization of the financial services providers' world, in particular in the insurance field, which is creating both huge opportunities and strong challenges for the players.



Croatian Insurance Days Live

On 9 November has started in Opatija, Croatia, the 2017 edition of the Croatian Insurance Days Conference, the traditional meeting of the Croatian insurance top professionals with their European peers. XPRIMM Publications are supporting the event as Media Partners.



The 2017 Baden Baden Meeting: Short recap

The Baden-Baden meeting, one of the key events in the reinsurance calendar, has just set the final point of this year's edition. XPRIMM Publications have reported from the meeting's premises. Let's recap!


Baden Baden Headlines 3: CEE insurance markets are attractive for reinsurers

Central and Eastern Europe insurance markets are an important source of business for Lloyds, total premium income from this region increasing by EUR 64 million since 2010, pointed out the Lloyd's representative in a seminar dedicated to CEE insurance markets: "We are seeing strong growth from Czech Rep, Poland, Slovakia and Ukraine. At the same time are some contractions from Russia, Bulgaria, Romania and Hungary due to challenging trading conditions as political implications and other sanctions".


Baden Baden Headlines 2: cyber insurance market set to grow under regulatory presure; nat cat events more frequent, but losses per event are decreasing

Asian insurance market, especially the Indian market - are considered to be "the new El-Dorado" of the global re/insurance market, with rapidly expanding markets and an dynamic environment: "Indian P&C re/insurance markets are expected to grow at a pace of 15% per annum", according  to Victor PEIGNET, CEO, Global P&C, SCOR SE. The French -based reinsurer setted-up its Indian branch in 2016, after the authorisation from the local market authority - IRDAI. India's re/insurance market has become more attractive for global companies following the relaxation of regulatory requirements, and lately, "big names" in the industry entered the market by opening branches: GEN Re, SCOR, Lloyd's of London, MUNICH Re, SWISS Re, Reinsurance Group of America (RGA), HANNOVER Re, XL Catlin and others.


See all