Kbc Group N.v. · EURONEXT:KBC
Kbc — Debt Investor Presentation (2023)
48 slides from Kbc's debt investor presentation, 2023
Slide 1: KBC Group Debt presentation 2Q 2023
1 of 48 KBC Group Debt presentation 2Q 2023 More information: www.kbc.com KBC Group - Investor Relations Office: IR4U@kbc.be
Slide 2: KBC Group passport | Well-defined core markets
KBC Group passport | Well-defined core markets 2 of 48 BELGIUM BU INTERNATIONAL MARKETS BU GDP growth SK HU BG in %, KBC Economics debt to 61% of assets GDP ratio 4% of assets 4% of assets 4% of assets 3.9m clients 105% 0.8m clients 1.6m clients 2.2m clients 440 branches 3.2% 108 branches 195 branch
Slide 3: What differentiates us from peers
What differentiates us from peers 3 of 48 Unique integrated Successful digital-first Firmly embedded Core shareholder bank-insurance+ model approach through KATE sustainability strategy structure • We offer an integrated response • Our Digital interaction with clients • As a company that aims to sup
Slide 4: KBC Group's legal structure and issuer of debt instruments
KBC Group’s legal structure and issuer of debt instruments 4 of 48 KBC Group NV AT 1 Tier 2 MREL Senior 100% 100% 100% 100% KBC Bank KBC Insurance KBC Global Services N.V. DISCAI* Covered bond No public issuance KBC IFIMA** Retail and Wholesale EMTN * DISCAI (Discovering AI) is a separate full
Slide 5: Last credit ratings of KBC Group and KBC Bank
Last credit ratings 5 of 48 Moody’s S&P Fitch Senior Unsecured Baa1 A- A Latest update: Tier II Baa2 BBB BBB+ 6 June 2023: Moody’s upgraded KBC Bank's long-term issuer and deposit ratings and affirmed KBC Group's issuer rating (outlook Group Additional Tier I Ba1 BB+ BBB- remains positive). The upgr
Slide 6: KBC's ESG ratings and indices are ahead of the curve
KBC’s ESG ratings and indices are ahead of the curve 6 of 48 Agency ESG rating of 18th of July 2023 (previous score) Position versus industry average D- A • Leader in addressing climate change • CDP’s A list • Financial average service B- A (A-) Severe Risk High Risk Medium Risk Low Risk Negligible
Slide 7: Business profile | Our financial footprint
Business profile | Our financial footprint 7 of 48 High profitability (IFRS 17 figures) Solid capital position combined CET 1 ratio (fully loaded, Danish compromise) C/I ratio* ratio net result in % 49% FY22 87% FY22 2,818m FY22 16.3% 17.1% 17.6% 16.5% 1,848m 1H23 15.8% 16.0% 15.5% 15.3% 49% 1H23 84
Slide 8: Our non-financial targets
Our non-financial targets 8 of 48 Customer ranking Bank-insurance (BI) clients Digital sales BI clients Digital sales banking products* in % in % Top-3 Top-2 Top-2 Top-2 * 2020 2021 2022 2023 77% 78% 81% 78% * 80% 39% 46% 50% 40% 32% • KBC is 2nd in customer NPS (Net Promoter Score) ranking 2020 202
Slide 9: Sustainability highlights
Sustainability highlights 9 of 48 Commitment to climate action Sustainable business Social responsibility 2030 and 2050 climate targets Social bond 7.4bn EUR Committed to a first set of climate Issued a second social bond for Financing contributing to targets for the most material investments in hea
Slide 10: Excellent net result of 966m EUR over 2Q23
Excellent net result of 966m EUR over 2Q23 Highlights 10 of 48 • Commercial bank-insurance franchises Net result in core markets performed excellently in m EUR • Customer loans and customer deposits increased q-o-q in most of our core countries (on a comparable basis) • KBC issued its second social
Slide 11: Higher net interest income in line with expectations
Higher net interest income in line with expectations 11 of 48 Net interest income Net interest margin* in m EUR in %, calculated excl. the dealing room and the net positive impact of ALM FX swaps & repos 1,417 1,407 1,297 118 1,324 1,248 106 Insurance 1,201 115 92 98 111 1.91% 1.91% 1.90% 2.10% 2.04
Slide 12: Inflow of core customer money
Inflow of core customer money 12 of 48 Customer money dynamic over 2Q23 Customer money dynamic over 1H23 in m EUR in m EUR +2.2bn EUR +3.6bn EUR +1.1bn EUR +2.8bn EUR -1.5bn EUR +1.5bn EUR -0.4bn EUR -0.2bn EUR +5.0bn EUR -3.3bn EUR +11.1bn EUR +4.7bn EUR -10.4bn EUR -0.6bn EUR 0.0bn EUR 31MAR23 for
Slide 13: Higher fee and commission income
Higher fee and commission income 13 of 48 Net fee & commission income Assets under management in m EUR in bn EUR 570 576 584 228 225 542 557 549 217 9 10 11 211 205 206 8 8 9 Other Investment 45 46 41 40 42 advice Banking 40 240 256 262 262 239 249 services 67 63 65 Fund-of-Funds 62 60 60 Group asse
Slide 14: Non-life sales significantly up y-o-y, life sales up q-o-q and y-o-y
Non-life sales significantly up y-o-y, life sales up q-o-q and y-o-y 14 of 48 Non-life sales Life sales in m EUR in m EUR 723 727 30 32 Hybrid products Guaranteed- 599 667 577 538 218 interest 511 501 483 297 27 products 477 422 31 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 28 388 247 29 • Up by 13% y-o-y, with
Slide 15: Higher FIFV result and net other income in line with normal run rate
Higher FIFV result and net other income in line with normal run rate 15 of 48 FIFV Net other income in m EUR in m EUR 89 90 115 90 38 106 69 Dealing room 94 53 90 MVA/CVA/FVA 498 35 5 M2M ALM derivatives 28 13 and other 25 0 4 Inv. backing UL 26 29 69 16 15 16 contracts under IFRS17 47 54 6 3 -13 -5
Slide 16: Costs excluding bank & insurance taxes slightly increased q-o-q
Costs excluding bank & insurance taxes slightly increased q-o-q 16 of 48 Operating expenses (including directly attributable costs to Bank and insurance tax spread 2023 (preliminary) insurance) in m EUR in m EUR 1,648 Total Upfront Spread out over the year 1,516 2Q23 1Q23 2Q23 1Q23 2Q23 3Q23e 4Q23e
Slide 17: Net loan loss impairment releases & excellent credit cost ratio
Net loan loss impairment releases & excellent credit cost ratio 17 of 48 Other impairments ECL for geopolitical, emerging and Covid risks Asset impairment Credit cost ratio in m EUR; negative sign is a release Impairments on financial assets at AC and FVOCI in bps *In FY20, an ECL buffer of 44 bps w
Slide 18: Outstanding ECL for geopolitical and emerging risks amounts to 350m EUR
Outstanding ECL for geopolitical and emerging risks amounts to 350m EUR 18 of 48 Q-o-q change in the outstanding ECL for geopolitical and emerging risks in m EUR; negative sign is a release YTD ECL impact: -79m EUR 429 -21 -18 In 2Q23 ECL release of 40m EUR, driven by improved macroeconomic indicato
Slide 19: Loan loss experience at KBC
Loan loss experience at KBC 19 of 48 Credit cost ratio* in %; Credit cost ratio: amount of losses incurred on troubled loans as a % of total average outstanding loan portfolio AVERAGE 1H23 FY22 FY21 FY20 FY19 FY18 FY17 ‘99 –’22 Belgium BU 0.05% 0.03% -0.26% 0.57% 0.22% 0.09% 0.09% n/a Czech Republic
Slide 20: Diversified loan portfolio
Diversified loan portfolio 20 of 48 Total loan portfolio outstanding Total loan portfolio outstanding | by segment as % of total Group loan portfolio outstanding* Total loan portfolio outstanding Corporate 201bn EUR* 37.2% Retail 41.1% Group level Total loan portfolio outstanding | by sector as % of
Slide 21: Loan portfolio breakdown by IFRS 9 ECL stage
Loan portfolio breakdown by IFRS 9 ECL stage 21 of 48 Total loan portfolio outstanding | by IFRS9 ECL Stage* Stage 3 ratio | Belgium BU as % of total Group loan portfolio outstanding in % 19.9% 19.0% 18.2% 2.4% 2.3% 2.2% Stage 2 1.9% 1.9% 2.0% 13.6% 11.3% 11.5% FY19 FY20 FY21 FY22 1Q23 1H23 3.5% 3.3
Slide 22: Cover ratios
Cover ratios 22 of 48 Cover ratio | by IFRS9 ECL Stage* Stage 3 cover ratio | Belgium BU in % in % 41.7% 45.6% 42.6% 47.1% 47.1% 39.6% 39.3% 38.7% 44.7% 46.4% 46.0% 42.0% Stage 3 FY19 FY20 FY21 FY22 1Q23 1H23 Stage 3 cover ratio | Czech Republic BU 4.8% in % 1.3% 2.2% 1.7% 1.8% 1.6% Stage 2 47.2% 48
Slide 23: Solvency, liquidity & funding | Strong capital position with substantial buffer to MDA
Solvency, liquidity & funding I Strong capital position with substantial buffer to MDA 23 of 48 Capital requirements and distance to Maximum Distributable Amount (MDA) restrictions as at 30JUN23 (fully loaded, B3) in % Regulatory requirement 20.0 KBC Group 2.1 Tier 2 17.9 Fully loaded B3 common equi
Slide 24: 3 capital impacts in the near future
3 capital impacts in the near future 24 of 48 Share buyback of 1.3bn EUR Further optimisation of RWA add-on, + 1 EUR interim DPS KBC’s capital structure mitigated • KBC Group will distribute – over and above • In line with CRD V Art. 104a(4), ECB allows • KBC Group has received a final ECB the 4 eur
Slide 25: Dividend policy & capital distribution
Dividend policy & capital distribution 25 of 48 as of 2023 • We aim to be amongst the better capitalised financial institutions in Europe. As a consequence, the dividend policy of KBC Group is tailored to that purpose. Each year, the Board of Directors will decide, at its discretion, on the total di
Slide 26: Leverage ratio, Solvency II ratio and liquidity ratios
Leverage ratio, Solvency II ratio and liquidity ratios 26 of 48 Leverage ratio | KBC Group Liquidity ratios | KBC Group Solvency II ratio | KBC Group fully loaded, Basel 3 in % in % Leverage LCR NSFR Solvency II ratio ratio 5.4% 1H23 152% 1H23 145% 1H23 206% 1H23 5.3% FY22 152% FY22 136% FY22 203% F
Slide 27: KBC Group consolidated balance sheet
KBC Group consolidated balance sheet 27 of 48 368bn EUR Total balance sheet Deposits from customers End of 1H23 End of 1H23 Total assets Total liabilities and equity by core countries as % of total deposits from customers 45 5% Bulgaria 4% 101 7 4% Hungary 29 23% Slovakia 3 39 Czech Republic 14 23 2
Slide 28: Strong and growing customer funding base
Strong and growing customer funding base 28 of 48 • KBC Bank continues to have a strong retail/mid-cap deposit base in its core markets – resulting in a stable funding mix with a significant portion of the funding attracted from core customer segments and markets • Stable % in customer funding compa
Slide 29: Upcoming mid-term funding maturities
Upcoming mid-term funding maturities 29 of 48 Total outstanding | 2Q23 Funding program | 2Q23 in % • In April 2023, KBC Group issued a senior Holdco benchmark for an amount of KBC Bank has 6 solid sources of long-term funding: (i) Retail term deposits, (ii) 1bn EUR with a 7-year maturity callable af
Slide 30: Above resolution requirements of 1H23 in terms of MREL
Above resolution requirements of 1H23 in terms of MREL 30 of 48 MREL targets MREL actuals • The resolution plan for KBC is based on a Single Point of Entry • The MREL ratio in % of RWA increased from 30.1% in 1Q23 to 32.2% in (SPE) approach at KBC Group level, with bail-in as the preferred 1H23. Thi
Slide 31: KBC has strong buffers cushioning senior debt at all levels
KBC has strong buffers cushioning senior debt at all levels 31 of 48 Buffers for senior level debt at KBC Group, KBC Bank & KBC Insurance in m EUR KBC Group Senior 14 018 Tier 2 2 681 KBC Bank Additional Tier 1 KBC Insurance 1 500 Tier 2 Subordinated on loan by KBC Group 14 018 CET1 (transitional) 5
Slide 32: Direct environmental impact: our progress in brief
Direct environmental impact: our progress in brief 32 of 48 DIRECT environmental footprint (FY 2022) More details in our 2022 Sustainability Report • In 2020, we set more stringent ambitions to reduce the GHG emissions resulting from our own operations • Furthermore, we included commuter travel in o
Slide 33: Indirect environmental impact: our progress in brief
Indirect environmental impact: our progress in brief 33 of 48 INDIRECT environmental footprint (FY 2022) Loan portfolio (selection of sectors) reduction compared to 2021 baseline, otherwise indicated • We refer to our Collective Commitment to Climate Mortgages and commercial Operational lease Electr
Slide 34: KBC Green Bond framework and issuances
KBC Green Bond framework and issuances 34 of 48 Aligned with best practices and market Verification developments • One year after issuance and until maturity, a limited assurance report • The KBC Green Bond Framework is in line with the on the allocation of the Green Bond proceeds to Eligible Assets
Slide 35: KBC Social Bond framework and issuances
KBC Social Bond framework and issuances 35 of 48 Aligned with best practices and market Clear Social Bond governance developments Social Bond Eligible Assets include financing in Belgium in the Use following categories: • By adding the social aspect to its funding mix, KBC Bank of • Access to Essent
Slide 36: Covered bond programme | Overview
Covered bond programme | Overview 36 of 48 The covered bond programme is considered as an important funding tool for the treasury department. KBC’s intentions are to be a frequent benchmark issuer if markets and funding plan permit. Issuer KBC Bank NV Minimum 105% of covered bond outstanding is cove
Slide 37: Covered bond programme | Belgian legal framework
Covered bond programme | Belgian legal framework 37 of 48 Belgian legal framework • Direct covered bond issuance from a bank’s balance sheet National Bank of • Dual recourse, including recourse to a special estate with cover assets included in a register Belgium • The special estate is not affected
Slide 38: Covered bond programme | Strong legal protection mechanisms
Covered bond programme | Strong legal protection mechanisms 38 of 48 Several legal protection mechanisms are in place: 1 Collateral type The value of one asset category must be at least 85% of the nominal amount of covered bonds KBC Bank exclusively selects residential mortgage loans and commits t
Slide 39: Looking forward
Looking forward 39 of 48 Economic outlook Group guidance under IFRS17 | 2023 • Our FY23 total income guidance remains at 11.15bn EUR ballpark figure • The low GDP growth in the euro area is expected to (including a 0.4bn EUR positive one-off effect upon closing of substantially all continue in the r
Slide 40: Long-term / 3-year financial guidance
Long-term / 3-year financial guidance (as provided with FY22 results, not updated) 40 of 48 3-year financial guidance* • CAGR total income (‘22-’25) + 7.3% by 2025 Jaws • CAGR OPEX (excl. bank & ins. taxes) and insurance commissions (’22-’25) + 2.3% by 2025 ±5.0% • Combined ratio ≤ 92% as of now C/I
Slide 41: Annex 1 | Summary of the different business units' performance
Annex 1 | Summary of the different business units’ performance 41 of 48 Czech Slovakia Hungary Bulgaria Group KBC Belgium 1H 2023 Republic Centre Group BU BU BU International Markets BU Note that 1Q23 included Net result (YTD, in euros) 1 848m 875m 461m 62m 95m 141m 215m 351m EUR from KBC Bank Irela
Slide 42: Annex 2 | Outstanding benchmarks as at end of July 2023
Annex 2 | Outstanding benchmarks as at end of July 2023 42 of 48 Additional tier I securities Issuer Currency Isin Code Issued (in mio) Coupon Re-off spread Settlement date Call date Maturity Trigger Level KBC Group EUR BE0002592708 1,000 4.250% M/S+359,4bps 24/04/2018 24/10/2025 Perpetual Temporary
Slide 43: Annex 3 | KBC's covered bond programme characteristics
Annex 3 | KBC’s covered bond programme characteristics 43 of 48 Portfolio data as of 30 June 2023 Interest rate type Geographical allocation in EUR in % in % Total Outstanding Principal Balance 18 724 728 728 Fixed 86% Brussels Total value of the assets for the over- 1 y / 1y 5% Hoofdstedelijk 17 11
Slide 44: Annex 4 | Key cover pool characteristics
Annex 4 | Key cover pool characteristics 44 of 48 Final maturity date Seasoning in bn EUR in bn EUR 18 4.0 16 Weighted Average 3.5 Weighted Average Remaining Maturity: Seasoning: 14 3.0 192 months 57 months 12 2.5 10 2.0 8 1.5 6 1.0 4 0.5 2 0.0 0 0 - 12 13 - 24 25 - 36 37 - 48 49 - 60 61 - 72 73 - 8
Slide 45: Annex 5 | Belgian real estate market
Annex 5 | Belgian real estate market – House price dynamics in Belgium are slowing down 45 of 48 The y-o-y house price increase slowed to 4.8% in The overvaluation of Belgian real estate is Q1 2023, down from a peak of 8.2% in Q3 2021 estimated at some 9% in Q1 2023 KBC Group passport Business profi
Slide 46: Glossary
Glossary 46 of 48 B3 / B4 Basel III / Basel IV Combined ratio (non-life Short-term non-life insurance contracts: [claims and claim related costs net of reinsurance + costs other than claims and commissions] / [earned expected insurance) premiums received, net of reinsurance] Common equity ratio [com
Slide 47: Contacts / questions
Contacts / questions 47 of 48 Kurt De Baenst direct +32 2 429 35 73 More information Investor Relations General Manager mobile +32 472 500 427 kurt.debaenst@kbc.be • Company website KBC • Quarterly Report Ilya Vercammen direct +32 2 429 21 26 Quarterly Reports • Table of results (Excel) Investor Rel
Slide 48: Disclaimer
Disclaimer 48 of 48 • This presentation is provided for information purposes only. It does not constitute an offer to sell or the solicitation to buy any security issued by the KBC Group. • KBC believes that this presentation is reliable, although some information is condensed and therefore incomple