Slide 1: KBC Group Company presentation FY 2019 / 4Q 2019
KBC Group Company presentation FY 2019 / 4Q 2019 More information: www.kbc.com KBC Group - Investor Relations Office – E-mail: IR4U@kbc.be 1
Slide 2: Important information for investors
Important information for investors 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 th
Slide 3: 4Q 2019 key takeaways
4Q 2019 key takeaways 4Q19 financial performance FY19 Commercial bank-insurance franchises in core markets performed well ROE 14.3% Cost-income ratio 58%* Customer loans and customer deposits Cost-income ratio excluding bank taxes 51%* increased in most of our core countries Combined rat
Slide 4: 4Q 2019 key takeaways: capital deployment / dividend proposal
4Q 2019 key takeaways Capital deployment / Dividend proposal A total gross dividend of 3.5 EUR per share will be proposed to the AGM for the 2019 accounting year (of which an interim dividend of 1 EUR per share paid in November 2019 and a final dividend of 2.5 EUR per share). Also a buy-back of
Slide 5: Overview of building blocks of the 4Q19 net result
Overview of building blocks of the 4Q19 net result 2.041 -51 194 220 -994 445 1.182 -82 -210 702 NII NFCI Technical Other Total Income Bank tax Opex excl. Impairments Taxes 4Q19 net Insurance Income** bank tax result Result* Q-o-Q +1% 0% +24% - +13% +5% +15% Y-o-Y +1% +9% +20% +109% +10% +4% +13% *
Slide 6: Main exceptional items
Main exceptional items 4Q19 3Q19 4Q18 NOI – Settlement of legacy legal files +33m EUR BE BU Tax – DTA impact +20m EUR Total Exceptional Items BE BU +53m EUR Opex – Restructuring costs -5m EUR -1m EUR CZ BU Opex – Release provision of legacy legal files +4m EUR Total Exceptional Items CZ BU -1m EUR -
Slide 7: Contents
Contents 1 4Q 2019 performance of KBC Group 2 4Q 2019 performance of business units 3 Strong solvency and solid liquidity 4 FY 2019 key takeaways 5 Looking forward Annex 1: FY 2019 performance of KBC Group Annex 2: Company profile Annex 3: Other items 7
Slide 8: 4Q 2019 performance of KBC Group
KBC Group Section 1 4Q 2019 performance of KBC Group 8
Slide 9: Net result at KBC Group
Net result at KBC Group CONTRIBUTION OF BANKING ACTIVITIES TO KBC GROUP NET RESULT* 603 618 574 586 539 514 461 334 NET RESULT AT KBC GROUP* 745 692 701 702 621 612 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 556 430 CONTRIBUTION OF INSURANCE ACTIVITIES TO KBC GROUP NET RESULT* 155 143 1Q18 2Q18 3Q18 4Q
Slide 10: Higher net interest income and stable net interest margin
Higher net interest income and stable net interest margin NII Amounts in m EUR Net interest income (1,182m EUR) 1,166 1,174 1,182 • Increased by 1% both q-o-q and y-o-y. Note that NII banking 1,125 1,117 1,136 1,129 1,132 27 19 128 17 125 24 118 16 114 12 117 14 114 12 increased by 1% q-o-q and by
Slide 11: Higher net fee and commission income
Higher net fee and commission income F&C Amounts in m EUR Net fee and commission income (445m EUR) 450 438 444 445 • Slightly higher q-o-q and up by 9% y-o-y 424 407 410 435 • Q-o-q increase was the result of the following: 215 223 219 225 219 230 237 243 o Net F&C income from Asset Management Ser
Slide 12: Insurance premium income up y-o-y and excellent combined ratio
Insurance premium income up y-o-y and excellent combined ratio PREMIUM INCOME (GROSS EARNED PREMIUMS) Insurance premium income (gross earned 825 805 premiums) at 805m EUR 766 714 707 696 742 731 • Non-life premium income (441m) increased by 8% 416 351 317 291 364 y-o-y 336 315 293 • Life premium i
Slide 13: Non-life sales up y-o-y, life sales up q-o-q and down y-o-y
Non-life sales up y-o-y, life sales up q-o-q and down y-o-y NON-LIFE SALES (GROSS WRITTEN PREMIUM) Sales of non-life insurance products 534 • Up by 7% y-o-y thanks to a good commercial 492 performance in all major product lines in our core 412 411 382 378 373 400 markets and tariff increases 1Q18
Slide 14: Higher FV gains and higher net other income
Higher FV gains and higher net other income FV GAINS The higher q-o-q figures for net gains from 130 financial instruments at fair value were 96 54 79 99 44 attributable mainly to: 2 78 55 45 62 48 • a positive change in market, credit and funding value 36 11 10 adjustments (mainly as a result of
Slide 15: Strict cost management
Strict cost management OPERATING EXPENSES Cost/income ratio (banking): 52% in 4Q19 and 58% in FY19. Cost/income ratio (banking) adjusted 1,291 1,296 for specific items* at 56% in 4Q19 and 58% in FY19 371 966 981 996 382 988 975 1,045 (57% in FY18). Including higher bank taxes (+29m 24 26 41 30 28
Slide 16: Overview of bank taxes
Overview of bank taxes* Bank taxes of 277m EUR in KBC GROUP Bank taxes of 491m EUR in BELGIUM BU FY19, representing 11.1% of 382 FY19, representing 11.4% of 273 273 FY19 opex at the Belgium BU 371 FY19 opex at KBC Group** 58 63 98 109 215 210 273 273 41 30 51 3 0 0 4 0 0 24 26 28 2 29 2 -7 22 -4 1Q1
Slide 17: Higher asset impairments, benign credit cost ratio and stable impaired loans ratio
Higher asset impairments, benign credit cost ratio and stable impaired loans ratio ASSET IMPAIRMENT 69 82 Higher asset impairments q-o-q 7 43 1 40 • This was attributable to: 13 67 4 26 75 o sharply higher loan loss impairments in Belgium due to 5 1 20 30 36 25 corporate files 6 6 -63 -21 -8 -2 o
Slide 18: 4Q 2019 performance of business units
KBC Group Section 2 4Q 2019 performance of business units 18
Slide 19: Business profile
Business profile BELGIUM CZECH GROUP SLOVAKIA HUNGARY BULGARIA IRELAND REPUBLIC CENTRE 4Q19 NET RESULT (in million euros) 412m 205m 38m 50m 27m 2m -33m ALLOCATED CAPITAL (in billion euros) 6.8bn 1.7bn 0.6bn 0.7bn 0.4bn 0.7bn 0.5bn LOANS (in billion euros) 101bn 30bn 8bn 5bn 3bn 10bn DEPOSITS (in bil
Slide 20: Belgium BU (1): net result of 412m EUR
Belgium BU (1): net result of 412m EUR NET RESULT Net result at the Belgium Business Unit amounted 437 to 412m EUR 409 388 412 • The quarter under review was characterised by lower 361 368 net interest income, higher net fee and commission income, slightly higher dividend income, higher trading and
Slide 21: Belgium BU (2): lower NII and stable NIM
Belgium BU (2): lower NII and stable NIM NII Amounts in m EUR 649 642 637 647 637 634 Net interest income (634m EUR) 625 621 19 11 8 11 7 10 13 7 • Slightly down q-o-q due mainly to: 117 113 116 113 106 101 105 101 o lower reinvestment yields o lower netted positive impact of FX swaps o lower NII
Slide 22: Credit margins in Belgium
Credit margins in Belgium PRODUCT SPREAD ON CUSTOMER LOAN BOOK, OUTSTANDING 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 1Q112Q113Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q132Q13 3Q13 4Q13 1Q142Q143Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q162Q163Q164Q16 1Q17 2Q17 3Q17 4Q171Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q
Slide 23: Belgium BU (3): higher net F&C income
Belgium BU (3): higher net F&C income F&C Amounts in m EUR Net fee and commission income (307m EUR) 318 302 289 286 293 297 307 • Net F&C income increased by 4% q-o-q due mainly to: 273 o higher entry fees from mutual funds and unit-linked life insurance products o higher fees from credit files &
Slide 24: Belgium BU (4): higher y-o-y non-life sales, excellent combined ratio
Belgium BU (4): higher y-o-y non-life sales, excellent combined ratio Sales of non-life insurance products NON-LIFE SALES (GROSS WRITTEN PREMIUM) • Increased by 4% y-o-y 329 340 • Premium growth in almost all classes and tariff increases 262 273 263 252 247 238 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4
Slide 25: Belgium BU (5): higher life sales, good cross-selling ratios
Belgium BU (5): higher life sales, good cross-selling ratios LIFE SALES Sales of life insurance products 423 • Rose by 19% q-o-q driven entirely by higher sales of 404 397 380 guaranteed interest products (attributable chiefly to 362 333 traditionally higher volumes in tax-incentivised 319 282 pen
Slide 26: Belgium BU (6): higher FV gains and lower net other income
Belgium BU (6): higher FV gains and lower net other income FV GAINS 89 The higher q-o-q figures for net gains from 54 54 financial instruments at fair value were due 46 34 22 53 48 43 to: 14 24 7 19 17 22 • a positive change in market, credit and funding 2 8 19 33 18 12 3 30 19 18 6 24 value adjus
Slide 27: Belgium BU (7): lower opex and higher impairments
Belgium BU (7): lower opex and higher impairments OPERATING EXPENSES Operating expenses: slightly lower q-o-q and +2% y-o-y 822 • Operating expenses without bank tax slightly decreased q-o-q 807 due chiefly to 273 273 o lower ICT expenses 575 562 559 541 4 552 550 o lower marketing costs o lower f
Slide 28: Net result at the Belgium BU
Net result at the Belgium BU CONTRIBUTION OF BANKING ACTIVITIES TO NET RESULT OF THE BELGIUM BU* 325 302 289 301 279 287 NET RESULT AT THE BELGIUM BU* 165 437 102 409 412 388 361 368 243 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 176 CONTRIBUTION OF INSURANCE ACTIVITIES TO NET RESULT OF THE BELGIUM BU*
Slide 29: Czech Republic BU
Czech Republic BU Net result of 205m EUR in 4Q19 NET RESULT Amounts in m EUR 248 +28% q-o-q excluding FX effect due mainly to higher net 205 171 168 170 177 82 results from financial instruments at fair value, higher net 159 145 interest income and lower loan loss impairments, partly offset by hig
Slide 30: Czech Republic BU
Czech Republic BU Net F&C income F&C • -16% q-o-q and -8% y-o-y (both excl. FX effects) Amounts in m EUR • Q-o-q decrease driven mainly by lower fees from payment 67 67 70 services (partly seasonal effect, partly due to the SEPA regulation 64 62 64 58 59 (-2m EUR)), higher distribution costs, lowe
Slide 31: Czech Republic BU
Czech Republic BU Operating expenses OPERATING EXPENSES Amounts in m EUR • 200m EUR; +6% both q-o-q and y-o-y, both excluding FX 189 187 204 187 200 effect and bank tax 173 180 179 35 29 1 0 1 • Q-o-q increase excluding FX effect and bank tax was due mainly to higher marketing, ICT and facilities
Slide 32: International Markets BU
International Markets BU Amounts in m EUR 163 NET RESULT 141 Net result of 119m EUR 137 26 21 31 119 Slovakia 38m EUR, Hungary 50m EUR, Ireland 2m EUR 55 93 104 27 and Bulgaria 27m EUR 32 29 85 57 19 2 70 23 11 13 9 50 4 34 62 51 49 14 55 Highlights (q-o-q results) 45 25 38 Higher net interest i
Slide 33: International Markets BU - Slovakia
International Markets BU - Slovakia Net result of 38m EUR NET RESULT Amounts in m EUR 38 Highlights (q-o-q results) 27 Stable net interest income as volume growth was offset by the 23 19 negative impact of lower reinvestment yields and pressure on 18 loan margins on total outstanding portfolio 13
Slide 34: International Markets BU - Hungary
International Markets BU - Hungary Net result of 50m EUR NET RESULT Amounts in m EUR 62 55 Highlights (q-o-q results) 51 49 50 Higher net interest income excluding FX effect driven mainly by 45 volume growth 34 Higher net fee and commission income excluding FX effect 25 Higher net results from
Slide 35: International Markets BU - Ireland
International Markets BU - Ireland Net result of 2m EUR 57 NET RESULT Amounts in m EUR 55 Highlights (q-o-q results) Higher net interest income Net other income was impacted by an additional -1m EUR for 32 the industry wide review of the tracker rate mortgage products originated in Ireland befor
Slide 36: International Markets BU - Bulgaria
International Markets BU - Bulgaria Net result of 27m EUR NET RESULT Amounts in m EUR 31 29 Highlights (q-o-q results) 26 27 Slightly higher total income thanks to higher net interest income 23 21 and higher life insurance result (due chiefly to higher life 19 insurance sales q-o-q) 13 Very stro
Slide 37: Group Centre
Group Centre Net result of -33m EUR The net result for the Group Centre comprises the results NET RESULT Amounts in m EUR from activities and/or decisions specifically made for 5 7 4 group purposes (see table below for components) 0 -3 Highlights (q-o-q results) -17 Q-o-q deterioration was attributa
Slide 38: Overview of contribution of business units to FY19 result
Overview of contribution of business units to FY19 result Amounts in m EUR NET PROFIT – KBC GROUP FY19 ROAC: 22% 2,639 2,575 2,570 2,427 2,489 462 621 863 685 702 2,113 1,948 1,776 1,742 1,787 2015 2016 2017 2018 2019 4Q 9M NET PROFIT – BELGIUM NET PROFIT – CZECH REPUBLIC NET PROFIT – INTERNATIONAL
Slide 39: Balance sheet: loans and deposits continue to grow in most core countries
Balance sheet: Loans and deposits continue to grow in most core countries 10% BE 6% 4% 2% 2% 0% Y-O-Y ORGANIC* VOLUME GROWTH Loans** Retail Deposits*** Loans** Retail Deposits*** mortgages mortgages 13% 4% 5% 8% 8% 4% 3% 3% 2% CR 4% Loans** Retail Deposits*** Loans**** Retail Deposits*** mortgages m
Slide 40: Strong solvency and solid liquidity
KBC Group Section 3 Strong solvency and solid liquidity 40
Slide 41: Strong capital position
Strong capital position Fully loaded Basel 3 CET1 ratio at KBC Group (Danish Compromise) At the end of 2019, the common equity 15.9% 15.8% 16.0% 16.0% 15.7%* 15.6%* 15.4%* 16.1% ** ratio amounted to 16.1% based on the Danish Compromise. The Board of Directors 14.0% ‘Own Capital Target’ decided to
Slide 42: Fully loaded Basel 3 leverage ratio and Solvency II ratio
Fully loaded Basel 3 leverage ratio and Solvency II ratio Fully loaded Basel 3 leverage ratio at KBC Group Fully loaded Basel 3 leverage ratio at KBC Bank 6.4% ** 6.0% 6.1% 6.1% 6.0%* 6.1%* 6.0% * 5.7% 5.2% 5.2% 5.2% 5.2% 5.1% 5.1% 5.0% 4.7% 1Q18 1H18 9M18 FY18 1Q19 1H19 9M19 FY19 1Q18 1H18 9M18 FY1
Slide 43: Strong and growing customer funding base with liquidity ratios remaining very strong
Strong and growing customer funding base with liquidity ratios remaining very strong 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
Slide 44: FY 2019 key takeaways
KBC Group Section 4 FY 2019 key takeaways 44
Slide 45: FY 2019 key takeaways
FY 2019 key takeaways FY19 financial performance FY19 Commercial bank-insurance franchises in core ROE 14.3% markets performed well Cost-income ratio 58%* Customer loans and customer deposits increased Cost-income ratio excluding bank taxes 51%* in most of our core countries Combined rat
Slide 46: Looking forward
KBC Group Section 5 Looking forward 46
Slide 47: Looking forward
Looking forward After the global economic slowdown in 2019, 2020 started with a slightly more positive economic outlook. The euro area economy is expected to gradually recover throughout this year. Very low unemployment rates combined with solid wage inflation, are likely to continue underpinning
Slide 48: FY 2019 performance of KBC Group
KBC Group Annex 1 FY 2019 performance of KBC Group 48
Slide 49: FY 2019 net result amounted to 2,489m EUR
FY 2019 net result amounted to 2,489m EUR Net result fell by 3% y-o-y to 2,489m EUR in 2019, mainly as a result of the following: • Revenues rose by 2% y-o-y mainly due to higher net interest NET RESULT income, net fee & commission income, net other income and result from life and non-life insuran
Slide 50: Higher net interest income and lower net interest margin
Higher net interest income and lower net interest margin Amounts in m EUR NII Net interest income 4,543 +2% 4,618 • Net interest income rose by 2% y-o-y (and by 1% y-o-y 87 507 3 -9% 462 3 53 excluding the impact of the full consolidation of ČMSS) • Net interest income banking rose by 4% y-o-y due
Slide 51: Higher net fee and commission income and AUM
Higher net fee and commission income and AUM F&C Net fee and commission income +1% 1,719 1,734 • Increased by 1% y-o-y (and stabilised y-o-y excluding the impact of the full consolidation of 883 930 ČMSS): o Net F&C from Asset Management Services 1,110 1,088 decreased by 2% y-o-y as a result of lo
Slide 52: Higher non-life insurance sales and excellent combined ratio
Higher non-life insurance sales and excellent combined ratio NON-LIFE SALES (GROSS WRITTEN PREMIUM) 1,626 +8% 1,757 Sales of non-life insurance products • Up by 8% y-o-y mainly thanks to a good commercial performance in all major product lines in our core markets and tariff increases 2018 2019 Amo
Slide 53: Higher life insurance sales and higher VNB
Higher life insurance sales and higher VNB LIFE SALES Sales of life insurance products 1,817 +2% 1,849 • Up by 2% y-o-y o The 4% y-o-y increase in sales of unit-linked 1,112 1,116 products was driven mainly by higher sales of unit- linked products in Belgium o Sales of guaranteed interest products
Slide 54: Lower FV gains and higher other net income
Lower FV gains and higher other net income FV GAINS The lower y-o-y figure for net gains from 231 -21% financial instruments at fair value was attributable to: 181 • Sharply lower dealing room & other income 213 88 • A negative change in ALM derivatives 1 partly offset by: 33 51 93 • A positive ch
Slide 55: Strict cost control
Strict cost control Cost/income ratio (banking): 58% in FY19 OPERATING EXPENSES Adjusted for specific items*, the C/I ratio 4,234 +2% 4,303 amounted to 58% in FY19 (compared with 57% in 462 491 FY18). Excluding bank tax, C/I ratio amounted to +6% 51% in FY19 +1% • Operating expenses excluding ba
Slide 56: Higher asset impairments, benign credit cost ratio and improved impaired loans ratio
Higher asset impairments, benign credit cost ratio and improved impaired loans ratio ASSET IMPAIRMENT 217 14 Impairments amounted to 217m EUR in FY19 (compared with net impairment releases of 17m 203 EUR in FY18). This was attributable chiefly to: 45 • sharply higher loan loss impairments in Belgi
Slide 57: Company profile
KBC Group Annex 2 Company profile 57
Slide 58: KBC Group in a nutshell (1)
KBC Group in a nutshell (1) We want to be among Europe’s best performing financial institutions! By achieving this, KBC wants to become the reference in bank-insurance in its core markets • We are a leading European financial group with a focus on providing bank-insurance products and services to
Slide 59: KBC Group in a nutshell (2)
KBC Group in a nutshell (2) High profitability CET1 generation C/I ratio Combined ratio Net result ROE before any deployment 271 bps 251 bps 2489m 58% 90% EUR 2570m 14% 57% 88% EUR 16% 2018 2019 FY19 FY18 Solid capital position… … and robust liquidity positions Fully loaded Basel 3 CET1 ratio
Slide 60: KBC Group in a nutshell (3)
KBC Group in a nutshell (3) We aim to be one of the better capitalised financial institutions in Europe • Every year, we assess the CET1 ratios of a peer Flexible buffer for M&A 1.7% group of European banks active in the retail, SME and corporate client segments. We position ourselves on the fully
Slide 61: Well-defined core markets: access to 'new growth' in Europe
Well-defined core markets: access to ‘new growth’ in Europe Market share (end 2019) BE CZ SK HU BG IRL 20% 21% Loans and deposits 10% 10% 10% 9%* 3.5m clients 4.2m clients 518 branches 30% 225 branches 24% 101bn EUR loans 13% 16% 30bn EUR loans Investment funds 7% 131bn EUR dep. 40bn EUR dep. IRELAN
Slide 62: Business profile
Business profile BREAKDOWN OF ALLOCATED CAPITAL BY BUSINESS UNIT AS AT 31 DECEMBER 2019 Czech Republic 15% Belgium 60% 21% International Markets 4% Group Centre KBC is a leading player (providing bank-insurance products and services to retail, SME and mid-cap clients) in Belgium, the Czech Republi
Slide 63: Shareholder structure
Shareholder structure SHAREHOLDER STRUCTURE AT END 2019 Other core MRBB 7.5% Cera 11.5% 2.7% KBC Ancora 18.6% 59.7% Free float Roughly 40% of KBC shares are owned by a syndicate of core shareholders, providing continuity to pursue long-term strategic goals. Committed shareholders include the Cera/
Slide 64: KBC Group going forward
KBC Group going forward: Aiming to be among the best performing financial institutions in Europe KBC wants to be among Europe’s best performing financial institutions. This will be achieved by: - Strengthening our bank-insurance business model for retail, SME and mid- cap clients in our core marke
Slide 65: The bank-insurance business model, different countries, different stages
KBC Group going forward: The bank-insurance business model, different countries, different stages of implementation Level 4: Integrated distribution and operation Acting as a single operational company: bank and insurance operations working under unified governance and achieving commercial and non-
Slide 66: More of the same… but differently…
More of the same… but differently… • Integrated distribution model • Client-centricity will be further • Investment in our digital according to a real-time fine-tuned into ‘think client, but presence (e.g., social media) to omni-channel approach design for a digital world’ enhance client relationshi
Slide 67: KBC the reference… Group financial guidance
KBC the reference… Group financial guidance (Investor visit 2017) Guidance End 2019 CAGR total income (‘16-’20)* ≥ 2.25% by 2020 2.3% (CAGR ’16-’19) C/I ratio banking excluding bank tax ≤ 47% by 2020 51% (FY2019) C/I ratio banking including bank tax ≤ 54% by 2020 58% (FY2019) Combined ratio ≤ 94% by
Slide 68: KBC the reference… Group non-financial guidance
KBC the reference… Group non-financial guidance (Investor visit 2017) Non-financial guidance: End 2019 Non-financial guidance: End 2019 CAGR Bank-Insurance clients (CAGR ’16-’19) CAGR Bank-Insurance stable clients (CAGR ’16-’19) (1 Bank product + 1 Insurance product) (3 Bk + 3 Ins products in Belgiu
Slide 69: Inbound contacts via omni-channel and digital channel at 81% in 4Q19
Inbound contacts via omni-channel and digital channel* at KBC Group** amounted to 81% in 4Q19… already above the Investor Visit target (≥ 80% by 2020) • Clients interacting with KBC through at least one of the non-physical channels (digital or through a remote advisory centre), possibly in addition
Slide 70: Realisation of omnichannel strategy – client mix in 4Q19
Realisation of omnichannel strategy* – client mix in 4Q19 CZECH BELGIUM SLOVAKIA HUNGARY IRELAND BULGARIA*** REPUBLIC 13% 9% 12% 21% 22% 26% 32% 25% 26% 32% 13% 46% 45% 60% 2% 6% 55% 57% 49% 49% Omnichannel clients Contact Centre only clients Digital only clients Branch or ATM only clients** * Clien
Slide 71: Digital Investments 2017-2020
Digital Investments 2017-2020 Cashflow 2017-2020 = 1.5bn EUR Operating Expenses 2017-2020 = 1bn EUR Regulatory driven Organic growth developments (IFRS or operational 48 55 9, CRS(*), MIFID, Regulatory efficiencies 43 44 etc.) 20% Strategic 78 83 90 Growth 94 36% Strategic Transformation 112 125 127
Slide 72: Sustainability
Sustainablity The core of our sustainability strategy Strict policies for our day-to-day activities Four focus domains that are close to our core activities Focus on sustainable investments Limiting our Increasing our Financial Stimulating Reducing our own environmental adverse impact positive impac
Slide 73: Sustainability: non-financial environmental targets
Sustainablity Our non-financial environmental targets Indicator Goal 2019 2018 Share of renewables in total energy credit Minimum 50% by 2030 57% 43.8% portfolio Financing of coal-related activities1 Immediate stop of coal-related activities and gradual exit in 36m EUR exposure 34m EUR exposure the
Slide 74: Other items
KBC Group Annex 3 Other items 74
Slide 75: Loan loss experience at KBC
Loan loss experience at KBC FY19 FY18 FY17 FY16 FY15 AVERAGE CREDIT COST CREDIT COST CREDIT COST CREDIT COST CREDIT COST ‘99 –’19 RATIO RATIO RATIO RATIO RATIO Belgium 0.22% 0.09% 0.09% 0.12% 0.19% n/a Czech 0.04% 0.03% 0.02% 0.11% 0.18% n/a Republic International -0.07% -0.46% -0.74% -0.16% 0.32% n
Slide 76: Ireland: impaired loans ratio continues to improve
Ireland: impaired loans ratio continues to improve LOAN PORTFOLIO €m OUTSTANDING IMPAIRED LOANS IMPAIRED LOANS PROVISIONS IMPAIRED LOANS The Irish economy sustained positive momentum PD 10-12 PD 10-12 PD 10-12 COVERAGE throughout 2019 in spite of elevated uncertainty related to Owner occupied mort
Slide 77: Sectorial breakdown of outstanding loan portfolio
Sectorial breakdown of outstanding loan portfolio (1) (175bn EUR*) of KBC Bank Consolidated Services 11% Distribution Oil, gas & other fuels Electricity 7% Hotels, bars & restaurants Shipping 0.7% 1.6% 0.8% 0.6% Private Persons Food producers 42% Machinery & heavy equipment 1.0% 1.7% 14% Rest Chemic
Slide 78: Geographical breakdown of the outstanding loan portfolio
Geographical breakdown of the outstanding loan portfolio (2) (175bn EUR*) of KBC Bank Consolidated Asia North America Rest Other CEE Other W-Eur 1.6% 0.4% 8.6% 1.5% Bulgaria 1.5% Hungary 2.0% 3.1% Slovakia 4.9% Ireland 5.9% 52.9% Belgium 17.6% Czech Rep. * It includes all payment credit, guarantee c
Slide 79: Impaired loans ratios, of which over 90 days past due
Impaired loans ratios, of which over 90 days past due KBC GROUP BELGIUM BU 5.9% 2.6% 2.6% 2.6% 5.5% 5.5% 2.4% 2.4% 2.3% 2.3% 2.4% 4.3% 4.3% 3.7% 3.5% 3.5% 3.5% 3.2% 3.2% 1.3% 1.3% 2.5% 2.4% 1.2% 1.2% 1.2% 1.1% 1.1% 1.1% 2.1% 2.0% 1.9% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q18 2Q18 3Q18 4Q18 1Q19
Slide 80: Cover ratios
Cover ratios KBC GROUP BELGIUM BU 68.1% 67.7% 66.8% 65.7% 65.6% 67.6% 66.4% 66.0% 63.4% 64.4% 62.5% 64.2% 63.4% 59.9% 60.4% 60.3% 47.8% 48.0% 47.2% 45.9% 44.8% 45.3% 44.2% 44.4% 43.0% 42.2% 42.0% 42.0% 41.6% 42.1% 42.3% 41.7% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Slide 81: Fully loaded B3 CET1 based on the Danish Compromise from 3Q19 to 4Q19
Fully loaded B3 CET1 based on the Danish Compromise (DC) from 3Q19 to 4Q19 DELTA AT NUMERATOR LEVEL (BN EUR) 2.0 -1.5 15.0 0.2 0.1 0.0 15.9 Fully loaded B3 common equity ratio amounted to 16.1%*** at end FY19 based B3 CET1 at FY19 net result Dividend payout DividendJan 2012 Remeasurement payment O
Slide 82: Overview of B3 CET1 ratios at KBC Group
Overview of B3 CET1 ratios at KBC Group Method Numerator Denominator B3 CET1 ratio FICOD*, fully loaded 16,610 111,526 14.9% DC**, fully loaded 15,948 99,071 16.1% DM***, fully loaded 15,078 93,936 16.1% * FICOD: Financial Conglomerate Directive ** DC: Danish Compromise *** DM: Deduction Method 82
Slide 83: Revised MREL target is slightly lower at 9.67% as % of TLOF
Revised MREL target is slightly lower at 9.67% as % of TLOF New target applicable as from 31-12-2021, previous target ceases to apply since December 2019 The resolution plan for KBC is based on a Single Point of Entry (SPE) approach at KBC Group level, with bail-in as the preferred resolution tool
Slide 84: Definition of MREL eligible instruments has been narrowed
Definition of MREL eligible instruments has been narrowed As of December 2019, 1bn EUR instruments no longer eligible for SRB to satisfy the MREL target Eligible instruments to satisfy the MREL target are defined in the ‘2018 SRB Policy for the 2nd wave of resolution plans’ published on 16/01/2019
Slide 85: Available MREL (fully loaded) as a % of TLOF
Available MREL (fully loaded) as a % of TLOF Consolidated approach Hybrid approach Available MREL as a % of TLOF (fully loaded) Available MREL as a % of TLOF (fully loaded) 10.1% 10.1% 10.2% 10.4% 9.6% 9.6% 9.8% 10.0% 9.4% 9.3% 9.7% 8.9% 8.9% 9.3% 8.8% 8.3% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q
Slide 86: Government bond portfolio – Notional value
Government bond portfolio – Notional value Notional investment of 46.1bn EUR in government bonds (excl. trading book) at end of FY19, primarily as a result of a significant excess liquidity position and the reinvestment of insurance reserves in fixed-income instruments Notional value of GIIPS ex
Slide 87: Government bond portfolio – Carrying value
Government bond portfolio – Carrying value Carrying value of 49.4bn EUR in government bonds (excl. trading book) at end of FY19, primarily as a result of a significant excess liquidity position and the reinvestment of insurance reserves in fixed-income instruments Carrying value of GIIPS exposur
Slide 88: Upcoming mid-term funding maturities
Upcoming mid-term funding maturities Breakdown Funding Maturity Buckets In December 2019, KBC Bank NV decided to early repay the (Including % of KBC Group’s balance sheet) remaining part of the TLTRO II (i.e. 2.545bn EUR) and entered 8000,000 2.6% into the TLTRO III for 2.5bn EUR. Current outstand
Slide 89: Glossary (1)
Glossary (1) AQR Asset Quality Review B3 Basel III CBI Central Bank of Ireland [technical insurance charges, including the internal cost of settling claims / earned premiums] + [operating expenses / written premiums] (after reinsurance Combined ratio (non-life insurance) in each case) Common equity
Slide 90: Glossary (2)
Glossary (2) MARS Mortgage Arrears Resolution Strategy MREL Minimum requirement for own funds and eligible liabilities PD Probability of default Return on allocated capital (ROAC) for a [result after tax, including minority interests, of a business unit, adjusted for income on allocated capital inst
Slide 91: Contacts / Questions
Contacts / Questions Download the KBC IR APP Company website: www.kbc.com 91