Kbc Group N.v. · EURONEXT:KBC
Kbc — Debt Investor Presentation (February 2023)
53 slides from Kbc's debt investor presentation, Feb 17, 2023
Slide 1: KBC Group Debt presentation 4Q 2022
1 Disclaimer This document should be read together with the press release of 17 February 2023 “KBC confirms that ČSOB (Czech Republic) was delivered an arbitral award in the arbitration proceedings against ICEC- Holding” , in order for the reader to have a complete view on the 2022 financial results
Slide 2: Well-defined core markets
Well-defined core markets 2 BELGIUM BU INTERNATIONAL MARKETS BU SK HU BG GDP GROWTH in %, KBC Economics debt to 4% of assets 4% of assets 3% of assets 61% of assets GDP ratio 0.8m clients 1.6m clients 2.4m clients 3.8m clients 106% 110 branches 195 branches 266 branches 420 branches 6.2% 11bn EUR lo
Slide 3: What differentiates us from peers
What differentiates us from peers 3 Unique integrated Successful Firmly embedded Core shareholder bank-insurance+ model digital-first approach sustainability strategy structure through KATE • We offer an integrated response to our • Our Digital interaction with clients • As a company that aims to su
Slide 4: KBC Group's legal structure and issuer of debt instruments
KBC Group’s legal structure and issuer of debt instruments 4 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 • To ensure that KBC’s HoldCo senior debt
Slide 5: Latest credit ratings
Latest credit ratings 5 Latest updates: Moody’s S&P Fitch • 28 July 2022: Moody’s changed the outlook to positive and Senior Unsecured Baa1 A- A reflected the expectation that KBC's strong earnings generated in recent years will continue to be supported by Tier II Baa2 BBB BBB+ strong revenue growth
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 Agency ESG rating of 28th of December 2022 (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 Ri
Slide 7: Our financial footprint
Our financial footprint 7 high profitability solid capital position CET1 RATIO (FULLY LOADED, DANISH COMPROMISE) Combined C/I ratio* ratio Net result in % 54% | FY22 89% | FY22 2,864m | FY22 15.8% 16.3% 16.0% 17.1% 17.6% 15.5% 15.4% 55% | FY21 2,614m | FY21 89% | FY21 * Adjusted for specific items 1
Slide 8: Our non-financial targets
Our non-financial targets 8 Customer NPS ranking Bank-insurance (BI) clients Top-3 BI CLIENTS BI STABLE CLIENTS Top-2 Top-2 Top-2 in % in % 2020 2021 2022 2023 77% 78% 81% 85% 22% 23% 25% 27% • KBC is 2nd in customer NPS (Net Promoter Score) ranking 2020 2021 2022 2023 2020 2021 2022 2023 based on w
Slide 9: Some recent ESG realisations
Some recent ESG realisations 9 ESG ESG ESG Environmental Social Governance • Disclosure of 2030-2050 climate • 32bn EUR in Responsible Investing funds • Top level responsibility for sustainability targets for our lending portfolio and climate change – anchored in our and responsible investing funds
Slide 10: Our environmental footprint
Our environmental footprint 10 DIRECT footprint scope*: Measure, reduce and set clear targets on our direct footprint scope already since 2015. • At YE 2021, we achieved the target of 100% of renewable energy (in % of own electricity consumption) • We already substantially reduced our own GHG emissi
Slide 11: Our 2030 Climate targets
Our 2030 Climate targets 11 INDIRECT footprint Specific targets(1) for reducing future GHG emissions(2) of our lending and asset management business • In September 2019, KBC strengthened its climate commitment by signing the UN Collective Commitment to Climate Action (3) (CCCA) • We aligned our busi
Slide 12: Key takeaways | Excellent net result of 818m EUR over 4Q22
Key takeaways | Excellent net result of 818m EUR over 4Q22 12 Excellent 4Q22 net result of 818m EUR Highlights NET RESULT • Commercial bank-insurance franchises in core markets performed excellently in m EUR • Customer loans and customer deposits increased y-o-y in all our core countries (on a compa
Slide 13: Key takeaways | Capital deployment
Key takeaways | Capital deployment 13 Dividend policy & Capital deployment capital distribution For FY22: • A total gross dividend of 4.0 EUR per share will be proposed to the AGM for the (as of 2022) accounting year 2022 (of which an interim dividend of 1.0 EUR per share already paid in November 20
Slide 14: Higher net interest income
Higher net interest income 14 NET INTEREST INCOME Net interest income (1 416m EUR) in m EUR 1,416 • NII increased by 9% q-o-q and by 20% y-o-y, the latter due partly to the consolidation of Raiffeisenbank Bulgaria as of 3Q22 (+37m EUR NII in 4Q22) 1,297 112 1,248 • On a comparable basis, NII incre
Slide 15: Lower fee and commission income
Lower fee and commission income 15 Net fee and commission income (451m EUR) NET FEE & COMMISSION INCOME in m EUR • Down by 3% q-o-q and by 6% y-o-y (on a comparable basis, down by 3% q-o-q and by 9% y-o-y) 467 479 482 463 451 • Q-o-q decrease was mainly the result of the following: 441 450 451 o N
Slide 16: Non-life and life sales significantly up y-o-y
Non-life and life sales significantly up y-o-y 16 NON-LIFE SALES (GROSS WRITTEN PREMIUMS) Sales of non-life insurance products in m EUR • Up by 7% y-o-y (growth in all countries and almost all classes, but chiefly in the classes ‘Motor 590 645 Comprehensive Cover’ and ‘Property’, as a combination
Slide 17: Sharply higher FIFV result and net other income
Sharply higher FIFV result and net other income 17 FIFV The 60m EUR q-o-q increase in FIFV was attributable mainly to: in m EUR 143 117 • Significantly higher dealing room 127 • Higher net result on equity instruments (insurance) & other income 106 89 83 90 Dealing room 29 partly offset by: 53 23
Slide 18: Costs in line with guidance
Costs in line with guidance 18 OPERATING EXPENSES FY22 opex excluding bank taxes amounted to 4.17bn EUR, in line with our in m EUR 1,520 guidance of 4.15bn EUR 1,320 Operating expenses in FY22 excluding bank taxes, changes in the 514 1,160 1,025 1,078 1,071 1,067 consolidation scope, one-offs an
Slide 19: Net loan loss impairment charges & excellent credit cost ratio
Net loan loss impairment charges & excellent credit cost ratio 19 Other impairments ASSET IMPAIRMENT ECL for geopolitical, emerging and Covid risks Net loan loss impairment charges on lending book combined with an increased in m EUR; negative sign is a release Impairments on financial assets at AC
Slide 20: Outstanding ECL for geopolitical and emerging risks amounts to 429m EUR
Outstanding ECL for geopolitical and emerging risks amounts to 429m EUR 20 Y-O-Y CHANGE IN THE OUTSTANDING ECL FOR OUTSTANDING ECL BY RISK DRIVERS AT YE22 (and q-o-q change) COVID, GEOPOLITICAL & EMERGING RISKS in m EUR; negative sign is a release in m EUR; negative sign is a release A No direct KBC
Slide 21: Macroeconomic impact of the Russia/Ukraine conflict
Macroeconomic impact of the Russia/Ukraine conflict 21 PRIMARY ENERGY CONSUMPTION | DECOMPOSITION NATURAL GAS STOCK LEVEL | AS ON 31/JAN/23 in fraction of Joules consumed; Source: BP in % of capacity; Source: KBC Economics based on GIE 82 79 76 Other 69 68 renewables Hydro 58 Nuclear 65 52 50 Presen
Slide 22: Loan loss experience at KBC
Loan loss experience at KBC 22 CREDIT COST RATIO* in %; Credit cost ratio: amount of losses incurred on troubled loans as a % of total average outstanding loan portfolio AVERAGE FY22 FY21 FY20 FY19 FY18 FY17 ‘99 –’22 Belgium BU 0.03% -0.26% 0.57% 0.22% 0.09% 0.09% n/a Czech Republic BU 0.13% -0.42%
Slide 23: Loan portfolio breakdown by IFRS 9 ECL stage
Loan portfolio breakdown by IFRS 9 ECL stage 23 STAGE 3 RATIO | BELGIUM BU TOTAL LOAN PORTFOLIO OUTSTANDING – BY IFRS9 ECL STAGE* in % in %; as % of total Group loan portfolio outstanding 2.4% 2.3% 2.2% 2.1% 1.9% 1.9% 1.8% 19.9% 17.6% 16.4% 14.9% 13.6% FY19 FY20 FY21 1Q22 1H22 9M22 FY22 11.3% 11.5%
Slide 24: Cover ratios
Cover ratios 24 COVER RATIO – BY IFRS9 ECL STAGE* STAGE 3 COVER RATIO | BELGIUM BU in % in % 41.7% 45.6% 42.6% 43.0% 42.7% 42.6% 39.6% 48.2% 48.5% 49.5% 47.1% 47.1% 44.7% 42.0% Stage 3 FY19 FY20 FY21 1Q22 1H22 9M22 FY22 STAGE 3 COVER RATIO | CZECH REPUBLIC BU in % 47.2% 48.7% 49.4% 47.2% 46.8% 48.2%
Slide 25: KBC Group consolidated balance sheet - FY22
KBC Group consolidated balance sheet - FY22 25 Total assets Total liabilities and (EUR 356bn) equity (EUR 356bn) Credit quality 178 224 Capital adequacy & liquidity position 65 21 2 13 28 18 97 9 12 43 Loan book (loans and advances to customers) Deposits from customers Investment portfolio (equity a
Slide 26: Diversified loan portfolio
Diversified loan portfolio 26 TOTAL LOAN PORTFOLIO OUTSTANDING – BY SEGMENT TOTAL LOAN PORTFOLIO OUTSTANDING – BY SECTOR as % of total Group loan portfolio outstanding* as % of total Group loan portfolio outstanding* Corporate Mortgages 39.6% 35.9% Retail Consumer Finance 3.5% Retail 43.2% Services
Slide 27: Strong capital position with substantial buffer to MDA
Strong capital position with substantial buffer to MDA 27 CAPITAL REQUIREMENTS AND DISTANCE TO MAXIMUM DISTRIBUTABLE AMOUNT (MDA) RESTRICTIONS AS AT 31 DEC’22 (FULLY LOADED, B3) in % Regulatory requirement 18.4 KBC Group Fully loaded B3 common equity ratio amounted to 15.4% at the 16.8 1.6 Tier 2 en
Slide 28: Leverage ratio, Solvency II ratio and liquidity ratios
Leverage ratio, Solvency II ratio and liquidity ratios 28 LEVERAGE RATIO | KBC GROUP SOLVENCY II RATIO | KBC INSURANCE LIQUIDITY RATIOS | KBC GROUP fully loaded, Basel 3 leverage SII ratio LCR NSFR ratio 5.3% * * 203% 152% 136% FY22 FY22 FY22 FY22 5.2% in 9M22 227% in 9M22 155% in 9M22 140% in 9M22
Slide 29: Above resolution requirements of 2022 in terms of MREL
Above resolution requirements of 2022 in terms of MREL 29 MREL targets MREL actuals in bn EUR in % of RWA in % of LRE 30.3 27.5% 8.7% • The resolution plan for KBC is based on a Single Point of Entry • The MREL ratio in % of RWA increased from (SPE) approach at KBC Group level, with bail-in as the p
Slide 30: Upcoming mid-term funding maturities
upcoming mid-term funding maturities 30 TOTAL OUTSTANDING FUNDING MATURITY BUCKETS in % in m EUR % of KBC Group B/S KBC Bank has 6 solid sources of long-term 17% Covered bonds 0.7% 1.2% 1.1% 1.1% 0.6% 0.2% 0% 0.7% funding: 4.500 Subordinated T2 • Retail term deposits 11% 4.000 Subordinated T1 • Reta
Slide 31: Strong and growing customer funding base
strong and growing customer funding base 31 • 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 compared to
Slide 32: KBC has strong buffers cushioning senior debt at all levels
KBC has strong buffers cushioning senior debt at all levels 32 BUFFERS FOR SENIOR LEVEL DEBT AT KBC GROUP, KBC BANK & KBC INSURANCE in m EUR KBC Group Senior 11 522 Tier 2 2 183 KBC Bank Additional Tier 1 KBC Insurance 1 500 Tier 2 Subordinated on loan by KBC Group 11 522 CET1 (transitional) 500 15
Slide 33: Covered bond programme | Overview
Covered bond programme | Overview 33 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 covered ex
Slide 34: Covered bond programme | Belgian legal framework
Covered bond programme | Belgian legal framework 34 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 by a b
Slide 35: Covered bond programme | Strong legal protection mechanisms
Covered bond programme | Strong legal protection mechanisms 35 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 that th
Slide 36: KBC Green Bond framework and issuances
KBC Green Bond framework and issuances 36 Aligned with best practices and market Certification developments • The Climate Bonds Standard Board approved the certification of the KBC Green Bonds • The KBC Green Bond Framework is in line with the Green Bond Principles (2017) • Second party opinion prov
Slide 37: KBC Social Bond framework and issuances
KBC Social Bond framework and issuances 37 Aligned with best practices and market Clear Social Bond governance developments Use Social Bond Eligible Assets include financing in Belgium in the following categories: of • Access to Essential Services – Education • Affordable Housing • By adding the soc
Slide 38: Looking forward
Looking forward 38 While at the end of 2022 some of the headwinds to the global economy turned into tailwinds (mild winter weather, significant structural savings in gas consumption…) and despite strong economic resilience last year, we expect a broad-based slowdown Inflation may have peaked in
Slide 39: 2023 NII sensitivity
2023 NII sensitivity 39 NII EVOLUTION WITH PASS-THROUGH SENSITIVITY in bn EUR 5.7bn +0.15bn 0.9bn 5.2bn 0.2bn 0.1bn 0.2bn 4.8bn FY22 KBC Ireland KBC Bank TLTRO, FY22 volume & FY23 sensitivity if NII disposal Bulgaria ECB Tiering NII margin impact NII 30% PT on EUR full annum & negative like-for-like
Slide 40: Long-term / 3-year financial guidance
Long-term / 3-year financial guidance 40 3-year financial guidance* CAGR total income (‘22-’25) + 6.0% by 2025 ⇒ Jaws of ± 4.2% CAGR OPEX excl. bank taxes (’22-’25) + 1.8% by 2025 ⇒ C/I ratio excl BT ±43% Combined ratio ≤ 92% as of now Surplus capital ** > 15% as of now * Our long-term financial gui
Slide 41: Annex 1 | Summary of the different business units performance
Annex 1 | Summary of the different business units performance 41 GROUP Of which KBC BELGIUM CZECH SLOVAKIA HUNGARY BULGARIA CENTRE IRELAND GROUP BU REPUBLIC BU INTERNATIONAL MARKETS BU GROUP CENTRE BU 4Q22 NET RESULT (in million euros) 818m 525m 159m 17m 104m 48m -35m 33m FY22 ROAC (in %) 22% 22% 38
Slide 42: Annex 2 | FY 2022 Net result amounted to 2,864m EUR
Annex 2 | FY 2022 Net result amounted to 2 864m EUR 42 NET RESULT Net result rose by 10% y-o-y to 2,864m EUR in 2022 (and +8% y-o-y excluding Raiffeisenbank in m EUR Bulgaria), mainly as a result of the following 2,864 • Revenues rose by 14% y-o-y (and +13% y-o-y excluding Raiffeisenbank Bulgaria)
Slide 43: Annex 2 | FY 2022 Higher NII and NIM
Annex 2 | FY 2022 Higher NII and NIM 43 NET INTEREST INCOME Net interest income (5 161m EUR) in m EUR • Net interest income rose by 16% y-o-y due mainly to : o Increasing reinvestment yield in all core countries +16% 5,161 o Good loan and deposit volume growth 428 Insurance NII o Increased income
Slide 44: Annex 2 | FY 2022 Higher net fee and commission income and lower AUM
Annex 2 | FY 2022 Higher net fee and commission income and lower AUM 44 NET FEE & COMMISSION INCOME in m EUR 1,847 Net fee and commission income (1,847m EUR) 1,836 36 • Increased by 1% y-o-y +1% Raiffeisenbank Bulgaria o Net F&C from Asset Management Services decreased by 2% y-o-y driven entirely
Slide 45: Annex 2 | FY 2022 Non-life and life insurance sales significantly up y-o-y
Annex 2 | FY 2022 Non-life and life insurance sales significantly up y-o-y 45 Sales of non-life insurance products NON-LIFE SALES (GROSS WRITTEN PREMIUMS) in m EUR • Up by 8% y-o-y thanks to growth in all classes +8% The non-life combined ratio for FY22 amounted to an excellent 89% (89% in FY21)
Slide 46: Annex 2 | FY 2022 Costs in line with guidance
Annex 2 | FY 2022 Costs in line with guidance 46 OPERATING EXPENSES in m EUR +10% 4,818 Operating expenses excluding bank taxes rose by 8% y-o-y (and +6% y-o-y excluding Raiffeisenbank Bulgaria) to 4.17bn EUR, in line with the guided 4.15bn 4,396 646 Bank tax EUR 525 51 Raiffeisen Bank Bulgaria +6
Slide 47: Annex 3 | Outstanding benchmarks as at end of January 2023
Annex 3 | Outstanding benchmarks as at end of January 2023 47 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 wr
Slide 48: Annex 4 | KBC's covered bond programme characteristics
Annex 4 | KBC’s covered bond programme characteristics 48 INTEREST RATE TYPE GEOGRAPHICAL ALLOCATION PORTFOLIO DATA AS OF 31 DECEMBER 2022 in % in % in EUR Brussels Hoofdstedelijk gewest 6% Waals Brabant Fixed 82% Oost- 1% 1 y / 1y 6% Vlaanderen 18% Total Outstanding Principal Balance 16 549 426 188
Slide 49: Annex 4 | Key cover pool characteristics
Annex 4 | Key cover pool characteristics 49 FINAL MATURITY DATE SEASONING 25 90 20 Weighted Average 80 Seasoning: 70 Weighted Average 15 59 months 60 Remaining Maturity: 50 185 months 40 10 30 20 5 10 0 0 2018 - 2022 2023 - 2027 2028 - 2032 > 2032 0 - 12 13 - 24 25 - 36 37 - 48 49 - 60 61 - 72 73 -
Slide 50: Annex 5 | Belgian real estate market
Annex 5 | Belgian real estate market 50 House price dynamics in Belgium are The overvaluation of Belgian real estate The y-o-y house price increase slowed to is estimated at some 12% in Q3 2022 slowing down 5.4% in Q3 2022, down from 8.2% in Q3 2021 KBC Group passport Business profile Financial perf
Slide 51: Glossary
51 Glossary B3 / B4 Basel III / Basel IV CBI Central Bank of Ireland Combined ratio (non-life [technical insurance charges, including the internal cost of settling claims / earned premiums] + [operating expenses / written premiums] (after reinsurance in each case) insurance) Common equity ratio [com
Slide 52: Contacts / questions
52 Contacts / questions More information Download Johan Thijs the KBC IR APP • Company website KBC KBC Group CEO • Quarterly Report • Table of results (Excel) Quarterly Reports • Quarterly presentation • Debt presentation Presentations Luc Popelier KBC Group CFO Upcoming 2023 events Kurt De Baenst d
Slide 53: Disclaimer
53 Disclaimer • 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 incomplete. KB
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