KBC Group N.V. · EURONEXT:KBC
KBC — Q1 2022 Earnings Presentation
40 slides from KBC's earnings presentation, 2022
Slide 1: KBC Group Press presentation 1Q 2022 results
KBC Group Press presentation Johan Thijs, KBC Group CEO 1Q 2022 results Luc Popelier, KBC Group CFO More infomation: www.kbc.com KBC Group - Investor Relations Office - Email: 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: 1Q 2022 key takeaways
1Q 2022 key takeaways Commercial bank-insurance franchises in core markets performed excellently 1Q22 Customer loans and customer deposits increased y-o-y in ROE 14%2 most of our core countries (on a comparable basis) Cost-income ratio excluding bank taxes 48% We have now realised our goal
Slide 4: Update on the Russia/Ukraine conflict (including emerging risks)
Update on the Russia/Ukraine conflict (including emerging risks) Limited impact on KBC Provisions for direct exposure on credit portfolio 55m EUR • Direct loan exposure to Russia, Belarus & Ukraine amounts to approx. 55m EUR, mostly commercial exposure to Russian banks Indirect credit exposure to Ru
Slide 5: 1Q 2022 performance of KBC Group
KBC Group 1Q 2022 performance of KBC Group 5
Slide 6: Overview of building blocks of the 1Q22 net result
Overview of building blocks of the 1Q22 net result 663 2.116 557 458 59 143 232 -514 1Q21 4Q21 1Q22 482 1.200 -1.007 -22 -3 458 -113 NII NFCI Technical FIFV Other Total Income Bank taxes Opex excl. Impairments Other Income taxes 1Q22 Net Insurance Income** bank tax Result Result* Q-o-Q +2% +1% +13%
Slide 7: Net result per business unit
Net result per business unit Excellent contribution from all countries BE BU CZ BU IM BU q-o-q q-o-q q-o-q 603 Bulgaria Hungary 528 Ireland Slovakia 486 140 380 209 30 198 207 88 13 33 56 22 29 74 168 8 75 62 17 46 35 227 123 43 15 22 29 18 22 -37 -282 1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2Q21 3Q21 4Q21 1Q
Slide 8: Net interest income
Net interest income Higher net interest income (NII) and net interest margin (NIM) Net Interest Income 1 177 1 200 NII increased by 2% q-o-q and 12% y-o-y, driven primarily by: 1 068 26 28 (+) organic loan volume growth, rate hikes in the Czech Republic (and to a lesser 16 101 100 extent also in Hun
Slide 9: Net fee and commission income
Net fee and commission income Higher net fee and commission income Net fee and commission income Net fee and commission income up by 1% q-o-q and by 9% y-o-y Q-o-q increase was the result of the following: Net F&C income from Asset Management Services decreased by 2% q-o-q: a drop in management fe
Slide 10: Non-life insurance
Non-life insurance Non-life premium income up y-o-y and excellent combined ratio Non-Life (Gross earned premiums) Y-o-y increase of gross earned premium Non-Life by +8% in 1Q22 453 486 487 1Q21 4Q21 1Q22 The non-life combined ratio for 1Q22 amounted to an excellent 83% (78% Combined ratio non-life i
Slide 11: Life insurance
Life insurance Life sales up q-o-q and y-o-y Life sales Sales of life insurance products increased by 1% q-o-q and by 541 544 16% y-o-y 471 The q-o-q increase was driven mainly by higher sales of unit- linked products in Belgium partly offset by a decrease of sale 251 of guaranteed interest produc
Slide 12: Net result from financial instruments at fair value
Net result from financial instruments at fair value Strong increase of net result from financial instruments at fair value Fair value result The q-o-q increase in FIFV was attributable mainly to: • Significantly higher dealing room and other income: higher trading and sales desks revenues due to upw
Slide 13: Net other income
Net other income Stable net other income Net other income Net other income amounted to 54m EUR, slightly higher than the normal run rate of around 50m EUR per quarter. 1Q22 includes some one-offs 53 56 54 (such as a positive 7m EUR related to a legal file in the Czech Republic) 1Q21 4Q21 1Q22 Amou
Slide 14: Operating expenses
Operating expenses Costs excluding bank taxes and one-off items decreased q-o-q FY21 1Q22 Operating expenses Cost/Income ratio (group)* 55% 53% 1 520 Operating expenses in 1Q22 at first sight increased by 41% q-o-q and by 15% y-o-y, 1 320 strongly influenced by the following: 514 Extraordinary s
Slide 15: Operating expenses: overview of bank taxes
Operating expenses Overview of bank taxes* BELGIUM BU KBC GROUP Bank taxes of 354m EUR in 1Q22. Bank taxes of 514m EUR in On a pro rata basis, bank taxes 354 1Q22. On a pro rata basis, bank 514 311 represented 13.9% of 1Q22 opex taxes represented 12.8% of 99 424 154 70 at the Belgium BU 1Q22 opex at
Slide 16: Asset impairments
Asset impairments Net loan loss impairment releases and excellent credit cost ratio Asset impairment Net loan loss impairment releases (negative sign is write-back) Loan loss impairment releases of 15m EUR in 1Q22 (compared with 62m 22 EUR in 4Q21) due to: • 33m EUR loan impairment releases • a re
Slide 17: Outstanding ECL for geopolitical, emerging and Covid risks
Outstanding ECL for geopolitical, emerging and Covid risks q-o-q release for Covid risk offset by geopolitical & emerging risks Q-o-q change in the outstanding ECL for geopolitical, emerging and Covid risks Q-o-q 18m • During 1Q 2022, we updated the impact assessment of risks that could adversely af
Slide 18: Update on the Russia/Ukraine conflict (1/2)
Update on the Russia/Ukraine conflict (including emerging risks) (1/2) Estimated impact on credit exposure A No No direct direct subsidiaries subsidiaries KBC has no direct subsidiaries in Russia (R), Belarus (B) or Ukraine (U) Direct credit exposure amounts to approx. 55m EUR B Very limited direct
Slide 19: Update on the Russia/Ukraine conflict (2/2)
Update on the Russia/Ukraine conflict (including emerging risks) (2/2) Macro economic impact of the Russia/Ukraine conflict GDP Outlook downward revised Exports/imports to Russia/Ukraine: Impact limited Rising commodity prices feed into inflation Outlook GDP Growth Inflation Period avg in % April Pr
Slide 20: Diversified loan portfolio
Diversified loan portfolio Total loan portfolio outstanding by sector Total loan portfolio outstanding as a % of total Group portfolio outstanding(1) by segment(1) 194bn EUR(2) Corporate 35.4% 43.5% Retail Mortgages 40.3% Consumer Finance 3.2% Retail 21.1% Services 10.1% SME Distribution 7.6% Financ
Slide 21: Balance sheet: loans and deposits continue to grow
Balance sheet: Loans and deposits continue to grow in most countries 11% 8% 7% 8% 4% BE Loans** Retail Deposits*** -7% Y-O-Y ORGANIC* VOLUME GROWTH mortgages Loans** Retail Deposits*** mortgages 18% 17% 7% 7% 8% 8% 5% 6% CR 13% 4% Loans** Retail mortgages Deposits*** Loans** Retail Deposits*** Loans
Slide 22: Strong solvency and solid liquidity
KBC Group Strong solvency and solid liquidity 22
Slide 23: Common equity ratio
Common equity ratio Strong capital position Fully loaded Basel 3 CET1 ratio at KBC Group The fully loaded common equity ratio amounted to 15.3% at the end of (Danish Compromise) 1Q22 based on the Danish Compromise. • The q-o-q decrease in 1Q22 is mainly related to increase of the risk weighted ass
Slide 24: Liquidity ratios
Liquidity ratios Liquidity continues to be very solid KBC Group’s liquidity ratios NSFR* LCR** 148% 149% 167% 162% Regulatory Requirement ≥ 100% FY21 1Q22 FY21 1Q22 NSFR is at 149% and LCR is at 162% by the end of 1Q22 • Both ratios were well above the regulatory requirement of 100% due to a stron
Slide 25: Looking forward
KBC Group _Z Looking forward Diffeverdty THE NEXT LEVEL 2. 25 KBC
Slide 26: Looking forward
Looking forward Repercussions of the Russian invasion of Ukraine hit the global economy at a time that it had still not fully recovered from the pandemic crisis High-for-longer energy prices imply lower growth and significantly higher inflation in 2022 European economy is hit more severely tha
Slide 27: Message on the tragedy in Ukraine
The tragedy unfolding in Ukraine has caused immense human suffering and we express our heartfelt solidarity with all the victims of the conflict, both those in the region itself and the large number of refugees in various guest countries in Europe. Particularly in these challenging times, I would li
Slide 28: Annex: Differently: the next level
KBC Group Annex 1 Differently: the next level 28
Slide 29: KATE
KATE Kate4MassRetail Kate4Business Kate is a personal virtual assistant that engages with our Kate will also engage with our SME and corporate retail customers to save them time and money. clients with relevant and actionable insights that are Kate engages both in a reactive way (You2Kate) and a per
Slide 30: KBC is becoming a data-driven organisation with KATE at the core
KBC is becoming a data-driven organisation with KATE at the core Kate is more than an interface towards customers. It also refers to the AI-enhanced software at our center: the Kate brain. The Kate brain will be the driving force behind data-driven decision making, product design and development, ma
Slide 31: Guidance as provided on February 10th
Guidance as provided on February 10th 3-year and long-term financial guidance 3-year financial guidance* CAGR total income (‘21-’24) CAGR OPEX excl. bank taxes (’21-’24) + 4.5% + 1.5% by 2024 by 2024 } => Jaws of ± 3% => C/I ratio excl BT ±47% in 2024 Combined ratio ≤ 92% as of now Surplus capital *
Slide 32: Digital investment 2022-2024
Differently: the next level Digital investment 2022-2024 OPEX excl. bank taxes 2021 2024 8% 10% CAGR (21-24) = +1.5% 92% 90% Other Digital first Forecast Cashflow only digital first strategy Forecast OPEX only digital first strategy 2022-2024 = 1.4bn EUR Amounts in m EUR 2022-2024 = 1.1bn EUR 2022 4
Slide 33: Dividend policy & capital distribution as of 2022
Differently: the next level Dividend policy & capital distribution as of 2022 • 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 discreti
Slide 34: Translating strategy into non-financial targets (1)
Differently: THE NEXT level Translating strategy into non-financial targets Update on our 4 operational targets (1) Customer NPS ranking % bank-insurance (BI) clients Top-3 85% Top-2 77% 78% Top-2 22% 23% 27% 2020 2021* target '23 2020 BI 2021 BI target '23 2020 2021 target '23 KBC is 3rd in custo
Slide 35: Translating strategy into non-financial targets (2)
Differently: THE NEXT level Translating strategy into non-financial targets Update on our 4 operational targets (2) % digital sales STP score* (bank / insurance) (straight through processing) 40% 39% 32% 25% 80% 60% 49% 19% 33% 41% 15% 25% 2020 2021 target 2020 2021 target 2020 2021 target '23 2020
Slide 36: ESG ratings and indices
ESG ratings and indices Ahead of the curve Agencies ESG rating of 29th of April 2022 (previous score) Position versus industry average D- A • Financial services average B A- (A-) Severe Risk High Risk Medium Risk Low Risk Negligible Risk • 3rd percentile of 413 diversified banks assessed • 9th of 41
Slide 37: Our sustainability roadmap
Our sustainability roadmap KBC milestones and initiatives Equator Principles Joined the UN Global compact and We have been a signatory to the Equator Principles (Eps) published first sustainability report over FY 2005 since 2004 and have integrated them in our lending policy of project finance 2006
Slide 38: Strong progress in Environmental, Social and Governance issues
Strong progress on in Environmental, Social and Governance issues Some latest highlights ESG ESG ESG Environmental Social Governance All remaining direct coal exposure has been 31.7bn EUR in Responsible Investing Top level responsibility for phased out in line with our commitment funds sustain
Slide 39: Our sustainability ambitions
Our sustainability ambitions We substantially raise the bar for our climate-related ambitions Achieved Above track Achieved Volume of Responsible Renewable energy loans Direct coal-related finance (In millions of EUR) Investing Funds(*) (In % of total energy sector loan portfolio) 252 (In billions o
Slide 40: KBC
40 KBC