Kbc Group N.v. · EURONEXT:KBC
Kbc — FY2018 Earnings Presentation
38 slides from Kbc's earnings presentation, February 2019
Slide 1: KBC Group 4Q and FY2018 results Press presentation
KBC Group 4Q and FY2018 results Press presentation Johan Thijs, KBC Group CEO Rik Scheerlinck, KBC Group CFO More detailed analyst presentation available at www.kbc.com 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: Key takeaways for KBC Group
Key takeaways for KBC Group 4Q 2018 financial performance Commercial bank-insurance franchises in core markets performed well Customer loans and customer deposits increased in most of our core countries Higher net interest income and net interest margin FY18 Lower net fee and commission inco
Slide 4: Consolidated results 4Q 2018 performance
KBC Group Consolidated results 4Q 2018 performance 4
Slide 5: Excellent net result of 621m in 4Q 2018
KBC Group Excellent net result of 621m in 4Q 2018 and 2,570m in FY 2018 Net result 2,639 2,575 2,570 2,427 1,762 692 701 556 621 399 4Q17 1Q18 2Q18 3Q18 4Q18 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 q-o-q FY Amounts in millions of EUR 5
Slide 6: Net result per business unit
Net result per business unit Overall positive contribution of the business units BE BU CZ BU IM BU 437 409 361 336 243 167 171 168 170 163 145 137 26 141 21 31 55 93 32 74 57 19 18 11 3 62 51 39 34 49 23 19 27 13 16 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 Bulgaria
Slide 7: Net interest income
Net interest income Higher net interest income (NII) and net interest margin (NIM) NII (pro forma for 2017*) +3% NII up by 3% q-o-q and by 2% y-o-y. Note that NII banking 1 137 1 136 1 166 increased by 3% q-o-q and by 7% y-o-y. The q-o-q increase 135 47 128 17 125 24 was driven primarily by: 2% (+)
Slide 8: Net fee and commission income
Net fee and commission income Lower net fee and commission income Net fee and commission income (pro forma for 2017*) -4% Net fee and commission income (407m EUR) 456 424 Q-o-q decrease by 4% was the result of: 407 -11% • Net F&C income from Asset Management Services decreased by 7% q-o-q as a resul
Slide 9: Non-life insurance
Non-life insurance Higher non-life premium and exceptional combined ratio Non-Life (Gross earned premium) +6% Combined ratio non-life 1 582 90% 84% 88% 83% 88% 88% 88% 1 491 79% 2017 2018 1Q 1H 9M FY FY 2017 FY 2018 The non-life combined ratio for FY18 amounted to 88%. An excellent level in line wit
Slide 10: Life insurance
Life insurance Life sales increased q-o-q driven by seasonality, but down y-o-y Sales of Life insurance products increased by 33% q-o-q and decreased by 13% y-o-y • The q-o-q increase was driven mainly by higher sales of guaranteed interest products in Belgium (attributable chiefly to traditionally
Slide 11: Net gains from financial instruments at fair value
Net gains from financial instruments at fair value Lower fair value gains The lower q-o-q figures for net gains from financial instruments at fair value were attributable mainly to: • a negative change in market, credit and funding value adjustments (mainly as a result of changes in the underlying m
Slide 12: Other net income
Other net income Higher other net income Other net income amounted to 76m EUR, higher than the normal run rate of around 50m EUR. 4Q18 was positively impacted by the settlement of legacy legal files in the Belgium Business Unit (+33m EUR). Note that 4Q17 was negatively impacted by an additional prov
Slide 13: Operating expenses
Operating expenses Strict cost management FY17 9M18 FY18 Operating expenses Cost/Income ratio* 55% 57% 57% 1 021 981 996 41 Operating expenses excluding bank tax roughly stabilised q-o-q 26 41 primarily as a result of: • lower staff expenses, despite wage inflation in most countries • less one-off c
Slide 14: Asset impairments
Asset impairments Low asset impairments and excellent credit cost ratio Asset impairment (negative sign is write-back) Low asset impairments, mainly to: 43 • loan loss impairments of 48m EUR in Belgium due to a number of corporate files 2 13 • small loan loss impairments in Slovakia and Bulgaria 29
Slide 15: Consolidated results FY 2018 performance
KBC Group Consolidated results FY 2018 performance 15
Slide 16: Key takeaways for KBC Group: Full year 2018
Key takeaways for KBC Group Full year 2018 financial performance Commercial bank-insurance franchises in core markets performed well Customer loans and customer deposits increased in most of our core countries Higher net interest income and net interest FY18 margin ROE 16% Cost-income rati
Slide 17: FY 2018 net result amounted to 2,570m EUR
KBC Group FY 2018 net result amounted to 2,570m EUR Net result Net result stabilized y-o-y to 2,570m EUR in 2018, mainly as a result of the following: = • Revenues fell by 1% y-o-y pro forma mainly due to sharply lower net 2,575 2,570 result from net gains from financial instruments at fair value an
Slide 18: Net interest income
Net interest income Higher net interest income (NII) and net interest margin (NIM) NII (pro forma for 2017*) NII rose by 3% y-o-y +3% NII banking rose by 6% y-o-y due mainly to: 4 426 4 543 (+) lower funding costs, the additional positive impact of both short- & 123 87 long-term interest increase in
Slide 19: Net fee and commission income
Net fee and commission income Lower net fee and commission income and AUM Net fee and commission income Assets under management (AuM) (pro forma for 2017*) -5% -8% 1 806 1 719 217 200 FY 2017 FY 2018 FY 2017 FY 2018 Amounts in millions of EUR Amounts in billions of EUR Net fee and commission income
Slide 20: Non-life insurance
Non-life insurance Higher non-life insurance sales and exceptional combined ratio Non-Life sales (Gross written premium) +7% Combined ratio non-life 1 626 90% 84% 88% 83% 88% 88% 88% 1 518 79% 2017 2018 1Q 1H 9M FY FY 2017 FY 2018 The non-life combined ratio at FY18 stood at an exceptional 88%. This
Slide 21: Life
Life Lower life insurance sales and lower value of new business (VNB) LIFE SALES VNB (Life)* -3% 1 881 1 817 293.5 300 30 250 231.7 25 1 025 200 20% 1 112 150 9.9% 9.0% 15 100 10 50 5 856 705 0 0% FY 2017 FY 2018 VNB (m EUR) VNB/PVNBP (%) FY 2017 FY 2018 VNB fell by 21% y-o-y to 231.7 EUR due to the
Slide 22: The other total income drivers
The other total income drivers Lower fair value gains and higher other net income Fair Value Gains (pro forma for 2017*) Other net income 522 231 226 114 FY 2017 FY 2018 FY 2017 FY 2018 The sharply lower y-o-y figure for net gains from Other net income sharply increased to 226m EUR in financial inst
Slide 23: Operating expenses
Operating expenses Strict cost control, good cost/income ratio Operating expenses +4% • Operating expenses excluding bank tax increased by 4 074 4 234 4% y-o-y or 137m EUR y-o-y in FY18 439 462 +5% • Total bank taxes increased from 439m EUR in FY17 to 462m in FY18 • Excluding the consolidation impac
Slide 24: Asset impairments
Asset impairments Net impairment releases and excellent credit cost ratio Impairments on loans and receivables Credit cost ratio (YTD) (negative sign is write-back) 1.21% 0.82% 45 45 0.71% -62 0.42% -87 -17 0.23% -42 0.09% FY 2017 FY 2018 Other impairments -0.06% -0.04% Impairments on financial asse
Slide 25: Balance sheet, capital and liquidity
KBC Group Balance sheet, capital and liquidity 25
Slide 26: Balance sheet
Balance sheet Loans and deposits continue to grow in most core countries 10% 8% BE 5% 5% 2% Y-O-Y ORGANIC* VOLUME GROWTH -1% Loans** Retail Deposits*** Loans** Retail Deposits*** mortgages mortgages 8% 8% 6% 5% 5% CR 3% 2% 3% Loans** Retail Deposits*** Loans** Retail Deposits*** 4% mortgages mortgag
Slide 27: Common equity ratio
Common equity ratio Strong capital position Fully loaded Basel 3 CET1 ratio at KBC Group (Danish Compromise) At the end of 4Q18, the CET1 ratio has increased by 24 bps q-o-q to 16.22%. In line 16.3% 15.9% 15.8% 16.0% 16.0% with our capital distribution policy, the Board of Directors decided that for
Slide 28: Liquidity ratios
Liquidity ratios Liquidity continues to be solid KBC Group’s liquidity ratios NSFR* LCR** 134% 136% 139% 139% Regulatory Requirement ≥ 100% FY 2017 FY 2018 FY 2017 FY 2018 * Net Stable Funding Ratio (NSFR) is based on KBC’s interpretation of the proposal of CRR amendment ** Liquidity Coverage ratio
Slide 29: More of the same... but differently ...
KBC Group More of the same... but differently ... 29
Slide 30: Inbound contacts via omni-channel and digital channel at 78%
Inbound contacts via omni-channel and digital channel* at KBC Group** amounted to 78% at end 2018… on track to reach 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 addit
Slide 31: 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 Growth 94 78 83 90 36% Strategic Transformation 112 125 127
Slide 32: Digital sales are increasing (examples: Belgium BU)
Digital sales are increasing (examples: Belgium BU) # of files # of files 70 000 3 000 60 000 2 500 50 000 2 000 40 000 1 500 30 000 1 000 20 000 10 000 500 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018 2017 2018 # of files # of files Consumer loans Travel insurance 14 000 90 000 12
Slide 33: Omnichannel is embraced by our clients
Omnichannel is embraced by our clients (examples: Belgium BU) Digital signing after contact with the branches Digital sales @ KBC Live increases, or KBC Live strong performance in non-life 100% KBC Live cumulative sales 90% 60 000 80% 50 000 70% 40 000 60% 30 000 50% 20 000 40% 10 000 30% Q1 Q2 Q3 Q
Slide 34: 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 adverse positive Reducing our own environmental impact on im
Slide 35: Our non-financial environmental targets
Sustainablity Our non-financial environmental targets Indicator Goal 2018 2017 Share of renewables in total energy Minimum 50% by 2030 43,8% 41,1% credit portfolio Financing of coal-related activities Immediate stop of coal-related activities and 34m EUR exposure 86m EUR exposure gradual exit in the
Slide 36: 4Q and FY 2018 Looking forward
KBC Group 4Q and FY 2018 Looking forward 36
Slide 37: Looking forward
Looking forward European economic conditions generally solid, although the growth peak is behind us. Decreasing unemployment rates, with growing labour shortages in some European economies, combined with gradually rising wage inflation will continue to support private consumption. Economic Moreover,
Slide 38: We put our clients centre stage
We put our clients centre stage and they keep counting on us to help them realise and protect their dreams. We do this proactively and work together to help build society and create sustainable growth. We are genuinely grateful for the confidence they put in us. Johan Thijs, KBC Group CEO 38