Kbc Group N.v. · EURONEXT:KBC
Kbc — Q1 2020 Earnings Presentation
37 slides from Kbc's earnings presentation, 2020
Slide 1: KBC Group 1Q 2020 results Press presentation
KBC Group 1Q 2020 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 1Q 2020 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 1Q20 ROE 4%* Lower net fee and comm
Slide 4: Consolidated results
KBC Group Consolidated results 1Q 2020 performance 4
Slide 5: Overview of building blocks of the 1Q20 net result
KBC Group Overview of building blocks of the 1Q20 net result Net result q-o-q 178 -385 1.479 429 62 1.195 -407 702 430 -5 1Q19 4Q19 1Q20 -931 -141 -3 -2 -5 NII NFCI Technical FIFV Other Total Bank taxes Opex excl. Impairments Other Taxes 1Q20 net Insurance Income** Income bank tax result Result* Q-o
Slide 6: Net result per business unit
Net result per business unit Except Belgium, positive contribution of the business units BE BU CZ BU IM BU q-o-q q-o-q q-o-q 412 388 368 248 82 205 177 159 119 176 104 85 27 88 70 29 2 166 9 23 13 4 50 14 55 35 25 45 10 38 12 18 11 12 10 4 -86 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2
Slide 7: Net interest income
Net interest income Higher net interest income (NII) and higher net interest margin (NIM) Net Interest Income 1 182 1 195 NII increased by 1% q-o-q and by 6% y-o-y. Note that NII banking 1 129 rose by 1% q-o-q and by 7% y-o-y 118 16 114 12 111 17 The q-o-q increase was driven primarily by: (+) conti
Slide 8: Net fee and commission income
Net fee and commission income Lower net fee and commission income Net fee and commission income Net fee and commission income (429m EUR) Down by 4% q-o-q and up by 5% y-o-y 445 429 Q-o-q decrease was the result of the following: 410 • Net F&C income from Asset Management services decreased by 3% q-o
Slide 9: Non-life insurance
Non-life insurance Non-life premium income up and excellent combined ratio Non-Life (Gross earned premium) Combined ratio non-life 415 441 443 93% 90% 92% 92% 90% 2019 2020 1Q19 4Q19 1Q20 1Q 1H 9M FY Up by 7% y-o-y mainly thanks to a The non-life combined ratio for 1Q20 amounted to 90%, an good comm
Slide 10: Life insurance
Life insurance Life sales down Sales of life insurance products decreased by 9% q-o-q and by 17% y-o-y • The q-o-q decrease was driven entirely by lower sales of guaranteed interest products in Belgium (attributable chiefly to traditionally higher volumes in tax-incentivised pension savings products
Slide 11: Net result from financial instruments at fair value
Net result from financial instruments at fair value Sharply lower fair value result The sharply lower q-o-q figures for net result 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
Slide 12: Net other income
Net other income Net other income amounted to 50m EUR, fully in line with the normal run rate Net other income 59 47 50 1Q19 4Q19 1Q20 12 Amounts in millions of EUR
Slide 13: Operating expenses
Operating expenses Strict cost management FY19 1Q20 Operating expenses 58% 69% Cost/Income ratio (banking)* 1 296 1 338 382 1 045 407 Operating expenses excluding bank taxes decreased by 6% 51 q-o-q primarily as a result of: o lower staff expenses (partly due to lower number of FTEs q-o-q), despit
Slide 14: Asset impairments
Asset impairments Higher asset impairments, benign credit cost ratio Asset impairment (negative sign is write-back) Higher asset impairments q-o-q : • A large part of the loan loss provisions was related to 141 impairments on a number of corporate loans in 20 Belgium, as was the case in previous qua
Slide 15: Covid-19
KBC Group Covid-19 15
Slide 16: COVID-19 (1/8): Commitment towards our stakeholders
COVID-19 (1/8) Commitment towards our stakeholders SAFETY AND CONTINUITY Safety of staff and clients received priority, continuity of service was guaranteed All systems up and running as of day one; KBC operationally well prepared to address this crisis Resulted in massive numbers of staff wor
Slide 17: COVID-19 (2/8): Overview of government response
COVID-19 (2/8) Overview of government response in our core countries Belgium Czech Republic Hungary Opt-in: 6 months, (maximum until 31 Oct 2020) Opt-in: 3 or 6 months Opt-out: a blanket moratorium until 31 Dec 2020 • Applicable for mortgages and viable • Applicable for retail and non-retail clients
Slide 18: COVID-19 (3/8): Overview of government response
COVID-19 (3/8) Overview of government response in our core countries Slovakia Bulgaria Ireland Opt-in: 9 months or 6 months (for leases) Opt-in: 6 months (maximum until Opt-in: 3 to 6 months 31 Dec 2020) • Applicable for retail customers, • Applicable for mortgage loans, consumer Deferral of payment
Slide 19: COVID-19 (4/8): IFRS scenarios
COVID-19 (4/8) IFRS 9 scenarios OPTIMISTIC BASE PESSIMISTIC SCENARIO SCENARIO SCENARIO Virus spread quickly under Virus spread and impact Virus spread continues until • Because of the uncertainty surrounding the spread of the covid-19 control, fast decline in number under control thanks to vaccinati
Slide 20: COVID-19 (5/8): IFRS scenarios
COVID-19 (5/8) IFRS 9 scenarios Macroeconomic scenarios (situation at March 31, 2020) Unemployment 2020 2021 2022 rate Optimistic Base Pessimistic Optimistic Base Pessimistic Optimistic Base Pessimistic Belgium 5.9% 6.2% 10.0% 5.8% 5.8% 12.0% 5.6% 5.6% 9.5% Czech Republic 3.5% 4.5% 5.5% 4.0% 5.5% 7.
Slide 21: COVID-19 (6/8): Stress assumptions applied
COVID-19 (6/8) Stress assumptions applied • Our 1Q20 collective Expected Credit Losses (ECL) calculations are based on pre-Covid-19 Loan portfolio*: macroeconomics. The ECL models are not able to adequately reflect the specificities of the Covid- 19 crisis nor the various government measures impleme
Slide 22: COVID-19 (7/8): Sub-sectors in scope
COVID-19 (7/8) Which (sub)sectors are in scope*? Distribution (retail) • Circa 18% of the portfolio has been defined at high risk • Retail trade services of cars, textiles, audio, construction (2.2bn EUR) materials etc. Shipping • Focused on the transportation sector • Circa 81% of the total shippin
Slide 23: COVID-19 (8/8): Impact of the management overlay
COVID-19 (8/8) Impact of the COVID-19 management overlay Impairment on financial assets at AC and at FVOCI 121 • Taken into account this stress on a certain number of (sub)sectors, the management overlay amounts to 43m EUR in 1Q20 (BU BE: 35m EUR, BU CR: 6m EUR, HU: 1m EUR 43 and SK: 1m EUR) • For t
Slide 24: Balance sheet, capital and liquidity
KBC Group Balance sheet, capital and liquidity 24
Slide 25: Balance sheet
Balance sheet Loans and deposits continue to grow in most core countries 10% BE 6% 5% 4% 3% 0% Loans** Retail Deposits*** Loans** Retail Deposits*** Y-O-Y ORGANIC* VOLUME GROWTH mortgages mortgages 14% 6% 7% 7% 9% 6% 5% 5% 5% CR 4% Loans** Retail Deposits*** Loans**** Retail Deposits*** mortgages mo
Slide 26: Common equity ratio
Common equity ratio Strong capital position Fully loaded Basel 3 CET1 ratio at KBC Group • The common equity ratio amounted to 16.3% at the end of 1Q20 based on the Danish (Danish Compromise) Compromise • KBC’s CET1 ratio of 16.3% at the end of 1Q20 represents a solid capital buffer: ** • 8.3% capit
Slide 27: Liquidity ratios
Liquidity ratios Liquidity continues to be solid KBC Group’s liquidity ratios NSFR* LCR** 136% 134% 138% 135% Regulatory Requirement ≥ 100% FY19 1Q20 FY19 1Q20 * Net Stable Funding Ratio (NSFR) is based on KBC’s interpretation of the proposal of CRR amendment ** Liquidity Coverage ratio (LCR) is bas
Slide 28: More of the same... but differently ...
KBC Group More of the same... but differently ... 28
Slide 29: Inbound contacts via omni-channel and digital channel at 83%
Inbound contacts via omni-channel and digital channel* at KBC Group** amounted to 83% in 1Q20… 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 30: Realisation of omnichannel strategy – client mix in 1Q20
Realisation of omnichannel strategy* – client mix in 1Q20 CZECH BELGIUM SLOVAKIA HUNGARY IRELAND BULGARIA*** REPUBLIC 12% 8% 11% 19% 21% 21% 25% 31% 27% 13% 33% 1% 41% 1% 58% 51% 2% 7% 57% 59% 51% 51% Omnichannel clients Contact Centre only clients Digital only clients Branch or ATM only clients** *
Slide 31: Our sustainability strategy: Responsible behaviour
Our sustainability strategy The cornerstones of our sustainability strategy and our commitment to the United Nations Sustainable Development Goals We apply strict sustainability rules to our business activities in adverse impact respect of human rights, the environment, business ethics Limiting our
Slide 32: Sustainability governance
Our sustainability strategy Sustainability governance The Group Executive Committee reports to the BOARD OF DIRECTORS on the sustainability strategy, including policy on climate change. The EXECUTIVE COMMITTEE is the highest level with direct responsibility for sustainability, including policy on cl
Slide 33: Our non-financial targets
Our sustainability strategy Our non-financial targets Indicator Goal/ambition level 2019 (= 1Q20) 2018 Share of renewables in the total energy Minimum 50% by 2030 57% 44% credit portfolio Financing of coal-related activities Reduce financing of coal sector and coal-fired power 36 million euros 34 mi
Slide 34: 2019 achievements
Our sustainability strategy 2019 achievements Sustainable finance 2019 2018 2019 achievements: (KBC Group, in millions of euros) Green finance • We signed the Collective Commitment to Climate Action, an initiative of the UNEP FI (Sep 2019) Renewable energy and biofuel sector 1 768 1 235 • The entire
Slide 35: Looking forward
KBC Group 1Q 2020 Looking forward 35
Slide 36: Looking forward
Looking forward Economic growth in 2020 will move into negative territory in the euro area and the US as a consequence of the demand and supply side disruptions the coronavirus crisis causes. However, we envisage a strong recovery in 2021. After all, rather than being a normal recession, the Econo
Slide 37: We put our clients centre stage
We put our clients centre stage as they keep counting on us to help them realise and protect their dreams. We do this proactively and work together to support the society and create sustainable growth. We are genuinely grateful for the confidence they put in us. Particularly in these challenging tim