KBC Group N.V. · EURONEXT:KBC
KBC — FY2023 Earnings Presentation
41 slides from KBC's earnings presentation, February 2024
Slide 1: Press presentation 4Q / FY 2023
1 KBC Group Press presentation 4Q / FY 2023 Johan Thijs, KBC Group CEO Luc Popelier, KBC Group CFO More information: www.kbc.com KBC Group - Investor Relations Office: IR4U@kbc.be
Slide 2: Highlights: Good net result of 677m EUR over 4Q23
Highlights Good net result of 677m EUR over 4Q23 2 • Commercial bank-insurance franchises performed well Net result in m EUR • As policy rates are peaking, KBC Group is well-positioned being an integrated bank-insurer with tailored AM business • Customer loans and customer deposits increased q-o-q i
Slide 3: Capital deployment
Capital deployment 3 For FY23: • A total gross dividend of 4.15 EUR per share will be proposed to the AGM for the accounting year 2023 (of which an interim dividend of 1.0 EUR per share already paid in November 2023 and the remaining 3.15 EUR per share to be paid in May 2024) • Including the propose
Slide 4: Strategic focus | The reference
Strategic focus | The reference 4 Profitability With a Return on Equity of 15% in FY23 KBC is one of the most profitable EU financial institutions Solvency With a fully loaded CET1 ratio of 15.2% at end FY23 KBC is amongst the better capitalised EU banks At KBC it is our ambition to be the reference
Slide 5: Good contribution from all business units
Good contribution from all business units 5 Net result per business unit in m EUR BU BE BU CZ BU IM 576 545 517 474 276 200 190 178 160 200 79 299 184 90 67 Bulgaria 45 108 102 51 63 96 99 94 Hungary 41 32 24 37 25 16 18 Slovakia 4Q22 1Q23 2Q23 3Q23 4Q23 4Q22 1Q23 2Q23 3Q23 4Q23 4Q22 1Q23 2Q23 3Q23
Slide 6: Lower net interest income
Lower net interest income 6 Net interest income Net interest margin* in m EUR in %, calculated excl. the dealing room and the net positive impact of ALM FX swaps & repos 1,417 1,382 1,360 118 96 98 Insurance 2.10% 2.04% 1.99% 1,299 1,286 Banking 1,261 (incl. Holding) 4Q22 3Q23 4Q23 * Excluding Irela
Slide 7: Inflow of core customer money
Inflow of core customer money 7 Customer money dynamic over 4Q23 Customer money dynamic over FY23 in m EUR in m EUR +2.2bn EUR +0.9bn EUR -2.1bn EUR +5.9bn EUR -0.2bn EUR -0.9bn EUR -5.7bn EUR +4.8bn EUR -0.6bn EUR +1.6bn EUR +2.7bn EUR -14.7bn EUR +16.9bn EUR -1.2bn EUR -0.2bn EUR -1.1bn EUR 30SEP2
Slide 8: Higher net fee and commission income
Higher net fee and commission income 8 Net fee & commission income Assets under management in m EUR in bn EUR 588 600 244 549 12 12 227 9 Other 206 Investment 55 Banking 49 advice 268 265 40 249 services 64 68 Fund-of-Funds 60 Group assets & 19 21 Asset 19 Pension fund 291 309 323 management Direct
Slide 9: Non-life sales significantly up y-o-y, life sales up q-o-q and down y-o-y
Non-life sales significantly up y-o-y, life sales up q-o-q and down y-o-y 9 Non-life sales Life sales in m EUR in m EUR 723 30 685 36 Hybrid products 483 558 549 297 Guaranteed- 297 interest 438 products 4Q22 3Q23 4Q23 32 • Up by 14% y-o-y, with growth in all countries and all classes, due to a 216
Slide 10: Stable FIFV result and higher net other income
Stable FIFV result and higher net other income 10 FIFV Net other income in m EUR in m EUR 90 60 44 58 58 -103 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 • FIFV stable q-o-q, attributable mainly to: • Above the normal run rate of around 50m EUR per quarter in 4Q23 • Higher dealing room result • Due mainly to a on
Slide 11: Costs excluding bank & insurance taxes in line with guidance
Costs excluding bank & insurance taxes in line with guidance 11 Operating expenses (including costs directly attributable to Cost/income ratio insurance) When excluding bank and insurance taxes in m EUR 1,158 1,205 1,130 36 15 29 Bank & insurance taxes FY22 FY23 45% 43% Operating 1,143 1,101 1,169 e
Slide 12: Overview of bank & insurance taxes (FY23)
Overview of bank & insurance taxes (FY23)* 12 KBC Group KBC Group Belgium BU in m EUR in m EUR BU BE 687m EUR 361m EUR 13.4% of FY23 opex*** 571 354 12.8% of 347 514 FY23 opex*** 148 ESRF 99 ESRF** 86 154 contribution contribution Common 423 Common 255 360 261 bank & insur. taxes bank & insur. taxes
Slide 13: Net loan loss impairment releases & excellent credit cost ratio
Net loan loss impairment releases & excellent credit cost ratio High other impairments (mainly goodwill and software) 13 Other impairments Asset impairment ECL for geopolitical, emerging and Covid risks Credit cost ratio in m EUR; negative sign is a release in bps Impairments on financial assets at
Slide 14: Outstanding ECL for geopolitical and emerging risks amounts to 256m EUR
Outstanding ECL for geopolitical and emerging risks amounts to 256m EUR 14 Q-o-q change in the outstanding ECL for geopolitical and emerging risks in m EUR; negative sign is a release YTD ECL impact: -173m EUR 429 -21 -18 -39 -40 -59 -35 256 In 4Q23 ECL release of 35m EUR, driven mainly by the evolu
Slide 15: Strong capital position with substantial buffer
Strong capital position with substantial buffer 15 CET1 ratio in % 17.6 17.1 16.3 16.1 16.5 15.8 16.0 15.5 15.4 15.2 14.6 Fully loaded B3 common equity 10.92% Overall Capital ratio amounted to 15.2% at the Requirement (OCR) end of FY23 based on the Danish Compromise FY16 FY17 FY18 FY19 FY20 FY21 FY2
Slide 16: Leverage ratio, Solvency II ratio and liquidity ratios
Leverage ratio, Solvency II ratio and liquidity ratios 16 Leverage ratio | KBC Group Liquidity ratios | KBC Group Solvency II ratio | KBC Group fully loaded, Basel 3 in % in % Leverage LCR NSFR Solvency II ratio ratio 5.7% FY23 159% FY23 136% FY23 206% FY23 5.3% FY22 152% FY22 136% FY22 203% FY22 Q-
Slide 17: Wrap-up
Wrap-up 17 Excellent financial Outstanding solvency Kate convinces Franchise is growing performance and liquidity customers net result CET1 ratio 4.2 million loan customer 677m volumes deposits 4Q23 15.2% users 3402m 3.6% buffer in contact +3% -3% vs MDA with Kate y-o-y y-o-y FY23 NSFR AM net return
Slide 18: Looking forward I Economic outlook
Looking forward I Economic outlook 18 • Growth in the euro area stagnated in the fourth • The main risks to our short-term outlook for European quarter of 2023, mainly due to the impact of the ECB’s growth include the global weakness of the tightening cycle on credit growth and the weakness in manuf
Slide 19: Looking forward I FY24 financial guidance
Looking forward I FY24 financial guidance 19 Our bank-insurance+ model is firing on all cylinders Note: all growth figures are based on reported 2023 figures 2024 Net interest income* 5.3-5.5bn EUR Organic loan volume growth approx. +3% Insurance revenues (before reinsurance) at least +6% y-o-y Oper
Slide 20: FY24 financial guidance | NII sensitivities for 2024
FY24 financial guidance | NII sensitivities for 2024 20 5.5bn EUR Full guidance range accounts for following conservative assumptions: Within this range, we see following sensitivities • Market forward rates of mid-January assuming full impact/shock as of 1/1/2024: • Increase of MRR to 2% as of 1 Ap
Slide 21: Looking forward I FY26 financial guidance
Looking forward I FY26 financial guidance 21 Our bank-insurance+ model is firing on all cylinders Note: all growth figures are based on reported 2023 figures 2026 Net interest income* CAGR23-26 at least +1.8% Insurance revenues (before reinsurance) CAGR23-26 at least +6% Operating expenses and insur
Slide 22: Indicative view on transitional RWA evolution under Basel IV
Indicative view on transitional RWA evolution under Basel IV Based on current EU consensus for Basel IV, a static balance sheet and all other parameters ceteris paribus, without any 22 mitigating actions • 3Q23 included the previously communicated 8.2bn EUR model-related RWA add-on, partly offset by
Slide 23: Strategy | KBC's non-financial targets (2020-2023)
Strategy | KBC’s non-financial targets (2020-2023) 23 Customer ranking Bank-insurance (BI) clients Digital sales BI clients Digital sales banking products* TARGET in % in % TARGET Top-3 Top-3 Top-2 Top-2 Top-2 * TARGET 2020 2021 2022 2023 2023 77% 78% 81% 77% * 80% 39% 46% 52% 40% 32% • KBC is 3rd i
Slide 24: Strategy | New KBC's non-financial targets (2023-2026)
Strategy | New KBC’s non-financial targets (2023-2026) 24 Customer ranking Bank-insurance (BI) clients Digital sales BI clients Digital sales banking products* TARGET in % in % TARGET TARGET Top-3 Top-2 77% 83% 65% 2023 2026 52% • KBC is 3rd in customer NPS (Net Promoter Score) ranking 2023 2026 202
Slide 25: Company profile | KBC Group in a nutshell
Company profile | KBC Group in a nutshell 25 Dividend policy & capital distribution Shareholder structure (will be updated with 1Q24 results) (as at end FY23) • We aim to be amongst the better capitalised financial MRBB Other core institutions in Europe. As a consequence, the dividend policy of KBC
Slide 26: Strategic focus | What differentiates us from peers
Strategic focus | What differentiates us from peers 26 Unique integrated bank- Successful digital-first Firmly embedded insurance+ model approach through KATE sustainability strategy • We offer an integrated response to our • Our digital interaction with clients forms • As a company that aims to sup
Slide 27: Indirect environmental impact: our progress in brief
Indirect environmental impact: our progress in brief 27 INDIRECT environmental footprint (FY 2022) Loan portfolio (selection of sectors) reduction compared to 2021 baseline, otherwise indicated Mortgages and commercial Operational lease Agriculture • We refer to our Collective Commitment to Climate
Slide 28: Kate | Four flavours, one Kate
Kate | Four flavours, one Kate 28 Kate4MassRetail Kate4Business Kate Group Platform Kate4Employees Kate is a personal virtual Kate will also engage with our We do not build Kate for every Kate will also have an impact on assistant that engages with our self-employed, micro-SME, SME country individua
Slide 29: Kate | A data-driven organisation with Kate at the core
Kate | A data-driven organisation with Kate at the core 29 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, marketin
Slide 30: KBC's ESG ratings and indices are ahead of the curve
KBC’s ESG ratings and indices are ahead of the curve 30 Agency ESG rating 29th of December 2023 Position versus industry average D- A • Leader in addressing climate change • CDP’s A list A • Financial average service B- Severe Risk High Risk Medium Risk Low Risk Negligible Risk • 2nd percentile of 3
Slide 31: Sustainability highlights
Sustainability highlights 31 Commitment to environmental action Sustainable business Social responsibility 2030 and 2050 climate targets Social bond 7.4bn EUR Committed to a first set of climate Issued a second social bond for Financing contributing to targets for the most material investments in he
Slide 32: Direct environmental impact: our progress in brief
Direct environmental impact: our progress in brief 32 DIRECT environmental footprint (FY 2022) More details in our 2022 Sustainability Report • In 2020, we set more stringent ambitions to reduce the GHG emissions resulting from our own operations • Furthermore, we included commuter travel in our tar
Slide 33: FY23 | Highlights
FY23 | Highlights 33 Net result Net result rose by 21% y-o-y to 3,402m EUR in 2023, mainly as a result of the following in m EUR • Revenues rose by 12% y-o-y due mainly to higher net interest income, higher net fee and commission income, higher insurance revenues (both life and non-life), higher net
Slide 34: FY23 | Higher net interest income and NIM
FY23 | Higher net interest income (better dan guided) and NIM 34 Net interest income Net interest margin in m EUR in % 5,473 5,162 392 Insurance NII 442 +0.09% +6% 1.96% 2.05% 4,720 5,081 Banking (incl. Holding) 2022 2023 • Increased by 9 bps y-o-y for the reasons mentioned under Net 2022 2023 inter
Slide 35: FY23 | Higher net fee and commission income and higher AUM
FY23 | Higher net fee and commission income and higher AUM 35 Net fee & commission income Assets under management in m EUR in bn EUR 2,349 244 2,218 45 36 Other Investment 206 55 +6% advice 1,057 Banking services 40 +19% 983 68 Fund-of-Funds 60 Group assets & 21 19 Pension fund Asset Management 1,19
Slide 36: FY23 | Non-life and life insurance sales significantly up y-o-y
FY23 | Non-life and life insurance sales significantly up y-o-y 36 Non-life sales Life sales in m EUR in m EUR 2,328 2,071 131 Hybrid products +12% 115 +12% Guaranteed interest 2,093 2,351 979 products 983 2022 2023 • Up by 12% y-o-y, with growth in all countries and all classes, due to a Unit-linke
Slide 37: FY23 | Higher FIFV result and sharply higher net other income
FY23 | Higher FIFV result and sharply higher net other income 37 FIFV Net other income in m EUR in m EUR 322 252 288 Dealing room Dealing room 245 656 Inv. Backing UL contracts MVA/CVA/FVA 80 96 under IFRS17 -6 -15 M2M ALM der. -65 -47 MVA/CVA/FVA and Other M2M ALM derivatives and Other 16 2022 2023
Slide 38: FY23 | Costs in line with guidance
FY23 | Costs in line with guidance 38 Operating expenses (including costs directly attributable to Bank and insurance taxes insurance) in m EUR in m EUR FY23 FY22 5,125 BE BU 361 349 4,805 687 Bank & insurance tax CZ BU 60 61 646 Hungary 238 211 +7% Slovakia 4 7 Bulgaria 20 10 4,159 4,438 Operating
Slide 39: FY23 | Net loan loss impairment charges & excellent credit cost ratio
FY23 | Net loan loss impairment charges & excellent credit cost ratio 39 Asset impairment Credit cost ratio in m EUR; negative sign is a release in bps 60 *In FY20, an ECL buffer of 44 bps was added re Covid risks, fully released in FY21. 215 In FY21, a new ECL buffer of 429m EUR was added for geopo
Slide 40: Thank you message from the CEO
40 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. I would like to explicitly thank o
Slide 41: Disclaimer
Disclaimer 41 • 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