Kbc Group N.v. · EURONEXT:KBC

Kbc — Debt Investor Presentation (June 2018)

49 slides from Kbc's debt investor presentation, June 2018

  1. Slide 1: KBC Group Green Bond Investor Presentation

    KBC Group Green Bond Investor Presentation June 2018

  2. Slide 2: Disclaimer

    Disclaimer  This document is intended to provide non-exhaustive general information. It does not constitute an offer to sell or the solicitation to buy any security issued by KBC Group NV or any of its subsidiaries (KBC).  The information contained in this document has not been independently verif

  3. Slide 3: Table of contents

    Table of contents 1 Summary 2 Sustainability at KBC 3 KBC Green Bond 4 KBC strategy and business profile 5 Financial performance 6 Funding 2

  4. Slide 4: Executive Summary (1/3)

    Executive Summary (1/3)  KBC is a leading European financial group with a focus on providing bank-insurance products and services to retail, SME and mid-cap clients, mainly to its core countries: Belgium, Bulgaria, Czech Republic, Hungary, Ireland and Slovakia Sustain-  Our sustainability strategy

  5. Slide 5: Executive Summary (2/3)

    Executive Summary (2/3) KBC Group Structure Shareholder structure (end 1Q 2018) MRBB Other core 7.4% Cera 11.4% 2.7% KBC Ancora 18.5% 60.0% Free float 4

  6. Slide 6: Executive Summary (3/3)

    Executive Summary (3/3) FY 2017 1Q 2018 CET1 ratio1 Net result ROE2 C/I ratio3 Combined ratio EUR 55 88 16.3 17 % 15.9 2 575 14 % 55 % 90 EUR % % m 556 m % % % Diversified and strong business performance Solid capital and robust liquidity positions  Strong performance of the commercial bank, asset

  7. Slide 7: Table of contents

    Table of contents 1 Summary 2 Sustainability at KBC 3 KBC Green Bond 4 KBC strategy and business profile 5 Financial performance 6 Funding 6

  8. Slide 8: The three corner stones of the KBC sustainability strategy

    The three corner stones of the KBC sustainability strategy 7

  9. Slide 9: Limiting our adverse impact (1/2)

    The core of our sustainability strategy: limiting our adverse impact (1/2) KBC is determined to limit its adverse impact on society by:  Strict policies for its day-to-day activities on environment, human rights, business ethics and socially sensitive issues  Companies involved in controversial we

  10. Slide 10: Limiting our adverse impact (2/2)

    The core of our sustainability strategy: limiting our adverse impact (2/2) KBC is furthermore determined to limit its adverse impact on society by:  Focus on sustainable investments  Actively promoting sustainable investments as an equal alternative to conventional investment products  Sustainabl

  11. Slide 11: Increasing our positive impact

    The core of our sustainability strategy: increasing our positive impact KBC focuses on four sustainability domains in which it aims to address social and environmental challenges to create value for both KBC and society: 1) Environmental responsibility  Development of sustainable business solutions

  12. Slide 12: Responsible behaviour

    The core of our sustainability strategy: responsible behaviour The foundation of responsible behaviour is integrity, which entails honesty, correctness, transparency and confidentiality, combined with a sound risk awareness  We are convinced that our strategy – powered by the ‘Pearl’ culture and th

  13. Slide 13: Our environmental non-financial targets

    Our environmental non-financial targets Indicator Goal/ambition 2017 2016 Share of renewables in total energy Minimum 50% by 2030 41.2% 42.1% credit portfolio Financing of coal-related activities Immediate stop of coal-related activities and Progress in line with Progress in line with gradually exit

  14. Slide 14: KBC Sustainability Dashboard

    KBC Sustainability Dashboard We monitor progress in the implementation of our sustainability strategy through our ‘Corporate Sustainability Dashboard’ The Executive Committee and Board of Directors assess the evolution of these parameters twice a year 13

  15. Slide 15: Rating agencies & benchmarks

    Rating agencies & benchmarks Rating agencies Commitments and initiatives  85/100 (Sector Leader) UN Global Compact UN Guiding Principles on Business and Human Rights UN Environment Programme Finance Initiative (UNEP FI)  C (Prime, best in class) Principles for Responsible Investments (PRI) Task fo

  16. Slide 16: Table of contents

    Table of contents 1 Summary 2 Sustainability at KBC 3 KBC Green Bond 4 KBC strategy and business profile 5 Financial performance 6 Funding 15

  17. Slide 17: Introduction to KBC's Green Bond

    Introduction to KBC’s Green Bond Rationale: enhancing the KBC sustainability strategy Aligned with best practices and market developments  KBC is convinced that the financial industry has a key role to play in the  The KBC Green Bond Framework is in line with the Green Bond transition to a low car

  18. Slide 18: KBC Green Bond Use of Proceeds

    KBC Green Bond Use of Proceeds To be included in KBC Category Eligible assets Use of inaugural Green Bond  proceeds  Onshore and offshore wind energy  Solar energy Renewable energy  Geothermal energy  Biomass  Waste-to-energy Process for project  ‘Green energy loans’ for energy efficient home

  19. Slide 19: KBC Green Bond Eligibility Criteria

    KBC Green Bond Eligibility Criteria 1. Renewable Energy 4. Green Buildings Loans to finance equipment, development, manufacturing, construction, operation, Real estate loans for new constructed energy efficient residential Use of distribution and maintenance of renewable energy generation sources: b

  20. Slide 20: Use of Proceeds of KBC inaugural Green Bond

    Use of Proceeds of KBC inaugural Green Bond  At a first stage, in the context of its potential inaugural Green Bond, KBC intends to allocate the proceeds to two green asset categories: renewable energy and residential real-estate loans.  Within those categories, KBC has identified more than EUR 1.

  21. Slide 21: Focus on renewable energy portfolio

    Focus on renewable energy portfolio  # of loans : 21 SPLIT BY YEAR OF LOAN CLOSING  Total loan amount: EUR504 M  Average loan size: EUR24 M 2010 Wind aan de Stroom 18% – ONSHORE WIND –  # of turbines financed: 366 2014 / 2018  Total capacity installed: 1,294 MW 2017 2014  Annual energy generat

  22. Slide 22: Focus on residential real estate loans portfolio (1/2)

    Focus on residential real estate loans portfolio (1/2)  # of loans: 5,556 ENERGY PERFORMANCE REQUIREMENTS IN FLANDERS  Location: Belgium (Flanders)  As of 1 January 2006, permitting requirements of the Building Code of the Flemish  Total amount of loans committed: EUR 1,010m Region require all n

  23. Slide 23: Focus on residential real estate loans portfolio (2/2)

    Focus on residential real estate loans portfolio (2/2)  KBC has performed an in-depth analysis of the Flemish residential energy performance, in order to focus on buildings meeting strict energy performance  Residential buildings constructed from 2011 represent 3.3% of the Flemish Region building

  24. Slide 24: Process for project evaluation and selection

    Process for project evaluation and selection As part of KBC Sustainability Framework and “business as usual” credit application Use of process proceeds Alignment with  Human rights, business ethics, ESG controversies KBC  Sectorial policies Sustainability policy and  Equator Principles Process fo

  25. Slide 25: Management of the proceeds

    Management of the proceeds  Proceeds allocation KBC GREEN PORTFOLIO APPROACH Use of proceeds • KBC Treasury team in charge of managing the allocation of the net proceeds to Green Assets on a portfolio basis KBC will ensure the • Allocated Eligible Assets to be individually availability of sufficien

  26. Slide 26: Reporting and external review

    Reporting and external review Use of proceeds Reporting Second Opinion Verification  Sustainalytics provided a second party opinion on KBC Process for  One year after issuance and Green Bond Framework project until maturity, a limited  Allocation and impact  “Sustainalytics is of the evaluation

  27. Slide 27: Reporting and external review

    Reporting and external review Use of proceeds Certification Process for  On 23 May 2018, the Climate project Bonds Standard Board evaluation approved the certification of and selection the proposed KBC Green Bond  Application was made on the basis of the proposed inaugural allocation, focused Mana

  28. Slide 28: Impact reporting preview

    Impact reporting preview Key methodical assumptions Key results (preliminary selected assets) Use of  Average energy performance (amount of primary energy  KBC real-estate Green loans result in: proceeds required for one year for the heating, the production of hot • Annual saving of 5,707 tonnes C

  29. Slide 29: Table of contents

    Table of contents 1 Summary 2 Sustainability at KBC 3 KBC Green Bond 4 KBC strategy and business profile 5 Financial performance 6 Funding 28

  30. Slide 30: Well-defined core markets provide access to 'new growth' in Europe

    Well-defined core markets provide access to ‘new growth’ in Europe KBC Group’s core markets UK NETHERLANDS IRELAND BELGIUM GERMANY CZECH REP SLOVAKIA HUNGARY FRANCE BULGARIA ITALY PORTUGAL SPAIN Macroeconomic outlook GREECE Based on GDP, CPI and unemployment trends Inspired by the Financial Times 1.

  31. Slide 31: More of the same, but differently...

    More of the same, but differently...  KBC wants to be among Europe’s best performing financial institutions. This will be achieved by: - Strengthening our bank-insurance business model for retail, SME and mid- cap clients in our core markets, in a highly cost-efficient way - Focusing on sustainable

  32. Slide 32: More of the same, but differently...

    More of the same, but differently... Enhanced channels for empowered clients Creating superior client satisfaction via a seamless, multi-channel client-centric Investing €1.5bn cash-flow (2017-20): distribution approach  Further optimise our integrated distribution model according to a real-time om

  33. Slide 33: Guidance as announced at our Investor Visit in June 2017

    Guidance as announced at our Investor Visit in June 2017 1. Excluding marked-to-market valuations of ALM derivatives 2. Fully loaded, Danish Compromise. P2G = Pillar 2 guidance 3. See part 6 – Funding - for more details 32

  34. Slide 34: Table of contents

    Table of contents 1 Summary 2 Sustainability at KBC 3 KBC Green Bond 4 KBC strategy and business profile 5 Financial performance 6 Funding 33

  35. Slide 35: Overview of results based on business units

    Overview of results based on business units NET PROFIT – KBC GROUP ROAC: 25% (FY 2017) 2,639 2,575 2,427 1,762 2Q-4Q 2,129 1,945 1Q 2,035 1,415 556 510 392 630 347 2014 2015 2016 2017 1Q18 NET PROFIT – BELGIUM NET PROFIT – CZECH REPUBLIC NET PROFIT – INTERNATIONAL MARKETS ROAC: 26% (FY 2017) ROAC: 4

  36. Slide 36: Diversified income within KBC

    Diversified income within KBC Net Interest Income (pro-forma for 20171) Fees and commission income 1,137 1,125 (pro-forma for 20173) 1,081 1,094 1,114 28 21 22 47 128 27 143 142 144 135 463 455 433 457 450 24 24 25 26 25 511 504 489 517 502 PREMIUM INCOME 910 931 948 955 970 (GROSS EARNED PREMIUM) -

  37. Slide 37: Loans and deposits continue to grow in most core countries

    Loans and deposits continue to grow in most core countries 12% BE 9% 4% 7% Y-O-Y ORGANIC* VOLUME GROWTH 1Q 2018 VS 1Q 2017 1% 0% Loans** Retail Deposits*** mortgages Loans** Retail Deposits*** mortgages 4% 4% 20% CR 10% 5% 11% 3% 9% 4% 1% Loans** Retail Deposits*** mortgages 11% Loans** Retail Depos

  38. Slide 38: Robust Asset Quality

    Robust Asset Quality Impaired loans ratios, of which over 90 days past due Cover Ratio 9.9% 68.1% 63.1% 64.1% 8.6% 57.1% 60.3% 7.2% 47.8% 6.0% 44.8% 46.1% 44.0% 5.9% 41.7% 5.5% 4.8% 3.9% 3.4% 3.5% FY14 FY15 FY16 FY17 1Q 2018 FY14 FY15 FY16 FY17 1Q 2018 Impaired loan ratio (*) Impaired loans cover ra

  39. Slide 39: KBC aims to be one of the better capitalized financial institutions in Europe

    KBC aims … to be one of the better capitalized financial institutions in Europe  As a starting point, we assess each year the CET1 ratios of a peer group of European banks active in the Retail, SME and Corporate client segments. We Flexible buffer for M&A 2.0% position ourselves on the fully loaded

  40. Slide 40: Strong capital position

    Strong capital position Fully Loaded Basel 3 CET1 Ratio at KBC Group CET1 generation (Danish Compromise) before any distribution* 15.7% 15.7% 15.9% 16.3% 15.9% 296 bps 277 bps 279 bps 14.0% ‘Own Capital Target’ 10.6% ‘Pro forma regulatory minimum’ 2015 2016 2017 1Q17 1H17 9M17 FY17 1Q18 … and Strong

  41. Slide 41: Table of contents

    Table of contents 1 Summary 2 Sustainability at KBC 3 KBC Green Bond 4 KBC strategy and business profile 5 Financial performance 6 Funding 40

  42. Slide 42: Balance sheet

    Balance sheet KBC Group consolidated at 31 March 2018 Total assets Total liabilities and equity (EUR 304bn) (EUR 304bn) Credit quality 143 156 Capital adequacy & liquidity postion 64 19 32 6 14 19 6 13 78 59 Deposits from customers Loan book (loans and advances to customers) Equity (including AT1) I

  43. Slide 43: Solid liquidity position

    Solid liquidity position  KBC Bank continues to have a strong retail/mid-cap deposit base in its core markets – resulting Funding from customers (m EUR) in a stable funding mix with a significant portion of the funding attracted from core customer segments & markets 162 536 143 690 155 774  Custom

  44. Slide 44: Upcoming mid-term funding maturities

    Upcoming mid-term funding maturities Breakdown Funding Maturity Buckets  KBC Bank placed covered bonds of 750m EUR with 8-year (including % of KBC Group’s balance sheet) maturity and 250m EUR with 20-year maturity in March 2018 6000 1.8% 1.7%  KBC Bank has successfully issued a 1bn EUR additional

  45. Slide 45: Resolution strategy for KBC

    Resolution strategy for KBC  The resolution plan for KBC is based on a Single Point of Entry (SPE) approach at the level of KBC Group;  Bail-in is identified as the preferred resolution tool;  SRB’s current approach to MREL is defined in the ‘2017 MREL Policy’ published on 20 December 2017, which

  46. Slide 46: Available MREL based on KBC resolution strategy

    Available MREL based on KBC resolution strategy MREL ratio as a % RWA (fully loaded) 26.0% 26.3% 26.2% 26.3% 25.9% OpCo MREL 24.8% 1.3% Holdco MREL 3.4% 2.5% 2.3% 3.8% 1.3% 23.7% 24.0% 23.5% 24.6% 22.3% 22.8% 1Q17 2Q17 3Q17 4Q17 1Q18 1Q18 pro forma* * Pro forma MREL also includes the successful issu

  47. Slide 47: Glossary (1/2)

    Glossary (1/2) AT1 Additional l Tier I B3 Basel III Combined ratio (non-life insurance) [technical insurance charges, including the internal cost of settling claims / earned premiums] + [operating expenses / written premiums] (after reinsurance in each case) Common equity ratio [common equity tier-1

  48. Slide 48: Glossary (2/2)

    Glossary (2/2) MREL Minimum requirement for own funds and eligible liabilities Return on allocated capital (ROAC) for a [result after tax, including minority interests, of a business unit, adjusted for income on allocated capital instead of real capital] / [average capital allocated to the business

  49. Slide 49: Contact information

    Contact information Investor Relations Office E-mail: investor.relations@kbc.com Visit www.kbc.com for the latest update 48

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