Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KBC Groupe NV (KBCSF, Financial) posted an excellent result of EUR868 million for the third quarter, showcasing strong commercial performance across all markets.
- The company successfully recuperated EUR6.5 billion of customer monies, exceeding the outflow of EUR5.7 billion, demonstrating effective market positioning.
- Net interest income rose by 1%, with increased sales in customer loans and significant growth in the fee and insurance business.
- KBC Groupe NV (KBCSF) was recognized for having the best performing mobile banking app globally, highlighting its technological advancements.
- The company's solvency ratio and liquidity position have further improved, supporting the announcement of an interim dividend of EUR1 per share.
Negative Points
- There was a 6% uptick in costs, attributed to increased ICT investments, inflation, and higher facility expenses.
- Natural catastrophes, including windstorms and floodings, negatively impacted the insurance business, with a net cost of EUR49 million after reinsurance.
- The net interest margin dropped slightly due to increased interest-bearing assets and negative impacts from inflation-linked bonds.
- The competitive environment in Belgium, particularly due to the state note, resulted in a negative impact of EUR87 million, with EUR26 million affecting 2024.
- The company faces pressure on lending margins due to commercial competition, with varying impacts across different countries.
Q & A Highlights
Q: How has the mix shift in deposits evolved in October following the impact of the state bond, and do you see further competition and pressure in the market?
A: In non-euro countries, term deposits are flowing back to current and savings accounts due to rate cuts, a trend expected to continue. In Belgium, the state note created a different dynamic, but similar shifts are anticipated as rate cuts occur in the eurozone.
Q: How quickly can you adjust insurance premiums to account for increased storm events due to climate change?
A: KBC has increased gross written premiums by 8% year-on-year, driven by tariff increases and volume growth across all countries and asset classes. Premium adjustments are made annually to reflect cost changes.
Q: Can you update us on the competitive dynamics in Belgium following the state note, particularly regarding deposits and mortgages?
A: KBC attracted more funds than it lost after the state note, demonstrating strong commercial power. The bank expects to maintain this position, supported by growth in market share across lending and deposits in Belgium and Central Europe.
Q: What are the main drivers for the expected improvement in net interest income (NII) in 2025, and how do you see the impact of the replicating portfolio?
A: The NII improvement is driven by a strong transformation result, continued lending growth, and expected stabilization in deposit shifts due to rate cuts. The replicating portfolio benefits from strategic hedging and a favorable shift in deposit types.
Q: How does KBC view the use of the Danish compromise for M&A, and are there concerns about regulatory changes?
A: KBC uses the Danish compromise as intended, without leveraging it for extreme purposes. There is a possibility that regulators might reconsider its use if it is perceived as being exploited for purposes beyond its original intent.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
