Kbc Group N.v. · EURONEXT:KBC

Kbc — Q1 2018 Earnings Presentation

90 slides from Kbc's earnings presentation, 2018

  1. Slide 1: KBC Group Company presentation 1Q 2018

    KBC Group Company presentation 1Q 2018 More information: www.kbc.com KBC Group - Investor Relations Office – E-mail: [email protected] 1

  2. 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

  3. Slide 3: 1Q 2018 key takeaways for KBC Group

    1Q 2018 key takeaways for KBC Group 1Q18 financial performance: Capital and liquidity positions: Very good net result of 556m EUR, despite the large  The fully loaded** B3 common equity ratio based on the upfront bank taxes (371m EUR). ROE of 14%* in 1Q18 Danish Compromise decreased from 16.3% at t

  4. Slide 4: Contents

    Contents 1 1Q 2018 performance of KBC Group 2 1Q 2018 performance of business units 3 Strong solvency and solid liquidity 4 1Q 2018 wrap up Annex 1: Company profile Annex 2: Other items 4

  5. Slide 5: 1Q 2018 performance of KBC Group

    KBC Group Section 1 1Q 2018 performance of KBC Group 5

  6. Slide 6: Net result at KBC Group

    Net result at KBC Group CONTRIBUTION OF BANKING ACTIVITIES TO KBC GROUP NET RESULT* 750 575 526 461 NET RESULT AT KBC GROUP* 330 855 1Q17 2Q17 3Q17 4Q17 1Q18 691 630 556 CONTRIBUTION OF INSURANCE ACTIVITIES 399 TO KBC GROUP NET RESULT* 137 1Q17 2Q17 3Q17 4Q17 1Q18 111 113 96 102 78 64 78 27 42 82 93

  7. Slide 7: Summary 2017 pro forma figures

    Summary 2017 pro forma figures Impact shift 4Q17 4Q17 3Q17 3Q17 2Q17 2Q17 1Q17 1Q17 per P&L line as was pro forma as was pro forma as was pro forma as was pro forma NII 1,029 1,137 1,039 1,114 1,028 1,094 1,025 1,081 +108 +75 +66 +56 FIFV 235 118 182 94 249 180 191 130 +26 +25 +24 +24 F&C 430 456 40

  8. Slide 8: Good net interest income and higher net interest margin

    Good net interest income and higher net interest margin NII (pro forma for 2017*) Amounts in m EUR 1,081 1,094 1,114 2 22 1,137 3 47 1,125 0 27  Net interest income (1,125m EUR) 3 28 3 21 128 143 142 144 135 • Down by 1% q-o-q and up by 4% y-o-y • The small q-o-q decrease was driven primarily by: o

  9. Slide 9: High net fee and commission income

    High net fee and commission income Amounts in m EUR  Net fee and commission income (450m EUR) F&C (pro forma for 2017*) • Down by 1% q-o-q and by 3% y-o-y • Positive net sales of mutual funds in 1Q18 463 454 456 450 24 24 433 26 25 • Q-o-q decrease was the result chiefly of: 25 o lower management f

  10. Slide 10: Insurance premium income up y-o-y and good combined ratio

    Insurance premium income up y-o-y and good combined ratio PREMIUM INCOME (GROSS EARNED PREMIUM)  Insurance premium income (gross earned 794 premium) at 714m EUR 672 636 660 714 • Non-life premium income (378m) increased by 5% 410 y-o-y 282 336 312 267 • Life premium income (336m) down by 18% q-o-q

  11. Slide 11: Non-life and life sales up y-o-y

    Non-life and life sales up y-o-y NON-LIFE SALES (GROSS WRITTEN PREMIUM)  Sales of non-life insurance products 468 492 • Up by 5% y-o-y thanks to a good commercial performance in all major product lines in our core 358 349 342 markets and tariff increases 1Q17 2Q17 3Q17 4Q17 1Q18  Sales of life ins

  12. Slide 12: Lower FV gains, higher other net income

    Lower FV gains, higher other net income FV GAINS (pro forma for 2017*) 180  The lower q-o-q figures for net gains from 130 86 118 financial instruments at fair value were 94 96 attributable mainly to: 110 94 • a negative change in market, credit and funding value 73 71 73 adjustments (mainly as a r

  13. Slide 13: Operating expenses up due entirely to higher bank taxes

    Operating expenses up due entirely to higher bank taxes, but good cost/income ratio OPERATING EXPENSES  Cost/income ratio (banking) adjusted for specific items* at 55% in 1Q18 1,291 1,229 • Operating expenses excluding bank tax went down by 1,021 371 6% q-o-q due mainly to seasonal effects such as

  14. Slide 14: Overview of bank taxes

    Overview of bank taxes* Bank taxes of 273m EUR in 1Q18. On a pro rata basis, bank taxes represented 11.1% of KBC GROUP Bank taxes of 371m EUR in BELGIUM BU 1Q18 opex at the Belgium BU 361 371 1Q18. On a pro rata basis, 278 273 bank taxes represented 11.1% 53 58 83 98 of 1Q18 opex at KBC Group** 225

  15. Slide 15: Net impairment releases, excellent credit cost ratio

    Net impairment releases, excellent credit cost ratio and improved impaired loans ratio ASSET IMPAIRMENT 31 2  Very low asset impairments 15 8 1 15 32 • This was attributable mainly to: 6 7 6 o net loan loss provision releases in Ireland of 43m EUR -30 -78 -63 (compared with 52m in 4Q17) o also smal

  16. Slide 16: 1Q 2018 performance of business units

    KBC Group Section 2 1Q 2018 performance of business units 16

  17. Slide 17: Belgium Business Unit

    BELGIUM BUSINESS UNIT CFO SERVICES CRO SERVICES CZECH INTERNATIONAL BELGIUM REPUBLIC MARKETS CORPORATE STAFF 17

  18. Slide 18: Belgium BU (1): net result of 243m EUR

    Belgium BU (1): net result of 243m EUR NET RESULT  Net result at the Belgium Business Unit 483 amounted to 243m EUR 455 • The quarter under review was characterised by lower net interest income, roughly stable net fee and 336 commission income, decreased trading and fair value 301 income, higher ot

  19. Slide 19: Belgium BU (2): lower NII despite stable NIM

    Belgium BU (2): lower NII despite stable NIM Amounts in m EUR NII (pro forma for 2017*) 681 677 664 677 649  Net interest income (649m EUR) 28 19 20 39 130 129 19 • Fell by 4% q-o-q due mainly to the lower netted impact of FX 132 123 117 swaps, lower reinvestment yields and lower number of days • D

  20. Slide 20: Credit margins in Belgium

    Credit margins in Belgium PRODUCT SPREAD ON CUSTOMER LOAN BOOK, OUTSTANDING 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Customer loans PRODUCT SPREAD ON NEW PRODUCTION

  21. Slide 21: Belgium BU (3): good net F&C income

    Belgium BU (3): good net F&C income Amounts in m EUR F&C (pro forma for 2017*)  Net fee and commission income (318m EUR) 356 • Positive net sales of mutual funds in 1Q18 339 321 10 9 307 8 318 9 • Net F&C income decreased by 1% q-o-q due mainly to: 7 o lower management fees o lower securities-relat

  22. Slide 22: Belgium BU (4): higher y-o-y non-life sales and good combined ratio

    Belgium BU (4): higher y-o-y non-life sales and good combined ratio  Sales of non-life insurance products NON-LIFE SALES (GROSS WRITTEN PREMIUM) • Increased by 2% y-o-y 323 329 • Premium growth was situated in all classes, except for ‘Accident & Health’ 256 241 228 1Q17 2Q17 3Q17 4Q17 1Q18 COMBINED

  23. Slide 23: Belgium BU (5): lower life sales and good cross-selling ratios

    Belgium BU (5): lower life sales and good cross-selling ratios LIFE SALES  Sales of life insurance products 460 • Fell by 12% q-o-q as the sales of guaranteed interest 404 products are traditionally lower in the first quarter 396 (versus traditionally higher volumes in tax-incentivised 340 pension

  24. Slide 24: Belgium BU (6): lower FV gains and higher other net income

    Belgium BU (6): lower FV gains and higher other net income FV GAINS (pro forma for 2017*)  The lower q-o-q figures for net gains from 110 financial instruments at fair value were the 61 74 result mainly of negative q-o-q change in 23 51 market, credit and funding value adjustments 36 34 (mainly as

  25. Slide 25: Belgium BU (7): higher opex due to bank taxes

    Belgium BU (7): higher opex due entirely to higher bank taxes, lower impairments, good credit cost ratio OPERATING EXPENSES  Operating expenses: +45% q-o-q and stable y-o-y 822 822 • Operating expenses without bank tax fell by 3% q-o-q due mainly to traditionally lower marketing, professional fee a

  26. Slide 26: Net result at the Belgium BU

    Net result at the Belgium BU CONTRIBUTION OF BANKING ACTIVITIES TO NET RESULT OF THE BELGIUM BU* 385 336 271 NET RESULT AT THE BELGIUM BU* 208 165 483 455 336 301 1Q17 2Q17 3Q17 4Q17 1Q18 243 CONTRIBUTION OF INSURANCE ACTIVITIES TO NET RESULT OF THE BELGIUM BU* 119 1Q17 2Q17 3Q17 4Q17 1Q18 93 98 79

  27. Slide 27: Czech Republic Business Unit

    CZECH REPUBLIC BUSINESS UNIT CFO SERVICES CRO SERVICES CZECH INTERNATIONAL BELGIUM REPUBLIC MARKETS CORPORATE STAFF 27

  28. Slide 28: Czech Republic BU (1): net result of 171m EUR

    Czech Republic BU (1): net result of 171m EUR NET RESULT  Net result at the Czech Republic Business Unit of 181 183 170 167 171 171m EUR • Q-o-q results were characterised by higher net interest income, higher net fee and commission income, lower but still good net results from financial instrument

  29. Slide 29: Czech Republic BU (2): higher NII and NIM

    Czech Republic BU (2): higher NII and NIM NII  Net interest income (248m EUR) 248 • Up by 6% q-o-q and by 15% y-o-y to 248m EUR. 216 220 218 234 Corrected for FX effects, NII rose by 5% q-o-q and by 8% y-o-y pro forma • The pro forma q-o-q increase was the result primarily of the positive impact of

  30. Slide 30: Czech Republic BU (3): higher net F&C income

    Czech Republic BU (3): higher net F&C income Amounts in m EUR F&C (pro forma for 2017*)  Net fee and commission income (67m EUR) 67 • Rose by 5% q-o-q and by 19% y-o-y on a pro forma 64 basis 56 56 10 53 10 • The q-o-q increase was driven by lower paid 9 9 10 commissions to the Czech Post (from thi

  31. Slide 31: Czech Republic BU (4): higher premium income, good combined ratio

    Czech Republic BU (4): higher premium income, good combined ratio PREMIUM INCOME (GROSS EARNED PREMIUM) 155  Insurance premium income (gross earned 124 117 premium) stood at 117m EUR 97 100 96 • Non-life premium income (57m) rose by 10% y-o-y 68 60 48 47 excluding FX effect, due to growth in all pr

  32. Slide 32: Czech Republic BU (5): higher opex, excellent credit cost ratio

    Czech Republic BU (5): higher opex due entirely to higher bank taxes, excellent credit cost ratio  Operating expenses (189m EUR) OPERATING EXPENSES • Fell by 10% q-o-q and rose by 8% y-o-y, excluding FX effect and bank tax 189 165 177 0 • The q-o-q decrease excluding FX effect and bank tax 29 151 1

  33. Slide 33: International Markets Business Unit

    INTERNATIONAL MARKETS BUSINESS UNIT CFO SERVICES CRO SERVICES CZECH INTERNATIONAL BELGIUM REPUBLIC MARKETS CORPORATE STAFF 33

  34. Slide 34: International Markets BU (1): net result of 137m EUR

    International Markets BU (1): net result of 137m EUR  Net result: 137m EUR NET RESULT  The pro forma q-o-q results were characterised by: • lower net interest income. NIM amounted to 2.88% in 177 5 1Q18 (2.84% in 4Q17) • lower net fee and commission income (in BG & HU) 137 • higher result from fin

  35. Slide 35: International Markets BU (2): Slovakia

    International Markets BU (2): Slovakia  Net result of 23m EUR characterised by (pro NET RESULT forma q-o-q): • slightly lower net interest income as volume growth 25 was more than offset by margin pressure 23 22 • stable net fee & commission income as the strong performance in sales of mutual funds

  36. Slide 36: International Markets BU (3): Hungary

    International Markets BU (3): Hungary  Net result of 34m EUR characterised by (pro forma NET RESULT q-o-q): • lower net interest income due to a one-off effect (2m 47 EUR) 40 39 • lower net fee and commission income as higher management fees were more than offset by traditionally 34 lower fees from

  37. Slide 37: International Markets BU (4): Ireland

    International Markets BU (4): Ireland  Net result of 57m EUR characterised by (pro forma NET RESULT q-o-q): • higher net interest income due mainly to lower funding 99 costs • net other income in 4Q17 was impacted by an additional provision of 61.5m EUR related to the industry-wide review of the tr

  38. Slide 38: International Markets BU (5): Bulgaria

    International Markets BU (5): Bulgaria  Net result of 21m EUR NET RESULT  Net result was characterised by (pro forma q-o-q): Amounts in m EUR 22 • In banking (CIBank & UBB/Interlease): 21 o slightly lower net interest income, as volume growth was 18 more than offset by margin pressure o lower net

  39. Slide 39: Group Centre

    GROUP CENTRE CFO SERVICES CRO SERVICES CZECH INTERNATIONAL BELGIUM REPUBLIC MARKETS CORPORATE STAFF 39

  40. Slide 40: Group Centre: net result of 5m EUR

    Group Centre: net result of 5m EUR NET RESULT  Net result: 5m EUR 33  The net result for the Group Centre comprises the results coming from activities and/or decisions specifically made for group 12 purposes (see table below for components) 5 -12  The q-o-q improvement was attributable mainly to:

  41. Slide 41: Overview of results based on business units

    Overview of results based on business units* Amounts in m EUR NET PROFIT – KBC GROUP 1Q18 ROAC: 21% 2,639 2,575 2,427 1,762 2,129 1,945 2,035 1,415 556 510 392 630 347 2014 2015 2016 2017 1Q18 2Q-4Q 1Q NET PROFIT – BELGIUM NET PROFIT – CZECH REPUBLIC NET PROFIT – INTERNATIONAL MARKETS 1Q18 ROAC: 15%

  42. Slide 42: Balance sheet (1/2): Loans and deposits continue to grow

    Balance sheet (1/2): Loans and deposits continue to grow in most core countries Y-O-Y ORGANIC* VOLUME GROWTH FOR KBC GROUP 4% 4% 1% Loans** Retail mortgages Deposits*** * Volume growth excluding FX effects and divestments/acquisitions ** Loans to customers, excluding reverse repos (and bonds) *** Cu

  43. Slide 43: Balance sheet (2/2): Loans and deposits continue to grow

    Balance sheet (2/2): Loans and deposits continue to grow in most core countries Y-O-Y ORGANIC* VOLUME GROWTH FOR MAIN ENTITIES 12% 9% 10% 7% 4% BE CZ 5% 3% 1% 0% Loans** Retail Deposits*** Loans** Retail Deposits*** Loans** Retail Deposits*** mortgages mortgages mortgages 20% 11% 11% 7% 6% 9% 8% 2%

  44. Slide 44: Strong solvency and solid liquidity

    KBC Group Section 3 Strong solvency and solid liquidity 44

  45. Slide 45: Strong capital position

    Strong capital position Fully loaded Basel 3 CET1 ratio at KBC Group (Danish Compromise)  The common equity ratio* decreased from 15.9% 16.3% 16.3% at the end of 2017 to 15.9% at the end 15.7% 15.7% 15.9% of 1Q18 based on the Danish Compromise, 14.0% ‘Own Capital Target’ due to the impact of the fi

  46. Slide 46: Fully loaded Basel 3 leverage ratio and Solvency II ratio

    Fully loaded Basel 3 leverage ratio and Solvency II ratio Fully loaded Basel 3 leverage ratio at KBC Group Fully loaded Basel 3 leverage ratio at KBC Bank 5.7% 5.8% 6.1% 5.7% 5.7% 4.8% 4.7% 4.7% 5.0% 4.7% 1Q17 1H17 9M17 FY17 1Q18 1Q17 1H17 9M17 FY17 1Q18 Solvency II ratio 4Q17 1Q18  The increase (+

  47. Slide 47: Solid liquidity position (1)

    Solid liquidity position (1)  KBC Bank continues to have a strong retail/mid-cap deposit base in its core markets – resulting in a stable funding mix with a significant portion of the funding attracted from core customer segments & markets  Customer funding further increased in 1Q18. The elevated

  48. Slide 48: Solid liquidity position (2)

    Solid liquidity position (2) Short term unsecured funding KBC Bank vs Liquid assets as of end March 2018 (*) (bn EUR) 486% 68,14 411% 65,39 58,30  KBC maintains a solid liquidity position, given that: 56,23 57,79 • Available liquid assets remained very high at more than 3 times the amount of the ne

  49. Slide 49: 1Q 2018 wrap up

    KBC Group Section 4 1Q 2018 wrap up 49

  50. Slide 50: 1Q 2018 wrap up

    1Q 2018 wrap up  Strong commercial bank-insurance results in our core countries  Successful earnings track record  Solid capital and robust liquidity position 50

  51. Slide 51: Looking forward

    Looking forward  We expect 2018 to be a year of sustained economic growth in both the euro area, the US and in each of our core markets  Management guides for: • solid returns for all Business Units • loan impairments for Ireland towards a release in a 100m-150m EUR range for FY18 • the impact of

  52. Slide 52: Company profile

    KBC Group Annex 1 Company profile 52

  53. Slide 53: Business profile

    Business profile BREAKDOWN OF ALLOCATED CAPITAL BY BUSINESS UNIT AS AT 31 MARCH 2018 Czech Republic 16% Belgium 61% 20% International Markets 3% Group Centre  KBC is a leading player (retail and SME bank-insurance, private banking, commercial and local investment banking) in Belgium, the Czech Repu

  54. Slide 54: Well-defined core markets provide access to new growth in Europe

    Well-defined core markets provide access to ‘new growth’ in Europe MARKET SHARE (END 2017) BE CZ SK HU BG IRL KBC Group’s core markets Loans and 20% 20% 11% 11% 10% 8%* deposits Investment 33% 22% 13% 13% funds 7% NETHERLANDS Life 21% 14% 8% IRELAND UK insurance 4% 3% BELGIUM Non-life 11% GERMANY in

  55. Slide 55: Key strengths

    Key strengths  Well-developed bank-insurance strategy and strong cross-selling capabilities  Strong commercial bank-insurance franchises in Belgium and the Czech Republic with stable and solid returns. The International Markets Business Unit also has become a strong contributor to the net result o

  56. Slide 56: Shareholder structure

    Shareholder structure SHAREHOLDER STRUCTURE AT END 1Q18 Other core MRBB 7.4% Cera 11.4% 2.7% KBC Ancora 18.5% 60.0% Free float  Roughly 40% of KBC shares are owned by a syndicate of core shareholders, providing continuity to pursue long-term strategic goals. Committed shareholders include the Cera/

  57. Slide 57: KBC Group going forward

    KBC Group going forward: Wants to be among the best performing financial institutions in Europe  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

  58. Slide 58: The bank-insurance business model, different stages of implementation

    KBC Group going forward: The bank-insurance business model, different countries, different stages of implementation Level 4: Integrated distribution and operation Acting as a single operational company: bank and insurance operations Belgium working under unified governance and achieving commercial a

  59. Slide 59: More of the same… but differently…

    More of the same… but differently… • Integrated distribution model • Client-centricity will be further • Investment in our digital according to a real-time fine-tuned into ‘think client, but presence (e.g., social media) to omni-channel approach design for a digital world’ enhance client relationshi

  60. Slide 60: Summary of the guidance at KBC Group level

    Summary of the guidance at KBC Group level as announced at our Investor Visit in June 2017 More of the same … Guidance… by… CAGR total income (‘16-’20)* ≥ 2.25% 2020 C/I ratio banking excluding bank tax ≤ 47% 2020 C/I ratio banking including bank tax ≤ 54% 2020 Combined ratio ≤ 94% 2020 Dividend pay

  61. Slide 61: Summary of the guidance at KBC Group level

    Summary of the guidance at KBC Group level as announced at our Investor Visit in June 2017 … but differently…  Make further progress in our bank-insurance model Guidance by… Guidance by… CAGR Bank-Insurance clients CAGR Bank-Insurance stable clients (1 Bank product + 1 Insurance product) (3 Bk + 3

  62. Slide 62: 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 78 83 90 Growth 94 36% Strategic Transformation 112 125 127

  63. Slide 63: Digital sales are increasing

    Digital sales are increasing (examples: BU Belgium) 20.000 1.200 18.000 16.000 1.000 14.000 800 12.000 10.000 600 8.000 6.000 400 4.000 200 2.000 0 0 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2017 2018 2017 2018 Consumer loans Travel insurance 8.000 35.000 7.000 30.000 6.000 25.000 5.000 20.000 4.000 15.000 3.0

  64. Slide 64: Omnichannel is embraced by our customers

    Omnichannel is embraced by our customers (examples: BU Belgium) Digital signing after contact with the branches Digital sales @ KBC Live increases, or KBC Live in 2017-2018 strong performance in non-life 90,00% 80,00% 30.000 70,00% 25.000 60,00% KBC Live cumulative sales 2017-2018 20.000 50,00% 15.0

  65. Slide 65: Impact of Basel 4 agreement

    Impact of Basel 4 agreement  On 7 December, the Basel Committee reached an agreement on the remaining Basel 3 post-crisis regulatory reforms (commonly known as Basel 4). The main elements of the Basel 4 agreement are: o credit risk: changes to the internal ratings-based approach and a revised stand

  66. Slide 66: Impact of Basel 4 agreement: update Own Capital Target

    Impact of Basel 4 agreement: update ‘Own Capital Target’  We aim to be one of the better capitalised financial institutions in Europe. Therefore as 1% Additional buffer B4 a starting position, we assess each year the CET1 ratios of a peer group of European banks active in the Retail, SME, and Corpo

  67. Slide 67: Impact of Basel 4 agreement: update Reference Capital Position

    Impact of Basel 4 agreement: update ‘Reference Capital Position’  KBC Group wants to keep a flexible Flexible buffer for M&A 2.0% buffer of up to 2% CET1 for potential add-on M&A in our core markets  This buffer comes on top of the ‘Own ‘Reference Capital Target’ of KBC Group, and all = 16.0% toge

  68. Slide 68: Capital distribution to shareholders

    Capital distribution to shareholders  The payout ratio policy (i.e. dividend + AT1 coupon) of at least 50% of consolidated profit is reconfirmed, with an annual interim dividend of 1 EUR per share being paid in November of each accounting year as an advance on the total dividend  On top of the pay

  69. Slide 69: The core of KBC's sustainability strategy (1)

    The core of KBC’s sustainability strategy (1)  We apply strict sustainability rules to our business activities, in  Sustainability goes beyond philanthropy respect of human rights, and sponsorship environment, business ethics and  We focus on a number of societal needs social themes and actively

  70. Slide 70: The core of KBC's sustainability strategy (2)

    The core of KBC’s sustainability strategy (2) Our focus areas What? A few examples • Helping clients make the right choices • Around 200 lessons on financial subjects Financial through good and transparent advice, given by ČSOB employees at 50 different literacy and clear communication schools in 20

  71. Slide 71: The core of KBC's sustainability strategy (3)

    The core of KBC’s sustainability strategy (3) Our focus areas What? A few examples • Contributing to • Launching the e-stores programme in Bulgaria Entrepre- economic growth by • Rolling out Start it @kbc from Belgium to other core countries neurship supporting innovative • KBC Match’it, a digital p

  72. Slide 72: Other items

    KBC Group Annex 2 Other items 72

  73. Slide 73: Loan loss experience at KBC

    Loan loss experience at KBC 1Q18 FY17 FY16 FY15 FY14 AVERAGE CREDIT COST CREDIT COST CREDIT COST CREDIT COST CREDIT COST ‘99 –’17 RATIO RATIO RATIO RATIO RATIO Belgium 0.05% 0.09% 0.12% 0.19% 0.23% n/a Czech 0.01% 0.02% 0.11% 0.18% 0.18% n/a Republic International -0.86% -0.74% -0.16% 0.32% 1.06% n/

  74. Slide 74: Ireland (1): impaired loans ratio further improved

    Ireland (1): impaired loans ratio further improved  The Irish economy has begun 2018 with significant positive momentum in activity and employment growth, FY18 GDP growth of 6% is envisaged  The upswing in the Irish economy has progressively strengthened and this has been reflected in robust and b

  75. Slide 75: Ireland (2): portfolio analysis

    Ireland (2): portfolio analysis - Forborne loans (in line with EBA Technical Standards) comprise loans on a live restructure or continuing to serve a probation period post-restructure/cure to Performing Retail portfolio Corporate loan portfolio  The New Retail portfolio (all originations post 1 Jan

  76. Slide 76: Sectorial breakdown of outstanding loan portfolio

    Sectorial breakdown of outstanding loan portfolio (1) (163bn EUR* including UBB) of KBC Bank Consolidated Services 11% Distribution Oil, gas & other fuels Electricity 7% Hotels, bars & restaurants Shipping 0.7% 1.6% Private Persons 1.1% 0.7% Food producers 40% 1.5% Machinery & heavy equipment 1.1% 1

  77. Slide 77: Geographical breakdown of the outstanding loan portfolio

    Geographical breakdown of the outstanding loan portfolio (2) (163bn EUR* including UBB) of KBC Bank Consolidated North America Asia Other CEE Rest 1.8% Other W-Eur 0.6% 8.1% 1.5% Bulgaria 1.6% Hungary 2.1% 3.2% Slovakia 4.8% 54.2% Ireland 7.7% 14.5% Belgium Czech Rep. * It includes all payment credi

  78. Slide 78: Impaired loans ratios, of which over 90 days past due

    Impaired loans ratios*, of which over 90 days past due KBC GROUP BELGIUM BU 6.9% 3.0% 3.0% 6.8% 6.6% 2.8% 2.8% 6.0% 5.9% 2.6% 3.6% 3.9% 3.7% 3.4% 3.5% 1.5% 1.5% 1.5% 1.4% 1.3% 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 Impaired loans ratio * Of which over 90 days past due CZECH REPUBLIC BU IN

  79. Slide 79: Cover ratios

    Cover ratios KBC GROUP BELGIUM BU 68.1% 67.5% 67.6% 69.7% 68.6% 67.6% 63.7% 64.2% 64.5% 64.1% 46.6% 47.3% 47.5% 47.8% 47.9% 48.4% 44.0% 46.4% 44.4% 44.2% 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 Impaired loans cover ratio * Cover ratio for loans with over 90 days past due CZECH REPUBLIC BU

  80. Slide 80: Fully loaded B3 CET1 based on the Danish Compromise

    Fully loaded B3 CET1 based on the Danish Compromise (DC) from 4Q17 to 1Q18 DELTA AT NUMERATOR LEVEL (BN EUR) 15.1 0.5 -0.3 -0.4 -0.1  Fully loaded B3 common 14.8 equity ratio decreased to 15.9% at end 1Q18 based on the Danish Compromise, due Jan 2012 Dec 2012 mainly 2014-2020 to the impact of the B

  81. Slide 81: Overview of B3 CET1 ratios at KBC Group

    Overview of B3 CET1 ratios at KBC Group Method Numerator Denominator B3 CET1 ratio FICOD*, fully loaded 15,803 106,327 14.9% DC**, fully loaded 14,793 93,173 15.9% DM***, fully loaded 13,806 87,743 15.7% * FICOD: Financial Conglomerate Directive ** DC: Danish Compromise *** DM: Deduction Method 81

  82. Slide 82: KBC well on track to comply with resolution requirements

    KBC well on track to comply with resolution requirements  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’ publish

  83. Slide 83: Available MREL as a % of RWA

    Available MREL as a % of RWA (fully loaded) 26.0% 26.3% 26.2% 26.3% 25.9% 2.3% 24.8% 1.3% 3.4% 2.5% 1.3% 3.8% 23.7% 24.0% 23.5% 24.6% 22.3% 22.8% 1Q17 2Q17 3Q17 4Q17 1Q18 1Q18 pro forma* OpCo MREL HoldCo MREL * Pro forma MREL also includes the successful issuance of 1bn EUR additional Tier-1 instrum

  84. Slide 84: Government bond portfolio – Notional value

    Government bond portfolio – Notional value  Notional investment of 46.3bn EUR in government bonds (excl. trading book) at end of 1Q18, primarily as a result of a significant excess liquidity position and the reinvestment of insurance reserves in fixed-income instruments  Notional value of GIIPS ex

  85. Slide 85: Government bond portfolio – Carrying value

    Government bond portfolio – Carrying value  Carrying value of 49.3bn EUR in government bonds (excl. trading book) at end of 1Q18, primarily as a result of a significant excess liquidity position and the reinvestment of insurance reserves in fixed-income instruments  Carrying value of GIIPS exposur

  86. Slide 86: Upcoming mid-term funding maturities

    Upcoming mid-term funding maturities Breakdown Funding Maturity Buckets 6000 (Including % of KBC Group’s balance sheet)  KBC Bank placed covered bonds of 750m EUR with 8-year maturity 1.8% and 250m EUR with 20-year maturity in March 2018 1.7% 5000 1.4% m EUR 4000  KBC Bank has successfully issued

  87. Slide 87: Credit spreads evolution

    Credit spreads evolution Credit Spreads Evolution 140 210 120 100 160 80 110 60 40 60 20 10 0 -20 -40 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 0.5Y Senior Debt Opco 5Y Covered Bond Interpolated 5Y Senior Debt Holdco

  88. Slide 88: Glossary (1)

    Glossary (1) AQR Asset Quality Review B3 Basel III CBI Central Bank of Ireland [technical insurance charges, including the internal cost of settling claims / earned premiums] + [operating expenses / written premiums] (after reinsurance Combined ratio (non-life insurance) in each case) Common equity

  89. Slide 89: Glossary (2)

    Glossary (2) MARS Mortgage Arrears Resolution Strategy MREL Minimum requirement for own funds and eligible liabilities PD Probability of default Return on allocated capital (ROAC) for a [result after tax, including minority interests, of a business unit, adjusted for income on allocated capital inst

  90. Slide 90: Contact information Investor Relations Office

    Contact information Investor Relations Office E-mail: [email protected] visit www.kbc.com for the latest update 90

KBC Group — Q1 2018 Earnings Presentation on 6ix