Interim / Quarterly Report • Aug 7, 2012
Interim / Quarterly Report
Open in ViewerOpens in native device viewer
'I, Luc Popelier, Chief Financial Officer of the KBC Group certify on behalf of the Executive Committee of KBC Group NV that, to the best of my knowledge, the abbreviated financial statements included in the quarterly report are based on the relevant accounting standards and fairly present in all material respects the financial condition and results of KBC Group NV including its consolidated subsidiaries, and that the quarterly report provides a fair view of the main events, the main transactions with related parties in the period under review and their impact on the abbreviated financial statements, and an overview of the main risks and uncertainties for the remainder of the current year.
The expectations, forecasts and statements regarding future developments that are contained in this report are, of course, based on assumptions and are contingent on a number of factors that will come into play in the future. Consequently, the actual situation may turn out to be (substantially) different.
www.kbc.com/ir m.kbc.com
KBC Group NV Investor Relations Office (IRO) Havenlaan 2, BE 1080 Brussels, Belgium
Visit www.kbc.com
[consolidated total regulatory capital] / [total weighted risks].
[technical insurance charges, including the internal cost of settling claims / earned premiums] + [expenses / written premiums] (after reinsurance).
[consolidated tier-1 capital] / [total weighted risks]. The calculation of the core tier-1 ratio does not include hybrid instruments (but does include the core-capital securities sold to the Belgian and Flemish governments).
[operating expenses of the banking businesses of the group] / [ total income of the banking businesses of the group].
Cost ratio, non-life insurance
[expenses / written premiums] (after reinsurance).
[impairment on loans] / [outstanding non-performing loans]. For a definition of 'non-performing', see 'Non-performing ratio'. Where appropriate, the numerator may be limited to individual impairment on non-performing loans.
[net changes in individual and portfolio-based impairment for credit risks]/ [average outstanding loan portfolio]. Note that, inter alia, government bonds are not included in this formula.
[result after tax, attributable to the equity holders of the parent)] / [average number of ordinary shares, less treasury shares]. If a coupon is expected to be paid on the core-capital securities sold to the Belgian and Flemish governments, it will be deducted from the numerator (pro rata). If a penalty has to be paid, it will likewise be deducted.
[result after tax, attributable to equity holders of the parent, adjusted for interest expense (after tax) for non-mandatorily convertible bonds] /
[average number of ordinary shares, less treasury shares, plus the dilutive effect of options (number of stock options allocated to staff with an exercise price less than the market price) and non-mandatorily convertible bonds]. If a coupon is expected to be paid on the core-capital securities sold to the Belgian and Flemish governments, it will be deducted from the numerator (pro rata). If a penalty has to be paid, it will likewise be deducted.
[net interest income of the banking activities (underlying)] / [average interest-bearing assets of the banking activities].
[amount outstanding of non-performing loans (loans for which principal repayments or interest payments are more than ninety days in arrears or overdrawn)] / [total outstanding loan portfolio]
[parent shareholders' equity] / [number of ordinary shares, less treasury shares (at period-end)].
[result after tax, including minority interests, of a business unit, adjusted for income on allocated instead of real equity] / [average equity allocated to the business unit]. The result of a business unit is the sum of the result of the companies belonging to the business unit, adjusted for the funding cost of goodwill (related to the companies in the business unit) and allocated central governance expenses. The equity allocated to a business unit is based on risk-weighted assets for banking and risk-weighted asset equivalents for insurance.
Return on equity
[result after tax, attributable to the equity holders of the parent] / [average parent shareholders' equity, excluding the revaluation reserve for availablefor-sale investments]. If a coupon is expected to be paid on the core-capital securities sold to the Belgian and Flemish governments, it will be deducted from the numerator (pro rata). If a penalty has to be paid, it will likewise be deducted.
Solvency ratio, insurance
[consolidated available capital of KBC Insurance] / [minimum required solvency margin of KBC Insurance].
Consolidated financial statements according to IFRS 33
This news release contains information that is subject to transparency regulations for listed companies. Date of release: 7 August 2012, 7 a.m. CEST.
The IFRS-based net result reported for the quarter under review came to a net loss of 539 million euros, compared with a net profit of 380 million euros in the previous quarter and 333 million euros in the year-earlier quarter. This means the group has generated a total net loss of 160 million euros for the first six months of 2012, as opposed to a net profit of 1 154 million euros for the corresponding period of 2011.
Excluding all exceptional and non-operating items, KBC ended the second quarter of 2012 with an underlying net profit of 372 million euros, compared with 455 million euros in the previous quarter and 528 million euros in the corresponding quarter of 2011. The underlying results for the first six months of 2012 amounted to 827 million euros, compared to 1 186 million euros for the corresponding period in 2011.
Johan Thijs, Group CEO:
'The second quarter was marked by a good business performance, considerable progress on the divestment front, significant derisking and a further strengthening of our capital and liquidity position. We recorded 372 million euros in underlying net profit.
Our underlying result has been driven by the good commercial performance of our strategic banking and insurance business model on our home markets in Belgium and Central and Eastern Europe. Net interest income contracted somewhat primarily on account of lower reinvestment yields and higher senior debt costs, but loans and deposits continued to grow at a good rate in our core markets. Fee income remained satisfactory and commercial insurance results remained good. The quarter was also characterised by a low combined ratio and low levels of loan loss impairments. These impairments included lower, though still significant, loan loss provisioning in Ireland.
The closure of the sale of Warta positively influenced the second-quarter earnings by 0.3 billion euros and had a positive impact on capital of 0.7 billion euros, increasing our tier-1 ratio by 0.7%.
Moreover, closure of the sale of KBL European Private Bankers is expected to release a substantial amount of capital (approximately 0.7 billion euros) for us in the third quarter of 2012, increasing our tier-1 ratio by 0.7%.
In addition, we closed the previously announced deal with Banco Santander for the sale of Żagiel, our consumer finance business in Poland, after having received the necessary regulatory approvals.
On the basis of the progress made in the respective divestment processes, a thorough assessment was made of the value of the businesses of Absolut Bank (Russia), NLB (Slovenia), KBC Banka (Serbia), KBC Bank Deutschland (Germany) and Antwerp Diamond Bank (Belgium). Given our determination to continue with the divestments, we have decided to reclassify four of these businesses under IFRS5 and record impairment charges for the divestment files. The impact of these charges on total earnings is 1.2 billion euros, after tax. Given that impairment is largely related to goodwill, the impact on regulatory capital is substantially lower at 0.6 billion euros. This negative capital impact will be reversed entirely at the time these divestments are closed, mainly through the release of RWAs (5 billion euros in total).
These decisions have further reduced the volatility of our profit and hence the risk profile of our company.
All of this pushed up our tier-1 capital ratio further, bringing it to 13.6% in the second quarter of 2012. This ratio amounts to 15.4% on a pro forma basis when all the agreements that have been signed, but not yet closed, are included. Our estimated common equity ratio under Basel III at the end of 2013 stands at 9.5% (fully loaded).
We are continuing our efforts to ensure that 4.67 billion euros in state aid (before any penalty) is reimbursed by the end of 2013, as set out in the European plan, with the aim to pay back a substantial part before the end of 2012.
We have improved our already strong liquidity position, with a loan-to-deposit ratio of 83% at the end of June. We have covered all funding needs for 2012 and have strengthened our funding buffer.
We remain committed to executing our strategic plan with the same diligence and determination to ensure timely repayment of the state aid and are committed to playing an active role in the European financial sector, which will benefit our customers, employees, shareholders and other stakeholders.'
KBC has acted to reduce its exposure to Southern European government bonds by almost half in the second quarter through a substantial reduction of its exposure to Spanish and Italian government bonds.
The main exceptional and non-operating items having an impact on the reported IFRS result for 2Q2012 were:
Closure of the sale of Polish insurance company Warta to Talanx International AG, which was announced on 2 July 2012, positively influenced the second-quarter earnings by 0.3 billion euros and had a positive impact on capital of 0.7 billion euros. As a result, core tier-1 capital for the group at the end of 2Q2012 improved by just under 0.7% compared to the previous quarter.
KBC decided to record impairment charges that impact total earnings by -1.2 billion euros, after tax. This relates to the remaining divestment files of Absolut Bank (Russia), NLB (Slovenia), KBC Banka (Serbia), KBC Bank Deutschland (Germany) and Antwerp Diamond Bank (Belgium). Given that impairment is largely related to goodwill, the impact on regulatory capital is substantially lower at 0.6 billion euros. This negative capital impact will be reversed entirely at the time these divestments are closed, mainly through the release of RWAs (5 billion euros in total).
The main special item having an impact on the underlying result for 2Q2012 was:
• Ireland
Recent economic indicators point towards resilience in Irish exports, continuing strength in the pipeline of FDI and progress in reducing the deficit in public finances. These developments have been reflected in continuing positive assessments by the EU/IMF. While residential mortgage arrears continue to deteriorate, the pace of deterioration has slowed markedly compared to 2011, which is also positively impacting NPL trends. There are tentative early signs of house prices stabilising, but local confidence remains fragile. Commercial collateral values continue to suffer as all Irish banks deleverage in an illiquid market. As a consequence, a loan loss provision of 136 million euros was recorded in 2Q2012. We estimate that full-year impairment charges at KBC Bank Ireland will end up between 500 and 600 million euros.
With a pro forma total tier-1 ratio of 15.4% and a core tier-1 ratio of 13.4% (including the impact of the divestment of Kredyt Bank and KBC epb), solvency remains solid.
Johan Thijs concludes: 'The second quarter was one in which good commercial performances were shaded by the impairment charges recorded on the remaining divestment files. Our focus firmly remains on catering for our customer base in our core markets in Belgium and Central and Eastern Europe.'
| Overview (consolidated) | 2Q2011 | 1Q2012 | 2Q2012 | Cumul. 1H2011 |
Cumul. 1H2012 |
|---|---|---|---|---|---|
| Net result, IFRS (in millions of EUR) | 333 | 380 | -539 | 1 154 | -160 |
| Basic earnings per share, IFRS (in EUR)1 | 0.54 | 0.71 | -1.99 | 2.52 | -1.28 |
| Underlying net result (in millions of EUR) | 528 | 455 | 372 | 1 186 | 827 |
| Underlying basic earnings per share (in EUR)1 | 1.11 | 0.93 | 0.69 | 2.61 | 1.62 |
| Breakdown of underlying net result per business unit (in millions of EUR) | |||||
| Belgium | 238 | 266 | 226 | 518 | 492 |
| Central & Eastern Europe | 146 | 118 | 188 | 269 | 306 |
| Merchant Banking | 63 | 42 | -65 | 240 | -23 |
| Group Centre | 81 | 30 | 23 | 158 | 52 |
| Parent shareholders' equity per share (in EUR, end of period) | 33.8 | 32.2 | 28.5 | 33.8 | 28.5 |
1 Note: If a coupon is expected to be paid on the core-capital securities sold to the Belgian and Flemish governments, it will be deducted from the numerator (pro rata). If a penalty has to be paid, it will likewise be deducted.
The IFRS and underlying income statement summary tables are provided further on in this earnings statement.
Financial highlights for 2Q2012 compared to 1Q2012:
Johan Thijs, Group CEO, summarises the underlying business performance for 2Q2012 as follows:
The non-life segment was characterised by a good level of premiums, relatively low claims and a modest investment result. The year-to-date combined ratio came to an excellent 89%.
In the life segment and on a comparable basis, there was a 21% quarter-on-quarter increase in the sale of life insurance products (thanks to higher sales of unit-linked products). Year-on year, these sales rose by as much as 62%.
It should be noted that the insurance results are also affected by investment income and charges, as well as by general administrative expenses. Investment income, in particular, was modest for both the life and non-life businesses in the quarter under review.
• Operating expenses came to 1 016 million euros in the second quarter of 2012, down 8% on their level in the previous quarter and 12% on their year-earlier level. This was accounted for primarily by the deconsolidation of KBL epb, Fidea and Centea for the year-on-year comparison. The quarter-on-quarter performance was also impacted by banking tax items, notably the full-year Hungarian bank tax charged in the first quarter and the amount recovered under the Belgian deposit guarantee scheme (partly offsetting the additional bank tax in Belgium) in the second quarter. Excluding deconsolidated companies and these tax effects, underlying costs increased by 1% compared to the previous quarter. The year-to-date cost/income ratio came to 58%, a clear indication of the ongoing well-controlled cost environment.
• Loan loss impairment stood at 198 million euros in the second quarter, up on the 164 million euros recorded a year earlier, but down on the 261 million euros recorded in the previous quarter. The figure came about largely because of the loan loss impairment of 136 million euros in Ireland, whereas the credit cost was low in the other business activities. As a consequence, the annualised credit cost ratio stood at 0.59% year-to-date; this breaks down into a very low 0.04% for the Belgian retail book (compared to 0.10% for FY2011), 0.42% in Central and Eastern Europe (down from 1.59%
for FY2011, which had been affected by Hungary and Bulgaria) and 1.38% for Merchant Banking (marginally up from 1.36% for FY2011). Excluding Ireland, the credit cost ratio for Merchant Banking stands at a low 0.14% (down from 0.59% for FY2011).
• Impairment charges on available-for-sale assets came to 24 million euros and other impairment charges came to 18 million euros in the quarter under review.
Explanations per heading of the IFRS income statement for the first half of 2012 (see summary table on the next page):
For the non-life activities, the year-to-date combined ratio came to an excellent 89% (87% in Belgium, 95% in CEE), an improvement on the 92% for FY2011.
For the life activities and on a comparable basis, there was a 44% year-on-year increase in the sale of life insurance products (thanks to higher sales of unit-linked products).
It should be noted that the insurance results are also affected by investment income and charges, as well as by general administrative expenses. Investment income, in particular, was modest for both the life and non-life businesses in the quarter under review.
A summary of the income statement of KBC Group, based on the International Financial Reporting Standards (IFRS) is given below. A full overview of the IFRS consolidated income statement and balance sheet is provided in the 'Consolidated Financial Statements' section of the quarterly report. Condensed statements of comprehensive income, changes in shareholders' equity, and cash flow, as well as several notes to the accounts, are also available in the same section. In order to provide a good insight into the underlying business trends, KBC also publishes its 'underlying' results (see the following section).
| Consolidated income statement according to IFRS, KBC Group (in millions of EUR) |
1Q 2011 |
2Q 2011 |
3Q 2011 |
4Q 2011 |
1Q 2012 |
2Q 2012 |
3Q 2012 |
4Q 2012 |
Cumul 1H2011 |
Cumul 1H2012 |
|---|---|---|---|---|---|---|---|---|---|---|
| Net interest income | 1 395 | 1 406 | 1 341 | 1 337 | 1 261 | 1 190 | - | - | 2 801 | 2 451 |
| Interest income | 3 047 | 3 195 | 2 910 | 2 732 | 2 695 | 2 563 | - | - | 6 241 | 5 258 |
| Interest expense | -1 651 | -1 789 | - 1 569 | -1 395 | -1 434 | -1 374 | - | - | -3 440 | -2 808 |
| Earned premiums, insurance (before reinsurance) |
1 141 | 974 | 972 | 1 033 | 884 | 890 | - | - | 2 115 | 1 774 |
| Technical charges, insurance (before reinsurance) |
-1 012 | -840 | -812 | -877 | -752 | - 757 | - | - | -1 852 | -1 509 |
| Ceded reinsurance result | -17 | -8 | -18 | -1 | -14 | -1 | - | - | -25 | -14 |
| Dividend income | 12 | 41 | 17 | 15 | 6 | 21 | - | - | 53 | 27 |
| Net result from financial instruments at fair value through profit or loss |
472 | -194 | -892 | 436 | 60 | 43 | - | - | 279 | 103 |
| Net realised result from available-for-sale assets | 34 | 42 | 10 | 83 | 32 | 9 | - | - | 76 | 41 |
| Net fee and commission income | 300 | 297 | 281 | 287 | 304 | 309 | - | - | 597 | 613 |
| Fee and commission income | 518 | 530 | 480 | 514 | 492 | 479 | - | - | 1 048 | 970 |
| Fee and commission expense | -218 | -233 | -200 | -227 | -188 | -170 | - | - | -452 | -358 |
| Other net income | 92 | 110 | -149 | 3 | 73 | 368 | - | - | 202 | 441 |
| Total income | 2 416 | 1 829 | 749 | 2 317 | 1 853 | 2 072 | - | - | 4 245 | 3 925 |
| Operating expenses | -1 143 | -1 081 | -1 077 | -1 043 | -1 132 | -1 033 | - | - | -2 224 | - 2 165 |
| Impairment | -105 | -332 | -940 | -746 | -273 | -1 473 | - | - | -437 | -1 746 |
| on loans and receivables | -97 | -164 | -473 | -599 | -261 | -198 | - | - | -260 | -459 |
| on available-for-sale assets | -6 | -118 | -223 | -71 | -5 | -75 | - | - | -124 | -79 |
| on goodwill | 0 | -17 | -62 | -41 | 0 | -414 | - | - | -17 | -414 |
| on other | -2 | -33 | -183 | -35 | -7 | -786 | - | - | -35 | -794 |
| Share in results of associated companies | 1 | 0 | -23 | -35 | -9 | 17 | - | - | 1 | 8 |
| Result before tax | 1 170 | 416 | -1 292 | 492 | 439 | -417 | - | - | 1 585 | 22 |
| Income tax expense | -334 | -76 | 165 | -75 | -93 | -110 | - | - | -411 | - 202 |
| Net post-tax result from discontinued operations | 0 | 0 | -445 | 26 | 40 | -8 | - | - | 0 | 33 |
| Result after tax | 835 | 340 | -1 571 | 443 | 387 | -535 | - | - | 1 175 | -148 |
| attributable to minority interests | 14 | 6 | 8 | 6 | 7 | 5 | - | - | 20 | 12 |
| attributable to equity holders of the parent | 821 | 333 | -1 579 | 437 | 380 | -539 | - | - | 1 154 | -160 |
| Belgium | 385 | 158 | -348 | 226 | 489 | 204 | - | - | 543 | 694 |
| Central & Eastern Europe | 141 | 145 | -91 | 94 | 119 | 171 | - | - | 286 | 290 |
| Merchant Banking | 203 | 69 | -255 | -225 | 17 | -65 | - | - | 272 | -48 |
| Group Centre | 92 | -39 | -885 | 342 | -246 | -849 | - | - | 54 | -1 096 |
| Basic earnings per share (EUR) | 1.98 | 0.54 | -5.08 | 0.63 | 0.71 | -1.99 | - | - | 2.52 | -1.28 |
| Diluted earnings per share (EUR) | 1.98 | 0.54 | -5.08 | 0.63 | 0.71 | -1.99 | - | - | 2.52 | -1.28 |
| Highlights, consolidated balance sheet and ratios, KBC Group (in millions of EUR or %) |
31-03- 2011 |
30-06- 2011 |
30-09- 2011 |
31-12- 2011 |
31-03- 2012 |
30-06- 2012 |
30-09- 2012 |
31-12- 2012 |
|---|---|---|---|---|---|---|---|---|
| Total assets | 322 493 | 312 899 | 305 109 | 285 382 | 290 635 | 285 848 | - | - |
| Loans and advances to customers* | 147 625 | 143 182 | 143 451 | 138 284 | 135 980 | 133 326 | - | - |
| Securities (equity and debt instruments)* | 88 839 | 85 144 | 74 062 | 65 036 | 65 853 | 64 227 | - | - |
| Deposits from customers and debt certificates* | 192 412 | 188 116 | 184 453 | 165 226 | 166 551 | 163 685 | - | - |
| Technical provisions, before reinsurance* | 23 870 | 24 084 | 21 064 | 19 914 | 19 925 | 19 539 | - | - |
| Liabilities under investment contracts, insurance* | 6 568 | 6 638 | 6 787 | 7 014 | 7 871 | 8 856 | - | - |
| Parent shareholders' equity | 11 011 | 11 500 | 9 834 | 9 756 | 10 949 | 9 687 | - | - |
| Non-voting core-capital securities | 7 000 | 7 000 | 7 000 | 6 500 | 6 500 | 6 500 | - | - |
| KBC Group ratios (based on underlying results, year-to-date) | ||||||||
| Return on equity | 5% | 11.7% | - | - | ||||
| Cost/income ratio, banking | 60% | 58% | - | - | ||||
| Combined ratio, non-life insurance | 92% | 89% | - | - | ||||
| KBC Group solvency | ||||||||
| Tier-1 ratio | 12.3% | 13.6% | - | - | ||||
| Core tier-1 ratio | 10.6% | 11.8% | - | - |
* Note: in accordance with IFRS 5, the assets and liabilities of a number of divestments were moved to 'Non-current assets held for sale and assets associated with disposal groups' and 'Liabilities associated with disposal groups', which slightly distorts the comparison between periods.
Over and above the figures according to IFRS, KBC provides a number of 'underlying' figures aimed at providing more insight into the business trends. The differences with the IFRS figures relate to the exclusion of exceptional or non-operating items and a different accounting treatment of certain hedging results and capital-market income. In view of their nature and materiality, it is important to adjust the results for these factors to understand the profit trend fully. A full explanation of the differences between IFRS and underlying figures is provided in the 'Consolidated financial statements' section of the quarterly report, under 'Notes on segment reporting'. A reconciliation table for the net result is provided below.
| Consolidated income statement, KBC Group, underlying (in millions of EUR) |
1Q 2011 |
2Q 2011 |
3Q 2011 |
4Q 2011 |
1Q 2012 |
2Q 2012 |
3Q 2012 |
4Q 2012 |
Cumul 1H2011 |
Cumul 1H2012 |
|---|---|---|---|---|---|---|---|---|---|---|
| Net interest income | 1 374 | 1 390 | 1 342 | 1 298 | 1 211 | 1 150 | - | - | 2 764 | 2 361 |
| Earned premiums, insurance (before reinsurance) |
1 141 | 975 | 972 | 1 033 | 884 | 890 | - | - | 2 116 | 1 774 |
| Technical charges, insurance (before reinsurance) |
-1 016 | -843 | -817 | -880 | -752 | -757 | - | - | -1 859 | -1 509 |
| Ceded reinsurance result | -17 | -8 | -18 | -1 | -14 | -1 | - | - | -26 | -14 |
| Dividend income | 8 | 37 | 14 | 15 | 5 | 21 | - | - | 45 | 26 |
| Net result from financial instruments at fair value through profit or loss |
259 | 102 | 10 | 138 | 326 | 113 | - | - | 361 | 439 |
| Net realised result from available-for-sale assets | 53 | 42 | 11 | 85 | 31 | 6 | - | - | 95 | 37 |
| Net fee and commission income | 399 | 394 | 367 | 374 | 306 | 310 | - | - | 794 | 616 |
| Other net income | 73 | 72 | -210 | 12 | -8 | 53 | - | - | 145 | 46 |
| Total income | 2 274 | 2 161 | 1 673 | 2 075 | 1 989 | 1 786 | - | - | 4 434 | 3 776 |
| Operating expenses | -1 227 | -1 155 | -1 172 | -1 133 | -1 110 | - 1 016 | - | - | -2 382 | -2 126 |
| Impairment | - 105 | -333 | -740 | -730 | -271 | -241 | - | - | -439 | -512 |
| on loans and receivables | -97 | -164 | -475 | -599 | -261 | -198 | - | - | -261 | -459 |
| on available-for-sale assets | -6 | -135 | -228 | -85 | -5 | -24 | - | - | -141 | -29 |
| on goodwill | 0 | 0 | 0 | 0 | 0 | 0 | - | - | 0 | 0 |
| on other | -2 | -35 | -38 | -46 | -5 | -18 | -37 | -24 | ||
| Share in results of associated companies | 1 | 0 | -23 | -35 | -9 | -9 | - | - | 1 | -19 |
| Result before tax | 943 | 673 | -262 | 177 | 599 | 520 | - | - | 1 615 | 1 119 |
| Income tax expense | - 271 | -138 | 22 | -9 | -136 | -144 | - | - | -410 | -280 |
| Result after tax | 671 | 534 | -240 | 167 | 463 | 376 | - | - | 1 206 | 839 |
| attributable to minority interests | 14 | 6 | 8 | 7 | 7 | 5 | - | - | 20 | 12 |
| attributable to equity holders of the parent | 658 | 528 | -248 | 161 | 455 | 372 | - | - | 1 186 | 827 |
| Belgium | 280 | 238 | 32 | 251 | 266 | 226 | - | - | 518 | 492 |
| Central & Eastern Europe | 123 | 146 | -40 | 98 | 118 | 188 | - | - | 269 | 306 |
| Merchant Banking | 177 | 63 | -196 | -153 | 42 | -65 | - | - | 240 | -23 |
| Group Centre | 77 | 81 | -44 | -35 | 30 | 23 | - | - | 158 | 52 |
| Basic earnings per share (EUR) | 1.50 | 1.11 | -1.17 | -0.19 | 0.93 | 0.69 | - | - | 2.61 | 1.62 |
| Diluted earnings per share (EUR) | 1.50 | 1.11 | -1.17 | -0.19 | 0.93 | 0.69 | - | - | 2.61 | 1.62 |
| Reconciliation between underlying result and result according to IFRS KBC Group (in millions of EUR) |
1Q 2011 |
2Q 2011 |
3Q 2011 |
4Q 2011 |
1Q 2012 |
2Q 2012 |
3Q 2012 |
4Q 2012 |
Cumul 1H2011 |
Cumul 1H2012 |
|---|---|---|---|---|---|---|---|---|---|---|
| Result after tax, attributable to equity holders of the parent, UNDERLYING |
658 | 528 | -248 | 161 | 455 | 372 | - | - | 1 186 | 827 |
| + MTM of derivatives for ALM hedging | 96 | -77 | -245 | -46 | 45 | -29 | - | - | 19 | 16 |
| + gains/losses on CDOs | 124 | -86 | -618 | 164 | 189 | -14 | - | - | 39 | 175 |
| + MTM of CDO guarantee and commitment fee | -10 | -22 | -10 | -10 | -40 | -18 | - | - | -31 | -58 |
| + impairment on goodwill | 0 | -17 | -57 | -41 | 0 | -16 | - | - | -17 | -16 |
| + result on legacy structured derivative business (KBC FP) |
14 | 43 | 5 | -12 | -11 | -7 | - | - | 57 | -19 |
| + MTM of own debt issued | -16 | -25 | 185 | 215 | -340 | 41 | - | - | -41 | -300 |
| + Results on divestments | -45 | -12 | -591 | 8 | 81 | -868 | - | - | -56 | -787 |
| Result after tax, attributable to equity holders of the parent: IFRS |
821 | 333 | -1 579 | 437 | 380 | -539 | - | - | 1 154 | -160 |
The financial calendar, including analyst and investor meetings, is available at www.kbc.com/ir/calendar.
As usual, the underlying figures exclude a number of non-operating or exceptional items. A full overview of these items is provided in the table 'Reconciliation between underlying result and result according to IFRS' in the first part of this report, while the impact for each business unit is summarised separately in the following section of the report.
For 2Q2012, the main exceptional or non-operating items (recorded under 'Results on divestments' in the relevant tables) are:
| Total income, underlying (in millions of EUR) | 1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Net interest income | 1 374 | 1 390 | 1 342 | 1 298 | 1 211 | 1 150 | - | - |
| Earned premiums, insurance (before reinsurance) | 1 141 | 975 | 972 | 1 033 | 884 | 890 | - | - |
| Non-life | 451 | 468 | 477 | 466 | 438 | 442 | - | - |
| Life | 691 | 507 | 496 | 567 | 446 | 448 | - | - |
| Technical charges, insurance (before reinsurance) | -1 016 | -843 | -817 | -880 | -752 | -757 | - | - |
| Non-life | -234 | -245 | -259 | -258 | -234 | -243 | - | - |
| Life | -782 | -599 | -557 | -622 | -518 | -514 | - | - |
| Ceded reinsurance result | -17 | -8 | -18 | -1 | -14 | -1 | - | - |
| Dividend income | 8 | 37 | 14 | 15 | 5 | 21 | - | - |
| Net result from financial instruments at fair value through profit or loss |
259 | 102 | 10 | 138 | 326 | 113 | - | - |
| Net realised result from available-for-sale assets | 53 | 42 | 11 | 85 | 31 | 6 | - | - |
| Net fee and commission income | 399 | 394 | 367 | 374 | 306 | 310 | - | - |
| Banking | 497 | 488 | 468 | 475 | 396 | 394 | - | - |
| Insurance | -98 | -93 | -101 | -102 | -89 | -84 | - | - |
| Other net income | 73 | 72 | -210 | 12 | -8 | 53 | - | - |
| Total income | 2 274 | 2 161 | 1 673 | 2 075 | 1 989 | 1 786 | - | - |
| Belgium | 845 | 864 | 692 | 860 | 829 | 795 | - | - |
| Central & Eastern Europe | 556 | 537 | 538 | 544 | 531 | 531 | - | - |
| Merchant Banking | 469 | 340 | 105 | 323 | 425 | 248 | - | - |
| Group Centre | 404 | 420 | 338 | 348 | 204 | 212 | - | - |
Net interest income in the quarter under review amounted to 1 150 million.
This was down 5% on the figure in the previous quarter and, at first sight, 17% lower than its level in the year-earlier quarter. However, on a comparable basis (i.e. excluding Centea, Fidea and KBL epb, all of which have now been deconsolidated), net interest income was down 10% on its 2Q2011 level. The decrease in net interest income was mainly driven by higher senior debt costs and the reduction in the (high-yield) GIIPS government bond portfolio. This also caused the overall net interest margin of the group's banking activities to decrease to 182 basis points in 2Q2012, down 11 basis points quarter-onquarter.
On a comparable basis (excluding divestments and entities falling under IFRS 5), the group's total loan portfolio increased by 1% quarter-on-quarter and by 3% year-on-year, while total deposit volumes went up 2% quarter-on-quarter and contracted 8% year-on-year (see below). In the Belgium Business Unit, the credit portfolio continued to increase, going up by 2% quarter-on-quarter and by more than 6% year-on-year. In the CEE Business Unit, credit volumes went up by 2% quarter-on-quarter and by 4% year-on-year (in both cases, the decline in Hungary – mainly in FX mortgage loans – was more than offset by the growth of the credit portfolios in the Czech and Slovak Republics). In the Merchant Banking Business Unit, credit volumes were up 1% both quarter-on-quarter and year-on-year.
Deposit volumes in the Belgium Business Unit were up 5% both quarter-on-quarter and year-on-year; in the CEE Business Unit, they remained flat quarter-on-quarter and increased 3% year-on-year (unchanged in Hungary, but increasing in all other countries); in the Merchant Banking Business Unit, they rose by 2% in the quarter under review, and – bearing in mind the significant drop in the last quarter of 2011 – were still down 28% year-on-year.
Earned insurance premiums amounted to 890 million in 2Q2012, which breaks down into 448 million for life insurance and 442 million for non-life insurance.
Non-life premium income was up 1% quarter-on-quarter and down 5% year-on-year. On a comparable basis (excluding deconsolidated entities), however, it was up 3% year-on-year. The non-life combined ratio in 2Q2012 stood at a good 91%, which gives a year-to-date ratio of 89%. The latter ratio breaks down into an excellent 87% for Belgium and a good 95% for CEE.
Earned premiums for life insurance under IFRS exclude certain types of life insurance contracts (in simplified terms, the unitlinked contracts). When these contracts are included, total life insurance sales amounted to some 1.4 billion in the quarter under review. On a comparable basis (excluding deconsolidated companies), this figure was up 21% on its 1Q2012 level and 62% on its 2Q2011 level, thanks to very strong sales of unit-linked products in Belgium and the Czech Republic in the quarter under review. As a result, sales of unit-linked life insurance products for the group as a whole accounted for approximately 75% of life insurance sales in the quarter under review, with interest-guaranteed products accounting for the remainder.
Net fee and commission income was up 1% quarter-on-quarter and was 21% lower year-on-year. On a comparable basis (excluding deconsolidated entities), however, it was down 4% year-on-year. Fee and commission income fell somewhat in the CEE and Merchant Banking Business Units, but rose at the Belgium Business Unit, thanks to higher management fees related to investment funds, increased sales of unit-linked insurance products and higher fee income from securities transactions. Total assets under management of the group (excluding KBL epb) stood at 150 billion at the end of June 2012, down 2% on its level three months earlier, essentially due to a negative volume effect (net outflows).
The other income components were as follows. Dividend income amounted to 21 million, a 16 million increase on the figure for the previous quarter as the bulk of dividend income is traditionally received in the second quarter of the year. Trading and fair value income (recorded under 'Net result from financial instruments at fair value through profit and loss') amounted to 113 million, down on the average of 144 million for the four preceding quarters. This income item was negatively impacted by significant credit value adjustments (some -57 million) mainly on OTC derivatives concluded with our corporate clients. The net realised result on available-for-sale assets stood at a low 6 million, down on the average of 42 million for the four preceding quarters, as the quarter under review included a loss of around 53 million realised on the sale of Spanish government bonds (due to the strategy of decreasing the overall exposure to GIIPS government bonds), which was only partially offset by gains on the sale of shares at KBC Insurance (24 million). Other net income amounted to 53 million in 2Q2012, significantly more than in the previous quarter, which had included -56 million related to the 5-5-5-product, -51 million related to the sale of Atomium assets and +41 million in amounts recovered in relation to the fraud case at KBC Lease in 2010.
| Operating expenses, underlying (in millions of EUR) | 1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Staff expenses | -694 | -701 | -719 | -693 | -628 | -633 | - | - |
| General administrative expenses | -444 | -366 | -367 | -354 | -404 | -305 | - | - |
| Depreciation and amortisation of fixed assets | -89 | -87 | -86 | -85 | -78 | -78 | - | - |
| Operating expenses | -1 227 | -1 155 | -1 172 | -1 133 | -1 110 | -1 016 | - | - |
| Belgium | -429 | -446 | -462 | -453 | -458 | -425 | - | - |
| Central & Eastern Europe | -350 | -302 | -297 | -243 | -349 | -290 | - | - |
| Merchant Banking | -152 | -142 | -143 | -132 | -147 | -148 | - | - |
| Group Centre | -296 | -265 | -269 | -305 | -156 | -154 | - | - |
Operating expenses amounted to 1 016 million in the quarter under review.
At first sight, costs were down 8% quarter-on-quarter and 12% year-on-year. However, the comparison is distorted not only by the effect of the deconsolidated entities, but also by the Hungarian bank tax for the full year being booked in 1Q2012 and by an amount recovered under the Belgian deposit guarantee scheme in 2Q2012. Excluding these items, costs were flat quarter-on-quarter and only slightly up (+1%) year-on-year (mainly for inflation-related reasons).
As a result, the cost/income ratio (operating expenses versus total income) of the group's banking activities stood at 59% in 2Q2012, or 58% for the first six months of 2012 (1H2012), a slight improvement on the 60% recorded for FY2011. The 1H2012 cost/income ratio breaks down per business unit as follows: 62% for Belgium, 59% for CEE and 44% for Merchant Banking.
| Impairment, underlying (in millions of EUR) | 1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Impairment on loans and receivables | -97 | -164 | -475 | -599 | -261 | -198 | - | - |
| Impairment on available-for-sale assets | -6 | -135 | -228 | -85 | -5 | -24 | - | - |
| Impairment on goodwill | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Impairment on other | -2 | -35 | -38 | -46 | -5 | -18 | - | - |
| Impairment | -105 | -333 | -740 | -730 | -271 | -241 | - | - |
| Belgium | -15 | -74 | -165 | -58 | -2 | -39 | - | - |
| Central & Eastern Europe | -52 | -96 | -280 | -191 | -47 | -21 | - | - |
| Merchant Banking | -57 | -112 | -215 | -384 | -205 | -166 | - | - |
| Group Centre | 19 | -51 | -81 | -97 | -17 | -14 | - | - |
Impairment on loans and receivables (loan loss provisions) stood at 198 million. The loan loss provisions in 2Q2012 were lower than the 261 million recorded in the previous quarter, due mainly to a significantly better figure for K&H Bank in Hungary (retail portfolio) and lower (though still significant) provisioning at KBC Bank Ireland (136 million in 2Q2012 compared with 195 million in 1Q2012). Compared to 2Q2011, loan loss provisions in the quarter under review were higher, due to the fact that the year-earlier figure had included only 49 million for Ireland, as opposed to the 136 million in 2Q2012. Overall, this led to an annualised credit cost ratio of 59 basis points for 1H2012, an improvement on the 82 basis points recorded for FY2011. The credit cost ratio for 1H2012 breaks down as follows: a very good 4 basis points for the Belgium Business Unit, 42 basis points for the CEE Business Unit and 138 basis points for the Merchant Banking Business Unit (only 14 basis points excluding Ireland). At the end of June 2012, non-performing loans accounted for some 5.3% of the total loan book, roughly the same as three months earlier.
Up on the 10 million recorded in the previous quarter, other impairment in the quarter under review totalled 42 million, as it included significant impairment on shares (24 million, mainly in relation to Spain and the Telecom sector) and on investment property (14 million). We repeat that impairment related to group companies that have still to be divested is excluded from the underlying results.
| Other components of the result, underlying (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Share in result of associated companies | 1 | 0 | -23 | -35 | -9 | -9 | - | - |
| Income tax expense | -271 | -138 | 22 | -9 | -136 | -144 | - | - |
| Minority interests in profit after tax | 14 | 6 | 8 | 7 | 7 | 5 | - | - |
The share in the results of associated companies was -9 million in the quarter under review (this item traditionally includes the result of KBC's minority participation in NLB in Slovenia). Underlying group tax amounted to -144 million in 2Q2012 (in line with both reference quarters) and minority interests in the result amounted to 5 million.
In order to create more transparency and to avoid substantial quarter-on-quarter distortion in the results of the business units upon each divestment, all the results of the companies that are earmarked for divestment have been grouped together in the Group Centre. The results of the other business units (Belgium, Central & Eastern Europe (CEE) and Merchant Banking) therefore exclude these companies and the analysis of their result is, in principle, not distorted by the deconsolidation of group companies that have been divested.
The Belgium Business Unit encompasses the retail and private bancassurance activities in Belgium. More specifically, it includes the retail and private banking activities of the legal entity KBC Bank in Belgium, the activities of the legal entity KBC Insurance, and the activities of a number of subsidiaries (primarily CBC Banque, ADD, KBC Asset Management, part of KBC Lease, KBC Group Re, KBC Consumer Finance and VAB). It should be noted that the entities that are earmarked for divestment under the strategic plan are not included here, but grouped together in the Group Centre (until their sale date).
| Income statement, Belgium Business Unit, underlying (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Net interest income | 567 | 581 | 581 | 591 | 585 | 561 | - | - |
| Earned premiums, insurance (before reinsurance) | 615 | 512 | 473 | 534 | 490 | 411 | - | - |
| Technical charges, insurance (before reinsurance) | -593 | -507 | -436 | -488 | -468 | -393 | - | - |
| Ceded reinsurance result | -8 | -1 | -11 | -5 | -8 | -6 | - | - |
| Dividend income | 6 | 26 | 9 | 11 | 5 | 19 | - | - |
| Net result from financial instruments at fair value through profit or loss |
10 | 12 | 10 | 13 | 15 | 8 | - | - |
| Net realised result from available-for-sale assets | 22 | 24 | 7 | 45 | 41 | -16 | - | - |
| Net fee and commission income | 186 | 178 | 169 | 166 | 177 | 197 | - | - |
| Other net income | 41 | 37 | -110 | -8 | -6 | 15 | - | - |
| Total income | 845 | 864 | 692 | 860 | 829 | 795 | - | - |
| Operating expenses | -429 | -446 | -462 | -453 | -458 | -425 | - | - |
| Impairment | -15 | -74 | -165 | -58 | -2 | -39 | - | - |
| on loans and receivables | -11 | -16 | -10 | -23 | 2 | -15 | - | - |
| on available-for-sale assets | -4 | -53 | -142 | -31 | -4 | -24 | - | - |
| on goodwill | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| on other | 0 | -5 | -13 | -5 | 0 | 0 | - | - |
| Share in results of associated companies | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result before tax | 402 | 344 | 65 | 348 | 369 | 332 | - | - |
| Income tax expense | -121 | -105 | -32 | -97 | -103 | -105 | - | - |
| Result after tax | 281 | 238 | 33 | 251 | 266 | 227 | - | - |
| attributable to minority interests | 1 | 0 | 1 | 0 | 1 | 0 | - | - |
| attributable to equity holders of the parent | 280 | 238 | 32 | 251 | 266 | 226 | - | - |
| Banking | 175 | 147 | 64 | 148 | 137 | 159 | - | - |
| Insurance | 106 | 91 | -32 | 103 | 128 | 68 | - | - |
| Risk-weighted assets, group (end of period, Basel II) | 29 104 | 29 158 | 29 161 | 28 929 | 29 101 | 25 273 | - | - |
| of which banking | 18 086 | 18 013 | 17 988 | 18 038 | 18 179 | 14 519 | - | - |
| Allocated equity (end of period, Basel II) | 2 775 | 2 786 | 2 787 | 2 746 | 2 763 | 2 453 | - | - |
| Return on allocated equity (ROAC, Basel II) | 39% | 32% | 3% | 34% | 37% | 33% | - | - |
| Cost/income ratio, banking | 57% | 60% | 77% | 60% | 65% | 58% | - | - |
| Combined ratio, non-life insurance | 74% | 89% | 95% | 106% | 82% | 92% | - | - |
These underlying figures exclude exceptional and non-operating items. A table reconciling the underlying result and the result according to IFRS is provided below (amounts are after taxes and minority interests).
| Reconciliation between underlying result and result according to IFRS Belgium Business Unit (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Result after tax, attributable to equity holders of the parent: underlying |
280 | 238 | 32 | 251 | 266 | 226 | - | - |
| + MTM of derivatives for ALM hedging | 57 | -56 | -213 | -38 | 68 | -26 | - | - |
| + gains/losses on CDOs | 49 | -20 | -165 | 18 | 161 | 7 | - | - |
| + MTM of CDO guarantee and commitment fee | -1 | -4 | -2 | -2 | -6 | -3 | - | - |
| + impairment on goodwill | 0 | 0 | 0 | -4 | 0 | 0 | - | - |
| + results on divestments | 0 | 0 | 0 | 0 | 2 | 0 | - | - |
| + other | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result after tax, attributable to equity holders of the parent: IFRS |
385 | 158 | -348 | 226 | 489 | 204 | - | - |
In the quarter under review, the Belgium Business Unit generated an underlying profit of 226 million, above the average of 197 million for the four preceding quarters. The quarter under review was characterised by lower net interest income, strong sales of unit-linked life insurance products, increased net fee and commission income, a loss on the sale of Spanish government bonds, lower costs due to an amount being recovered under the deposit guarantee scheme, low impairment on loans, but higher impairment on shares. Banking activities accounted for 70% of the underlying result of the Belgium Business Unit in the quarter under review, and insurance activities for 30%.
Net interest income stood at 561 million in the quarter under review, a 4% decrease both year-on-year and quarter-onquarter, which is partly due to the lower income on savings accounts (lower reinvestment yield only partially offset by lower external rate) and less income generated by the insurer's bond portfolio (owing to the sale of GIIPS government bonds with a high return). Moreover, the previous quarter had benefitted from interest corrections on Greek bonds.
At 128 basis points, the net interest margin of KBC Bank in Belgium narrowed by 15 basis points quarter-on-quarter and by 14 basis points year-on-year. The Belgian retail loan book continued to increase, expanding by almost 2% quarter-onquarter and by more than 6% year-on-year, in line with the group's focus on its home markets. Mortgage loans remained an important driver of this volume growth (up 8% year-on-year). Customers' deposits likewise increased, going up by 5% both quarter-on-quarter and year-on-year.
Earned insurance premiums in the quarter under review amounted to 411 million and break down into 184 million for life insurance and 226 million for non-life insurance.
Non-life premium income continued its upward trend, increasing by 1% compared to the previous quarter and by as much as 5% on the year-earlier quarter (increases in, inter alia, the Fire Insurance class). As regards claims, the relatively high amount of major claims in the quarter under review was partially offset by a relatively low amount of normal claims. The combined ratio moved up 10 basis point quarter-on-quarter, but on the whole remained at an excellent 87% in 1H2012.
Life sales, including unit-linked products (which – in simplified terms – are not included in the premium figures under IFRS), amounted to 1 047 million in 2Q2012, up 14% on the already high level in the previous quarter and almost 80% compared to the year-earlier quarter. As was the case in the previous quarters, life insurance sales related primarily to unit-linked products, which accounted for over 80% of such sales in 2Q2012, the remainder being accounted for by interest-guaranteed products (which were negatively affected by the reduced guaranteed interest rate on life savings products from May onwards). At the end of June 2012, the life reserves of this business unit amounted to 23 billion.
Total net fee and commission income amounted to a satisfying 197 million in the quarter under review, up 11% on the previous quarter and 10% on the year-earlier quarter, and hence continuing its gradual recovery. Net fee and commission income was positively impacted by robust sales of unit-linked insurance products (the margin on those products is included in net fee and commission income), a satisfactory level of management fee income from mutual funds, and increased fees related to securities transactions, among other things. Assets under management of this business unit stood at 140 billion at the end of June 2012, slightly lower (-1%) than three months earlier, due essentially to a small net outflow not entirely being offset by a positive price effect.
Trading and fair value income (recorded under 'Net result from financial instruments at fair value through profit and loss') came to 8 million in the quarter under review, slightly down on the average of 13 million for the four preceding quarters (the quarter under review includes negative credit value adjustments, among other factors). Dividend income stood at 19 million, somewhat less than a year earlier (smaller share portfolio) but clearly higher than the previous quarter, since dividends are traditionally received in the second quarter of the year. The realised result on available-for-sale assets amounted to a negative 16 million and included, inter alia, a loss of 49 million on the sale of Spanish government bonds, which more than offset the 24 million gain on the sale of shares at the insurance company. Other net income came to 15 million in 2Q2012, including several small items (it should be noted that the previous quarter had been significantly impacted by a -29 million charge for the 5-5-5 product and that the year-earlier quarter had benefitted from a 15 million gain on the sale of a building).
The operating expenses of the Belgium Business Unit stood at 425 million in the quarter under review, down 7% on the previous quarter and 5% on the year-earlier quarter, in both cases the decline was almost entirely related to a recuperation of funds from the former deposit guarantee scheme. Excluding this item, costs were slightly up on their level in the previous quarter (+2%) and the year-earlier quarter (1%), with increased staff costs only partially being offset by decreased ICT expenses. The cost/income ratio in the quarter under review amounted to 58%, or 62% for 1H2012, more or less comparable to the 63% recorded for FY2011.
Impairment on loans and receivables (loan loss provisions) was again quite limited (only 15 million) in the quarter under review and as a consequence, the annualised credit cost ratio for 1H2012 remained at an excellent 4 basis points, compared to an already very favourable 10 basis points for FY2011. At the end of 2Q2012, some 1.5% of the Belgian retail loan book was non-performing, the same low level as three months earlier.
Other impairment charges amounted to 24 million in the quarter under review and related solely to shares in portfolio (mainly Spanish and telecom shares).
The CEE Business Unit encompasses the banking and insurance activities in the Czech Republic (ČSOB Bank and ČSOB Insurance), Slovakia (ČSOB Bank and ČSOB Insurance), Hungary (K&H Bank and K&H Insurance) and Bulgaria (CIBANK and DZI Insurance). Since they are earmarked for divestment, Absolut Bank in Russia, KBC Banka in Serbia, NLB and NLB Vita in Slovenia, and Kredyt Bank and Warta (both Poland) are not included here, but grouped together in the Group Centre (until they are sold).
| Income statement, CEE Business Unit, underlying (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Net interest income | 385 | 381 | 388 | 370 | 357 | 347 | - | - |
| Earned premiums, insurance (before reinsurance) | 241 | 163 | 182 | 159 | 173 | 264 | - | - |
| Technical charges, insurance (before reinsurance) | -189 | -115 | -135 | -108 | -127 | -216 | - | - |
| Ceded reinsurance result | -5 | -4 | -6 | -6 | -3 | -4 | - | - |
| Dividend income | 0 | 1 | 1 | 0 | 0 | 0 | - | - |
| Net result from financial instruments at fair value through profit or loss |
33 | 14 | 5 | 22 | 55 | 49 | - | - |
| Net realised result from available-for-sale assets | 6 | 3 | 6 | 17 | -11 | 8 | - | - |
| Net fee and commission income | 76 | 86 | 84 | 83 | 77 | 71 | - | - |
| Other net income | 9 | 9 | 13 | 7 | 11 | 11 | - | - |
| Total income | 556 | 537 | 538 | 544 | 531 | 531 | - | - |
| Operating expenses | -350 | -302 | -297 | -243 | -349 | -290 | - | - |
| Impairment | -52 | -96 | -280 | -191 | -47 | -21 | - | - |
| on loans and receivables | -51 | -42 | -234 | -151 | -46 | -18 | - | - |
| on available-for-sale assets | 0 | -52 | -45 | -30 | 0 | 0 | - | - |
| on goodwill | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| on other | -1 | -2 | 0 | -11 | -1 | -3 | - | - |
| Share in results of associated companies | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result before tax | 154 | 139 | -39 | 111 | 136 | 220 | - | - |
| Income tax expense | -31 | 8 | -1 | -14 | -19 | -32 | - | - |
| Result after tax | 123 | 147 | -40 | 97 | 118 | 188 | - | - |
| attributable to minority interests | 0 | 0 | 0 | -1 | 0 | 0 | - | - |
| attributable to equity holders of the parent | 123 | 146 | -40 | 98 | 118 | 188 | - | - |
| Banking | 113 | 136 | -43 | 85 | 112 | 178 | - | - |
| Insurance | 10 | 11 | 3 | 12 | 6 | 10 | - | - |
| Risk-weighted assets, group (end of period, Basel II) | 25 607 | 25 810 | 26 062 | 26 128 | 26 260 | 26 314 | - | - |
| of which banking | 24 140 | 24 300 | 24 541 | 24 563 | 24 742 | 24 820 | - | - |
| Allocated equity (end of period, Basel II) | 2 137 | 2 155 | 2 176 | 2 184 | 2 192 | 2 195 | - | - |
| Return on allocated equity (ROAC, Basel II) | 19% | 22% | -11% | 14% | 17% | 30% | - | - |
| Cost/income ratio, banking | 63% | 55% | 53% | 43% | 65% | 54% | - | - |
| Combined ratio, non-life insurance | 88% | 89% | 101% | 93% | 95% | 96% | - | - |
These underlying figures exclude exceptional and non-operating items. A table reconciling the underlying result and the result according to IFRS is provided below (amounts are after taxes and minority interests).
| Reconciliation between underlying result and result according to IFRS CEE Business Unit (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Result after tax, attributable to equity holders of the parent: underlying |
123 | 146 | -40 | 98 | 118 | 188 | - | - |
| + MTM of derivatives for ALM hedging | 22 | -1 | 2 | 21 | 2 | -2 | - | - |
| + gains/losses on CDOs | 2 | 0 | 0 | -3 | 0 | 0 | - | - |
| + MTM of CDO guarantee and commitment fee | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| + impairment on goodwill | 0 | -1 | -53 | -21 | 0 | -15 | - | - |
| + results on divestments | -5 | 1 | 0 | 0 | 0 | 0 | - | - |
| + other | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result after tax, attributable to equity holders of the parent: IFRS |
141 | 145 | -91 | 94 | 119 | 171 | - | - |
In the quarter under review, the CEE Business Unit generated an underlying net result of 188 million, considerably more than the average figure of 81 million for the four preceding quarters. The quarter under review was characterised by lower interest and fee and commission income, strong sales of unit-linked life insurance products, good trading income, stable costs and a low level of loan loss provisions. The CEE Business Unit's net result for 2Q2012 includes 158 million for the Czech Republic, 16 million for Slovakia, 35 million for Hungary, and 6 million for Bulgaria.
Net interest income generated in this business unit amounted to 347 million in the quarter under review. Excluding the exchange rate impact, this represents a 3% decrease on the previous quarter and a 5% decline on the year-earlier quarter, which was partly related to the decrease in the Hungarian loan book (repayment of FX mortgages as a result of the FX mortgage relief programme, and a reduced corporate loan portfolio). At 304 basis points, the net interest margin narrowed by some 12 and 20 basis points compared to its respective1Q2012 and 2Q2011 levels, though this was partly due to an FX effect. As regards volumes, the combined loan book of the business unit was up almost 2% quarter-on-quarter and more than 4% year-on-year (with the above-mentioned decrease in Hungary being compensated by increases in the loan books of the Czech Republic and Slovakia). As regards customer deposits, the total volume for the CEE-4 was flat quarter-on-quarter, but rose by over 3% year-on-year (flat in Hungary, though increasing in the other countries).
Earned insurance premiums in the quarter under review amounted to 264 million, which breaks down into 182 million for life insurance and 82 million for non-life insurance.
Non-life premium income was more or less in line with its level in both the previous and year-earlier quarters. The combined ratio for the quarter under review stood at a good 96%, resulting in a year-to-date ratio of 95% for 1H2012.
Life sales, including insurance products not booked under earned premiums under IFRS, amounted to 190 million in the quarter under review, around twice the level recorded in both the previous and year-earlier quarters, thanks mainly to the strong sale of unit-linked life products in the Czech Republic. Overall, unit-linked life products accounted for some 83% of life insurance sales in the CEE Business Unit in 2Q2012, with interest-guaranteed products accounting for the remaining 17%. At the end of June 2012, the outstanding life reserves in this business unit stood at 1.7 billion.
Net fee and commission income amounted to 71 million in the quarter under review, which is below the average of 83 million for the four preceding quarters. Total assets under management of this business unit amounted to 10 billion at quarter-end, down 7% compared to three months earlier, which was essentially the result of net outflows.Trading and fair value income (recorded under 'Net result from financial instruments at fair value through profit and loss') came to 49 million, up on the average of 24 million for the four preceding quarters (the quarter under review included good trading results in the Czech Republic, among other factors). The net realised result from available-for-sale assets came to 8 million and related to both bonds and shares (it should be noted that the previous quarter had been negatively impacted by the Greek debt exchange operation). Other net income totalled 11 million.
The operating expenses of this business unit came to 290 million, which, at first sight, would appear to be significantly lower than the previous quarter. However, the level of costs in 1Q2012 included the negative impact of the special Hungarian bank tax for FY2012 (57 million). When this impact and movements in the exchange rate are excluded, costs were roughly comparable to both the previous and year-earlier quarters. The cost/income ratio of the CEE banking activities stood at 54% in the quarter under review, or 59% for 1H2012, compared to 54% for FY2011.
In the quarter under review, impairment on loans and receivables (loan loss provisions) stood at a low 18 million, even down on the already low levels recorded in both the previous and year-earlier quarters (46 million and 42 million, respectively), thanks mainly to a significant decrease in Hungary (retail segment). As a result, the annualised credit cost ratio of this business unit amounted to a favourable 42 basis points in 1H2012, well below the 159 basis points recorded for FY2011 (which had been impacted by high provisioning for Hungary and Bulgaria). At the end of the quarter under review, nonperforming loans accounted for some 5.6% of the CEE loan book, comparable to the level recorded three months earlier. Impairment on assets other than loans and receivables amounted to a mere 3 million in the quarter under review (please note that the year-earlier quarter had been significantly impacted by impairment on Greek bonds).
The underlying income statements for the Czech Republic, Slovakia, Hungary and Bulgaria are given below.
| Net interest income 259 261 268 257 260 258 - Earned premiums, insurance (before reinsurance) 178 96 119 99 111 201 - Technical charges, insurance (before reinsurance) -151 -71 -92 -68 -86 -173 - Ceded reinsurance result -2 -2 -3 -5 -1 -2 - Dividend income 0 1 1 0 0 0 - Net result from financial instruments at fair value 26 12 -1 16 31 23 - through profit or loss Net realised result from available-for-sale assets 5 3 6 15 -11 7 - Net fee and commission income 42 49 50 49 45 38 - Other net income 4 2 9 5 10 6 - Total income 361 351 357 368 358 358 - Operating expenses -158 -165 -169 -182 -160 -160 - Impairment -18 -65 -52 -70 -13 -14 - Of which on loans and receivables -18 -13 -9 -33 -13 -12 - Of which on available-for-sale assets 0 -52 -43 -29 0 0 - Share in results of associated companies 0 0 0 0 0 0 - Result before tax 185 121 136 116 185 184 - Income tax expense -28 -13 -19 -16 -29 -27 - Result after tax 157 108 116 100 156 158 - |
Income statement, Czech Republic, underlying (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|---|
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| - | |||||||||
| attributable to minority interests 0 0 0 0 0 0 - |
- | ||||||||
| attributable to equity holders of the parent 157 108 116 100 156 158 - |
- | ||||||||
| banking 148 101 112 91 151 152 - |
- | ||||||||
| insurance 8 7 5 9 5 5 - |
- | ||||||||
| Risk-weighted assets, group (end of period, Basel II) 13 854 13 937 14 342 14 869 15 590 15 715 - |
- | ||||||||
| of which banking 13 015 13 080 13 477 14 013 14 709 14 836 - |
- | ||||||||
| Allocated equity (end of period, Basel II) 1 159 1 166 1 199 1 241 1 300 1 310 - |
- | ||||||||
| Return on allocated equity (ROAC, Basel II) 46% 30% 32% 27% 42% 42% - |
- | ||||||||
| Cost/income ratio, banking 43% 46% 46% 49% 44% 44% - |
- | ||||||||
| Combined ratio, non-life insurance 87% 91% 97% 84% 91% 94% - |
- |
| Income statement, Slovakia, underlying (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Net interest income | 48 | 46 | 48 | 51 | 46 | 44 | - | - |
| Earned premiums, insurance (before reinsurance) | 19 | 20 | 16 | 15 | 18 | 21 | - | - |
| Technical charges, insurance (before reinsurance) | -13 | -14 | -9 | -6 | -10 | -14 | - | - |
| Ceded reinsurance result | -1 | 0 | -1 | -1 | -1 | 0 | - | - |
| Dividend income | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Net result from financial instruments at fair value through profit or loss |
3 | 1 | -3 | -7 | 10 | 4 | - | - |
| Net realised result from available-for-sale assets | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Net fee and commission income | 11 | 10 | 9 | 10 | 9 | 9 | - | - |
| Other net income | 2 | 4 | 1 | 1 | 2 | 2 | - | - |
| Total income | 70 | 67 | 60 | 64 | 75 | 67 | - | - |
| Operating expenses | -40 | -42 | -39 | -36 | -44 | -44 | - | - |
| Impairment | -1 | -8 | -5 | 0 | -3 | -2 | - | - |
| Of which on loans and receivables | -1 | -7 | -3 | 1 | -3 | -2 | - | - |
| Of which on available-for-sale assets | 0 | 0 | -2 | 0 | 0 | 0 | - | - |
| Share in results of associated companies | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result before tax | 29 | 17 | 16 | 27 | 28 | 21 | - | - |
| Income tax expense | -5 | 0 | -4 | -4 | -5 | -5 | - | - |
| Result after tax | 24 | 18 | 13 | 23 | 23 | 16 | - | - |
| attributable to minority interests | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| attributable to equity holders of the parent | 24 | 18 | 13 | 23 | 23 | 16 | - | - |
| banking | 19 | 15 | 13 | 20 | 19 | 14 | - | - |
| insurance | 6 | 3 | 0 | 4 | 4 | 3 | - | - |
| Risk-weighted assets, group (end of period, Basel II) | 4 208 | 4 382 | 4 435 | 4 261 | 4 102 | 4 034 | - | - |
| of which banking | 4 038 | 4 205 | 4 258 | 4 084 | 3 926 | 3 855 | - | - |
| Allocated equity (end of period, Basel II) | 347 | 361 | 365 | 352 | 339 | 333 | - | - |
| Return on allocated equity (ROAC, Basel II) | 23% | 16% | 9% | 24% | 22% | 15% | - | - |
| Cost/income ratio, banking | 61% | 63% | 65% | 58% | 60% | 66% | - | - |
| Combined ratio, non-life insurance | 85% | 88% | 89% | 67% | 52% | 85% | - | - |
| Income statement, Hungary, underlying( in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Net interest income | 103 | 100 | 95 | 83 | 70 | 65 | - | - |
| Earned premiums, insurance (before reinsurance) | 22 | 23 | 23 | 20 | 19 | 17 | - | - |
| Technical charges, insurance (before reinsurance) | -11 | -17 | -18 | -16 | -15 | -13 | - | - |
| Ceded reinsurance result | -1 | -1 | -1 | -1 | -1 | -1 | - | - |
| Dividend income | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Net result from financial instruments at fair value | ||||||||
| through profit or loss | 4 | 12 | 12 | 13 | 15 | 21 | - | - |
| Net realised result from available-for-sale assets | 0 | 0 | 0 | 2 | 0 | 0 | - | - |
| Net fee and commission income | 24 | 25 | 25 | 24 | 22 | 22 | - | - |
| Other net income | 1 | 2 | 1 | 0 | -2 | 1 | - | - |
| Total income | 143 | 143 | 138 | 125 | 109 | 113 | - | - |
| Operating expenses | -130 | -71 | -68 | 0 | -122 | -64 | - | - |
| Impairment | -29 | -19 | -126 | -117 | -29 | -4 | - | - |
| Of which on loans and receivables | -28 | -18 | -126 | -116 | -28 | -3 | - | - |
| Of which on available-for-sale assets | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Share in results of associated companies | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result before tax | -15 | 54 | -56 | 8 | -41 | 45 | - | - |
| Income tax expense | -1 | -13 | 6 | -1 | 5 | -10 | - | - |
| Result after tax | -16 | 40 | -50 | 7 | -36 | 35 | - | - |
| attributable to minority interests | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| attributable to equity holders of the parent | -16 | 40 | -50 | 7 | -36 | 35 | - | - |
| banking | -19 | 38 | -50 | 5 | -35 | 33 | - | - |
| insurance | 3 | 2 | 0 | 2 | -1 | 2 | - | - |
| Risk-weighted assets, group (end of period, Basel II) | 6 666 | 6 587 | 6 505 | 6 123 | 5 759 | 5 413 | - | - |
| of which banking | 6 424 | 6 335 | 6 253 | 5 834 | 5 513 | 5 178 | - | - |
| Allocated equity (end of period, Basel II) | 548 | 542 | 536 | 507 | 475 | 447 | - | - |
| Return on allocated equity (ROAC, Basel II) | -18% | 24% | -41% | -1% | -35% | 24% | - | - |
| Cost/income ratio, banking | 93% | 49% | 48% | 2% | 112% | 57% | - | - |
| Combined ratio, non-life insurance | 74% | 92% | 109% | 109% | 98% | 103% | - | - |
| Income statement, Bulgaria, | 1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
| underlying (in millions of EUR) | ||||||||
| Net interest income | 12 | 10 | 8 | 9 | 10 | 9 | - | - |
| Earned premiums, insurance (before reinsurance) | 23 | 25 | 24 | 25 | 25 | 24 | - | - |
| Technical charges, insurance (before reinsurance) | -15 | -14 | -16 | -19 | -18 | -15 | - | - |
| Ceded reinsurance result | -2 | -1 | -1 | 1 | 0 | 0 | - | - |
| Dividend income | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Net result from financial instruments at fair value through profit or loss |
0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Net realised result from available-for-sale assets | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Net fee and commission income | 1 | 0 | 1 | 0 | 0 | 1 | - | - |
| Other net income | 0 | 0 | 0 | 0 | 1 | 1 | - | - |
| Total income | 19 | 21 | 17 | 17 | 19 | 21 | - | - |
| Operating expenses | -14 | -14 | -14 | -15 | -14 | -14 | - | - |
| Impairment | -4 | -3 | -2 | -8 | -2 | -1 | - | - |
| Of which on loans and receivables | -4 | -3 | -2 | -6 | -2 | -1 | - | - |
| Of which on available-for-sale assets | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Share in results of associated companies | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result before tax | 2 | 4 | 1 | -6 | 3 | 6 | - | - |
| Income tax expense | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result after tax | 2 | 5 | 1 | -6 | 3 | 6 | - | - |
| attributable to minority interests | 0 | 0 | 0 | -1 | 0 | 0 | - | - |
| attributable to equity holders of the parent | 2 | 4 | 1 | -5 | 3 | 6 | - | - |
| banking insurance |
0 1 |
0 4 |
1 1 |
-5 0 |
2 1 |
3 3 |
- - |
- - |
| Risk-weighted assets, group (end of period, Basel II) | 846 | 867 | 750 | 848 | 808 | 817 | - | - |
| of which banking | 628 | 643 | 523 | 604 | 593 | 614 | - | - |
| Allocated equity (end of period, Basel II) | 81 | 83 | 74 | 82 | 77 | 78 | - | - |
| Return on allocated equity (ROAC, Basel II) | -17% | -15% | -13% | -49% | -10% | 6% | - | - |
| Cost/income ratio, banking Combined ratio, non-life insurance |
66% 107% |
74% 83% |
82% 104% |
83% 107% |
69% 110% |
71% 99% |
- - |
- - |
| Income statement, CEE – other*, underlying (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Net interest income | -36 | -36 | -31 | -31 | -29 | -29 | - | - |
| Earned premiums, insurance (before reinsurance) | -1 | -1 | -1 | -1 | -1 | 0 | - | - |
| Technical charges, insurance (before reinsurance) | 0 | 0 | 0 | 0 | 1 | 0 | - | - |
| Ceded reinsurance result | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Dividend income | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Net result from financial instruments at fair value through profit or loss |
0 | -11 | -3 | 0 | 0 | 0 | - | - |
| Net realised result from available-for-sale assets | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Net fee and commission income | -2 | 2 | -1 | 0 | 0 | 0 | - | - |
| Other net income | 2 | 1 | 2 | 2 | 0 | 1 | - | - |
| Total income | -38 | -45 | -34 | -30 | -29 | -28 | - | - |
| Operating expenses | -9 | -11 | -8 | -9 | -9 | -8 | - | - |
| Impairment | 0 | -1 | -95 | 4 | 0 | 0 | - | - |
| Of which on loans and receivables | 0 | 0 | -96 | 4 | 0 | 0 | - | - |
| Of which on available-for-sale assets | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Share in results of associated companies | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result before tax | -47 | -57 | -136 | -35 | -38 | -36 | - | - |
| Income tax expense | 3 | 34 | 17 | 7 | 11 | 9 | - | - |
| Result after tax | -43 | -23 | -120 | -28 | -27 | -27 | - | - |
| attributable to minority interests | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| attributable to equity holders of the parent | -43 | -23 | -120 | -28 | -27 | -27 | - | - |
| banking insurance |
-36 -7 |
-19 -5 |
-118 -2 |
-25 -3 |
-25 -3 |
-24 -3 |
- - |
- - |
* includes funding costs of goodwill and some other allocations from KBC Bank Belgium and KBC Insurance, among other things.
The Merchant Banking Business Unit encompasses the financial services provided to large SMEs & corporate customers and capital market activities (merchant banking activities of the CEE group companies are included in the CEE Business Unit). More specifically, it includes commercial banking and market activities of KBC Bank in Belgium and its branches elsewhere, and the activities of a number of subsidiaries, the main ones being KBC Lease (partial), KBC Securities, KBC Commercial Finance, KBC Credit Investments and KBC Bank Ireland. The entities that are earmarked for divestment under the strategic plan (the main ones being KBC Financial Products, Antwerp Diamond Bank and KBC Bank Deutschland) are not included here, but are grouped together in the Group Centre (until they are sold).
| Income statement, Merchant Banking Business Unit, underlying (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Net interest income | 180 | 167 | 168 | 147 | 148 | 125 | - | - |
| Earned premiums, insurance (before reinsurance) | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Technical charges, insurance (before reinsurance) | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Ceded reinsurance result | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Dividend income | 0 | 4 | 2 | 0 | 0 | 1 | - | - |
| Net result from financial instruments at fair value through profit or loss |
213 | 87 | 9 | 97 | 239 | 45 | - | - |
| Net realised result from available-for-sale assets | 2 | 11 | 0 | 22 | -1 | 5 | - | - |
| Net fee and commission income | 51 | 53 | 43 | 55 | 56 | 46 | - | - |
| Other net income | 22 | 17 | -117 | 2 | -17 | 27 | - | - |
| Total income | 469 | 340 | 105 | 323 | 425 | 248 | - | - |
| Operating expenses | -152 | -142 | -143 | -132 | -147 | -148 | - | - |
| Impairment | -57 | -112 | -215 | -384 | -205 | -166 | - | - |
| on loans and receivables | -57 | -95 | -205 | -368 | -203 | -152 | - | - |
| on available-for-sale assets | 0 | -1 | -2 | -3 | 0 | 0 | - | - |
| on goodwill | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| on other | 0 | -16 | -7 | -13 | -1 | -14 | - | - |
| Share in results of associated companies | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result before tax | 259 | 86 | -253 | -193 | 74 | -66 | - | - |
| Income tax expense | -78 | -21 | 61 | 44 | -27 | 3 | - | - |
| Result after tax | 182 | 65 | -192 | -149 | 46 | -63 | - | - |
| attributable to minority interests | 5 | 2 | 4 | 4 | 4 | 2 | - | - |
| attributable to equity holders of the parent | 177 | 63 | -196 | -153 | 42 | -65 | - | - |
| Banking | 176 | 62 | -197 | -154 | 41 | -66 | - | - |
| Insurance | 1 | 1 | 1 | 1 | 1 | 1 | - | - |
| Risk-weighted assets, group (end of period, Basel II) | 45 945 | 42 446 | 39 736 | 42 126 | 40 319 | 40 884 | - | - |
| of which banking | 45 945 | 42 446 | 39 736 | 42 126 | 40 319 | 40 884 | - | - |
| Allocated equity (end of period, Basel II) | 3 676 | 3 396 | 3 179 | 3 370 | 3 225 | 3 271 | - | - |
| Return on allocated equity (ROAC, Basel II) | 19% | 6% | -25% | -19% | 6% | -7% | - | - |
| Cost/income ratio, banking | 32% | 42% | 138% | 41% | 35% | 60% | - | - |
These underlying figures exclude exceptional and non-operating items. A table reconciling the underlying result and the result according to IFRS is provided below (amounts are after taxes and minority interests).
| Reconciliation between underlying result and result according to IFRS Merchant Banking Business Unit (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Result after tax, attributable to equity holders of the parent: underlying |
177 | 63 | -196 | -153 | 42 | -65 | - | - |
| + MTM of derivatives for ALM hedging | 9 | -7 | -31 | -28 | -24 | 0 | - | - |
| + gains/losses on CDOs | 18 | 18 | -13 | -30 | -1 | 1 | - | - |
| + MTM of CDO guarantee and commitment fee | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| + impairment on goodwill | 0 | -5 | -4 | -8 | 0 | -1 | - | - |
| + results on divestments | -1 | 0 | -10 | -6 | 0 | 0 | - | - |
| + other | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result after tax, attributable to equity holders of the parent: IFRS |
203 | 69 | -255 | -225 | 17 | -65 | - | - |
In the quarter under review, the Merchant Banking Business Unit generated an underlying result of -65 million, comparable with the -61 million average for the four preceding quarters. The quarter under review was characterised by lower though still substantial loan impairment in Ireland, and significant negative credit value adjustments affecting total income. The underlying result for 2Q2012 breaks down as follows: 45 million for market activities and -110 million for commercial banking activities (-18 million excluding KBC Bank Ireland).
Total income for this business unit amounted to 248 million in the quarter under review. Trading and fair value income (recorded under 'Net result from financial instruments at fair value through profit or loss') amounted to 45 million in the quarter under review, below the average of 108 million for the four preceding quarters. This income item includes, inter alia, dealing room income, which was down on the excellent figure for the first quarter. This income item also suffered from significant negative credit value adjustments to the tune of 53 million, as opposed to a positive figure (+35 million) in the previous quarter. Moreover, the previous quarter benefitted from a 21 million gain on the sale of a private equity participation.
Net interest income stood at 125 million in 2Q2012, down on both 1Q2012 and 2Q2011, due in part to increased senior debt costs. The total credit portfolio of the Merchant Banking Business Unit increased slightly (+1%) both year-on-year and quarter-on-quarter. Deposit volume rose 2% in the quarter under review, following the 18% rise in the previous quarter. As a result, part of the large deposit outflow in the last quarter of 2011 has been countered, and the year-on-year decrease in deposits now comes to 28%.
The other income components combined totalled 79 million in the quarter under review and included net fee and commission income of 46 million (slightly down on the 52 million average for the four preceding quarters), a net realised result from available-for-sale assets of 5 million (as opposed to a 8 million average in the four preceding quarters), and other net income of 27 million. The latter figure did not include any significant one-off items, whereas in the previous quarter, it had included -27 million related to the 5-5-5 product, -51 million related to the sale of Atomium assets and +41 million in amounts recovered in relation to the 2010 fraud case at KBC Lease UK.
Operating expenses in the quarter under review amounted to 148 million, up 1% quarter-on-quarter and 4% year-on-year, due to various factors (mainly staff expenses, but also deconsolidation of a few small entities, the adjustment relating to the deposit guarantee scheme in Belgium, etc.). The underlying cost/income ratio stood at 60% in 2Q2012, or 44% for 1H2012, more or less in line with the 46% recorded for FY2011.
Impairment on loans and receivables (loan loss provisions) amounted to 152 million in the quarter under review, down on the 203 million registered in the previous quarter, but up on the 95 million recorded in the year-earlier quarter. As was the case in the previous quarter, provisioning related primarily to KBC Bank Ireland, where 136 million was set aside, less than the 195 million booked in the previous quarter, but clearly higher than the 49 million recorded in 2Q2011. Disregarding Ireland, loan loss impairment in the other merchant banking entities was very limited in the quarter under review (a mere 16 million in total). Consequently, the annualised credit cost ratio for the Merchant Banking Business Unit came to 138 basis points in 1H2012, in line with the 136 basis points recorded for FY2011. Excluding Ireland*, the 1H2012 credit cost ratio would have come to just 14 basis points, much better than the 59 basis points recorded for FY2011.
At the end of June 2012, approximately 9.5% of the Merchant Banking Business Unit's loan book was non-performing, compared to the 9.1% recorded three months earlier. Excluding Ireland*, non-performing loans accounted for 3.9% of the unit's loan book at 30 June 2012 (3.8% three months earlier).
Other impairment charges for this business unit amounted to 14 million and related to real estate property.
The underlying figures for the Merchant Banking Business Unit are broken down into 'Commercial Banking' (mainly lending and banking services to large SMEs and corporate customers) and 'Market Activities' (sales and trading on money and capital markets, corporate finance, etc.) on the next page.
* The annualised credit cost ratio for KBC Bank Ireland stood at 400 basis points in 1H2012, compared to 301 basis points for FY2011 (which included 2 quarters of relatively low impairment charges), while the non-performing ratio rose to 21.4% at the end of 2Q2012, up from 20.5% three months earlier.
| Income statement, Commercial Banking, underlying (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Net interest income | 180 | 167 | 168 | 148 | 148 | 125 | - | - |
| Earned premiums, insurance (before reinsurance) | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Technical charges, insurance (before reinsurance) | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Ceded reinsurance result | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Dividend income | 0 | 4 | 2 | 0 | 0 | 1 | - | - |
| Net result from financial instruments at fair value | ||||||||
| through profit or loss | 10 | -25 | -48 | 0 | 41 | -50 | - | - |
| Net realised result from available-for-sale assets | 2 | 11 | 0 | 22 | -1 | 5 | - | - |
| Net fee and commission income | 26 | 29 | 26 | 36 | 36 | 30 | - | - |
| Other net income | 22 | 24 | 21 | 37 | 61 | 27 | - | - |
| Total income | 242 | 210 | 169 | 242 | 286 | 138 | - | - |
| Operating expenses | -87 | -88 | -90 | -86 | -92 | -102 | - | - |
| Impairment | -72 | -100 | -208 | -385 | -202 | -172 | - | - |
| Of which on loans and receivables | -72 | -83 | -200 | -368 | -201 | -157 | - | - |
| Of which on available-for-sale assets | 0 | -1 | -1 | -3 | 0 | 0 | - | - |
| Share in results of associated companies | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result before tax | 83 | 23 | -130 | -229 | -8 | -136 | - | - |
| Income tax expense | -28 | -6 | 19 | 53 | -10 | 28 | - | - |
| Result after tax | 55 | 17 | -111 | -176 | -18 | -108 | - | - |
| attributable to minority interests | 4 | 3 | 4 | 3 | 4 | 2 | - | - |
| attributable to equity holders of the parent | 51 | 14 | -115 | -179 | -22 | -110 | - | - |
| Banking Insurance |
50 1 |
13 1 |
-116 1 |
-180 1 |
-23 -1 |
-111 1 |
- - |
- - |
| Risk-weighted assets, group (end of period, Basel II) | 32 176 | 30 934 | 30 733 | 31 065 | 31 300 | 31 226 | - | - |
| of which banking | 32 176 | 30 934 | 30 733 | 31 065 | 31 300 | 31 226 | - | - |
| Allocated equity (end of period, Basel II) | 2 574 | 2 475 | 2 459 | 2 485 | 2 504 | 2 498 | - | - |
| Return on allocated equity (ROAC, Basel II) | 7% | 2% | -19% | -30% | -3% | -16% | - | - |
| Cost/income ratio, banking | 36% | 42% | 54% | 36% | 32% | 75% | - | - |
| Income statement, Market Activities, | ||||||||
| underlying (in millions of EUR) | 1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
| Net interest income | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Earned premiums, insurance (before reinsurance) | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Technical charges, insurance (before reinsurance) | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Ceded reinsurance result | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Dividend income | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Net result from financial instruments at fair value | ||||||||
| through profit or loss | 203 | 112 | 57 | 96 | 198 | 95 | - | - |
| Net realised result from available-for-sale assets | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Net fee and commission income | 25 | 25 | 17 | 19 | 19 | 16 | - | - |
| Other net income | 0 | -8 | -138 | -35 | -78 | 0 | - | - |
| Total income | 227 | 129 | -64 | 80 | 139 | 110 | - | - |
| Operating expenses | -65 | -53 | -53 | -46 | -55 | -46 | - | - |
| Impairment | 15 | -12 | -6 | 1 | -2 | 5 | - | - |
| Of which on loans and receivables | 15 | -12 | -5 | 0 | -2 | 5 | - | - |
| Of which on available-for-sale assets | 0 | 0 | -1 | 1 | 0 | 0 | - | - |
| Share in results of associated companies | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result before tax | 177 | 63 | -123 | 36 | 82 | 70 | - | - |
| Income tax expense | -50 | -15 | 42 | -9 | -17 | -25 | - | - |
| Result after tax | 127 | 48 | -81 | 27 | 64 | 45 | - | - |
| attributable to minority interests | 1 | -1 | 0 | 1 | 0 | 0 | - | - |
| attributable to equity holders of the parent | 126 | 48 | -81 | 26 | 65 | 45 | - | - |
| banking | 126 | 48 | -81 | 26 | 65 | 45 | - | - |
| insurance | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Risk-weighted assets, group (end of period, Basel II) | 13 769 | 11 512 | 9 003 | 11 061 | 9 018 | 9 658 | - | - |
| of which banking | 13 769 | 11 512 | 9 003 | 11 061 | 9 018 | 9 658 | - | - |
| Allocated equity (end of period, Basel II) | 1 102 | 921 | 720 | 885 | 721 | 773 | - | - |
| Return on allocated equity (ROAC, Basel II) | 46% | 18% | -41% | 14% | 34% | 26% | - | - |
The Group Centre comprises the results of the holding company KBC Group NV, KBC Global Services, some results that are not attributable to the other business units and the elimination of the results of intersegment transactions. It also comprises the results of the companies that have been designated as non-core in the group's strategy and are therefore earmarked for divestment (included in the figures until they are sold). The main entities are Centea, Fidea, Absolut Bank, KBC Banka, NLB and NLB Vita, Kredyt Bank, Warta, KBC Financial Products, Antwerp Diamond Bank, KBC Bank Deutschland and the KBL epb group.
| Income statement, Group Centre, underlying (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Net interest income | 242 | 261 | 205 | 190 | 121 | 117 | - | - |
| Earned premiums, insurance (before reinsurance) | 284 | 299 | 317 | 341 | 222 | 216 | - | - |
| Technical charges, insurance (before reinsurance) | -234 | -221 | -245 | -283 | -157 | -149 | - | - |
| Ceded reinsurance result | -4 | -3 | -2 | 9 | -3 | 9 | - | - |
| Dividend income | 2 | 6 | 2 | 3 | 0 | 0 | - | - |
| Net result from financial instruments at fair value through profit or loss |
4 | -11 | -14 | 6 | 16 | 11 | - | - |
| Net realised result from available-for-sale assets | 22 | 3 | -2 | 2 | 3 | 9 | - | - |
| Net fee and commission income | 86 | 77 | 72 | 70 | -4 | -3 | - | - |
| Other net income | 2 | 9 | 4 | 11 | 5 | 0 | - | - |
| Total income | 404 | 420 | 338 | 348 | 204 | 212 | - | - |
| Operating expenses | -296 | -265 | -269 | -305 | -156 | -154 | - | - |
| Impairment | 19 | -51 | -81 | -97 | -17 | -14 | - | - |
| on loans and receivables | 21 | -11 | -26 | -58 | -14 | -13 | - | - |
| on available-for-sale assets | -2 | -29 | -38 | -21 | 0 | 0 | - | - |
| on goodwill | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| on other | -1 | -12 | -17 | -18 | -3 | -1 | - | - |
| Share in results of associated companies | 1 | 0 | -23 | -35 | -10 | -10 | - | - |
| Result before tax | 127 | 104 | -35 | -89 | 20 | 34 | - | - |
| Income tax expense | -42 | -19 | -6 | 58 | 12 | -9 | - | - |
| Result after tax | 85 | 85 | -41 | -32 | 32 | 25 | - | - |
| attributable to minority interests | 8 | 3 | 3 | 3 | 3 | 2 | - | - |
| attributable to equity holders of the parent | 77 | 81 | -44 | -35 | 30 | 23 | - | - |
| Banking | 86 | 57 | -19 | -29 | 17 | 13 | - | - |
| Insurance | 20 | 26 | -10 | 3 | 12 | 22 | - | - |
| holding company | -29 | -2 | -16 | -9 | 1 | -12 | - | - |
| Risk-weighted assets, group (end of period, Basel II) | 30 933 | 29 959 | 25 693 | 29 149 | 27 429 | 25 258 | - | - |
| of which banking | 27 732 | 26 637 | 22 347 | 25 814 | 25 850 | 25 033 | - | - |
| Allocated equity (end of period, Basel II) | 2 628 | 2 556 | 2 216 | 2 491 | 2 283 | 2 028 | - | - |
These underlying figures exclude exceptional and non-operating items. A table reconciling the underlying result and the result according to IFRS is provided below (amounts are after taxes and minority interests).
| Reconciliation between underlying result and result according to IFRS, Group Centre (in millions of EUR) |
1Q2011 | 2Q2011 | 3Q2011 | 4Q2011 | 1Q2012 | 2Q2012 | 3Q2012 | 4Q2012 |
|---|---|---|---|---|---|---|---|---|
| Result after tax, attributable to equity holders of the parent: underlying |
77 | 81 | -44 | -35 | 30 | 23 | - | - |
| + MTM of derivatives for ALM hedging | 8 | -13 | -2 | 0 | 1 | 0 | - | - |
| + gains/losses on CDOs | 55 | -84 | -439 | 178 | 29 | -22 | - | - |
| + MTM of CDO guarantee and commitment fee | -8 | -18 | -8 | -9 | -33 | -15 | - | - |
| + impairment on goodwill and other | 0 | -11 | 0 | -8 | 0 | 0 | - | - |
| + fair value changes of own debt outstanding | -16 | -25 | 185 | 215 | -340 | 41 | - | - |
| + legacy structured derivative business (KBC FP) | 14 | 43 | 5 | -12 | -11 | -7 | - | - |
| + Results on divestments | -38 | -12 | -581 | 14 | 80 | -868 | - | - |
| + other | 0 | 0 | 0 | 0 | 0 | 0 | - | - |
| Result after tax, attributable to equity holders of the parent: IFRS |
92 | -39 | -885 | 342 | -246 | -849 | - | - |
The net result contribution of the companies up for divestment can be broken down by former business unit as follows:
| In millions of EUR | Note | 2Q 2011 | 1Q 2012 | 2Q 2012 | 1H 2011 | 1H 2012 |
|---|---|---|---|---|---|---|
| Net interest income | 3 | 1 406 | 1 261 | 1 190 | 2 801 | 2 451 |
| Interest income | 3 | 3 195 | 2 695 | 2 563 | 6 241 | 5 258 |
| Interest expense | 3 | - 1 789 | - 1 434 | - 1 374 | - 3 440 | - 2 808 |
| Earned premiums, insurance (before reinsurance) | 9 | 974 | 884 | 890 | 2 115 | 1 774 |
| Non-life | 11 | 468 | 438 | 442 | 918 | 880 |
| Life | 10 | 506 | 446 | 448 | 1 196 | 894 |
| Technical charges, insurance (before reinsurance) | 9 | - 840 | - 752 | - 757 | - 1 852 | - 1 509 |
| Non-life | 9 | - 245 | - 234 | - 243 | - 479 | - 477 |
| Life | 9 | - 595 | - 518 | - 514 | - 1 374 | - 1 033 |
| Ceded reinsurance result | 9 | - 8 | - 14 | - 1 | - 25 | - 14 |
| Dividend income | 4 | 41 | 6 | 21 | 53 | 27 |
| Net result from financial instruments at fair value through profit or loss | 5 | - 194 | 60 | 43 | 279 | 103 |
| Net realised result from available-for-sale assets | 6 | 42 | 32 | 9 | 76 | 41 |
| Net fee and commission income | 7 | 297 | 304 | 309 | 597 | 613 |
| Fee and commission income | 7 | 530 | 492 | 479 | 1 048 | 970 |
| Fee and commission expense | 7 | - 233 | - 188 | - 170 | - 452 | - 358 |
| Other net income | 8 | 110 | 73 | 368 | 202 | 441 |
| TOTAL INCOME | 1 829 | 1 853 | 2 072 | 4 245 | 3 925 | |
| Operating expenses | 12 | - 1 081 | - 1 132 | - 1 033 | - 2 224 | - 2 165 |
| Staff expenses | 12 | - 648 | - 635 | - 639 | - 1 285 | - 1 273 |
| General administrative expenses | 12 | - 351 | - 416 | - 316 | - 772 | - 732 |
| Depreciation and amortisation of fixed assets | 12 | - 83 | - 81 | - 79 | - 167 | - 159 |
| Impairment | 14 | - 332 | - 273 | - 1 473 | - 437 | - 1 746 |
| on loans and receivables | 14 | - 164 | - 261 | - 198 | - 260 | - 459 |
| on available-for-sale assets | 14 | - 118 | - 5 | - 75 | - 124 | - 79 |
| on goodwill | 14 | - 17 | 0 | - 414 | - 17 | - 414 |
| on other | 14 | - 33 | - 7 | - 786 | - 35 | - 794 |
| Share in results of associated companies | 15 | 0 | - 9 | 17 | 1 | 8 |
| RESULT BEFORE TAX | 416 | 439 | - 417 | 1 585 | 22 | |
| Income tax expense | 16 | - 76 | - 93 | - 110 | - 411 | - 202 |
| Net post-tax result from discontinued operations | 46 | 0 | 40 | - 8 | 0 | 33 |
| RESULT AFTER TAX | 340 | 387 | - 535 | 1 175 | - 148 | |
| Attributable to minority interest | 6 | 7 | 5 | 20 | 12 | |
| of which relating to discontinued operations | 0 | 0 | 0 | 0 | 0 | |
| Attributable to equity holders of the parent | 333 | 380 | - 539 | 1 154 | - 160 | |
| of which relating to discontinued operations | 0 | 40 | - 8 | 0 | 33 | |
| Earnings per share (in EUR) | 17 | |||||
| Basic | 17 | 0,54 | 0,71 | -1,99 | 2,52 | -1,28 |
| Diluted | 17 | 0,54 | 0,71 | -1,99 | 2,52 | -1,28 |
| In millions of EUR | 2Q 2011 | 1Q 2012 | 2Q 2012 | 1H 2011 | 1H 2012 |
|---|---|---|---|---|---|
| RESULT AFTER TAX | 340 | 387 | - 535 | 1 175 | - 148 |
| attributable to minority interest | 6 | 7 | 5 | 20 | 12 |
| attributable to equity holders of the parent | 333 | 380 | - 539 | 1 154 | - 160 |
| OTHER COMPREHENSIVE INCOME | |||||
| Net change in revaluation reserve (AFS assets) - Equity | - 25 | 38 | - 47 | - 35 | - 10 |
| Net change in revaluation reserve (AFS assets) - Bonds | 224 | 732 | 93 | - 67 | 825 |
| Net change in revaluation reserve (AFS assets) - Other | 0 | 0 | 0 | - 1 | 0 |
| Net change in hedging reserve (cash flow hedge) | - 27 | - 6 | - 118 | 144 | - 123 |
| Net change in translation differences | - 6 | 107 | - 57 | 13 | 50 |
| Other movements | - 3 | - 2 | 0 | - 2 | - 1 |
| TOTAL COMPREHENSIVE INCOME | 502 | 1 256 | - 663 | 1 226 | 593 |
| attributable to minority interest | 12 | 19 | 2 | 22 | 22 |
| attributable to equity holders of the parent | 490 | 1 236 | - 665 | 1 204 | 571 |
| ASSETS (in millions of EUR) | Note | 31-12-2011 | 30-06-2012 |
|---|---|---|---|
| Cash and cash balances with central banks | 6 218 | 6 142 | |
| Financial assets | 18 | 249 439 | 240 277 |
| Held for trading | 18-29 | 26 936 | 23 656 |
| Designated at fair value through profit or loss | 18-29 | 13 940 | 18 755 |
| Available for sale | 18-29 | 39 491 | 31 225 |
| Loans and receivables | 18-29 | 153 894 | 141 748 |
| Held to maturity | 18-29 | 14 396 | 23 983 |
| Hedging derivatives | 18-29 | 782 | 911 |
| Reinsurers' share in technical provisions | 35 | 150 | 148 |
| Fair value adjustments of hedged items in portfolio hedge of interest rate risk | - | 197 | 195 |
| Tax assets | 31 | 2 646 | 2 293 |
| Current tax assets | 31 | 201 | 204 |
| Deferred tax assets | 31 | 2 445 | 2 089 |
| Non-current assets held for sale and assets associated with disposal groups | 46 | 19 123 | 30 214 |
| Investments in associated companies | 32 | 431 | 108 |
| Investment property | 33 | 758 | 657 |
| Property and equipment | 33 | 2 651 | 2 526 |
| Goodwill and other intangible assets | 34 | 1 898 | 1 358 |
| Other assets | 30 | 1 871 | 1 930 |
| TOTAL ASSETS | 285 382 | 285 848 |
| Financial liabilities 18 225 804 220 732 Held for trading 18-29 27 355 23 613 Designated at fair value through profit or loss 18-29 28 678 26 640 Measured at amortised cost 18-29 167 842 168 332 Hedging derivatives 18-29 1 929 2 148 Technical provisions, before reinsurance 35 19 914 19 539 Fair value adjustments of hedged items in portfolio hedge of interest rate risk - 4 16 Tax liabilities 31 545 473 Current tax liabilities 31 255 171 Deferred tax liabilies 31 290 302 Liabilities associated with disposal groups 46 18 132 23 488 Provisions for risks and charges 36 889 523 Other liabilities 37 3 322 4 361 TOTAL LIABILITIES 268 611 269 131 Total equity 39 16 772 16 717 Parent shareholders' equity 39 9 756 9 687 Non-voting core-capital securities 39 6 500 6 500 Minority interests - 516 529 TOTAL LIABILITIES AND EQUITY 285 382 285 848 |
LIABILITIES AND EQUITY (in millions of EUR) | Note | 31-12-2011 | 30-06-2012 |
|---|---|---|---|---|
In line with IFRS 5, the assets and liabilities of the largest part of the remaining divestments were moved from various balance sheet lines towards the lines 'Non-current assets held for sale and assets associated with disposal groups' and 'Liabilities associated with disposal groups'. Note that reference figures were not adjusted (not required by IFRS 5), however for the financial assets and liabilities pro forma figures for 31 December 2011 are shown in note 18. More information on divestments and all data required by IFRS 5 can be found in a separate note (note 46).
On 2 January 2012, KBC Group reimbursed 0.5 billion euros (and 15% penalty) to the Belgian State. This has already been taken into account in the balance sheet on 31-12-2011 (0.5 billion euros shift from equity to liabilities, and the extraction of the penalty from equity by presenting it as a liability).
| In millions of EUR | Issued and paid up share capital Share premium Treasury shares |
Revaluation reserve (AFS assets) |
Hedging reserve (cashflow hedges) |
Reserves | Translation differences |
Parent shareholders' equity |
Non-voting core capital securities |
Minority interests |
Total equity | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 30-06-2011 | |||||||||||
| Balance at the beginning of the period | 1 245 | 4 340 | - 1 529 | 66 | - 443 | 7 749 | - 281 | 11 147 | 7 000 | 527 | 18 674 |
| Net result for the period | 0 | 0 | 0 | 0 | 0 | 1 154 | 0 | 1 154 | 0 | 20 | 1 175 |
| Other comprehensive income for the period | 0 | 0 | 0 | - 103 | 144 | - 2 | 11 | 50 | 0 | 2 | 52 |
| Total comprehensive income | 0 | 0 | 0 | - 103 | 144 | 1 152 | 11 | 1 204 | 0 | 22 | 1 226 |
| Dividends | 0 | 0 | 0 | 0 | 0 | - 850 | 0 | - 850 | 0 | 0 | - 850 |
| Capital increase | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Purchases of treasury shares | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Sales of treasury shares | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Results on (derivatives on) treasury shares | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Impact business combinations | 0 | 0 | 0 | 0 | 0 | - 1 | 0 | - 1 | 0 | 0 | - 1 |
| Change in minorities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | - 29 | - 29 |
| Change in scope | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total change | 0 | 0 | 0 | - 103 | 144 | 301 | 11 | 353 | 0 | - 7 | 346 |
| Balance at the end of the period | 1 245 | 4 340 | - 1 529 | - 37 | - 299 | 8 050 | - 271 | 11 500 | 7 000 | 520 | 19 020 |
| of which revaluation reserve for shares of which revaluation reserve for bonds of which revaluation reserve for other assets than bonds and shares of which relating to non-current assets held for sale and disposal groups |
401 - 438 0 - 17 |
12 | - 5 | - 5 | |||||||
| 30-06-2012 | |||||||||||
| Balance at the beginning of the period | 1 245 | 4 341 | - 1 529 | - 117 | - 594 | 6 831 | - 422 | 9 756 | 6 500 | 516 | 16 772 |
| Net result for the period | 0 | 0 | 0 | 0 | 0 | - 160 | 0 | - 160 | 0 | 12 | - 148 |
| Other comprehensive income for the period | 0 | 0 | 0 | 812 | - 123 | - 1 | 43 | 731 | 0 | 10 | 741 |
| Total comprehensive income | 0 | 0 | 0 | 812 | - 123 | - 161 | 43 | 571 | 0 | 22 | 593 |
| Dividends | 0 | 0 | 0 | 0 | 0 | - 599 | 0 | - 599 | 0 | 0 | - 599 |
| Capital increase | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Repayment of non-voting core-capital securities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Results on (derivatives on) treasury shares | 0 | 0 | - 5 | 0 | 0 | 0 | 0 | - 5 | 0 | 0 | - 5 |
| Impact business combinations | 0 | 0 | 0 | 0 | 0 | - 6 | 0 | - 6 | 0 | 0 | - 6 |
| Change in minorities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | - 8 | - 8 |
| Change in scope | 0 | 0 | 0 | - 53 | 0 | 0 | 23 | - 30 | 0 | 0 | - 30 |
| Total change | 0 | 0 | - 5 | 759 | - 123 | - 766 | 66 | - 69 | 0 | 14 | - 55 |
| Balance at the end of the period | 1 245 | 4 341 | - 1 534 | 642 | - 717 | 6 065 | - 355 | 9 687 | 6 500 | 529 | 16 717 |
| of which revaluation reserve for shares of which revaluation reserve for bonds of which revaluation reserve for other assets than bonds and shares |
220 422 0 |
||||||||||
| of which relating to non-current assets held for sale and disposal groups | 27 | - 8 | 20 | 20 |
The changes in equity during 1H 2012 include the accounting of a gross dividend of 0.01 euros per share (3.6 million euros in total) and the coupon on the core-capital securities sold to the Belgian Federal and Flemish Regional governments (595 million euros or 8.5% of 7 billion euros). Both paid in the second quarter 2012.
On 2 January 2012, KBC Group reimbursed 0.5 billion euros (and 15% penalty) to the Belgian State. This has already been taken into account in the balance sheet on 31-12- 2011 (0.5 billion euros shift from equity to liabilities, and the extraction of the penalty from equity by presenting it as a liability).
| In millions of EUR | 1H 2011 | 1H 2012 |
|---|---|---|
| Operating activities | ||
| Net cash from (used in) operating activities | 1 923 | 4 324 |
| Investing activities | ||
| Net cash from (used in) investing activities | - 36 | - 10 274 |
| Financing activities | ||
| Net cash from (used in) financing activities | - 882 | - 2 061 |
| Change in cash and cash equivalents | ||
| Net increase or decrease in cash and cash equivalents | 1 004 | - 8 012 |
| Cash and cash equivalents at the beginning of the period | 17 709 | 13 997 |
| Effects of exchange rate changes on opening cash and cash equivalents | - 782 | 166 |
| Cash and cash equivalents at the end of the period | 17 930 | 6 151 |
As mentioned in note 45, Fidea has been sold in the first half of 2012. The sale of Fidea had a positive impact on the cash flows included in investing activities of +0.2 billion euros. The sale of Warta – as well as the closing of the sale of KBL EPB on 31 July 2012 – will have an impact on the third quarter cash flows from investing activities of +0.8 billion euros and -1.9 billion euros respectively (sale price minus cash and cash equivalents belonging to the disposal group).
The consolidated financial statements of the KBC Group have been prepared in accordance with the International Financial Reporting Standards (IAS 34) as adopted for use in the European Union ('endorsed IFRS'). The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2011.
A summary of the main accounting policies is provided in the annual report. In the first half of 2012, no changes in content were made in the accounting policies that had a material impact on the results.
KBC is structured and managed according to a number of segments (called 'business units'). This breakdown is based on a combination of geographic criteria (Belgium and Central and Eastern Europe, being the two core geographic areas the group operates in) and activity criteria (retail bancassurance versus merchant banking). The Shared Services and Operations business unit, which includes a number of divisions that provide support to and serve as a product factory for the other divisions (ICT, leasing, payments, asset management etc.) is not shown as a separate segment, as all costs and income of this business unit are allocated to the other business units and are hence included in their results.
The segment reporting (see below) is based on this breakdown, but also brings together all companies that are up for divestment under the Group Centre.
For reporting purposes, the business units hence are:
The basic principle of the segment reporting is that an individual subsidiary is allocated fully to one segment (see note 44 in annual report 2011). Exceptions are made for costs that cannot be allocated reliably to a certain segment (grouped together in a separate Group Centre) and KBC Bank NV (allocated to the different segments and to the Group Centre by means of different allocation keys).
Funding costs of goodwill regarding participations recorded in KBC Bank and KBC Insurance are allocated to the different segments in function of the subsidiaries concerned. As a principle the funding costs regarding leveraging at the level of KBC Group are not allocated.
Inter-segment transactions are presented at arm's length.
The figures of the segment reporting have been prepared in accordance with the general KBC accounting policies (see Note 1) and are thus in compliance with the International Financial Reporting Standards as adopted for use in the European Union (endorsed IFRS). Some adjustments to these accounting policies have been made to better reflect the underlying performance (the resulting figures are called 'underlying results'):
Fair value changes (due to marking-to-market) of a large part of KBC's ALM derivatives (who are treated as 'trading instruments') are recognised under 'net result from financial instruments at fair value', while most of the underlying assets are not fair-valued (i.e. not marked-to-market). In order to limit the volatility of this MtM, a (government) bond portfolio has been classified as financial assets at fair value through profit or loss (fair value option). The remaining volatility of the fair value changes in these ALM derivatives versus the fair value changes in the bond portfolio at fair value through profit or loss is excluded in the underlying results.
In the IFRS accounts, income related to trading activities is split across different components. While trading gains are recognised under 'net result from financial instruments at fair value', the funding costs and commissions paid in order to realise these trading gains are recognised respectively under 'net interest income' and 'net fee and commission income'. Moreover, part of the 'dividend income', 'net realised result on availablefor-sale assets' and 'other net income' are also related to trading income. In the underlying figures, all trading income components within the investment banking division are recognised under 'net result from financial instruments at fair value', without any impact on net profit.
| Reconciliation between underlying result and result according to IFRS * KBC Group, in millions of EUR |
2Q 2011 |
1Q 2012 |
2Q 2012 |
1H 2011 |
1H 2012 |
|---|---|---|---|---|---|
| Result after tax, attributable to equity holders of the parent, UNDERLYING | 528 | 455 | 372 | 1 186 | 827 |
| + MTM of derivatives for ALM hedging | -77 | 45 | -29 | 19 | 16 |
| + gains and losses on CDOs | -86 | 189 | -14 | 39 | 175 |
| + MTM of CDO guarantee and commitment fee | -22 | -40 | -18 | -31 | -58 |
| + impairment on goodwill | -17 | 0 | -16 | -17 | -16 |
| + result on legacy structured derivative business (KBC FP) | 43 | -11 | -7 | 57 | -19 |
| + change in fair value of own debt instruments (due to own credit risk) | -25 | -340 | 41 | -41 | -300 |
| + Results on divestments | -12 | 81 | -868 | -56 | -787 |
| Result after tax, attributable to equity holders of the parent: IFRS | 333 | 380 | -539 | 1 154 | -160 |
A table reconciling the net profit and the underlying net profit is provided below.
* A breakdown of this reconciliation table per business unit is provided in the 'Underlying results per business unit' section of the Extended quarterly report.
In the second quarter of 2012, the market price for corporate credit increased, as reflected in credit default swap spreads, generating a value mark-down of KBC's CDO exposure (including the impact of the government guarantee, but excluding the related fee and including the coverage of the CDO-linked counterparty risk against MBIA, the US monoline insurer which remained at the level of 31 December 2011, namely 70%). Remark that the first quarter of 2012 experienced a value mark-up which was offset by a negative P/L impact of approximately 0.1 billion euros from collapsing two CDOs in January 2012, which reduced the total nominal value of the CDO portfolio with 1.7 billion euros.
The positive impact on the results of the second quarter of 2012 can be explained by an increase of the senior and subordinated credit spreads of KBC, leading to a lower MtM of debt certificates included in the financial liabilities designated at fair value through profit or loss. Remark that during the first quarter of 2012, the credit spreads of KBC declined substantially.
In the second quarter of 2012, the results on divestments include mainly:
| Merchant | Group Centre | |||||
|---|---|---|---|---|---|---|
| Belgium | Banking | excluding | ||||
| Business | CEE | Business | intersegment | Inter-segment | ||
| In millions of EUR | unit | Business unit | unit | eliminations | eliminations KBC Group | |
| UNDERLYING INCOME STATEMENT - 1H 2011 | ||||||
| Net interest income | 1 148 | 766 | 348 | 502 | 0 | 2 764 |
| Earned premiums, insurance (before reinsurance) | 1 128 | 404 | 0 | 629 | - 46 | 2 116 |
| Non-life | 428 | 163 | 0 | 344 | - 18 | 918 |
| Life | 699 | 241 | 0 | 285 | - 28 | 1 197 |
| Technical charges, insurance (before reinsurance) | - 1 100 | - 304 | 0 | - 487 | 32 | - 1 859 |
| Non-life | - 208 | - 79 | 0 | - 194 | 3 | - 479 |
| Life | - 892 | - 225 | 0 | - 293 | 29 | - 1 381 |
| Ceded reinsurance result | - 9 | - 9 | 0 | - 14 | 7 | - 26 |
| Dividend income | 32 | 1 | 4 | 8 | 0 | 45 |
| Net result from financial instruments at fair value through profit or loss | 22 | 47 | 300 | - 7 | 0 | 361 |
| Net realised result from available-for-sale assets | 46 | 9 | 14 | 26 | 0 | 95 |
| Net fee and commission income | 365 | 162 | 104 | 163 | 0 | 794 |
| Other net income | 78 | 18 | 39 | 19 | - 8 | 145 |
| TOTAL INCOME | 1 709 | 1 093 | 809 | 838 | - 15 | 4 434 |
| Operating expenses | - 875 | - 652 | - 294 | - 575 | 15 | - 2 382 |
| Impairment | - 89 | - 148 | - 169 | - 32 | 0 | - 439 |
| on loans and receivables | - 27 | - 92 | - 152 | 10 | 0 | - 261 |
| on available-for-sale assets | - 57 | - 52 | - 1 | - 30 | 0 | - 141 |
| on goodwill | 0 | 0 | 0 | 0 | 0 | 0 |
| on other | - 5 | - 4 | - 16 | - 13 | 0 | - 37 |
| Share in results of associated companies | 0 | 1 | 0 | 1 | 0 | 1 |
| RESULT BEFORE TAX | 745 | 293 | 345 | 231 | 0 | 1 615 |
| Income tax expense | - 226 | - 24 | - 99 | - 61 | 0 | - 410 |
| Net post-tax result from discontinued operations | 0 | 0 | 0 | 0 | 0 | 0 |
| RESULT AFTER TAX | 520 | 270 | 247 | 170 | 0 | 1 206 |
| attributable to minority interests | 1 | 1 | 7 | 12 | 0 | 20 |
| attributable to equity holders of the parent | 518 | 269 | 240 | 158 | 0 | 1 186 |
| UNDERLYING INCOME STATEMENT 1H 2012 | ||||||
| Net interest income | 1 145 | 705 | 273 | 238 | 0 | 2 361 |
| Earned premiums, insurance (before reinsurance) | 900 | 436 | 0 | 452 | - 15 | 1 774 |
| Non-life | 452 | 163 | 0 | 280 | - 14 | 880 |
| Life | 449 | 273 | 0 | 173 | 0 | 894 |
| Technical charges, insurance (before reinsurance) | - 860 | - 343 | 0 | - 311 | 5 | - 1 509 |
| Non-life | - 227 | - 88 | 0 | - 167 | 5 | - 477 |
| Life | - 633 | - 255 | 0 | - 144 | 0 | - 1 033 |
| Ceded reinsurance result | - 15 | - 6 | 0 | 1 | 6 | - 14 |
| Dividend income | 24 | 0 | 1 | 1 | 0 | 26 |
| Net result from financial instruments at fair value through profit or loss | 23 | 105 | 284 | 28 | 0 | 439 |
| Net realised result from available-for-sale assets | 25 | - 3 | 4 | 12 | 0 | 37 |
| Net fee and commission income | 374 | 148 | 102 | - 7 | 0 | 616 |
| Other net income | 9 | 21 | 9 | 7 | - 1 | 46 |
| TOTAL INCOME | 1 625 | 1 062 | 673 | 420 | - 5 | 3 776 |
| Operating expenses | - 883 | - 639 | - 294 | - 316 | 5 | - 2 126 |
| Impairment | - 41 | - 68 | - 371 | - 32 | 0 | - 512 |
| on loans and receivables | - 13 | - 64 | - 355 | - 27 | 0 | - 459 |
| on available-for-sale assets | - 28 | 0 | 0 | 0 | 0 | - 29 |
| on goodwill | 0 | 0 | 0 | 0 | 0 | 0 |
| on other | 0 | - 4 | - 16 | - 4 | 0 | - 24 |
| Share in results of associated companies | 0 | 1 | 0 | - 19 | 0 | - 19 |
| RESULT BEFORE TAX | 701 | 357 | 8 | 54 | 0 | 1 119 |
| Income tax expense | - 208 | - 51 | - 25 | 4 | 0 | - 280 |
| Net post-tax result from discontinued operations | 0 | 0 | 0 | 0 | 0 | 0 |
| RESULT AFTER TAX | 493 | 306 | - 17 | 57 | 0 | 839 |
| attributable to minority interests | 1 | 0 | 6 | 5 | 0 | 12 |
| attributable to equity holders of the parent | 492 | 306 | - 23 | 52 | 0 | 827 |
In the table below, an overview is provided of certain balance sheet items divided by segment.
| Belgium | CEE | Merchant Banking | |||
|---|---|---|---|---|---|
| In millions of EUR | Business unit | Business unit | Business unit Group Centre | KBC Group | |
| Balance sheet information 31-12-2011 | |||||
| Total loans to customers | 55 254 | 25 648 | 43 832 | 13 550 | 138 284 |
| Of which mortgage loans | 29 417 | 10 533 | 12 288 | 5 194 | 57 431 |
| Of which reverse repos | 0 | 16 | 1 413 | 0 | 1 429 |
| Customer deposits | 71 156 | 38 216 | 46 168 | 9 687 | 165 226 |
| Of which repos | 0 | 3 209 | 12 633 | 0 | 15 841 |
| Balance sheet information 30-06-2012 | |||||
| Total loans to customers | 56 798 | 26 462 | 48 247 | 1 819 | 133 326 |
| Of which mortgage loans | 30 131 | 10 791 | 11 933 | 29 | 52 884 |
| Of which reverse repos | 0 | 297 | 5 708 | 0 | 6 005 |
| Customer deposits | 74 593 | 38 838 | 49 720 | 534 | 163 685 |
| Of which repos | 0 | 3 717 | 9 640 | 0 | 13 357 |
| Central and Eastern | ||||
|---|---|---|---|---|
| In millions of EUR | Belgium | Europe and Russia | Rest of the world | KBC Group |
| 1H 2011 | ||||
| Total income from external customers (underlying) | 2 077 | 1 566 | 790 | 4 434 |
| 31-12-2011 | ||||
| Total assets (period-end) | 181 036 | 60 898 | 43 448 | 285 382 |
| Total liabilities (period-end) | 171 262 | 55 189 | 42 159 | 268 611 |
| 1H 2012 | ||||
| Total income from external customers (underlying) | 1 930 | 1 397 | 449 | 3 776 |
| 30-06-2012 | ||||
| Total assets (period-end) | 184 542 | 61 700 | 39 605 | 285 848 |
| Total liabilities (period-end) | 175 431 | 55 775 | 37 925 | 269 131 |
The geographical information is based on geographic areas, and reflects KBC's focus on Belgium (land of domicile) and Central and Eastern Europe (including Russia) – and its selective presence in other countries ('rest of the world', i.e. mainly the US, Southeast Asia and Western Europe excluding Belgium). The geographic segmentation is based on the location where the services are rendered. Since at least 95% of the customers are local customers, the location of the branch or subsidiary determines the geographic breakdown of both the balance sheet and income statement. The geographic segmentation differs significantly from the business unit breakdown, due to, inter alia, a different allocation methodology and the fact that the geographic segment 'Belgium' includes not only the Belgium business unit, but also the Belgian part of the Merchant Banking Business unit.
| In millions of EUR | 2Q 2011 | 1Q 2012 | 2Q 2012 | 1H 2011 | 1H 2012 |
|---|---|---|---|---|---|
| Total | 1 406 | 1 261 | 1 190 | 2 801 | 2 451 |
| Interest income | 3 195 | 2 695 | 2 563 | 6 241 | 5 258 |
| Available-for-sale assets | 481 | 350 | 311 | 948 | 661 |
| Loans and receivables | 1 671 | 1 580 | 1 540 | 3 299 | 3 120 |
| Held-to-maturity investments | 160 | 184 | 229 | 299 | 412 |
| Other assets not at fair value | 8 | 8 | 7 | 17 | 15 |
| Subtotal, interest income from financial assets not measured at | |||||
| fair value through profit or loss | 2 321 | 2 122 | 2 086 | 4 563 | 4 209 |
| Financial assets held for trading | 620 | 344 | 313 | 1 167 | 657 |
| Hedging derivatives | 134 | 161 | 135 | 242 | 296 |
| Other financial assets at fair value through profit or loss | 121 | 67 | 29 | 270 | 96 |
| Interest expense | - 1 789 | - 1 434 | - 1 374 | - 3 440 | - 2 808 |
| Financial liabilities measured at amortised cost | - 828 | - 761 | - 776 | - 1 601 | - 1 538 |
| Other | 0 | - 1 | - 6 | - 1 | - 7 |
| Investment contracts at amortised cost | 0 | 0 | 0 | 0 | 0 |
| Subtotal, interest expense for financial liabilities not measured at | |||||
| fair value through profit or loss | - 828 | - 762 | - 782 | - 1 601 | - 1 545 |
| Financial liabilities held for trading | - 667 | - 392 | - 381 | - 1 283 | - 772 |
| Hedging derivatives | - 215 | - 220 | - 169 | - 411 | - 389 |
| Other financial liabilities at fair value through profit or loss | - 79 | - 60 | - 42 | - 144 | - 102 |
| In millions of EUR | 2Q 2011 | 1Q 2012 | 2Q 2012 | 1H 2011 | 1H 2012 |
|---|---|---|---|---|---|
| Total | 42 | 32 | 9 | 76 | 41 |
| Breakdown by portfolio | |||||
| Fixed-income securities | 3 | - 30 | - 22 | 10 | - 51 |
| Shares | 39 | 61 | 31 | 66 | 93 |
In 1Q 2012, a net realised loss from available for sale assets of -39 million euros stemming from the finalisation of the events regarding Greece was incurred.
In 2Q 2012, further reductions of Spanish, Italian and Portuguese government bonds led to net realised losses from available for sale assets to the tune of -53 million euros, -8 million euros and -6 million euros (before tax) respectively. These were partly compensated by gains on the sale of other securities.
More information is presented in note 47.
| In millions of EUR | 2Q 2011 | 1Q 2012 | 2Q 2012 | 1H 2011 | 1H 2012 |
|---|---|---|---|---|---|
| Total | 297 | 304 | 309 | 597 | 613 |
| Fee and commission income | 530 | 492 | 479 | 1 048 | 970 |
| Securities and asset management | 235 | 201 | 202 | 480 | 403 |
| Margin on deposit accounting (life in | |||||
| surance investment contracts w ithout DPF) | 10 | 24 | 33 | 19 | 57 |
| Commitment credit | 73 | 77 | 70 | 143 | 146 |
| Payments | 137 | 137 | 139 | 273 | 276 |
| Other | 76 | 54 | 35 | 134 | 89 |
| Fee and commission expense | - 233 | - 188 | - 170 | - 452 | - 358 |
| Commission paid to intermediaries | - 120 | - 101 | - 105 | - 242 | - 205 |
| Other | - 113 | - 87 | - 65 | - 210 | - 153 |
| 2Q 2011 | 1Q 2012 | 2Q 2012 | 1H 2011 | 1H 2012 | |
|---|---|---|---|---|---|
| Total | 110 | 73 | 368 | 202 | 441 |
| Of which net realised result following | |||||
| The sale of loans and receivables | - 10 | - 49 | - 3 | - 12 | - 52 |
| The sale of held-to-maturity investments | 0 | - 4 | - 5 | 0 | - 9 |
| The repurchase of financial liabilities measured at amortised cost | - 1 | 0 | 0 | - 1 | - 1 |
| Other: of which: | 121 | 126 | 376 | 215 | 502 |
| KBC Lease UK | 2 | 41 | 0 | 2 | 41 |
| Income concerning leasing at the KBC Lease-group | 23 | 20 | 19 | 44 | 40 |
| Income from consolidated private equity participations | 12 | 4 | 5 | 28 | 9 |
| Income from Group VAB | 15 | 18 | 15 | 32 | 33 |
| 5/5/5 loans | 0 | - 56 | 0 | 0 | - 56 |
| Realised gains or losses on divestments | 20 | 72 | 334 | 15 | 406 |
In 1Q 2012:
In 2Q 2012 there was significant impact in realised gains or losses on divestments. This results mainly from closing the divestment of Warta, which resulted in a gain of 0.3 billion euros in 2Q 2012.
In millions of EUR
| Non | ||||
|---|---|---|---|---|
| technical | ||||
| Life | Non-life | account | TOTAL | |
| 1H 2011 | ||||
| Technical result | - 233 | 262 | 22 | 51 |
| Earned premiums, insurance (before reinsurance) | 1 199 | 929 | 0 | 2 128 |
| Technical charges, insurance (before reinsurance) | - 1 376 | - 479 | 0 | - 1 855 |
| Net fee and commission income | - 54 | - 164 | 22 | - 196 |
| Ceded reinsurance result | - 1 | - 24 | 0 | - 25 |
| Financial result | 438 | 92 | 57 | 587 |
| Net interest income | 512 | 512 | ||
| Dividend income | 34 | 34 | ||
| Net result from financial instruments at fair value | - 8 | - 8 | ||
| Net realised result from AFS assets | 49 | 49 | ||
| Allocation to the technical accounts | 438 | 92 | - 530 | 0 |
| Operating expenses | - 73 | - 180 | - 4 | - 256 |
| Internal costs claim paid | - 4 | - 37 | 0 | - 41 |
| Administration costs related to acquisitions | - 20 | - 48 | 0 | - 69 |
| Administration costs | - 49 | - 94 | 0 | - 143 |
| Management costs investments | 0 | 0 | - 4 | - 4 |
| Other net income | 28 | 28 | ||
| Impairments | - 83 | - 83 | ||
| Share in results of associated companies | 0 | 0 | ||
| RESULT BEFORE TAX | 132 | 174 | 20 | 327 |
| Income tax expense | - 96 | |||
| Net post-tax result from discontinued operations | 4 | |||
| RESULT AFTER TAX | 235 | |||
| attributable to minority interest | 2 | |||
| attributable to equity holders of the parent | 233 | |||
| 1H 2012 | ||||
| Technical result | - 191 | 239 | 36 | 84 |
| Earned premiums, insurance (before reinsurance) | 895 | 890 | 0 | 1 785 |
| Technical charges, insurance (before reinsurance) | - 1 032 | - 482 | 0 | - 1 513 |
| Net fee and commission income | - 53 | - 156 | 36 | - 174 |
| Ceded reinsurance result | - 1 | - 14 | 0 | - 14 |
| Financial result | 378 | 77 | 299 | 754 |
| Net interest income | 444 | 444 | ||
| Dividend income | 24 | 24 | ||
| Net result from financial instruments at fair value | 231 | 231 | ||
| Net realised result from AFS assets | 55 | 55 | ||
| Allocation to the technical accounts | 378 | 77 | - 455 | 0 |
| Operating expenses | - 69 | - 174 | 0 | - 243 |
| Internal costs claim paid | - 4 | - 40 | 0 | - 44 |
| Administration costs related to acquisitions | - 21 | - 47 | 0 | - 68 |
| Administration costs | - 44 | - 87 | 0 | - 131 |
| Management costs investments | 0 | 0 | 0 | 0 |
| Other net income | 370 | 370 | ||
| Impairments | - 153 | - 153 | ||
| Share in results of associated companies | 0 | 0 | ||
| RESULT BEFORE TAX | 118 | 142 | 552 | 811 |
| Income tax expense | - 129 | |||
| Net post-tax result from discontinued operations | 1 | |||
| RESULT AFTER TAX | 684 | |||
| attributable to minority interest | 1 | |||
| attributable to equity holders of the parent | 683 |
Note: Figures for premium income exclude the investment contracts without DPF, which roughly coincide with the unit-linked products. Figures are before elimination of transactions between the bank and insurance entities of the group (more information in the 2011 annual report).
The operating expenses for the first quarter of 2011 and 2012 include the expenses related to the special tax imposed on financial institutions in Hungary (62 million euros cost in 2011 fully booked in the first quarter of 2011, 57 million euros cost in 2012 fully booked in the first quarter of 2012; deductible expense).
The first half of 2012, includes the new Belgian banking tax which is composed of mainly the following two elements which are taken up pro rata in the results: the contribution to the deposit guarantee scheme (82 million euros in 1H 2012) and the financial stability contribution (19 million euros in 1 H 2012).
The second quarter of 2012 includes a recuperation from the Belgian deposit guarantee fund to the tune of 51 million euros following the finalisation of governmental agreement regarding the recuperation of the non-recurring contribution of the deposit guarantee scheme.
| In millions of EUR | 2Q 2011 | 1Q 2012 | 2Q 2012 | 1H 2011 | 1H 2012 |
|---|---|---|---|---|---|
| Total | - 332 | - 273 | - 1 473 | - 437 | - 1 746 |
| Impairment on loans and receivables | - 164 | - 261 | - 198 | - 260 | - 459 |
| Breakdown by type | |||||
| Specific impairments for on-balance-sheet lending | - 182 | - 300 | - 182 | - 301 | - 481 |
| Provisions for off-balance-sheet credit commitments | - 1 | - 4 | - 1 | 7 | - 6 |
| Portfolio-based impairments | 19 | 44 | - 16 | 34 | 28 |
| Breakdown by business unit | |||||
| Belgium | - 16 | 2 | - 15 | - 27 | - 13 |
| Central and Eastern Europe | - 42 | - 46 | - 18 | - 92 | - 64 |
| Merchant Banking | - 95 | - 203 | - 152 | - 152 | - 355 |
| Group Centre | - 11 | - 14 | - 13 | 11 | - 27 |
| Impairment on available-for-sale assets | - 118 | - 5 | - 75 | - - 124 |
- 79 |
| Breakdown by type | |||||
| Shares | - 14 | - 5 | - 24 | - 20 | - 29 |
| Other | - 104 | 0 | - 50 | - 104 | - 50 |
| Impairment on goodwill | - 17 | 0 | - 414 | - 17 | - 414 |
| Impairment on other | - 33 | - 7 | - 786 | - 35 | - 794 |
| Intangible assets, other than goodwill | 0 | 0 | 0 | 0 | 0 |
| Property and equipment and investment property | - 13 | 0 | - 14 | - 12 | - 15 |
| Held-to-maturity assets | - 16 | 0 | 0 | - 16 | 0 |
| Associated companies | 0 | 0 | - 334 | 0 | - 334 |
| Other | - 4 | - 7 | - 438 | - 7 | - 445 |
The impairment on loans and receivables for the business unit Merchant Banking, includes an impairment on loans & receivables in Ireland of -136 million euros in 2Q 2012 (-331 million euros for the first half of 2012).
The impairment on other available for sale assets includes the impairment on subordinated securities of NLB, which were repurchased by NLB at the beginning of July 2012 at 45% of their nominal value. Remark that the share in results of associated companies of 2Q 2012 includes +26 million euros which are also related to repurchases of subordinated securities at NLB .
The impairment on goodwill includes for a large part impairments booked on companies included in the scope of IFRS 5 as at 30 June 2012 (see further note 46).
The impairment on associated companies is calculated as the difference between the carrying amount of the shares in NLB (using the equity method) and the estimated recoverable amount. The recoverable amount is based on the fair value used in the most recent capital increase. Previously, the recoverable value was based on a value-in-use calculation, but considering the lack of reliable business plans available to KBC and taking into account the uncertainty of the future stake of KBC in NLB (given NLB has issued a substantial convertible loan towards the Republic of Slovenia), a value-in-use calculation is no longer considered appropriate.
The impairment on other (other) include – as is the case for the impairment on goodwill - for a large part impairments booked on companies included in the scope of IFRS 5 as at 30 June 2012 (see further note 46).
Whereas in previous years, 'accrued interest income' and 'accrued interest expense' were disclosed separately in note 18, they are as of 30 June 2012 included in the corresponding products in the breakdown of the financial assets and financial liabilities. The reference figures were not adjusted retroactively.
| Measured at | Total excluding | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Held for trading | Designated at fair value |
Available for sale |
Loans and receivables |
Held to maturity |
Hedging derivatives |
amortised cost |
IFRS 5 companies* |
||
| In millions of EUR | Total | ||||||||
| FINANCIAL ASSETS, 31-12-2011 | |||||||||
| Loans and advances to credit institutions and investment | |||||||||
| firms a | 4 600 | 305 | 0 | 14 253 | - | - | - | 19 158 c | 18 700 |
| Loans and advances to customers b | 203 | 1 879 | 0 | 136 201 | - | - | - | 138 284 | 126 323 |
| Excluding reverse repos | 136 855 | 124 894 | |||||||
| Discount and acceptance credit | 0 | 0 | 0 | 137 | - | - | - | 137 | 136 |
| Consumer credit | 0 | 0 | 0 | 3 910 | - | - | - | 3 910 | 3 268 |
| Mortgage loans | 0 | 178 | 0 | 57 253 | - | - | - | 57 431 | 52 265 |
| Term loans | 203 | 1 531 | 0 | 61 880 | - | - | - | 63 614 | 59 340 |
| Finance leasing | 0 | 11 | 0 | 4 647 | - | - | - | 4 658 | 4 173 |
| Current account advances | 0 | 0 | 0 | 4 876 | - | - | - | 4 876 | 3 598 |
| Securitised loans | 0 | 0 | 0 | 0 | - | - | - | 0 | 0 |
| Other | 0 | 159 | 0 | 3 499 | - | - | - | 3 659 | 3 543 |
| Equity instruments | 1 028 | 28 | 1 446 | - | - | - | - | 2 501 | 2 491 |
| Investment contracts (insurance) | 7 652 | - | - | - | - | - | 7 652 | 7 652 | |
| Debt instruments issued by | 4 286 | 3 997 | 37 299 | 2 890 | 14 063 | - | - | 62 535 | 59 822 |
| Public bodies | 3 101 | 3 594 | 29 183 | 224 | 13 365 | - | - | 49 467 | 47 122 |
| Credit institutions and investment firms | 647 | 204 | 3 862 | 211 | 491 | - | - | 5 415 | 5 078 |
| Corporates | 538 | 199 | 4 255 | 2 455 | 207 | - | - | 7 653 | 7 621 |
| Derivatives | 16 750 | - | - | - | - | 624 | - | 17 375 | 17 096 |
| Total carrying value excluding accrued intrest income | 26 867 | 13 861 | 38 745 | 153 345 | 14 063 | 624 | 0 | 247 505 | 232 083 |
| Accrued interest income | 69 | 79 | 746 | 549 | 334 | 158 | 0 | 1 934 | 1 824 |
| Total carrying value including accrued interest income | 26 936 | 13 940 | 39 491 | 153 894 | 14 396 | 782 | 0 | 249 439 | 233 907 |
| a Of which reverse repos | 5 982 | 5 982 | |||||||
| b Of which reverse repos | 1 429 | 1 429 | |||||||
| FINANCIAL ASSETS, 30-06-2012 Loans and advances to credit institutions and investment |
|||||||||
| firms a | 3 928 | 801 | 0 | 12 539 | - | - | - | 17 268 c | |
| Loans and advances to customers b | 316 | 6 146 | 0 | 126 864 | - | - | - | 133 326 | |
| Excluding reverse repos | 127 321 | ||||||||
| Discount and acceptance credit | 0 | 0 | 0 | 133 | - | - | - | 133 | |
| Consumer credit | 0 | 0 | 0 | 3 448 | - | - | - | 3 448 | |
| Mortgage loans | 0 | 156 | 0 | 52 728 | - | - | - | 52 884 | |
| Term loans | 316 | 5 772 | 0 | 57 596 | - | - | - | 63 684 | |
| Finance leasing | 0 | 10 | 0 | 4 122 | - | - | - | 4 132 | |
| Current account advances | 0 | 0 | 0 | 4 693 | - | - | - | 4 693 | |
| Securitised loans | 0 | 0 | 0 | 0 | - | - | - | 0 | |
| Other | 0 | 207 | 0 | 4 144 | - | - | - | 4 351 | |
| Equity instruments | 580 | 22 | 1 215 | - | - | - | - | 1 816 | |
| Investment contracts (insurance) | 9 595 | - | - | - | - | - | 9 595 | ||
| Debt instruments issued by | 3 882 | 2 191 | 30 010 | 2 345 | 23 983 | - | - | 62 411 | |
| Public bodies | 3 169 | 1 826 | 21 713 | 200 | 22 783 | - | - | 49 692 | |
| Credit institutions and investment firms | 299 | 198 | 3 405 | 10 | 660 | - | - | 4 572 | |
| Corporates | 414 | 167 | 4 892 | 2 135 | 539 | - | - | 8 148 | |
| Derivatives | 14 951 | - | - | - | - | 911 | - | 15 862 | |
| Total carrying value excluding accrued interest income | 23 656 | 18 755 | 31 225 | 141 748 | 23 983 | 911 | 0 | 240 277 | |
| Accrued interest income | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Total carrying value including accrued interest income | 23 656 | 18 755 | 31 225 | 141 748 | 23 983 | 911 | 0 | 240 277 | |
| a Of which reverse repos | 5 062 | ||||||||
| b Of which reverse repos | 6 005 |
* Absolut Bank, Antwerp Diamond Bank Group, KBC Banka, KBC Bank Deutschland, Kredyt Bank Group
In the first half of 2012, a total amount of 4.1 billion euros of government securities were reclassified from available for sale to held to maturity.
| Measured | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Designated | at | Total excluding | |||||||
| In millions of EUR | Held for trading | at fair value |
Available for sale |
Loans and receivables |
Held to maturity |
Hedging derivatives |
amortised cost |
Total | IFRS 5 companies* |
| FINANCIAL LIABILITIES, 31-12-2011 Deposits from credit institutions and investment firms a |
25 934 c | ||||||||
| Deposits from customers and debt certificates b | 843 | 3 831 | - | - | - | - | 21 259 | 24 828 | |
| 4 288 | 17 565 | - | - | - | - | 143 373 | 165 226 | 156 810 | |
| Excluding repos | 149 385 | 140 969 | |||||||
| Deposits from customers | 3 774 | 13 277 | - | - | - | - | 117 410 | 134 461 | 126 119 |
| Demand deposits | 0 | 0 | - | - | - | - | 37 472 | 37 472 | 32 909 |
| Time deposits | 3 774 | 13 277 | - | - | - | - | 42 010 | 59 061 | 55 520 |
| Savings deposits | 0 | 0 | - | - | - | - | 32 624 | 32 624 | 32 624 |
| Special deposits | 0 | 0 | - | - | - | - | 3 887 | 3 887 | 3 886 |
| Other deposits | 0 | 0 | - | - | - | - | 1 417 | 1 417 | 1 180 |
| Debt certificates | 514 | 4 288 | - | - | - | - | 25 963 | 30 766 | 30 692 |
| Certificates of deposit Customer savings certificates |
0 0 |
20 0 |
- - |
- - |
- - |
- - |
4 597 710 |
4 617 710 |
4 617 710 |
| Convertible bonds | 0 | 0 | - | - | - | - | 0 | 0 | 0 |
| Non-convertible bonds | 514 | 4 167 | - | - | - | - | 12 694 | 17 375 | 17 316 |
| Convertible subordinated liabilities | 0 | 0 | - | - | - | - | 0 | 0 | 0 |
| Non-convertible subordinated liabilities | 0 | 101 | - | - | - | - | 7 961 | 8 063 | 8 048 |
| Liabilities under investment contracts | - | 7 014 | - | - | - | - | 0 | 7 014 | 7 014 |
| Derivatives | 21 699 | 0 | - | - | - | 1 601 | - | 23 300 | 23 060 |
| Short positions | 497 | 0 | - | - | - | - | - | 497 | 497 |
| in equity instruments | 4 | 0 | - | - | - | - | - | 4 | 4 |
| in debt instruments | 493 | 0 | - | - | - | - | - | 493 | 493 |
| Other | 0 | 173 | - | - | - | - | 2 408 | 2 581 | 2 581 |
| Total carrying value excluding accrued interest expense | 27 327 | 28 584 | - | - | - | 1 601 | 167 041 | 224 553 | 214 791 |
| Accrued interest expense | 27 | 94 | - | - | - | 328 | 801 | 1 251 | 1 222 |
| Total carrying value including accrued interest expense | 27 355 | 28 678 | - | - | - | 1 929 | 167 842 | 225 804 | 216 013 |
| a Of which repos | 6 574 | 6 563 | |||||||
| b Of which repos | 15 841 | 15 841 | |||||||
| FINANCIAL LIABILITIES, 30-06-2012 | |||||||||
| Deposits from credit institutions and investment firms a | 740 | 2 697 | - | - | - | - | 21 151 | 24 587 c | |
| Deposits from customers and debt certificates b | 4 247 | 15 012 | - | - | - | - | 144 426 | 163 685 | |
| Excluding repos | 150 328 | ||||||||
| Deposits from customers | 3 757 | 10 265 | - | - | - | - | 118 880 | 132 902 | |
| Demand deposits | 0 | 0 | - | - | - | - | 36 164 | 36 164 | |
| Time deposits | 3 757 | 10 265 | - | - | - | - | 43 722 | 57 744 | |
| Savings deposits | 0 | 0 | - | - | - | - | 33 932 | 33 932 | |
| Special deposits | 0 | 0 | - | - | - | - | 3 852 | 3 852 | |
| Other deposits | 0 | 0 | - | - | - | - | 1 211 | 1 211 | |
| Debt certificates | 489 | 4 748 | - | - | - | - | 25 547 | 30 783 | |
| Certificates of deposit | 0 | 7 | - | - | - | - | 5 544 | 5 551 | |
| Customer savings certificates | 0 | 0 | - | - | - | - | 598 | 598 | |
| Convertible bonds | 0 | 0 | - | - | - | - | 0 | 0 | |
| Non-convertible bonds | 489 | 4 517 | - | - | - | - | 12 062 | 17 068 | |
| Convertible subordinated liabilities | 0 | 0 | - | - | - | - | 0 | 0 | |
| Non-convertible subordinated liabilities | 0 | 223 | - | - | - | - | 7 343 | 7 566 | |
| Liabilities under investment contracts | - | 8 856 | - | - | - | - | 0 | 8 856 | |
| Derivatives | 18 324 | 0 | - | - | - | 2 148 | - | 20 471 | |
| Short positions | 303 | 0 | - | - | - | - | - | 303 | |
| in equity instruments | 9 | 0 | - | - | - | - | - | 9 | |
| in debt instruments | 295 | 0 | - | - | - | - | - | 295 | |
| Other | 0 | 75 | - | - | - | - | 2 755 | 2 829 | |
| Total carrying value excluding accrued interest expense | 23 613 | 26 640 | - | - | - | 2 148 | 168 332 | 220 732 | |
| Accrued interest expense | 0 | 0 | - | - | - | 0 | 0 | 0 | |
| Total carrying value including accrued interest expense | 23 613 | 26 640 | - | - | - | 2 148 | 168 332 | 220 732 | |
| a Of which repos | 6 986 | ||||||||
| b Of which repos |
13 357 | ||||||||
* Absolut Bank, Antwerp Diamond Bank Group, KBC Bank Deutschland, KBC Banka, Kredytbank Group.
| In millions of EUR | 30-06-2011 | 30-09-2011 | 31-12-2011 | 31-03-2012 | 30-06-2012 |
|---|---|---|---|---|---|
| Total | 135 674 | 136 281 | 136 855 | 131 940 | 127 321 |
| Breakdown per business unit | |||||
| Belgium | 53 364 | 54 190 | 55 254 | 55 776 | 56 798 |
| Central and Eastern Europe | 25 950 | 25 826 | 25 632 | 26 220 | 26 164 |
| Merchant Banking | 42 389 | 42 542 | 42 419 | 42 561 | 42 540 |
| Group Centre (*) | 13 972 | 13 723 | 13 550 | 7 383 | 1 819 |
(*) figures as of 31-03-2011 excluding Centea; figures as of 31-03-2012 excluding Kredyt Bank; figures as of 30-06-2012 excluding a.o. Absolut Bank, ADB, KBC Bank Deutschland, KBC Banka
| In millions of EUR | 30-06-2011 | 30-09-2011 | 31-12-2011 | 31-03-2012 | 30-06-2012 |
|---|---|---|---|---|---|
| Total | 56 731 | 57 081 | 57 431 | 53 951 | 52 884 |
| Breakdown per business unit | |||||
| Belgium | 27 833 | 28 457 | 29 417 | 29 703 | 30 131 |
| Central and Eastern Europe | 11 045 | 11 019 | 10 533 | 10 871 | 10 791 |
| Merchant Banking | 12 550 | 12 460 | 12 288 | 12 093 | 11 933 |
| Group Centre (*) | 5 303 | 5 145 | 5 194 | 1 284 | 29 |
(*) figures as of 31-03-2011 excluding Centea; figures as of 31-03-2012 excluding Kredyt Bank; figures as of 30-06-2012 excluding a.o. Absolut Bank, ADB, KBC Bank Deutschland, KBC Banka
| In millions of EUR | 30-06-2011 | 30-09-2011 | 31-12-2011 | 31-03-2012 | 30-06-2012 |
|---|---|---|---|---|---|
| Total | 171 388 | 167 683 | 149 385 | 149 685 | 150 328 |
| Breakdown per business unit | |||||
| Belgium | 70 802 | 72 687 | 71 156 | 71 324 | 74 593 |
| Central and Eastern Europe | 35 692 | 35 193 | 35 007 | 35 874 | 35 121 |
| Merchant Banking | 56 010 | 51 474 | 33 535 | 39 548 | 40 079 |
| Group Centre (*) | 8 884 | 8 329 | 9 687 | 2 940 | 534 |
(*) figures as of 31-03-2011 excluding Centea; figures as of 31-03-2012 excluding Kredyt Bank; figures as of 30-06-2012 excluding a.o. Absolut Bank, ADB, KBC Bank Deutschland, KBC Banka
| Technical provisions, Life Insurance 30-06-2011 (In millions of EUR) |
30-09-2011 | 31-12-2011 | 31-03-2012 | 30-06-2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest | Interest | Interest | Interest | Interest | |||||||
| Guaranteed Unit Linked | Guaranteed Unit Linked | Guaranteed Unit Linked | Guaranteed | Unit Linked | Guaranteed | Unit Linked | |||||
| Total | 18 885 | 7 356 | 18 860 | 7 579 | 18 891 | 7 936 | 16 296 | 8 820 | 15 651 | 9 595 | |
| Breakdown per business unit | |||||||||||
| Belgium | 15 374 | 6 217 | 15 363 | 6 466 | 15 414 | 6 859 | 15 240 | 7 713 | 14 784 | 8 687 | |
| Central and Eastern Europe | 879 | 803 | 865 | 779 | 836 | 742 | 859 | 796 | 835 | 853 | |
| Group Centre | 2 633 | 335 | 2 632 | 334 | 2 641 | 335 | 197 | 311 | 32 | 56 |
(*) figures as from 30/09/2011 are excluding Fidea, and as from 31/12/2011 also excluding Warta.
See note 8 (Other net income), for more detail on provision regarding 5/5/5 bonds.
| in number of shares | 31-12-2011 | 30-06-2012 |
|---|---|---|
| Ordinary shares | 357 980 313 | 357 980 313 |
| of which ordinary shares that entitle the holder to a dividend payment | 344 619 736 | 344 619 736 |
| of which treasury shares | 18 169 054 | 18 169 054 |
| Non-voting core-capital securities | 220 338 982 | 220 338 982 |
| Other information | ||
| Par value per ordinary share (in euros) | 3,48 | 3,48 |
| Number of shares issued but not fully paid up | 0 | 0 |
The ordinary shares of KBC Group NV have no nominal value and are quoted on NYSE Euronext (Brussels) and on the Luxembourg Stock Exchange.
The number of KBC-shares held by group companies is shown in the table under 'treasury shares'. As at 30 June 2012, this number includes, inter alia:
• the shares that are held to meet requirements under the various employee stock option plans (889 130 shares).
• the shares that were bought in relation to the 2007-2009 3-billion-euro share buyback program (13 360 577 shares).
On 2 January 2012, KBC Group reimbursed 0.5 billion euros (and 15% penalty) to the Belgian State representing 16 949 152 non-voting core-capital securities. This has already been taken into account in the balance sheet on 31-12-2011 (0.5 billion euros shift from equity to liabilities, and the extraction of the penalty from equity by presenting it as a liability) and in the number of non-voting core-capital securities as presented in the table above.
In the course of the first half of 2012, there was no significant change in related parties compared to the end of 2011.
In 2009, KBC entered into a guarantee agreement with the Belgian State to cover most of its potential downside risk exposure to CDOs. Included in the 2Q 2012 results is the related cost of 27 million euros (pre-tax) (87 million euros pre tax for 1H 2012), which is recognised in 'Net result from financial instruments at fair value through profit or loss'.
On 2 January 2012, KBC Group reimbursed 0.5 billion euros (and 15% penalty) to the Belgian State. This has already been taken into account in the balance sheet on 31-12-2011 (0.5 billion euros shift from equity to liabilities, and the extraction of the penalty from equity by presenting it as a liability). In the second quarter of 2012, the coupon on the core-capital securities sold to the Belgian Federal and Flemish Regional governments was paid (595 million euros or 8.5% of 7 billion euros).
| Company | Consolidation method |
Ownership percentage at KBC Group level |
Comments | |||||
|---|---|---|---|---|---|---|---|---|
| For income statement comparison | 1H 2011 | 1H 2012 | ||||||
| Additions | ||||||||
| None | ||||||||
| Exclusions | ||||||||
| Centea | Full | 100,00% | ------ | Sold in 3Q 2011 | ||||
| Fidea NV | Full | 100,00% | ------ | Sold in 1Q 2012 | ||||
| KBC Clearing NV | Full | 100,00% | ------ | Deconsolidated in 2Q12 due to immateriality | ||||
| Name Changes | ||||||||
| None | ||||||||
| Changes in ownership percentage and internal mergers | ||||||||
| DZI Insurance | Full | 90,35% | 100,00% | Increase with 9,65% (4Q 2011) | ||||
| Groep VAB NV | Full | 74,81% | 79,81% | Increase with 5% (2Q 2012) | ||||
| For balance sheet comparison | 31-12-2011 | 30-06-2012 | ||||||
| Additions | ||||||||
| None | ||||||||
| Exclusions | ||||||||
| Fidea NV | Full | 100,00% | ------ | Sold in 1Q 2012 | ||||
| KBC Clearing NV | Full | 100,00% | ------ | Deconsolidated in 2Q12 due to immateriality | ||||
| TUIR WARTA SA | Full | 100,00% | ------ | Deconsolidated on 30 June 2012 due to sale | ||||
| Name Changes | ||||||||
| None | ||||||||
| Changes in ownership percentage and internal mergers | ||||||||
| Groep VAB NV | Full | 74,81% | 79,81% Increase with 5% (2Q 2012) |
As compared to 1H 2011 the consolidation scope changed by excluding Centea and Fidea, both contributing 16 million euros and 23 million euros respectively to the consolidated net profit in 1H 2011.
On 30 June 2012, following planned divestments fulfill the criteria of IFRS 5:
The assets and liabilities of these divestments are shown separately on the balance sheet (Non-current assets held for sale and assets associated with disposal groups on the asset side and Liabilities associated with disposal groups on the liability side): see table below for more details.
In comparison with previous quarter mainly Absolut Bank, Antwerp Diamond Bank, KBC Bank Deutschland and KBC Banka are added to the scope of IFRS 5 based on:
Summary of facts and circumstances regarding divestments which have been signed, but not yet closed on 30 June 2012
| Activity: Segment: Other information: |
Private banking Group Centre On 10 October 2011, the KBC group has reached an agreement with Precision Capital for the sale of its dedicated private banking subsidiary KBL European Private Bankers ('KBL EPB') for a total consideration of approximately 1 billion euros. |
|---|---|
| Note that, the transaction was closed on 31 July 2012 (for more information see note 48). |
|
| Kredyt Bank: | |
| Activity: Segment: Other information: |
Banking Group Centre On 28 February 2012, KBC Group has reached an agreement with Santander for the merger of its subsidiary Kredyt Bank and Bank Zachodni WBK. Following the proposed merger, Santander will hold approximately 76.5% of the merged bank and KBC around 16.4%. The rest will be held by other minority shareholders. Banco Santander S.A. has committed to help KBC to lower its stake in the merged bank to below 10% immediately after the merger. Furthermore, KBC's intention is to divest its remaining stake, with a view to maximising value. Based on the market valuations at the time of reaching the agreement, the transaction will have a positive effect on KBC's income statement of approximately +0.1 billion euros at the time of closing the transaction. Closing of the transaction is subject to the customary regulatory approvals and is expected to be completed in the second half of 2012. Mid-May a signed merger plan was filed for the approval by the Financial Supervisory Commission. |
| Upon the deconsolidation of Kredyt Bank as a result of the proposed merger, and after a committed reduction of KBC's participation below 10% shortly after the registration of the merger and at the market valuations at the time of reaching the agreement approximately 0.7 billion euros of capital will be released, predominantly based on a reduction of Risk Weighted Assets – corresponding with a pro forma tier-1 impact at KBC-group consolidated level (calculated at year-end 2011) of approximately +0.8%. Assuming a full exit and based on current market valuations, the pro forma tier-1 impact at KBC- group consolidated level (calculated at year-end 2011) is estimated at approximately +0.9%. |
| In millions of EUR | 2Q 2011 | 1Q 2012 | 2Q 2012 | 1H 2011 1H 2012 | |
|---|---|---|---|---|---|
| A: DISCONTINUED OPERATIONS | |||||
| Income statement | |||||
| Income statement KBL EPB (including Vitis Life) | |||||
| Net interest income | 40 | 29 | 26 | 74 | 55 |
| Net fee and commission income | 89 | 88 | 79 | 187 | 167 |
| Other income | 2 | 20 | 14 | 25 | 34 |
| Total income | 131 | 137 | 120 | 287 | 257 |
| Operating expenses | - 97 | - 110 | - 110 | - 205 | - 220 |
| Impairment | - 18 | - 8 | - 14 | - 19 | - 22 |
| Share in results of associated companies | 0 | 0 | 0 | 0 | 0 |
| Result before tax | 15 | 19 | - 4 | 63 | 15 |
| Income tax expense | - 4 | - 6 | - 1 | - 15 | - 8 |
| Result after tax | 11 | 12 | - 5 | 48 | 7 |
| Result of sale of KBL EPB (including Vitis Life) | 0 | ||||
| Impairment loss recognised on the remeasurement to fair value less costs to sell | - 11 | 28 | - 3 | - 48 | 25 |
| Tax income related to measurement to fair value less costs to sell (deferred tax) | 0 | 0 | 0 | 0 | 0 |
| Result of sale after tax | - 11 | 28 | - 3 | - 48 | 25 |
| Net post-tax result from discontinued operations | 0 | 40 | - 8 | 0 | 32 |
| Cashflow statement KBL EPB (including Vitis Life) | |||||
| Net cash from (used in) operating activities | 1 591 | - 1 612 | |||
| Net cash from (used in) investing activities | - 12 | 8 | |||
| Net cash from (used in) financing activities | - 400 | 6 | |||
| Net cash outflow/inflow | 1 180 | - 1 597 |
| of which: | of which: | |||
|---|---|---|---|---|
| Discontinued | Discontinued | |||
| Balance sheet | 31-12-2011 | operations | 30-06-2012 | operations |
| Assets | ||||
| Cash and cash balances with central banks | 1 076 | 1 076 | 946 | 479 |
| Financial assets | 16 797 | 12 523 | 28 074 | 11 822 |
| Fair value adjustments of hedged items in portfolio hedge of interest rate risk | 12 | 12 | 14 | 14 |
| Tax assets | 110 | 95 | 209 | 72 |
| Investments in associated companies | 13 | 13 | 12 | 12 |
| Investment property and property and equipment | 278 | 224 | 427 | 214 |
| Goodwill and other intangible assets | 352 | 196 | 323 | 225 |
| Other assets | 485 | 103 | 209 | 134 |
| Total assets | 19 123 | 14 242 | 30 214 | 12 972 |
| Liabilities | ||||
| Financial liabilities | 12 901 | 12 710 | 22 548 | 11 283 |
| Technical provisions insurance, before reinsurance | 4 533 | 424 | 400 | 400 |
| Tax liabilities | 38 | 6 | 33 | 8 |
| Provisions for risks and charges | 30 | 22 | 55 | 19 |
| Other liabilities | 631 | 304 | 451 | 335 |
| Total liabilities | 18 132 | 13 466 | 23 488 | 12 045 |
| Other comprehensive income | ||||
| Available-for-sale reserve | - 81 | - 72 | 92 | 78 |
| Deferred tax on available-for-sale reserve | 29 | 20 | - 25 | - 22 |
| Cash flow hedge reserve | 1 | 0 | ||
| Translation differences | 7 | 7 | 22 | - 4 |
| Total other comprehensive income | - 45 | - 46 | 90 | 52 |
| Banking and Insurance book* |
Trading book |
Total | Banking and insurance book maturity breakdown |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| AFS | HTM | FIV | Maturity date in 2012 |
Maturity date in 2013 |
Maturity date in & after 2014 |
||||||
| Greece | 32 | 0 | 1 | 0 | 33 | 1 | 0 | 31 | |||
| Portugal | 40 | 64 | 4 | 0 | 109 | 0 | 0 | 108 | |||
| Spain | 340 | 0 | 0 | 1 | 341 | 55 | 27 | 258 | |||
| Italy | 948 | 390 | 0 | 23 | 1 361 | 14 | 91 | 1 255 | |||
| Ireland | 124 | 307 | 0 | 0 | 432 | 0 | 0 | 432 | |||
| Total | 1 483 | 761 | 5 | 25 | 2 274 | 71 | 118 | 2 085 |
Sovereign bonds on selected European countries, in millions of euros (carrying amounts), 30-06-2012
* AFS (available-for-sale), HTM (held-to-maturity), FIV (designated at fair value through profit and loss).
Evolution of Sovereign bond portfolio on selected European countries, banking and insurance (carrying amount in billions of EUR)
| End 2Q11 | End 3Q11 | End 4Q11 | End 1Q12 | End 2Q12 | |
|---|---|---|---|---|---|
| Greece | 0.5 | 0.3 | 0.2 | 0.0 | 0.0 |
| Portugal | 0.3 | 0.1 | 0.1 | 0.1 | 0.1 |
| Spain | 2.2 | 2.1 | 1.9 | 1.9 | 0.3 |
| Italy | 6.1 | 3.8 | 2.1 | 2.0 | 1.4 |
| Ireland | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 |
| Total | 9.6 | 6.7 | 4.8 | 4.4 | 2.3 |
During the first quarter of 2012, KBC took part in the exchange operation regarding Greek government bonds. The new Greek government bonds received as part of the exchange of the 'old' Greek government bonds (31,5% of the nominal value of the 'old' government bonds) were valued (prices between 21% and 29%) at the moment of exchange end of March 2012 leading to a limited remaining carrying value of 43 million euro and a realised loss on AFS and HTM (above the impairments booked in 2011) of about 42 million euros. At the end of June 2012, the carrying value of these bonds further decreased to 32 million euro. The new Greek government bonds are classified in level 1 (while the former Greek bonds were classified in level 2).
During the second quarter of 2012, KBC further reduced its GIIPS portfolio substantially:
At 30 June 2012, the carrying amounts of the AFS government bonds contained a negative revaluation. This effect is included in the revaluation reserve for AFS financial assets for a total amount before tax of -132 million euros (Italy: -33 million, Portugal: -14 million, Spain: -60 million, Ireland: -10 million, Greece: -15 million).
Significant events between the balance sheet date (30 June 2012) and the publication of this report (7 August 2012)
• KBC - after very careful and thorough consideration, and in consultation with all relevant parties – on 29 June decided not to participate in the short-term capital solution proposed by NLB and the Republic of Slovenia. This resulted in a dilution of KBC's stake in NLB, which was 25% (plus one share) at the time, to 22% after a capital increase which took place on 2 July 2012.
Every decision taken by KBC should also be in line with the strategic plan KBC agreed with the European Commission. In this strategic plan, KBC repeated that its non-strategic stake in NLB was earmarked for divestment.
• On 31 July 2012, KBC group finalised the sale, announced on 10 October 2011, of its private banking subsidiary KBL European Private Bankers to Precision Capital S.A. for a total consideration of approximately 1 billion euros. The sale is expected to release a substantial amount of capital (approximately 0.7 billion euros) for KBC, increasing its tier-1 ratio by 0.7 %.
Not reviewed by the auditors
The main source of credit risk is the loan portfolio of the bank. A snapshot of the banking portfolio is shown in the table below. It includes all payment credit, guarantee credit (except for confirmations of letters of credit and similar export- /import-related commercial credit), standby credit and credit derivatives, granted by KBC to private persons, companies, governments and banks. Bonds held in the investment portfolio are included if they are corporate- or bank-issued, hence government bonds and trading book exposure are not included. Further on in this chapter, extensive information is provided on the credit portfolio of each business unit. Structured credit exposure is described separately. Information specifically on sovereign bonds can be found under 'note 47 (in the annual accounts 2011)'.
| Total loan portfolio (in billions of EUR) Amount granted 186 169 168 Amount outstanding2 156 142 142 Total loan portfolio, by business unit (as a % of the portfolio of credit granted) Belgium 34% 37% 38% CEE 19% 21% 22% Merchant Banking 37% 40% 39% Group Centre 10% 1% 1% Total 100% 100% 100% Impaired loans (in millions of EUR or %) Amount outstanding 11 234 9 992 10 378 Specific loan impairments 4 870 4 152 4 344 Portfolio-based loan impairments 371 317 293 Credit cost ratio, per business unit Belgium 0.10% 0.10% 0.04% CEE 1.59% 1.59% 0.42% Czech Republic 0.37% 0.37% 0.24% Slovakia 0.25% 0.25% 0.25% Hungary 4.38% 4.38% 1.08% Bulgaria 14.73% 14.73% 0.86% Merchant Banking 1.36% 1.36% 1.38% 0.36%3 0.33%3 Group Centre 0.36% 0.83%3 0.59%3 Total 0.83% Non-performing (NP) loans (in millions of EUR or %) Amount outstanding 7 580 6 754 7 509 Specific loan impairments for NP loans 3 875 3 263 3 475 Non-performing ratio, per business unit Belgium 1.5% 1.5% 1.5% CEE 5.6% 5.6% 5.6% Merchant Banking 7.8% 7.8% 9.5% Group Centre 5.5% 2.2% 2.5% Total 4.9% 4.8% 5.3% Cover ratio Specific loan impairments for NP loans / Outstanding NP loans 51% 48% 46% Idem, excluding mortgage loans 62% 60% 58% Specific and portfolio-based loan impairments for performing and NP loans / outstanding NP loans 69% 66% 62% Idem, excluding mortgage loans 89% 88% 83% |
Credit risk: loan portfolio overview | 31-12-2011 | 31-12-2011 (pro forma)1 |
30-06-2012 |
|---|---|---|---|---|
Outstanding amount includes all on-balance sheet commitments and off-balance sheet guarantees.
CCR including IFRS 5 entities with the exception of KBL which remains excluded from the CCR ratio. Excluding IFRS 5 entities the CCR would be -0.12% for Group Centre and 0.60% for the Total.
* Following entities have been recognised as 'disposal groups' under IFRS 5 and have been excluded from the figures. KBL EPB has been excluded since 31-12-2011 ; Kredyt Bank as from 31-03-2012 ; Absolut Bank, ADB, KBC Bank Deutschland and KBC Banka are excluded as from 30-06-2012.
Legend:
| 30-06-2012, in millions of EUR | Belgium | ||
|---|---|---|---|
| Total outstanding amount | 57.986 | ||
| Counterparty break down | % outst. | ||
| SME / corporate | 1.589 | 2,7% | |
| retail | 56.398 | 97,3% | |
| o/w private | 31.367 | 54,1% | |
| o/w companies | 25.031 | 43,2% | |
| Mortgage loans (*) | % outst. | ind. LTV | |
| total | 30.045 | 51,8% | 64% |
| o/w FX mortgages | 0 | 0,0% | - |
| o/w vintage 2007 and 2008 | 4.682 | 8,1% | - |
| o/w LTV > 100% | 2.825 | 4,9% | - |
| Probability of default (PD) | % outst. | ||
| low risk (pd 1-4; 0.00%-0.80%) | 46.831 | 80,8% | |
| medium risk (pd 5-7; 0.80%-6.40%) | 8.040 | 13,9% | |
| high risk (pd 8-10; 6.40%-100.00%) | 2.229 | 3,8% | |
| non-performing loans (pd 11 - 12) | 883 | 1,5% | |
| unrated | 3 | 0,0% | |
| Other risk measures | % outst. | ||
| outstanding non-performing loans (NPL) | 883 | 1,5% | |
| provisions for NPL | 447 | ||
| all provisions (specific + portfolio based) | 537 | ||
| cover NPL by all provisions (specific + portfolio) | 61% | ||
| 2011 Credit cost ratio (CCR) | 0,10% | ||
| YTD 2012 CCR | 0,04% |
Remark
(*) mortgage loans: only to private persons (as opposed to the accounting figures)
* Following entities have been recognised as 'disposal groups' under IFRS 5 and have been excluded from the figures. KBL EPB has been excluded since 31-12-2011 ; Kredyt Bank as from 31-03-2012 ; Absolut Bank, ADB, KBC Bank Deutschland and KBC Banka are excluded as from 30-06-2012.
| 30-06-2012, in millions of EUR | Czech Republic | Slovakia | Hungary | Bulgaria | Total CEE | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total outstanding amount | 20.264 | 4.332 | 5.425 | 686 | 30.707 | |||||||||
| Counterparty break down SME / corporate retail o/w private o/w companies |
6.749 13.515 10.132 3.383 |
% outst. 33.3% 66.7% 50.0% 16.7% |
2.303 2.030 1.702 328 |
% outst. 53.2% 46.8% 39.3% 7.6% |
2.776 2.649 2.208 440 |
% outst. 51.2% 48.8% 40.7% 8.1% |
283 403 246 157 |
% outst. 41.3% 58.7% 35.8% 22.9% |
12.111 18.596 14.288 4.308 |
% outst. 39.4% 60.6% 46.5% 14.0% |
||||
| Mortgage loans (1) total o/w FX mortgages o/w vintage 2007 and 2008 o/w LTV > 100% |
6.679 0 1.983 414 |
% outst. 33.0% 0.0% 9.8% 2.0% |
ind. LTV 67% - - - |
1.435 0 295 0 |
% outst. 33.1% 0.0% 6.8% 0.0% |
ind. LTV 58% - - - |
1.944 1.600 1.010 633 |
% outst. 35.8% 29.5% 18.6% 11.7% |
ind. LTV 85% 92% - - |
116 72 53 15 |
% outst. 16.9% 10.5% 7.7% 2.2% |
ind. LTV 60% - - |
64% 10.175 1.672 3.341 1.062 |
% outst. 33.1% 5.4% 10.9% 3.5% |
| Probability of default (PD) low risk (pd 1-4; 0.00%-0.80%) medium risk (pd 5-7; 0.80%-6.40%) high risk (pd 8-10; 6.40%-100.00%) non-performing loans (pd 11 - 12) unrated |
11.859 6.802 915 683 4 |
% outst. 58.5% 33.6% 4.7% 3.2% 0.0% |
2.436 1.183 294 148 272 |
% outst. 56.2% 27.3% 6.8% 3.4% 6.3% |
2.326 1.689 723 683 4 |
% outst. 42.9% 31.1% 13.3% 12.6% 0.1% |
9 236 167 191 84 |
% outst. 1.3% 34.4% 24.3% 27.8% 12.2% |
16.630 9.910 2.099 1.704 364 |
% outst. 54.2% 32.3% 6.9% 5.4% 1.2% |
||||
| Other risk measures outstanding non-performing loans (NPL) provisions for NPL all provisions (specific + portfolio based) cover NPL by all provisions (specific + portfolio) 2011 Credit cost ratio (CCR) YTD 2012 CCR (local currency) (2) |
683 392 504 74% 0.37% 0.24% |
% outst. 3.4% |
148 85 118 80% 0.25% 0.25% |
% outst. 3.4% |
683 374 418 61% 4.38% 1.08% |
% outst. 12.6% |
191 92 127 67% 14.73% 0.86% |
% outst. 27.8% |
1.704 943 1.167 68% 1.59% 0.42% |
% outst. 5.6% |
(1) mortgage loans: only to private persons (as opposed to the accounting figures)
(2) individual CCR's in local currencies.
| Loan portfolio Business Unit Merchant Banking 30-06-2012, in millions of EUR |
Belgium | Western Europe | o/w Ireland | USA | Southeast Asia | Global | Credit Investments | Total Merchant Banking | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total outstanding amount | 20.874 | 20.952 | 16.452 | 3.496 | 918 | 2.023 | 3.028 | 51.291 | |||||||||||||||
| Counterparty break down | % outst. | % outst. | % outst. | % outst. | % outst. | % outst. | % outst. | % outst. | |||||||||||||||
| SME / corporate | 20.874 | 100,0% | 8.316 | 39,7% | 3.816 | 23,2% | 3.496 | 100,0% | 918 | 100,0% | 2.023 | 100,0% | 3.028 | 100,0% | 38.655 | 75,4% | |||||||
| retail | 0 | 0,0% | 12.636 | 60,3% | 12.636 | 76,8% | 0 | 0,0% | 0 | 0,0% | 0 | 0,0% | 0 | 0,0% | 12.636 | 24,6% | |||||||
| o/w private | 0 | 0,0% | 12.636 | 60,3% | 12.636 | 76,8% | 0 | 0,0% | 0 | 0,0% | 0 | 0,0% | 0 | 0,0% | 12.636 | 24,6% | |||||||
| o/w companies | 0 | 0,0% | 0 | 0,0% | 0 | 0,0% | 0 | 0,0% | 0 | 0,0% | 0 | 0,0% | 0 | 0,0% | 0 | 0,0% | |||||||
| Mortgage loans (*) | % outst. | ind. LTV | % outst. | ind. LTV | % outst. | ind. LTV | % outst. | ind. LTV | % outst. | ind. LTV | % outst. | ind. LTV | % outst. | ind. LTV | % outst. | ||||||||
| total | 0 | 0,0% | - | 12.636 | 60,3% | 119% | 12.636 | 76,8% | 119% | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% | - | 12.636 | 24,6% |
| o/w FX mortgages | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% |
| o/w vintage 2007 and 2008 | 0 | 0,0% | - | 4.637 | 22,1% | - | 4.637 | 28,2% | - | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% | - | 4.637 | 9,0% |
| o/w LTV > 100% | 0 | 0,0% | - | 8.442 | 40,3% | - | 8.442 | 51,3% | - | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% | - | 0 | 0,0% | - | 8.442 | 16,5% |
| Probability of default (PD) | % outst. | % outst. | % outst. | % outst. | % outst. | % outst. | % outst. | % outst. | |||||||||||||||
| low risk (pd 1-4; 0.00%-0.80%) | 13.181 | 63,1% | 8.925 | 42,6% | 6.751 | 41,0% | 2.765 | 79,1% | 540 | 58,8% | 799 | 1.657 | 54,7% | 27.818 | 54,2% | ||||||||
| medium risk (pd 5-7; 0.80%-6.40%) | 4.749 | 22,7% | 3.895 | 18,6% | 2.824 | 17,2% | 395 | 11,3% | 305 | 33,2% | 911 | 1.209 | 39,9% | 11.465 | 22,4% | ||||||||
| high risk (pd 8-10; 6.40%-100.00%) | 903 | 4,3% | 4.315 | 20,6% | 3.350 | 20,4% | 242 | 6,9% | 50 | 5,4% | 256 | 12,6% | 162 | 5,4% | 5.976 | 11,7% | |||||||
| non-performing loans (pd 11 - 12) | 931 | 4,5% | 3.771 | 18,0% | 3.526 | 21,4% | 94 | 2,7% | 24 | 2,6% | 57 | 2,8% | 0 | 0,0% | 4.877 | 9,5% | |||||||
| unrated | 1.110 | 5,3% | 46 | 0,2% | 0 | 0,0% | 0 | 0,0% | 0 | 0,0% | 0 | 0 | 0,0% | 1.156 | 2,3% | ||||||||
| Other risk measures | % outst. | % outst. | % outst. | % outst. | % outst. | % outst. | % outst. | % outst. | |||||||||||||||
| outstanding non-performing loans (NPL) | 931 | 4,5% | 3.771 | 18,0% | 3.526 | 21,4% | 94 | 2,7% | 24 | 2,6% | 57 | 2,8% | 0 | 0,0% | 4.877 | 9,5% | |||||||
| provisions for NPL | 569 | 1.349 | 1.210 | 84 | 15 | 52 | 0 | 2.069 | |||||||||||||||
| all provisions (specific + portfolio based) | 777 | 1.802 | 1.523 | 90 | 29 | 54 | 44 | 2.849 | |||||||||||||||
| cover NPL by all provisions (specific + portfolio) | 83% | 48% | 43% | 96% | 124% | 95% | - | 58% | |||||||||||||||
| 2011 Credit cost ratio (CCR) | n.a. | n.a. | 3,01% | n.a. | n.a. | n.a. | n.a. | 1,36% | |||||||||||||||
| YTD 2012 CCR | n.a. | n.a. | 4,00% | n.a. | n.a. | n.a. | n.a. | 1,38% |
Belgium = Belgian Corporate Branches, KBC Lease (Belgium), KBC Commercial Finance, KBC Real Estate
Western Europe = Foreign branches in Western Europe (UK, France, Netherlands); KBC Bank Ireland (incl. former Homeloans), KBC Lease UK, Ex-Atomium assets
Ireland = KBC Bank Ireland (incl. former KBC Homeloans)
USA = foreign branch in USA
Southeast Asia = Foreign branches in Asia (Hong Kong, Singapore, China)
Global = Structured Trade Finance, Foreign branch in Dublin (Syndicated loans), KBC Bank Head-office
Credit Investments = KBC Credit Investments
(*) mortgage loans: only KBC Homeloans exposure and only to private persons (as opposed to the accounting figures)
| Loan portfolio Business Unit Group Centre (excl. IFRS 5 scope) | ||||||||
|---|---|---|---|---|---|---|---|---|
| 30-06-2012, in millions of EUR | Global (mainly KBC Finance Ireland) |
for information: Russia (included in IFRS5 scope) |
||||||
| Total outstanding amount | 1.786 | 1.945 | ||||||
| Counterparty break down | % outst. | % outst. | ||||||
| SME / corporate | 1.786 | 100.0% | 955 | 49.1% | ||||
| retail | 0 | 0.0% | 990 | 50.9% | ||||
| o/w private | 0 | 0.0% | 920 | 47.3% | ||||
| o/w companies | 0 | 0.0% | 69 | 3.6% | ||||
| Mortgage loans (*) | % outst. | ind. LTV | % outst. | ind. LTV | ||||
| total | 0 | 0.0% | - | 781 | 40.1% | 54% | ||
| o/w FX mortgages | 0 | 0.0% | - | 179 | 9.2% | 55% | ||
| o/w vintage 2007 and 2008 | 0 | 0.0% | - | 372 | 19.1% | - | ||
| o/w LTV > 100% | 0 | 0.0% | - | 15 | 0.8% | - | ||
| Probability of default (PD) | % outst. | % outst. | ||||||
| low risk (pd 1-4; 0.00%-0.80%) | 446 | 24.9% | 991 | 51.0% | ||||
| medium risk (pd 5-7; 0.80%-6.40%) | 1.122 | 62.8% | 698 | 35.9% | ||||
| high risk (pd 8-10; 6.40%-100.00%) | 174 | 9.7% | 40 | 2.0% | ||||
| non-performing loans (pd 11 - 12) | 45 | 2.5% | 148 | 7.6% | ||||
| unrated | 0 | 0.0% | 68 | 3.5% | ||||
| Other risk measures | % outst. | % outst. | ||||||
| outstanding non-performing loans (NPL) | 45 | 2.5% | 148 | 7.6% | ||||
| provisions for NPL | 16 | 101 | ||||||
| all provisions (specific + portfolio based) | 38 | 116 | ||||||
| cover NPL by all provisions (specific + portfolio) | 84% | 79% | ||||||
| 2011 Credit cost ratio (CCR) | 0.70% | -1.99% | ||||||
| YTD 2012 CCR (local currency) | -0.12% | -1.27% |
Loan portfolio Business Unit Group Centre (excl. IFRS 5 scope)
Legend
ind. LTV Indexed Loan to Value: current outstanding loan / current value of property
avg. PD Average Probability of Default
In the past, KBC acted as an originator of structured credit transactions and also invested in such structured credit products itself.
In billions of EUR – 30-06-2012
| KBC investments in structured credit products (CDOs and other ABS)* | |
|---|---|
| Total nominal amount o/w hedged CDO exposure o/w unhedged CDO exposure o/w other ABS exposure |
17.9 10.1 5.5 2.3 |
| Cumulative value markdowns (mid 2007 to date)* | -4.8 |
| o/w value markdowns | -4.0 |
| for unhedged CDO exposure | -3.7 |
| for other ABS exposure | -0.3 |
| o/w Credit Value Adjustment (CVA) on MBIA cover | -0.7 |
* Note that, value adjustments to KBC's CDOs are accounted for via profit and loss (instead of directly via shareholders' equity), since the group's CDOs are mostly of a synthetic nature (meaning that the underlying assets are derivative products such as credit default swaps on corporate names). Their synthetic nature is also the reason why KBC's CDOs are not eligible for accounting reclassification under IFRS in order to neutralise their impact.
Over the second quarter of 2012, there was a total notional reduction of 0.3 billion euros. The reduction of 0.3 billion EUR is attributable to sales and repayments on 'other ABS exposures'.
Since the inception, the outstanding unhedged CDO positions held by KBC experienced net effective losses caused by claimed credit events until 9 July 2012 in the lower tranches of the CDO structure for a total amount of -2.2 billion euros. Of these, -2.0 billion euro's worth of events have been settled. These have had no further impact on P/L because complete value markdowns for these CDO tranches were already absorbed in P/L in the past.
As stated above, KBC bought credit protection from MBIA for a large part of the (super senior) CDOs it originated.
Moreover, the remaining risk related to MBIA's insurance coverage is to a large extent mitigated as it is included in the scope of the Guarantee Agreement that was agreed with the Belgian State on 14 May 2009. The contract with the Belgian State has a nominal value of 12.2 billion euros of which 10.1 billion euros relates to the exposure insured by MBIA. The remaining 2.1 billion euros of exposure covered by the contract with the Belgian State relates to the unhedged exposure. Of this portfolio (i.e. CDO exposure not covered by credit protection by MBIA) the super senior assets have also been included in the scope of the Guarantee Agreement with the Belgian State.
Details on the hedged CDO exposure (insurance for CDO-linked risks received from MBIA), 30-06-2012
| In billions of EUR | ||
|---|---|---|
| -------------------- | -- | -- |
| Total insured amount (notional amount of super senior swaps)1 | 10.1 |
|---|---|
| Details for MBIA insurance coverage | |
| - Fair value of insurance coverage received (modelled replacement value, after taking the Guarantee Agreement into account) | 1.1 |
| - CVA for counterparty risk, MBIA² | -0.7 |
| (as a % of fair value of insurance coverage received) | 70% |
| 1 The amount insured by MBIA is included in the Guarantee Agreement with the Belgian State (14 May 2009). |
2 The actual difference in CVA is 10 mln EUR from Q1 2012, it appears different due to rounding
* Figures exclude all expired, unwound and terminated CDO positions.
(Average % as of initial total deal notional exposure; figures as of 9 July 2012)
KBC reports its solvency at group, banking and insurance level, calculating it on the basis of IFRS figures and the relevant guidelines issued by the Belgian regulator. For group solvency, the so-called 'building block' method is used. This entails comparing group regulatory capital (i.e. parent shareholders' equity less intangible assets and a portion of the revaluation reserve for available-for-sale assets, plus subordinated debt, etc.) with the sum of the separate minimum regulatory solvency requirements for KBC Bank, KBL EPB and the holding company (after deduction of intercompany transactions between these entities) and KBC Insurance. The total risk-weighted volume of insurance companies is calculated as the required solvency margin under Solvency I divided by 8%. The target for the tier-1 capital ratio at group level has been set at 11%. In millions of EUR 31-12-2011 30-06-2012
| Regulatory capital | ||
|---|---|---|
| Total regulatory capital, KBC Group (after profit appropriation) | 19 687 | 19 433 |
| Tier-1 capital | 15 523 | 15 969 |
| Parent shareholders' equity | 9 756 | 9 687 |
| Non-voting core-capital securities (2) | 6 500 | 6 500 |
| Intangible fixed assets (-) | - 446 | - 422 |
| Goodwill on consolidation (-) | - 1 804 | - 1 259 |
| Innovative hybrid tier-1 instruments (2) | 420 | 426 |
| Non-innovative hybrid tier-1 instruments (2) | 1 690 | 1 691 |
| Direct & indirect funding of investments in own shares | - 250 | |
| Minority interests | 145 | 156 |
| Equity guarantee (Belgian State) | 564 | 382 |
| Revaluation reserve available-for-sale assets (-) | 117 | - 642 |
| Hedging reserve, cashflow hedges (-) | 594 | 717 |
| Valuation diff. in fin. liabilities at fair value - own credit risk (-) | - 550 | - 251 |
| Minority interest in AFS reserve & hedging reserve, cashflow hedges (-) | - 3 | 0 |
| Equalization reserve (-) | - 139 | - 97 |
| Dividend payout (-) (3) | - 598 | - 278 |
| IRB provision shortfall (50%) (-) | 0 | 0 |
| Limitation of deferred tax assets | - 384 | - 241 |
| Items to be deducted (1) (-) | - 338 | - 151 |
| Tier-2 & 3 capital | 4 164 | 3 464 |
| Perpetuals (incl. hybrid tier-1 not used in tier-1) | 30 | 30 |
| Revaluation reserve, available-for-sale shares (at 90%) | 246 | 198 |
| Minority interest in revaluation reserve AFS shares (at 90%) | 0 | |
| IRB provision excess (+) | 403 | 378 |
| Subordinated liabilities | 3 778 | 2 965 |
| Tier-3 capital | 45 | 44 |
| IRB provision shortfall (50%) (-) | 0 | 0 |
| Items to be deducted (1) (-) | - 338 | - 151 |
| Capital requirement | ||
| Total weighted risks | 126 333 | 117 728 |
| Banking | 110 355 | 104 971 |
| Insurance | 15 791 | 12 474 |
| Holding activities | 286 | 352 |
| Elimination of intercompany transactions between banking and holding activitie | - 100 | - 68 |
| Solvency ratios | ||
| Tier-1 ratio | 12.29% | 13.56% |
| Core Tier-1 ratio | 10.62% | 11.77% |
| CAD ratio | 15.58% | 16.51% |
Basic own funds ratio 5.47% 6.24% (1) items to be deducted are split 50/50 over tier-1 and tier-2 capital. Items to be deducted include mainly participations in and subordinated claims on financial institutions in w hich KBC Bank has betw een a 10% to 50% share (predominantly NLB).
(2) According to CRD II, these items are considered as grandfathered items.
(3) for 31/12/2011: includes 595 million euros coupon on non-voting core capital securities and 3 million euros dividend on ordinary shares; for 30/06/2012: includes a pro rata of the estimated dividend and coupon for 2012.
On 2 January 2012, KBC Group reimbursed 0.5 billion euros (and 15% penalty) to the Belgian State. This has already been taken into account in the balance sheet and hence also in the solvency calculation on 31-12-2011 (0.5 billion euros shift from equity to liabilities, and the extraction of the penalty from equity by presenting it as a liability). Both paid in the second quarter 2012.
The pro forma tier-1 ratio at 30 June 2012 including the impact of the sale of KBL EPB and Kredyt Bank amounts to approximately 15.4%.
The Belgian regulator has confirmed to KBC that the non-voting core capital securities will be fully grandfathered as common equity under the current CRD4 proposal.
In May 2012, KBC received confirmation that it can shift as of 2Q12 reporting from the IRB Foundation approach under Basel II to the IRB Advanced approach for the (credit) portfolios of following entities: KBC Bank (incl. KBC Real Estate), CBC, KBC Lease Belgium, KBC Credit Investments and KBC Finance Ireland. Subject to regulatory approval, CSOB CR is expected to shift as from August 2012.
IRB, since the implementation of Basel II in 2008, is the primary approach (used for somewhat more than 80% of the weighted credit risks, of which approx. 47% according to Advanced and approx. 33% according to Foundation approach). Note that retail exposure treated under IRB is always subject to an Advanced approach. The remaining weighted credit risks (almost 20%) are calculated according to the Standardised approach.
The tables below show the tier-1 and CAD ratios calculated under Basel II for KBC Bank, as well as the solvency ratio of KBC Insurance. More information on the solvency of KBC Bank and KBC Insurance can be found in their consolidated financial statements and in the KBC Risk Report.
| 31-12-2011 | 30-06-2012 |
|---|---|
| 16 364 | 15 313 |
| 12 346 | 11 929 |
| 4 019 | 3 384 |
| 106 256 | 100 530 |
| 85 786 | 81 296 |
| 9 727 | 8 490 |
| 10 744 | 10 744 |
| 11.6% | 11.9% |
| 9.6% | 9.8% |
| 15.4% | 15.2% |
| 31-12-2011 | 30-06-2012 |
| 2 533 | 3 132 |
| 1 263 | 998 |
| 201% | 314% |
| 1 270 | 2 134 |
(*) decrease compared to 31-12-2011 related to the closing of the sale of Fidea in 1Q 2012 and Warta in 2Q 201
+44 20 7162 0177 +32 2 290 14 11 +1 334 323 6203
Until 17 August +44 20 7031 4064 (code: 919537)
This presentation is provided for informational 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. KBC can not be held liable for any damage resulting from the use of the information.
This presentation contains non-IFRS information and forward-looking statements with respect to the strategy, earnings and capital trends of KBC, involving numerous assumptions and uncertainties. There is a risk that these statements may not be fulfilled and that future developments differ materially. Moreover, KBC does not undertake any obligation to update the presentation in line with new developments.
By reading this presentation, each investor is deemed to represent that it possesses sufficient expertise to understand the risks involved.
| 1 | 2Q 2012 financial highlights |
|---|---|
| 2 | Divestments and derisking |
| 3 | Strong solvency and solid liquidity |
| 4 | Wrap up |
Annex 1: 2Q12 underlying performance of business units
Annex 2: Other items
• Strong commercial franchise in all our core markets and core activities, with continued good underlying net group profit of 372m EUR in 2Q12 • Net interest income was negatively impacted by reduced GIIPS exposure and higher senior debt costs, while 1Q12 benefited from interest corrections on Greek bonds • Good growth in loan and deposit volumes • Net fee and commission income rose by 1% q-o-q, driven by higher management fees on mutual funds and the impact of successful sales of unit-linked products (both at the Belgium BU) • Written life insurance premiums further increased q-o-q • The combined ratio (non-life) stood at an excellent 89% YTD • Performance in life and non-life insurance was impacted by lower investment results (driven by lower realised gains on AFS shares) • Underlying cost/income ratio of 58% YTD • Credit cost ratio at a low 0.59% YTD. Excluding Ireland (in line with guidance), this ratio stands at 0.18% Underlying results Reported results Capital Liquidity & Funding • Continued strong capital base. Pro forma tier-1 ratio under Basel 2.5 – including the effect of divestments for which a sale agreement has been signed – at approximately 15.4% (with core tier-1 at 13.4%) • Strong liquidity position, with a loan-to-deposit ratio of 83% (vs. 90% at the end of 1Q12) Unencumbered assets are double the amount of the net recourse on short-term wholesale funding • 2012 funding needs covered and additional buffer in place thanks to the issuance of 2.25bn EUR unsecured long-term debt (1.25bn EUR 2y and 1.0bn EUR 5y), and continued growth in • Net reported profit of -539m EUR, affected by the impairments on planned divestments
customer deposits (+3.1bn EUR q-o-q excluding repos)
-539 437 380 333 821 724 545 149 442 3Q11 4Q11 1Q12 2Q12 -1,579 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Reported net profit * 372 455 161 -248 528 658 168 445 543 554 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Including exceptional items Exceptional items -911 -75 277 -195 163 556 100 -405 -101 3Q11 4Q11 1Q12 2Q12 -1,331 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Main exceptional items (post-tax) • Impairments related to divestment portfolio - 0.9bn
Underlying net profit *
7
Amounts in m EUR
Note: KBL epb and Fidea are no longer reported in underlying profit from 1Q12 onwards
NIM (excl. KBL epb from 4Q10 onwards)
Note: KBL epb and Fidea are no longer reported in underlying profit from 1Q12 onwards
2Q
1Q
Amounts in bn EUR
4Q
Note: KBL epb and Fidea are no longer reported in underlying profit from 1Q12 onwards
• Dividend income amounted to 21m EUR, as the bulk of dividend income is traditionally received in 2Q
| outstanding loan book |
2007 FY |
2008 FY |
2009 FY |
2010 FY |
2011 FY |
1H12 | |
|---|---|---|---|---|---|---|---|
| 'Old' BU reporting | 'New' BU reporting | ||||||
| Belgium | 58bn | 0.13% | 0.09% | 0.17% | 0.15% | 0.10% | 0.04% |
| CEE | 31bn | 0.26% | 0.73% | 2.12% | 1.16% | 1.59% | 0.42% |
| CEE (excl. one-off items in 2H11) | 0.69% | ||||||
| Merchant B. (incl. Ireland) |
51bn | 0.02% | 0.48% | 1.32% | 1.38% | 1.36% | 1.38% |
| Merchant B. (excl. Ireland) |
35bn | 0.02% | 0.53% | 1.44% | 0.67% | 0.59% | 0.14% |
| Total Group | 142bn | 0.13% | 0.46% | 1.11% | 0.91% | 0.82% | 0.59% |
| 1H 2012 | Non-Performing Loans (>90 days overdue) |
High risk, excl. restructured loans (probability of default >6.4%) |
Restructured loans (probability of default >6.4%) |
|---|---|---|---|
| Belgium BU |
1.5% | 3.0% | 0.8% |
| CEE BU | 5.6% | 4.6% | 2.3% |
| MEB BU | 9.5% | 7.7% | 3.9% |
2Q12
1Q12
4Q11
3Q11
2Q11
1.5%
1.6%
1.5%
1.5%
1.5%
BELGIUM BU CEE BU 2Q12 5.6% 1Q12 5.6% 4Q11 5.6% 3Q11 5.7% 2Q11 5.3% 1Q11 5.7% 4Q10 5.6% 3Q10 5.6% 2Q10 5.2% 1Q10 4.6% non performing loans
1Q11
4Q10
3Q10
2Q10
1Q10
1.6%
1.5%
1.5%
1.5%
1.6%
| In preparation/work-in-progress for 2012/2013 a.o. | |
|---|---|
| Absolut Bank |
|
| KBC Banka | Expected capital |
| NLB | relief of 0.6bn EUR |
| Antwerp Diamond Bank | (mainly from RWA reductions) |
| KBC Bank Deutschland |
| End 2010 | End 1Q11 | End 2Q11 | End 3Q11 | End 2011 | End 1Q12 | End 1H12 | |
|---|---|---|---|---|---|---|---|
| Greece | 0.6 | 0.6 | 0.5 | 0.3 | 0.2 | 0.0 | 0.0 |
| Ireland | 0.5 | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 |
| Italy | 6.4 | 6.2 | 6.1 | 3.8 | 2.1 | 2.0 | 1.4 |
| Portugal | 0.3 | 0.3 | 0.3 | 0.1 | 0.1 | 0.1 | 0.1 |
| Spain | 2.2 | 2.2 | 2.2 | 2.1 | 1.9 | 1.9 | 0.3 |
| TOTAL | 10.0 | 9.7 | 9.6 | 6.7 | 4.8 | 4.4 | 2.3 |
• Notional investment of 50bn EUR in government bonds (excl trading book) at end 1H12, primarily as a result of significant excess liquidity position and the reinvestment of insurance reserves into fixed income instruments
* 1H12 pro forma CT1 includes the impact of divestments already signed, but not yet closed (Kredyt Bank)
Strong capital position maintained despite capital impact of impairments on planned divestments, thanks to good underlying profit generation, the closing of Warta and further reduction of RWAs (driven by shift from IRB Foundation to IRB Advanced)
First repayment of 500m EUR to the Federal Government in January 2012 at 15% premium
Next reimbursement will be made once common equity target has been decided by the National Bank of Belgium
We are continuing our efforts to ensure that 4.67bn EUR in state aid (before any penalty) is reimbursed by the end of 2013, as set out in the European plan, of which a substantial part before end of 2012
Source: Company filings as of March 2012, BofAML
Note: capital ratios under Basel 2.5 for EU banks and under Basel 1 for US banks
(1) Excluding transition rules
(2) Including state capital and pro-forma of divestments signed as of 1Q12 (KBL epb, Warta and Kredyt Bank)
(3) As of December 2011
Tier 1 as of Mar-12 Core Tier 1 as of Mar-12
B3 impact at numerator level (bn EUR)
B3 impact at numerator level (bn EUR)
as agreed with local regulator)
• KBC Bank continues to have a strong retail/corporate 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
* Excluding all the entities earmarked for divestment in Group Centre: KBL epb, ADB, KBC Deutschland, KBC Banka, Absolut Bank and Kredyt Bank
** Excluding Centea (retroactively adjusted)
*** Excluding Kredyt Bank and Absolut Bank (items earmarked for divestment in Group Centre)
* According to IFRS5, situation as per 30/06/2012 (right-hand side) excludes the in-divestment entities (Absolut Bank, Kredyt Bank, KBC Deutschland, KBC Banka, ADB, KBL) ** Graphs are based on Note 18 of KBC's quarterly report, except for the liquid assets buffer which is based on the Treasury Management Report of KBC Group
Breakdown funding maturity buckets Senior vs. subordinated & callable vs. non-callable
Resilient business performance in core markets
Momentum maintained on divestments and derisking
Capital and liquidity positions further strengthened
| Total loans ** |
Of which mortgages |
Customer deposits |
AuM | Life reserves |
|
|---|---|---|---|---|---|
| Volume | 57bn | 30bn | 75bn | 140bn | 23bn |
| Growth q/q* | +2% | +1% | +5% | -1% | +2% |
| Growth y/y | +6% | +8% | +5% | -2% | +9% |
* Non-annualised
** Loans to customers, excluding reverse repos (and not including bonds)
Product spread on new production
Premium income (gross earned premium)
2Q
1Q
Amounts in m EUR
Underlying net profit of the Belgium BU *
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 2Q10 1Q10
Underlying net profit from Secura
* Difference between underlying net profit of the Belgium BU and the sum of the banking and insurance contribution is accounted for by some rounding up or down of figures
Underlying net profit contribution banking to the Belgium BU *
| Total loans ** |
Of which mortgages |
Customer deposits |
AUM | Life reserves |
|
|---|---|---|---|---|---|
| Volume | 26bn | 11bn | 35bn | 10bn | 2bn |
| Growth q/q* | +2% | +2% | 0% | -7% | +2% |
| Growth y/y | +4% | -2% | +3% | -15% | 0% |
* Non-annualised
** Loans to customers, excluding reverse repos (and not including bonds)
| Total loans | Mortgages | Deposits | ||||
|---|---|---|---|---|---|---|
| q/q | y/y | q/q | y/y | q/q | y/y | |
| CZ | +3% | +12% | +3% | +11% | +1% | +4% |
| SK | +1% | +9% | +4% | +13% | +2% | +4% |
| HU | -2% | -19% | 0% | -36% | -3% | 0% |
| BU | +1% | -18% | -18% | -41% | +2% | +9% |
| TOTAL | +2% | +4% | +2% | -2% | 0% | +3% |
The net interest margin narrowed by some 12bps quarter-on-quarter to 3.04%, mainly caused by the lower amount of loans & receivables at K&H (especially the result of fewer FX mortgage loans with relative high margins) and the FX impact from CZK
Excluding the FX effect, net fee and commission income (71m EUR) fell by 7% q-o-q and 13% y-o-y. The 7% q-o-q decrease is mainly driven by CSOB Bank CZ
Assets under management decreased by 7% q-o-q to roughly 10bn EUR, essentially as a result of net outflows (-6% q-o-q). Y-o-y, assets under management fell by 15%, driven by net outflows (-11%) and some negative price effect
Insurance premium income (gross earned premium) stood at 264m EUR
Combined ratio at 95% in 1H12
Opex (290m EUR) fell by 17% q-o-q and 4% y-o-y
| Loan book |
2009* CCR |
2010 CCR |
2011 CCR |
1H12 CCR |
|
|---|---|---|---|---|---|
| CEE | 31bn | 2.12% | 1.16% | 1.59% | 0.42% |
| - Czech Rep. - Hungary - Slovakia - Bulgaria |
20bn 5bn 4bn 1bn |
1.12% 2.01% 1.56% 2.22% |
0.75% 1.98% 0.96% 2.00% |
0.37% 4.38% 0.25% 14.73% |
0.24% 1.08% 0.25% 0.86% |
* CCR according to 'old business unit reporting'
| Loan portfolio | Outstanding | NPL | NPL coverage |
|---|---|---|---|
| SME/Corporate | 2.8bn | 7.7% | 64% |
| Retail | 2.6bn | 17.8% | 60% |
| o/w private | 2.2bn | 19.4% | 59% |
| o/w companies | 0.4bn | 9.5% | 73% |
| 5.4bn | 12.6% | 61% |
| Total loans |
Customer deposits |
|
|---|---|---|
| Volume | 43bn | 40bn |
| Growth q/q* | +1% | +2% |
| Growth y/y* | +1% | -28% |
*non-annualised
Other impairment charges amounted to 14m EUR, related to real estate investments
Loan loss provisions in 2Q12 of 136m EUR (195m EUR in 1Q12). The loss after tax in 2Q12 was 72m EUR
| Irish loan book – key figures as at June 2012 |
|||||
|---|---|---|---|---|---|
| Loan portfolio | Outstanding | NPL | NPL coverage | ||
| Owner occupied mortgages | 9.4bn | 15.9% | 30% | ||
| Buy to let mortgages | 3.2bn | 26.7% | 38% | ||
| SME /corporate | 1.9bn | 19.3% | 53% | ||
| Real estate investment Real estate development |
1.3bn 0.5bn |
27.8% 83.1% |
60% 76% |
||
| 16.4bn | 21.4% | 43% | |||
| 2Q12 | |
|---|---|
| Group item (ongoing business) |
-8 |
| Planned divestments |
31 |
| - Centea |
0 |
| - Fidea |
0 |
| - Kredyt Bank |
8 |
| - Warta |
26 |
| - Absolut Bank |
19 |
| - 'old' Merchant Banking activities |
8 |
| - KBL EPB |
0 |
| - Other |
-30 |
| TOTAL underlying net profit from Group Centre |
23 |
| 1Q10 | 2Q10 | 3Q10 | 4Q10 | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 1Q12 | 2Q12 | |
|---|---|---|---|---|---|---|---|---|---|---|
| NPL NPL formation |
17.9% 3.9% |
17.8% -0.1% |
18.3% 0.5% |
16.8% -1.5% |
16.1% -0.7% |
13.5% -2.6% |
11.4% -2.1% |
11.2% -0.2% |
10.3% -0.9% |
7.6% -2.7% |
| Restructured loans | 10.3% | 10.3% | 9.7% | 6.3% | 4.2% | 3.9% | 3.9% | 3.2% | 2.3% | 2.3% |
| Loan loss provisions (m EUR) |
0 | 19 | 12 | -9 | -29 | -9 | -8 | 4 | -10 | -3 |
KBC FP Convertible Bonds
KBC FP Asian Equity Derivatives
KBC FP Insurance Derivatives
KBC FP Reverse Mortgages
KBC Peel Hunt
KBC AM in the UK
KBC AM in Ireland
KBC Securities BIC
KBC Business Capital
Secura
KBC Concord Taiwan
KBC Securities Romania
KBC Securities Serbia
Organic wind-down of international MEB loan book outside home markets
Centea
Fidea
Warta
KBL European Private Bankers
Zagiel
Signed:
Kredyt Bank
Absolut Bank
KBC Banka
NLB
Antwerp Diamond Bank
KBC Bank Deutschland
63
| Outstanding CDO exposure (bn EUR) |
Notional | Outstanding markdowns |
|---|---|---|
| - Hedged portfolio - Unhedged portfolio |
10.1 5.5 |
-0.7 -3.7 |
| TOTAL | 15.6 | -4.5 |
| Amounts in bn EUR |
Total |
|---|---|
| Outstanding value adjustments Claimed and settled losses - Of which impact of settled credit events |
-4.5 -2.2 -2.0 |
| 10% | 20% | 50% | |
|---|---|---|---|
| Spread tightening | +0.1bn | +0.2bn | +0.6bn |
| Spread widening | -0.1bn | -0.2bn | -0.4bn |
* Figures exclude all expired, unwound or terminated CDO positions
** Taking into account the guarantee agreed with the Belgian State and a provision rate for MBIA at 70%
12%
* % of total initial deal exposure; figures at 9 July 2012
Corporate breakdown by ratings *
Direct Corporate Portfolio
*Direct Corporate exposure as a % of the total Corporate Portfolio; Tranched Corporate exposure as a % of the total Corporate Portfolio; figures as of 9 July 2012
65
Originally, 7bn EUR worth of core capital securities subscribed by the Belgian Federal and Flemish Regional Governments
| Belgian State | Flemish Region | ||||
|---|---|---|---|---|---|
| Amount | 3.5bn | 3.5bn | |||
| Instrument | Perpetual fully paid up new class of non-transferable securities qualifying as core capital | ||||
| Ranking | Pari passu with ordinary stock upon liquidation | ||||
| Issuer | KBC Group Proceeds used to subscribe ordinary share capital at KBC Bank (5.5bn) and KBC Insurance (1.5bn) |
||||
| Issue price | 29.5 EUR | ||||
| Interest coupon | Conditional on payment of dividend to shareholders The higher of (i) 8.5% or (ii) 120% of the dividend for 2009 and 125% for 2010 onwards Not tax deductible |
||||
| Buyback option KBC | Option for KBC to buy back the securities at 150% of the issue price (44.25) | ||||
| Conversion option KBC | From December 2011 onwards, option for KBC to convert securities into shares (1 for 1). In that case, the State can ask for cash at 115% (33.93) increasing every year by 5% to the maximum of 150% |
No conversion option |
Investor Relations Office
E-mail: [email protected]
Go to www.kbc.com for the latest update
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.