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Indice: BEL20-EURONEXT
100
KBC Banque & Assurance
est un groupe financier indépendant aux racines flamandes, d'envergure
internationale et, surtout, animée par un concept unique où
banquiers et assureurs se donnent la main.
KBC Bancassurance Holding
figure parmi les 1ers groupes bancaires belges
https://www.kbc.be
Earnings
Statement KBC Group, 3Q 2009
Regulated
information* - 13 November 2009 (07.00 a.m. CET)
Summary
KBC
ended the three months to September 2009 with a net profit of 528 million
euros. Excluding exceptional items, an underlying net profit of 631 million
euros was achieved, 54% higher than the previous quarter and up 15% compared
to the third quarter of 2008. Jan Vanhevel, Group CEO: 'Although volume
trends remain sluggish for the time being, business margins continue to
be resilient and charges for problem loans are lower. The figures presented
in this earnings statement provide evidence of the underlying earnings
power of the group. The operating environment further gradually improved
during the third quarter and leading indicators are signalling that we
are past the bottom of the economic cycle.'
Financial
highlights - 3Q 2009
Jan
Vanhevel, Group CEO summarises the underlying business performance for
3Q 2009 as follows:
'On
an underlying basis, interest income grew by 3% quarter-on-quarter and
17% year-on-year. While volume growth slowed in core markets and international
loan exposure has been reduced, the net interest margin remained
healthy. The average net interest margin for the banking operations stood
at 1.86%, compared to 1.78% for the previous quarter.'
'Still
a mixed picture for non-interest income. Trading results were solid, even
some 5% above the strong level of the previous quarter. Fee and commission
income was up 2% on the previous quarter, benefiting further from the improved
investment climate, though it is still, as yet, too early for a further
marked rebound of asset-management-driven fee and commission income. Insurance
premiums increased compared to the year-earlier quarter, but total insurance
revenue suffered from lower investment yields.'
'Since
late 2008, major efforts have been made to reduce costs. Following a marked
consecutive decrease in previous quarters, the cost trend is bottoming
out. Operating costs ended 4% lower year-on-year.'
'Compared
to the previous quarter, loan losses were lower by 210 million euros or
-37%. Loan losses were considerably lower for the international loan book
in the merchant banking unit, and also in Belgium. In Central & Eastern
Europe, additional loan provisions were set aside for corporate Russia
and the unsecured consumer finance business in Poland, two particular areas
of higher risk. In other parts of the CEE region, loan losses were roughly
stable. In Ireland, they were down somewhat to 40 million euros, bringing
the year-to-date loan loss ratio to 0.74%.'
Headlines
of underlying performance per business unit:
With
total income slightly up and costs and impairment charges slightly down
compared to the previous quarter, a good pre-tax performance was posted
again in the Belgium Business Unit. After tax, net profit remained stable
at a fairly high level, bringing the year-to-date return on allocated equity
to 32%.
Compared
to the preceding quarter, the net result for Central and Eastern Europe
was impacted by additional loan impairment for Russia (15 million euros
higher, mainly related to corporate credit) and Poland (13 million euros
higher, mainly related to consumer finance). The year-to-date credit cost
ratio for the entire region edged up to 1.83%. In the fourth quarter, additional
loan loss provisions for Polish consumer finance are anticipated; however,
total credit costs in Central and Eastern Europe and Russia for the full
year are expected to remain within the 2.00%-2.30% range (cf. earlier guidance).
KBC is now planning to refocus its consumer finance activities in Poland,
moving away from the stand-alone specialist model and towards an integrated
bancassurance distribution model.
In
merchant banking, there was a major recovery of net profit on the back
of falling corporate loan provision charges (even when excluding the non-recurrence
of general provisions set aside in 2Q 2009 for the US mortgage-backed securities
portfolio). Results for capital market activities also remained solid.
Results
for the European Private Banking Business Unit were down slightly on the
previous quarter, because some restructuring charges were posted. On the
revenue side, increased securities-related income was offset by lower interbank
income earned on available excess liquidity.
The
quarter was also characterised by a number of one-off items that were not
part of the normal course of business and were excluded from the presented
underlying results. The main items were:
A
value mark-up of KBC's CDO exposure was generated in the amount of +0.2
billion euros, net, primarily resulting from the further easing of market
prices for corporate credit risk;
A
positive impact of +0.1 billion, after tax, was realised when perpetual
subordinated hybrid Tier-1 securities were repurchased following a public
tender offering; this repurchase also had a positive effect (+0.19%) on
the core Tier-1 ratio of the group;
A
fair value change of KBC's own debt issued of -0.2 billion euros, net,
was recognised due to the improvement of KBC's own credit default swap
spread;
A
net present value change of the CDO guarantee fee of -0.1 billion euros,
net, was posted, since the downwards shift of the interest yield curve
resulted in lower discount rates used for the net present value calculation;
A
trading loss of -0.1 billion euros, net, was posted related to 'legacy'
structured derivatives positions within KBC Financial Products (Merchant
Banking).
Financial
highlights - 9M 2009
Explanations
per heading of the income statement for 9M 2009 (see summary table on page
5):
The
net result for the first nine months of 2009 amounted to -2.8 billion euros.
This figure includes exceptional items (totalling -4.3 billion euros, net),
such as value losses on CDO investments, the fee paid for the guarantee
bought to cover the remaining CDO-linked exposure and position losses of
discontinued trading activities. Adjusted for those items, (underlying)
profit came to a positive 1.5 billion euros.
Net
interest income came to 4.5 billion euros, up 21% year-on-year (+12% on
an underlying basis). While volume growth slowed down, margins recovered
significantly at the start of 2009. As at 30 September 2009, the customer
loan book (excluding reverse repos) stood, on an organic basis, 4% below
the year-earlier level (up 2% in Belgium, but down 1% in Central &
Eastern Europe and 8% in Merchant Banking). The net interest margin for
banking came to 1.81%, up from 1.68% for the first nine months of 2008.
Gross
earned premiums in insurance stood at 3.7 billion euros, up 16% on the
year-earlier figure. Net of technical charges and the ceded reinsurance
result, income came to 324 million euros. The combined ratio for the non-life
insurance activities came to a favourable 94%.
Dividend
income from equity investments amounted to 108 million euros, markedly
lower than the 195 million euros reported for the first nine months of
2008. The equity investment portfolio shrank (to 1.9 billion euros, down
from 2.7 billion euros at the start of the year) while corporate dividend
payouts were also generally lower.
Net
gains from financial instruments at fair value came to -3.8 billion euros.
Although sales and trading activities on money and debt securities markets
performed well, this income heading was strongly impacted by net negative
value adjustments on structured credit exposure (including the cost of
the acquired guarantee) and the marking down of discontinued derivative
positions. On an underlying basis, this income heading came to +886 million
euros.
Gains
from available-for-sale assets (mostly on investments in shares) were 164
million euros. Due to the pursued policy of reducing the share investment
portfolio and the past poor equity market performance, this was considerably
below the year-earlier figure of 341 million euros.
Net
fee and commission income amounted to 1.1 billion euros. This is 20% lower
than the year-earlier level, largely due to the lower income from asset
management activities consequent on the investment climate that prevailed
until the first half of 2009.
Other
net income ended at 384 million euros, down somewhat on the year-earlier
figure of 435 million euros.
Excluding
exceptional items, operating expenses were down 7% year-on-year. Cost containment
measures were implemented across all business units. The underlying cost/income
ratio for banking stood at 55%, compared to 64% for 2008.
Total
impairment charges stood at 1.8 billion euros, 1.3 billion euros of which
related to loans and receivables. This corresponds with a credit cost ratio
of 0.96%. Excluding the charge for US mortgage-backed securities classified
as loans, the credit cost ratio for the group came to 0.79% (0.12% for
the Belgium Business Unit, 1.83% for the Central & Eastern Europe and
Russia Business Unit and 0.76% for Merchant Banking Business Unit). Available-for-sale
investment securities, mainly shares, were impaired to the tune of 335
million euros on the back of falling share prices throughout 2008 and up
to the end of the first quarter of 2009. An impairment loss of 181 million
euros was recognised on the value of goodwill outstanding, related to,
among other things, acquisitions made in late 2007 and in early 2008 in
Bulgaria and Slovakia.
As
pre-tax results were negative, a deferred income tax credit of 266 million
euros was recognised.
The
result attributable to minority interests amounted to a negative 66 million
euros (the negative amount has to do with the repurchase of a number of
hybrid capital securities in the third quarter of 2009).
At
the end of September 2009, total equity came to 16.9 billion euros, up
1.6 billion euros on the figure at the start of the year, due to the fact
that the negative year-to-date result (-2.8 billion) and the effect of
the buying back hybrid capital securities (-0.6 billion) was offset by
the positive impact of the issue of non-voting core capital securities
to the State (Flemish Region of Belgium, +3.5 billion euros) and the positive
market value adjustments on assets (+1.6 billion euros). The tier-1 capital
ratio for the group stood at 10.2 % (8.8%, when excluding non-state hybrid
tier-1 instruments).
Coupon
on KBC Bank perpetuals to be paid as planned
The
coupons on two perpetuals issued by KBC Bank NV in 2008 (1.25 billion euros
KBC Bank 8% Perp NC5 Tier-1 issue and 700 million euros KBC Bank 8% Perp
NC5 Tier-1 issue) will be paid on 14 May 2009 and 27 June 2009.
KBC
Bank is aware that, given the current volatility on the financial markets,
a number of clients have questioned whether or not they will actually receive
these interest payments. At the moment, the bank sees no reason why these
payments should be called into question. Clients who present their coupons
for payment on the above dates will be paid in accordance with the conditions
set out in the prospectus.
New
appointment to the Executive Committee of KBC Group NV
Regulated
information* - 13 January 2009 (5.40 p.m. CET)
In
keeping with the succession plans drawn up in 2005 for members of the Executive
Committee, Herman Agneessens, Chief Financial and Risk Officer (CFRO) and
member of the Executive Committee of KBC Group NV has expressed his intention
to retire from KBC, with effect from the annual general meeting of 30 April
2009. At that time, he will have spent 37 years with KBC, thirteen as a
member of KBC's Executive Committee. He will be succeeded by Luc Philips,
who has carved out his entire career with the KBC group, knows the company
inside out and will therefore ensure that the change is a seamless one.
The
Board of Directors of KBC Group NV wishes to take this opportunity to express
its sincere gratitude to Herman for his contribution (including his work
as CFRO) to the successful growth of KBC into a leading bancassurance group.
As CFRO, he also made every effort to ensure that financial information
was communicated clearly and transparently to shareholders and financial
analysts.
Herman
Agneessens, who will turn 60 in May, graduated from KU Leuven with a Doctorate
in Law. He started his career with the former Kredietbank in 1971, where
he worked initially in the Middle East, and then in Australia and the US.
In 1983, he was appointed Vice President and General Manager of the Kredietbank's
New York branch. Six years later he was promoted to General Manager of
the International Directorate, based at the Kredietbank's head office in
Brussels. He was appointed Executive Director and member of the Executive
Committee of the Kredietbank in 1995, and Executive Director of KBC Bank
and member of the Executive Committee of the KBC Bank and Insurance Holding
Company in 1998 (when the holding company was formed through the merger
of the Kredietbank, CERA Bank and ABB-insurance). He was responsible for
the successful expansion of activities in Central and Eastern Europe between
1998 and 2003, and has been CFRO and a member of the KBC Group Executive
Committee since 2004.
With
the approval of the Executive Committee and having received advice from
the Nomination Committee, the Board of Directors of KBC Group NV has appointed
Luc Philips to succeed Herman as a member of the Executive Committee and
as KBC Group CFRO, with effect from 1 May 2009.
The
Management Committee of the Belgian Banking Finance and Insurance Commission
provided KBC with its concurrent advice today on Mr Philips' appointment.
KBC
adapts equity-linked market activities to current market circumstances
Regulated
information*
On
10 December, the KBC group announced that it is currently examining its
operations outside its home markets and evaluating whether or not they
belong to its core activities, generate sufficient return or use up too
much capital. As part of this group-wide exercise and as stated before
by the Group CEO, some of the derivatives-based market activities are being
subjected to an in-depth evaluation by KBC Financial Products ('KBCFP').
KBC FP has conducted a strategic review of operations and decided to discontinue
some of its hedge fund related activities. However, the remaining positions
of existing investors will be managed until they reach maturity. This decision
has already led to and could lead to further internal transfers and, where
no suitable alternatives are available, to redundancies.
As
part of this strategic review, KBC has also decided to close KBC Alternative
Investment Management ('KBC AIM'). KBC AIM is a hedge fund manager specialising
in a variety of strategies including relative value and market neutral
bias across multiple products and asset classes. KBC AIM's offices are
based in London, New York and Hong Kong, and the company employs 28 investment
professionals in total. The closure of KBC AIM will lead to a number of
job losses with some positions being reallocated to other KBC business
units. All investors in the funds have been fully redeemed.
At
the same time, Pacific Alternative Asset Management Company ('PAAMCO'),
a 9-billion-USD fund of hedge funds company, announced on 2 December that
the investment team of KBC Alpha Asset Management ('KBC Alpha'), a 700-million-USD
hedge fund of funds will be transferred to PAAMCO. The team will be integrated
into PAAMCO's global portfolio management team and will initially operate
as a separate division within PAAMCO, known as Pan Asia Alpha Strategies.
KBC Alpha has offices in London, Hong Kong, Tokyo and Singapore. The group
manages multi-strategy funds of hedge funds, which invest across Asia on
behalf of Japanese, European and North American investors.
*
This news item contains information that is subject to the transparency
regulations for listed companies.
KBC
FP_ENG_15122008.pdf
Earnings
Statement KBC Group 3Q 2008 and 9M 2008
Regulated
information* - 6 November 2008 (7 a.m. CET)
KBC
posted a net loss of 906 million euros (IFRS) for the quarter ending 30
September 2008. The loss was driven by value markdowns on structured credit
and other investment portfolios. Adjusted for exceptional items and for
structured credit and other value write-downs (see details in the quarterly
report), the net profit would have come to 551 million euros. As at 30
September 2008, year-to-date reported profit stood at 141 million euros
(2 094 million on an adjusted basis).
According
to André Bergen, Group CEO: "Following the credit-rating downgrades
of the Collateralised Debt Obligations held, KBC decided mid-October to
communicate its preliminary third-quarter earnings earlier than planned.
The definitive set of results presented today is fully in line with the
information disclosed at that time. Despite the difficult operating environment,
commercial performance was satisfactory, especially in Eastern Europe.
The financial position of the group remains solid, and the more so after
the capital-strengthening transaction that was announced last week."
Financial
highlights - 3Q 2008
André
Bergen, Group CEO, summarised the financial highlights for 3Q 2008, as
follows:
"The
preliminary earnings disclosure of mid-October is fully confirmed. Despite
the difficult climate, and taking into account the recurring seasonal revenue
pattern, commercial results were satisfactory, especially in Eastern Europe.
However, the reported results have been negatively affected by accounting
markdowns on investment portfolios across business units."
"The
net profit impact of the investment markdowns due to the financial crisis
was 1.4 billion euros: 1.1 billion on the CDO portfolio, 0.2 billion on
shareholdings and 0.1 billion on exposure to troubled US banks Lehman Brothers
and Washington Mutual. Part of the CDO markdown resulted from credit rating
downgrades of 5 CDOs held. The markdowns also included the impact of extrapolating
the rating downgrading to those CDO notes that were out of the scope of
the credit rating agency review. By so doing, the future financial impact
of potential effective downgrades of those CDOs has been anticipated."
"While
overall economic activity slowed, credit quality remained remarkably good.
Loan losses were low again in Belgium, as was the case in our international
loan book. Year-to-date, the credit cost ratio was 24 basis points. When
including the losses on bonds of the troubled US banks, the ratio came
to 37 basis points. Within the context of the deterioriating economic environment,
it is expected that the loan loss trend will remain upwards for the next
quarters."
"Even
after the consensus macroeconomic forecast for the region was revised,
the Central and Eastern Europe business unit continues to perform well,
mainly thanks to the relative weight of our presence in countries with
more moderate vulnerability. Updated stress tests also provide comfort
as regards our selective foreign-currency lending in the region."
"KBC's
financial position remains very solid thanks to its sound liquidity buffer
and firm solvency ratios. When account is taken of the capital-strengthening
transaction announced last week, the Tier-1 ratio for banking activities
stands at 10.7%, of which 8.2% core capital. For the insurance division,
the solvency margin is 280%."
Financial
highlights - 9M 2008
Net
profit according to IFRS for the nine months ending 30 September 2008 amounted
to 141 million euros. This figure includes charges for items that do not
occur during the normal course of business in the amount of -90 million
euros, net, and losses on investment portfolios related to the financial
crisis in the amount of 1 863 million, net.
Net
interest income came to 3 723 million euros, up 24% on the year-earlier
figure (+12% on an underlying basis), mainly thanks to solid volume growth
achieved across all markets. The net interest margin in the Central &
Eastern Europe and Russia Business Unit increased (partly thanks to growth
in higher-margin countries), while it fell in Belgium due to the repricing
of savings deposits during 3Q 2008.
Gross
earned premiums, insurance, stood at 3 166 million euros, up 19% compared
to the year-earlier figure. Net of technical charges and ceded reinsurance
result, the income was 54 million higher (+15%). The combined ratio, non-life,
remained at a remarkably favourable level of 92%.
Dividend
income from equity holdings amounted to 195 million euros, somewhat lower
than the year-earlier figure.
Net
gains from financial instruments at fair value came to a negative 1 680
million euros. This amount included a valuation markdown of 2.1 billion
euros on structured credit investments. The line item also includes income
from professional money and securities trading, which was negatively impacted
by the adverse capital-market climate.
Gains
from available-for-sale assets were realised in the amount of 341 million
euros (mostly on investments in shares), 199 million less than the year-earlier
figure.
Net
fee and commission income amounted to 1 336 million euros. This is 11%
below the year-earlier level, largely due to lower customer investment
activities consequent on the adverse investment climate.
Other
net income stood at 435 million euros, 47 million above the year-earlier
level.
Operating
expenses came to 3 939 million euros. Compared to the year-earlier period,
the 4% growth in costs is explained by new acquisitions and currency appreciations.
Excluding these factors, the cost level was down 3%, largely on the back
of lower bonus accruals due to lower trading revenue.
Impairment
charges stood at 909 million euros, 300 million euros of which related
to the loan portfolio. An impairment of 591 million euros was taken on
available-for-sale investment securities, of which 415 million euros related
to shares held mainly in the insurance business and 172 million euros related
to (mostly) bonds of the troubled US banks Lehman Brothers and Washington
Mutual.
The
contribution from associated companies amounted to 33 million euros, while
the share in the result attributable to minority interests was 83 million
euros. Due to the negative pre-tax results, a deferred tax asset was recognised,
resulting in a positive impact on the profit and loss account.
As
at the end of September 2008, parent shareholders' equity came to 14.3
billion euros (42 euros per share). Shareholders' equity was down on the
start of the year, as profit for the period (+0.1 billion euros) was more
than offset by dividends paid out and treasury shares repurchased (-1.6
billion euros, combined) and by a decrease in the revaluation reserve for
available-for-sales assets (-1.8 billion euros).
Future
developments
André
Bergen, Group CEO:"When the financial crisis first came to public notice
in the summer of 2007, we could not have imagined that it would last so
long and be so deep. Reported earnings will continue to be influenced by
market price trends of shares and credit instruments. It is obvious that
we remain vigilant, while we make sure that much of the management agenda
continues to be directed towards business performance and enhancement of
the mid-term value of our core business portfolio."
KBC
has a credit exposure to 3 Icelandic banks in the amount of 277 million
euros. No impairment decision has been taken yet since the level thereof
could not be reliably determined. This decision will be taken later in
the fourth quarter.
*
This news item contains information that is subject to the transparency
regulations for listed companies.
14/11/07
KBC reacts to factual inaccuracy in analyst's report
KBC
wants to react to an equity research note issued this morning by KBW Ltd
(London), since it contains a number of material factual inaccuracies concerning
KBC's total subprime exposure.
KBC
Group's consolidated exposure to CDOs with underlying ABS amounts to €7
bn as was disclosed in detail in the 2Q and 3Q quarterly reports. This
amount includes the exposure of KBC Financial Products, the issuer of the
CDOs. The perception that only €12 bn out of the €26 bn issued
is still outstanding is unfounded.
The
€7 bn in proprietary exposure forms part of a total (non-matured)
amount outstanding of €26 bn in CDOs with ABS underlyings issued by
KBC Financial Products. KBW's estimate that KBC holds 57% of the outstanding
CDOs issued by KBC Financial Products is therefore incorrect.
The
research note also suggests that there is a risk of KBC marking to market
"to itself", since it holds a large portion of the CDOs. In this regard,
we would like to clarify that the marking to market of the CDO components
(ABS, CDS) is based on third-party trades of these instruments or their
comparables.
It
is correct that €1.3 bn was placed on credit watch by Moody's yesterday,
€592 m of which is held by KBC.
In
this regard, KBC wants to reconfirm its earlier and repeated statements
that it considers its exposure to US subprime mortgage debt to be limited.
There are no reasons to change the loss expected as disclosed on 9 November
2007 in the 3Q quarterly report.
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