KBC Group (KBC) Q2 2024 earnings summary

Executive summary

• Net profit for Q2 2024 was €925 million, up from Q1 2024 but down from Q2 2023; H1 2024 net profit was €1,431 million, lower year-over-year due to a one-off gain in 2023, with strong performance across integrated bank-insurance franchises and digital initiatives like Kate, now reaching 4.8 million users.

• Total income in Q2 2024 rose 4% quarter-on-quarter and 1% year-on-year to €2,809 million, driven by higher net interest income, fee and commission income, insurance revenues, and trading income.

• Loan portfolio expanded 2% quarter-on-quarter and 4% year-on-year; customer deposits up 2% sequentially and stable year-on-year.

• Digital sales penetration increased, with 55% of banking and 27% of insurance products sold digitally, up from 50% and 24% a year ago.

• Strong solvency and liquidity: CET1 ratio at 15.1%, LCR at 160%, NSFR at 139%.

Financial highlights

• Net interest income in Q2 2024 was €1,379 million (+1% QoQ, -2% YoY); net interest margin at 2.10%.

• Net fee and commission income reached €623 million (+1% QoQ, +7% YoY), supported by asset management and banking services.

• Non-life insurance written premium up 8% and earned premium up 9% YoY; combined ratio at 87%.

• Life insurance sales down YoY and QoQ due to prior period campaign effects, but H1 sales exceeded last year by €200 million.

• Trading & fair value income and insurance finance income/expense at €3 million (+€58 million QoQ, -€30 million YoY).

• Operating expenses (excluding taxes) up 1% QoQ, down 2% YoY; cost/income ratio for H1 2024 at 46% (excl. non-operating items and taxes), 42% when excluding all taxes.

• Net loan loss impairment charge of €72 million in Q2 2024; credit cost ratio for H1 2024 at 0.09%.

• Basic EPS for Q2 2024 was €2.25.

Outlook and guidance

• Full-year 2024 net interest income guidance raised to €5.5 billion, supported by ~4% organic loan growth.

• Insurance revenues expected to grow at least 6% year-on-year.

• Operating expenses and insurance commissions (excluding taxes) to remain below +1.7% YoY.

• Cost/income ratio (excluding taxes) targeted below 45% for 2024; combined ratio expected below 91%.

• Credit cost ratio (excluding ECL buffer changes) expected well below through-the-cycle 25–30 bps.

• Interim dividend of €1/share to be paid in November 2024; payout ratio of at least 50% of consolidated profit.