KBC Group (KBC) Q3 2024 earnings summary

Executive summary

• Net profit for Q3 2024 was €868 million, reflecting strong commercial performance across all business units and core countries, though slightly down from Q2 2024 and Q3 2023.

• Integrated bank-insurance model and digital-first strategy, with KBC Mobile ranked #1 globally; digital sales penetration increased, with 55% of banking and 29% of insurance products sold digitally.

• Customer money inflows totaled €8.7 billion in the quarter, including €6.5 billion from the maturing Belgian State Note, despite fierce competition.

• Sustainability and digitalisation remain strategic priorities, with leading ESG ratings and climate targets.

• Year-to-date net result for 9M2024 was €2,300 million, a 3% decrease year-over-year, mainly due to the absence of a one-off gain from the Irish portfolio sale in 2023.

Financial highlights

• Net interest income rose 1% quarter-over-quarter and year-over-year, despite a negative impact from inflation-linked bonds; net interest margin was 2.08%.

• Net fee and commission income increased 3% quarter-over-quarter and 9% year-over-year, driven by asset management and banking services.

• Asset management net inflows hit a record €2.1 billion for the quarter and €4.6 billion year-to-date; assets under management reached €269 billion, up 18% year-over-year.

• Insurance business grew 8% year-over-year, with a combined ratio of 89% impacted by natural catastrophes; life insurance sales up 28% sequentially and 80% year-over-year.

• Operating expenses (excluding taxes) rose 6% quarter-on-quarter and 3% year-on-year, within guidance; cost/income ratio (excluding all taxes) at 43%.

• Loan loss impairment charge was €61 million, with a credit cost ratio of 0.10% for 9M2024.

Outlook and guidance

• Full-year 2024 guidance: net interest income ~€5.5 billion, organic loan growth ~4%, insurance revenues at least +6% year-on-year, cost/income ratio below 45%, combined ratio below 91%, credit cost ratio well below 25-30bps.

• Medium-term (2023-2026): net interest income CAGR at least 1.8%, insurance revenues CAGR at least 6%, cost/income ratio below 42% by end-2026.

• Basel IV implementation expected to increase risk-weighted assets by €8.5 billion by 2033.

• Interim dividend of €1/share to be paid in November 2024.