KBC Group (KBC) Q4 2023 earnings summary

Executive summary

• FY23 net profit rose 21% YoY to €3.402bn; 4Q23 net profit was €677m, down from €877m QoQ and €727m YoY.

• FY23 total income reached €11.224bn, up from €10.035bn, supported by higher net interest, fee, insurance and other income.

• Loans grew 3% YoY; customer deposits excluding debt certificates fell 3%, mainly reflecting €5.7bn of outflows to Belgium’s State Note.

Financial highlights

• FY23 net interest income rose 6% to €5.473bn; 4Q23 was €1.360bn, down 2% QoQ and 4% YoY, with a 1.99% net interest margin.

• FY23 net fee and commission income increased 6% to €2.349bn; 4Q23 reached €600m, up 2% QoQ and 9% YoY.

• Net other income was €656m versus €16m in FY22, including a €408m gain from Irish sale transactions; FY22 included a €149m Czech legacy legal-file loss.

• FY23 operating expenses excluding bank and insurance taxes rose 7% to €4.438bn; including taxes, expenses were €5.125bn, up 7%.

• FY23 net impairment charges were €215m versus €282m in FY22; 4Q23 included €175m of non-loan impairments and a €5m net loan-impairment release.

Outlook and guidance

• FY24 net interest income guidance is €5.3bn–€5.5bn; assumptions include mid-January forward rates, higher reserve requirements and no deposit inflows at State Note maturity.

• FY24 targets include organic loan growth ~3%, insurance revenue growth of at least 6%, and expenses plus insurance commissions growth below 1.7%.

• FY24 cost/income ratio target is below 45% excluding taxes; combined ratio target is below 91%.

• FY24 credit cost ratio is expected well below the 25–30 bps through-cycle level, excluding changes to the year-end geopolitical-risk ECL buffer.

• 2023–2026 targets include NII CAGR of at least 1.8%, insurance revenue CAGR of at least 6%, and a cost/income ratio below 42% by 2026.