KBC Group: First-quarter result of 557 million euros

Press Release

Outside trading hours – Regulated information*

Brussels, 11 May 2021 (07.00 a.m. CEST)

Light is starting to appear at the end of the tunnel thanks to the large-scale vaccination rollout that started in the first quarter of 2021. However, the coronavirus pandemic is still far from over and continues to cause human suffering and unprecedented economic upheaval all over the world. From the start of the crisis more than a year ago, we have taken responsibility in safeguarding the health of our staff and customers, while ensuring that services continue to be provided. We have also worked closely with government agencies to support all customers impacted by coronavirus, implementing various measures such as loan deferrals. We have, for example, granted payment holidays for 13.1 billion euros� worth of loans under coronavirus-related moratoria (according to the EBA definition). For 91% of that figure, the moratoria have now expired, with 98% of loans resuming normal payments. We have also granted almost 1 billion euros worth of loans under public guarantee schemes introduced in response to the pandemic.

Meanwhile, we continued to work tirelessly on implementing our strategy, including the further optimisation of our geographic presence. In the first quarter of 2021, we reached an agreement for the acquisition of NNs Bulgarian pension insurance and life insurance businesses. This will allow us to further increase our share of the life insurance market in Bulgaria and to broaden our bank-insurance offering to customers with the addition of high-end pension fund products, while also providing additional cross-selling opportunities for banking and insurance products in a one-stop shop approach. Closure of the deal is subject to regulatory approval and is expected to be finalised in the course of 2021. More recently, in the context of the competitive market conditions in Ireland, we entered into a Memorandum of Understanding with Bank of Ireland that could lead to a transaction where Bank of Ireland commits to acquire substantially all of KBC Bank Ireland’s performing loan assets and liabilities. In addition, we are examining our options for divesting KBC Bank Ireland’s portfolio of non-performing mortgage loans. Successful completion of both transactions may ultimately result in our withdrawal from the Irish market. While these discussions are ongoing, KBC Bank Ireland remains committed to offering its existing and new customers retail banking and insurance services of the highest standard through its digital channels and hubs. The transaction remains subject to customary due diligence, further negotiation and agreement of final terms and binding documentation, as well as obtaining all appropriate internal and external regulatory approvals.

As regards our financial results, the year got off to a strong start with a net profit of 557 million euros being posted in the quarter under review. This is a very good performance given that the bulk of bank taxes for the full year are recorded as always upfront in the first quarter of the year. In the quarter under review, nearly all income items increased, apart from dividend income. Costs excluding bank taxes continued to be strictly managed, resulting in a quarter-on-quarter decrease of 5%. We were also able to reverse some of the loan loss impairment charges taken previously, which had a positive impact on our net result. Our solvency position remained very strong with a common equity ratio of 17.6% on a fully loaded basis.

As announced earlier, we will pay out a gross dividend of 0.44 euros per share on 19 May 2021 for financial year 2020. It is also the intention of our Board of Directors to distribute an additional gross dividend of 2 euros per share in the fourth quarter of 2021 for financial year 2020.The final decision of the Board in this regard is subject to restrictions on dividends being lifted by the ECB.

In closing, I would like to take this opportunity to thank all stakeholders who have continued to put their trust in us. I also wish to express my appreciation to all our staff who have not only continued to serve our customers, but have also ensured that our group has been able to operate solidly and efficiently in these challenging times.

Johan Thijs

Chief Executive Officer

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