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 for 3Q 2009:
Continued resilient interest margin trend: net interest margin at 1.9%, up from 1.8% in previous quarter.
Supportive institutional trading environment, further gradual recovery of fee and commission income but lower insurance income.
On an underlying basis, operating expenses down 4% year-on-year.
Credit risk: loan provision charge significantly lower (year-to-date loan loss ratio of 79 basis points).
-0.1 billion euros of exceptional items: various fair value changes of balance sheet positions (with negative items outweighing positive ones), partly offset by the positive impact of the repurchase of hybrid Tier-1 securities.
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%."
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