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KBC Bank & Insurance Group

KBC Bank & Insurance Group. First Half Year Results 2001. 3 September 2001. KBC Bank & Insurance Group. Group results and key features Results - Banking Results - Insurance Activities Retail bancassurance Corporate services Central Europe Market activities Asset management Outlook.

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KBC Bank & Insurance Group

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  1. KBCBank & Insurance Group First Half Year Results 2001 3 September 2001

  2. KBC Bank & Insurance Group • Group results and key features • Results - Banking • Results - Insurance • Activities • Retail bancassurance • Corporate services • Central Europe • Market activities • Asset management • Outlook

  3. KBC Bank & Insurance GroupKey Figures 30-6-01  % In millions of EUR 30-6-00 Consolidated profit - Group share (1) - Banking - Insurance - Holding company Key figures per share (in EUR) - Net earnings - Net asset value 631.2 494.6 147.9 -11.3 2.11 35.2 585.2 442.4 169.9 -27.1 1.95 35.3 -7.3 -10.614.9 - -7.60.3 (2) (1) figures over 2000 excl. capital gain on CCF(2) as per 31.12.00

  4. KBC Bank & Insurance GroupNet Profit In m EUR -7.3%

  5. KBC Bank & Insurance Group1st Half 2001 Key elements • Core businesses deliver good revenues • Interest income : + 13.2 % • Non-life premiums : + 7.1 % • Slight increase of marketshares versus dec. 2000 • Lending : 23.1 % (+ 0.9 % pt) • Saving deposits : 19.5 % (+ 0.1 % pt) • Mutual funds : 29.8 % (+ 0.6 % pt) • Asset quality remains goodNon-performing loans stable at 2.2 % • Assets under management : + 3 bn EUR • Development of Central Europe on track • Sustained solid solvency ratio’s

  6. KBC Bank & Insurance Group1st Half 2001 Key elements • Unfavourable market conditions have negative impact on volatile revenue components • trading result : -14.7 % • commission income from securities : -1.3 % • unit linked premium income : -19.0 % • Cost performance in banking still unsatisfactory (+18.1 %) • merger related savings still limited • deterioration of cost / income ratio due to slower growth of revenues

  7. KBC Bank & Insurance GroupProfitability +87.7% 1821 incl. CCF +20.2% +21.6% In millions of EUR +12.8% +37.2% -7.3% 27.3% 23.3% 20.1% 20.5% 16.1%

  8. KBC Bank & Insurance GroupEfficiency Ratios 30-06-00 31-12-00 30-06-01 Cost / Income ratio Non-life Net cost ratio Net loss ratio (total) Net loss ratio(direct business) Combined ratio 59.3% 32.1% 73.6% 68.5% 105.7% 66.5% 64.2% (*) 34.0% 72.6% 67.7% 106.6% 70.2% 32.2% 71.9% 67.0% 104.1% (*) excl. impact change in consolidation scope

  9. KBC Bank & Insurance GroupSustained solid solvency ratios 1998 1999 2000 30-6-01 7.4% 12.8% 298% 9.5% 16.0% 307% 8.6% 14.8% 314% • Bank • Tier-1 ratio • CAD ratio Insurance • Solvency ratio (*) 7.2% 11.5% 311% (*) excluding unrealized capital gains

  10. KBC Bank & Insurance GroupOverall financial targets Realized 30 June ‘01 Target ROE at group level EPS growth Cost/income ratio bank Combined ratio insurer min. Tier-1 ratio bank min. CAD ratio bank min. Solvency ratio insurer 22% 15% (1) 55% (2) 103% (2) 7% 11% 200% 20.1% -7.6% 70.2% 104.1% 8.6% 14.8% 314.0% (1) average over the period 2000-2004 (2) by 2004

  11. KBC Bank & Insurance Group • Group results and key features • Results - Banking • Results - Insurance • Activities • Retail bancassurance • Corporate services • Central Europe • Market activities • Asset management • Outlook

  12. BankingSummary In millions of EUR  % 30-6-00 30-6-01 Gross operating incomeGeneral admin. expenses Operating result Value adjustments and provisionsExtraordinary result Profit before tax Taxes Minority interests Profit after tax 2380 -1411 969 -274 (1) 0 695 -128 -73 494(2) 2372-1666 706 -11592 683 -155 -86 442 -0.318.1 -27.1 -58.0- -1.7 21.2 17.8 -10.5 (1) incl. allocation to FGBR of 118 m EUR(2) excl. capital gain on CCF

  13. BankingIncome Stream Total 4656 Total 3868 349 Total 3435 319 1034 Total 2380 Total 2372 -0.3% 133 756 610 836 +13.1% In millions of EUR 636 732 237 268 -3.7% 514 495 -27.3% 423 581 2437 2157 1960 +13.2% 1186 1048 1998 1999 2000 30-6-00 30-6-01 % of total income 1999 2000 30-6-00 30-6-01 Other income Commission income Profit on financial transactions Net interest income (incl. dividends) 8% 20% 16% 56% 8% 22% 18% 52% 10% 22% 24% 44% 11% 21% 18% 50%

  14. BankingExpenses KBC Belgium 30-6-00 30-6-01  % In millions of EUR Personnel costs Other admin. expenses Total 482.1 280.9 763.0 527.0 272.9 799.9 +9.3 -2.9 +4.8 • Impact • Traditional elements : 28.5 m EUR (inflation, promotions, etc) • Profit related wage component : 6.5 m EUR • One-off elements : 20.0 m EUR

  15. BankingExpenses other group companies 30-6-00 30-6-01  % In millions of EUR Personnel costs Other admin. expenses TotalExcl. impact acquisitions 304.8 196.5 501.3501.3 390.6 302.4 693.0554.0 +28 +54 +38+10.5 • Impact • acquisitions : 139 m EUR (IPB, Peel Hunt, Patria) • KBC FP and KBC Sec. France : 37 m EUR (increase nr. of personnel with 96 FTE or 21 %)

  16. BankingProvisioning for credit risks 1999 30-6-00 2000 30-6-01 In millions of EUR Specific provisions Domestic International Loan loss ratio Domestic International Non performing loans Other general provisions for credit risks 270.4 103.2167.1 0.24%0.48% 2.1% 71.2 77.0 46.530.6 0.22%0.23% 2.0% 3.1 283.7 253.030.7 0.53%0.09% 2.1% -42.4 62.1 42.919.3 0.18%0.12% 2.2% 20.0 Asset quality remains good

  17. KBC Bank & Insurance Group • Group results and key features • Results - Banking • Results - Insurance • Activities • Retail bancassurance • Corporate services • Central Europe • Market activities • Asset management • Outlook

  18. InsuranceSummary In millions of EUR 30-6-00  % 30-6-01 3861064-1382304 372 -192 180 9 188 -37 -3 148 413915-1248316 396 -205 191 13 203 -33 0 170 7.1-14.0-9.73.9 6.4 6.4 6.4 42.9 8.1 -9.7 - 14.9 Non-life premium incomeLife premium income Net technical charges (*)Investment income (*) Total gross margin General expenses Operating result Non-recurring result Profit before tax Taxes Minority interests Profit after tax (*) excl. impact value changes unit-linked products

  19. 900 877 800 -19% 30-06-99 700 710 30-06-00 30-00-01 600 +7.8% 500 444 In millions of EUR 412 387 400 300 +7.7% 239 195 181 180 200 +9.1% 100 12 11 7 Acceptances Trad. Life Unit Linked Non-life 0 Insurance Evolution of gross premiums

  20. InsuranceBusiness mix 30-6-00 Gross premiums 1481 million EUR 30-6-01 Gross premiums 1361 million EUR group life 3% group life 4% other non-life 8% other non-life13% fire 6% fire 7% accepted business 7% accepted business 8% motor 9% motor 10% individuallife 68% individuallife 63%

  21. InsuranceContribution to recurring result Total 371 Total 312 Total 236 86 Total 190 Total 178 67 +6.4% 18 124 In millions of EUR +32.6% 128 57 117 43 -24.9% 44 59 161 +15.8% 117 101 90 77 1998 1999 2000 30-6-00 30-6-01 % of total recurring result 1999 2000 30-6-00 30-6-01 21% 26% 53% 22% 41% 37% 23% 34% 43% 24% 33% 43% Non-technical Non-life Life

  22. InsuranceNon recurring result In millions of EUR as per 30.06.01 Non recurring realized gains Allocation to provision for financial risks Non recurring result 69.6 56.8 12.8

  23. KBC Bank & Insurance Group • Group results and key features • Results - Banking • Results - Insurance • Activities • Retail bancassurance • Corporate services • Market activities • Central Europe • Asset management • Outlook

  24. Profit Contribution by Activity 227 -13.7% 30-6-00 : 631.2 m EUR 30-6-01 : 585.2 m EUR 196 149 -3.5% In millions of EUR 120 116 +30.5% -51.7% +279% 81 72 -12.6% 72 62 55 49 19 % profit contribution 36% 34% 19% 20% 24% 12% 3% 12% 9% 8% 10% 14% Retailbancassurance Corporateservices Marketactivities CentralEurope Assetmanagement Groupitems

  25. Revenues and Capital Allocation per activity Revenues CapitalAllocation Groupitems0.1% Groupitems13.9% MarketActivities13.5% MarketActivities12.3% Asset Manage-ment -- Retailbanc-assurance 39.1% Retailbanc-assurance 33.5% Asset Manage-ment 8.3% Corporate services 33.3% Corporateservices19.8% CentralEurope12.3% CentralEurope13.9% As per 30.6.2001

  26. Merger of bank branches on track retail branches reduced from 1272 end 2000 to 1217 mid 2001 goal : ± 850 by end 2003 / early 2004 Conversion and integration at insurance company as planned Banking market shares(1) on the rise (v.12/00) Consumer credit : Home loans : Saving deposits : Saving certificates : Positive evolution of cross selling Continued success of electronic banking Retail Bancassurance Financial highlights Profit contribution :(in m Eur) 30-6-2000 : 22730-6-2001 : 196 Share in Group profit : 30-6-2000 : 36.0% 30-6-2001 : 33.5% Return on equity: 30-6-2000 : 20.9% 30-6-2001 : 17.0% 26.5% 25.5% 19.5% 18.1% +0.7% pts +0.4% pts +0.1% pts +0.2% pts (1) KBC estimates

  27. Retail Bancassurance in BelgiumCross-selling penetration Total clients bank 1 331 242 Total clients insurance 741 010 548 401 mutual clients • Cross-selling • 548 401 clients holding at least 1 bank AND 1 insurance product • + 2.9 % versus 31.12.2000 • 36 % of overall client base • 166 322 clients holding at least 3 bank AND 3 insurance products • + 5.7 % versus 31.12.2000 • 10.9% of overall client base

  28. Continued success of electronic banking • 71.4 % (+ 2.1 % pt *) of payment transactions via electronic channels • 150 000 (+ 76 % *) active subscribers to KBC Internet & PC Banking (*) versus December 2000

  29. Strategic reduction of risk weighted assets started (-8,5 % or -3,9 bn EUR) Continued rationalization of international network scaling down of multinational relationships for focus on mid-caps closure of branch in Frankfurt regrouping of corporate branches at KBC Nederland improved relationship management by creation of ‘network desks’ Increase in domestic market share (1) in lending end 2000 : 20.7% mid 2001 : 21.9% slight increase in corporate lending in Belgium(+4.4%) Corporate services Financial highlights Profit contribution :(in m Eur) 30-6-2000 : 12030-6-2001 : 116 Share in Group profit : 30-6-2000 : 19.0% 30-6-2001 : 19.8% Return on equity: 30-6-2000 : 12.0% 30-6-2001 : 11.4% (1) KBC estimates

  30. Market activities Financial highlights • Strong performance of dealing rooms abroad • restructuring process • favourable interest rate positions • Stable profit for dealing room in Brussels • Weakness of stock markets reflected in results of equity-subsidiaries KBC Securities(-89 %)and KBC Financial Products(-69 %) • Peel Hunt • bid successfully wrapped up • perfect fit into European corporate platform for small- and mid-caps • profit contribution slightly positive (2.5 m EUR) Profit contribution :(in m Eur) 30-6-2000 : 14930-6-2001 : 72 Share in Group profit : 30-6-2000 : 23.6% 30-6-2001 : 12.3% Return on equity: 30-6-2000 : 40.6% 30-6-2001 : 17.9%

  31. CSOB becomes one of the premier financial groups in Central Europe since take-over of IPB market shares : ca. 20-25% in Czech Rep. (1)and 6% in Slovakia 3.4 million customers integration process on track staff levels reduced by ca. 6% in 1H 2001 K&H Bank and ABN Amro Magyar merged on 1July 2001 new K&H Bank becomes second bank in Hungary market share around 14% almost 600 000 clients staff levels reduced by ca. 12% in 1H 2001 Request to move to majority stake in Kredyt Bank (Poland) Central Europe (1) Financial highlights Profit contribution :(in m Eur) 30-6-2000 : 1930-6-2001 : 72 Share in Group profit : 30-6-2000 : 3.0% 30-6-2001 : 12.3% Return on equity: 30-6-2000 : 6.4% 30-6-2001 : 17.8% (1) Including all assets and liabilities of IPB

  32. Central European Insurance activities also progressing stake in CSOB Pojist’ovna raised from 75.8% to 100% market shares (2) : 0.5% in Czech Rep., 3.5% in Hungary and 13% in Poland Bancassurance on track in Central Europe co-operation started between Argosz, K&H Life and K&H Bank agreement signed between Warta and Kredyt Bank Central Europe (2) Financial highlights Profit contribution :(in m Eur) 30-6-2000 : 1930-6-2001 : 72 Share in Group profit : 30-6-2000 : 3.0% 30-6-2001 : 12.3% Return on equity: 30-6-2000 : 6.4% 30-6-2001 : 17.8% (2) KBC estimates

  33. Asset Management • Increase in assets under management, notwithstanding difficult market conditions • 4,3% rise in 1H 2001 • volume increase (3.7 bn EUR) more than compensates value decrease (- 0.7 bn EUR) • Largest Belgian player as to mutual funds • market share from 29.2% end 2000 to 29.8% mid 2001 • ± 50% market share in capital guaranteed funds • Continued launch of new investment funds during 1H 2001 • 55 new funds in Belgium • 2 new CSOB-funds in Czech Republic • focus on capital-guaranteed funds • Continued innovation in funds • KBC Private Equity Fund Biotech • KBC Click Solidarity 1 Kom op tegen Kanker • Hedge Fund Financial highlights Profit contribution :(in m Eur) 30-6-2000 : 55 30-6-2001 : 49 Share in Group profit : 30-6-2000 : 8.8% 30-6-2001 : 8.3%

  34. AssetManagementFurther growth in assets under management 72.6 (+4.3%) 69.6 (+34.1%) 51.9 (+41%) 36.8 (+18.3%) In billions of EUR 31.1 % of total AUM 1999 2000 30-6-01 Private Banking Institutional funds Mutual funds 7% 30% 63% 7% 30% 63% 10% 19% 71%

  35. Outlook • Economic climate and market conditions remain uncertain • Q3 and Q4 results however should develop more favourably • Y2001 result forecast slightly above Y2000 results • Lang term average EPS growth target of 15 % maintained

  36. KBCBank & Insurance Group First Half Year Results 2001 Brussels3 September 2001

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