Transcript 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
2
KBC Bank & Insurance Group
Key Figures
In millions of EUR
Consolidated profit - Group share (1)
- Banking
- Insurance
- Holding company
30-6-00
30-6-01
%
631.2
585.2
-7.3
494.6
147.9
-11.3
442.4
169.9
-27.1
-10.6
14.9
-
Key figures per share (in EUR)
- Net earnings
- Net asset value
2.11
35.2 (2)
1.95
35.3
-7.6
0.3
(1) figures over 2000 excl. capital gain on CCF
(2) as per 31.12.00
3
KBC Bank & Insurance Group
Net Profit
In m EUR
-7.3%
585
631
535
371
349
260
355
230
186
1Q 00 2Q 00 1H 00 3Q 00 4Q 00 2H 00
1Q 01 2Q 01 1H 01
4
KBC Bank & Insurance Group
1st 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 good
Non-performing loans stable at 2.2 %

Assets under management : + 3 bn EUR

Development of Central Europe on track

Sustained solid solvency ratio’s
5
KBC Bank & Insurance Group
1st 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
6
KBC Bank & Insurance Group
Profitability
+87.7%
In millions of EUR
1821
incl. CCF
+20.2%
+21.6%
+12.8%
970
1166
+37.2%
-7.3%
798
27.3%
23.3%
631
585
20.1%
20.5%
16.1%
1998
1999
30-06-00
Net profit
2000
ROE
30-06-01
7
KBC Bank & Insurance Group
Efficiency Ratios
30-06-00
Cost / Income ratio
31-12-00
30-06-01
59.3%
66.5%
64.2% (*)
70.2%
Net cost ratio
32.1%
34.0%
32.2%
Net loss ratio (total)
73.6%
72.6%
71.9%
Net loss ratio (direct business)
68.5%
67.7%
67.0%
105.7%
106.6%
104.1%
Non-life
Combined ratio
(*) excl. impact change in consolidation scope
8
KBC Bank & Insurance Group
Sustained solid solvency ratios
1998
1999
2000
30-6-01
Bank

Tier-1 ratio
7.2%
7.4%
9.5%
8.6%

CAD ratio
11.5%
12.8%
16.0%
14.8%
311%
298%
307%
314%
Insurance

Solvency ratio (*)
(*) excluding unrealized capital gains
9
KBC Bank & Insurance Group
Overall financial targets
Target
Realized
30 June ‘01
ROE at group level
22%
EPS growth
15%
(1)
-7.6%
Cost/income ratio bank
55%
(2)
70.2%
Combined ratio insurer
103%
(2)
104.1%
20.1%
min. Tier-1 ratio bank
7%
8.6%
min. CAD ratio bank
11%
14.8%
200%
314.0%
min. Solvency ratio insurer
(1) average over the period 2000-2004
(2) by 2004
10
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
11
Banking
Summary
In millions of EUR
Gross operating income
General admin. expenses
Operating result
Value adjustments
and provisions
Extraordinary result
30-6-01
%
2380
-1411
2372
-1666
-0.3
18.1
969
706
-27.1
-115
-58.0
30-6-00
-274
(1)
0
92
-
695
683
-1.7
-128
-155
21.2
Minority interests
-73
-86
17.8
Profit after tax
494
442
-10.5
Profit before tax
Taxes
(2)
(1) incl. allocation to FGBR of 118 m EUR
(2) excl. capital gain on CCF
12
Banking
Income Stream
Total
4656
In millions of EUR
Total
3435
Total
3868
319
133
610
732
1960
1998
349
1034
756
Total
2380
Total
2372
836
636
2157
1999
237
514
2437
2000
% of total income
1999
Other income
8%
Commission income
20%
Profit on financial transactions
16%
Net interest income (incl. dividends) 56%
581
268
495
423
1048
1186
30-6-00
30-6-01
2000
8%
22%
18%
52%
-0.3%
+13.1%
-3.7%
-27.3%
+13.2%
30-6-00 30-6-01
10%
11%
22%
21%
24%
18%
44%
50%
13
Banking
Expenses KBC Belgium
In millions of EUR
Personnel costs
Other admin. expenses
Total
30-6-00
30-6-01
482.1
280.9
763.0
527.0
272.9
799.9
%
+9.3
-2.9
+4.8
Impact
•
Traditional elements :
(inflation, promotions, etc)
• Profit related wage component :
• One-off elements :
28.5 m EUR
6.5 m EUR
20.0 m EUR
14
Banking
Expenses other group companies
In millions of EUR
Personnel costs
Other admin. expenses
Total
Excl. impact acquisitions
30-6-00
30-6-01
%
304.8
196.5
501.3
501.3
390.6
302.4
693.0
554.0
+28
+54
+38
+10.5
Impact
•
acquisitions :
(IPB, Peel Hunt, Patria)
• KBC FP and KBC Sec. France :
(increase nr. of personnel
with 96 FTE or 21 %)
139 m EUR
37 m EUR
15
Banking
Provisioning for credit risks
In millions of EUR
Specific provisions
Domestic
International
Loan loss ratio
Domestic
International
Non performing loans
Other general provisions
for credit risks
1999
30-6-00
2000
30-6-01
270.4
103.2
167.1
77.0
46.5
30.6
283.7
253.0
30.7
62.1
42.9
19.3
0.24%
0.48%
2.1%
0.22%
0.23%
2.0%
0.53%
0.09%
2.1%
0.18%
0.12%
2.2%
71.2
3.1
-42.4
20.0
Asset quality remains good
16
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
17
Insurance
Summary
%
In millions of EUR
30-6-00
Non-life premium income
Life premium income
Net technical charges (*)
Investment income (*)
Total gross margin
386
1064
-1382
304
372
413
915
-1248
316
396
7.1
-14.0
-9.7
3.9
6.4
General expenses
-192
-205
6.4
Operating result
180
191
6.4
9
13
42.9
Profit before tax
188
203
8.1
Taxes
-37
-33
-9.7
-3
0
-
148
170
14.9
Non-recurring result
Minority interests
Profit after tax
(*) excl. impact value changes unit-linked products
30-6-01
18
Insurance
Evolution of gross premiums
900
877
800
-19%
710
In millions of EUR
700
30-06-99
30-06-00
30-00-01
600
+7.8%
444
500
387 412
400
300
200
180
+7.7%
181 195
239
100
7
0
Trad. Life
Unit Linked
Non-life
+9.1%
11 12
Acceptances
19
Insurance
Business mix
30-6-00
30-6-01
Gross premiums
1481 million EUR
Gross premiums
1361 million EUR
group life
3% other non-life
13%
group life
4%
fire 6%
fire 7%
accepted
business 7%
accepted
business 8%
motor
9%
individual
life 68%
other
non-life 8%
motor
10%
individual
life 63%
20
Insurance
Contribution to recurring result
In millions of EUR
Total
312
Total
236
18
Total
371
86
67
124
117
128
101
117
1998
1999
% of total recurring result
Non-technical
Non-life
Life
161
2000
1999
22%
41%
37%
2000
23%
34%
43%
Total
178
Total
190
+6.4%
43
57
+32.6%
59
44
-24.9%
77
90
+15.8%
30-6-00
30-6-01
30-6-00
24%
33%
43%
30-6-01
21%
26%
53%
21
Insurance
Non recurring result
In millions of EUR as per 30.06.01
Non recurring realized gains
69.6
Allocation to provision for
financial risks
56.8
Non recurring result
12.8
22
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
23
Profit Contribution by Activity
In millions of EUR
227
-13.7%
30-6-00 : 631.2 m EUR
196
30-6-01 : 585.2 m EUR
-3.5%
149
120 116
+30.5%
-51.7%
81
+279%
72
-12.6%
72
55
62
49
19
% profit
36% 34% 19% 20% 24% 12%
contribution
Retail
Corporate
Market
bancassurance services
activities
3% 12%
Central
Europe
9% 8%
10% 14%
Asset
management
Group
items
24
Revenues and Capital Allocation
per activity
Revenues
Market
Activities
12.3%
Capital
Allocation
Group
items
13.9%
Retailbancassurance
33.5%
Asset
Management
8.3%
Corporate
services
19.8%
Group
Market items
Activities 0.1%
Asset 13.5%
Management
--
Retailbancassurance
39.1%
Corporate
services
33.3%
Central
Europe
12.3%
As per 30.6.2001
Central
Europe
13.9%
25
Retail Bancassurance

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 :
26.5%
25.5%
19.5%
18.1%
+0.7% pts
+0.4% pts
+0.1% pts
+0.2% pts
Positive evolution of cross selling
Continued success of electronic banking
Financial highlights
Profit contribution :
(in m Eur)
30-6-2000 :
30-6-2001 :
227
196
Share in Group profit :
30-6-2000 :
30-6-2001 :
36.0%
33.5%
Return on equity:
30-6-2000 :
30-6-2001 :
20.9%
17.0%
(1) KBC estimates
26
Retail Bancassurance in Belgium
Cross-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

27
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
28
Corporate services

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
Profit contribution :
(in m Eur)
30-6-2000 :
30-6-2001 :
120
116
Share in Group profit :
30-6-2000 :
30-6-2001 :
19.0%
19.8%
lending
end 2000 : 20.7%
mid 2001 : 21.9%
slight increase in corporate lending in Belgium
(+4.4%)
Financial highlights
Return on equity:
30-6-2000 :
30-6-2001 :
12.0%
11.4%
(1) KBC estimates
29
Market activities

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 %)
Financial highlights
Profit contribution :
(in m Eur)
30-6-2000 :
30-6-2001 :
149
72
Share in Group profit :
30-6-2000 :
30-6-2001 :
23.6%
12.3%
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)
Return on equity:
30-6-2000 :
30-6-2001 :
40.6%
17.9%
30
Central Europe (1)

CSOB becomes one of the premier financial
groups in Central Europe since take-over of IPB





K&H Bank and ABN Amro Magyar merged on
1July 2001





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
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)
Financial highlights
Profit contribution :
(in m Eur)
30-6-2000 :
30-6-2001 :
19
72
Share in Group profit :
30-6-2000 :
30-6-2001 :
3.0%
12.3%
Return on equity:
30-6-2000 :
30-6-2001 :
6.4%
17.8%
(1) Including all assets and liabilities of IPB
31
Central Europe (2)

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
Financial highlights
Profit contribution :
(in m Eur)
30-6-2000 :
30-6-2001 :
19
72
Share in Group profit :
30-6-2000 :
30-6-2001 :
3.0%
12.3%
Return on equity:
30-6-2000 :
30-6-2001 :
6.4%
17.8%
(2) KBC estimates
32
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
Financial highlights
Profit contribution :
(in m Eur)
30-6-2000 :
30-6-2001 :
55
49
Share in Group profit :
30-6-2000 :
30-6-2001 :
8.8%
8.3%
Continued innovation in funds



KBC Private Equity Fund Biotech
KBC Click Solidarity 1 Kom op tegen Kanker
Hedge Fund
33
Asset Management
Further growth in assets under management
69.6 (+34.1%)
4.9
5.1
51.9 (+41%)
31.
1
4.4
2.8
36.8 (+18.3%)
5.3
9.8
72.6 (+4.3%)
21.8
21.4
4.8
4.6
23.9
27.4
1997
1998
% of total AUM
Private Banking
Institutional funds
Mutual funds
36.8
1999
43.1
45.9
2000
30-06-01
1999
10%
19%
71%
2000
7%
30%
63%
30-6-01
7%
30%
63%
34
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
35
KBC
Bank & Insurance Group
First Half Year Results 2001
Brussels
3 September 2001