Fourth quarter result of 663 million euros
Outside trading hours – Regulated information*
Brussels, February 10, 2022 (07:00 CET)
KBC Group: fourth quarter result of 663 million euros
At the end of 2021, the macroeconomic and financial outlook remains difficult as the pandemic enters its third year. However, advances in booster vaccination and antiviral treatment in many countries can alleviate the extreme overload of health systems and thus avoid the need for comprehensive and long-lasting lockdowns. From the start of this crisis, we have taken responsibility for safeguarding the health of our staff and customers, while ensuring that services continue to be provided (with our digital assistant Kate who increasingly convinces and accompanies more customers). We have also worked closely with government agencies to support all customers affected by the coronavirus, implementing various measures such as loan repayment holidays.
In the meantime, we continued to implement our strategy, including further optimizing our geographic presence. In the fourth quarter of 2021, we reached an agreement to acquire the Bulgarian operations of Raiffeisen Bank International. This investment in a high-quality company with an excellent reputation will allow us to further strengthen our leading position in the Bulgarian financial market. Raiffeisenbank (Bulgaria)’s focus on innovation and digitization, combined with a high customer satisfaction rate, reflects our own Digital First strategy. The acquisition of Raiffeisenbank (Bulgaria) is another testimony to our commitment to the Bulgarian market and our support for the Bulgarian economy. The closing of the transaction is subject to regulatory approvals and will reduce our common equity ratio by approximately 1.0 percentage points at closing, which is expected by mid-2022.
In terms of sustainability, we continue to play an active role in the transition to a low carbon economy by working with all our stakeholders, as also evidenced by the in-depth evaluation of our policy and performance. KBC wants to minimize its negative impact on society as much as possible by applying strict policies and guidelines and reducing its own environmental footprint. As announced at the end of October, KBC will no longer provide credit, advice or insurance for the exploitation of new oil and gas fields. We have also begun offsetting our remaining greenhouse gas emissions to achieve net climate neutrality with respect to our direct footprint. At the same time, we are committed to gradually increasing the share of renewable energy sources in the total energy loan portfolio to at least 65% by 2030 at the latest. We continue to focus on activities with a positive impact on sustainability and the climate, and have, among other things, issued a third green bond in early December to finance projects that have a positive impact on the environment by reducing carbon emissions. greenhouse gases and promoting the sustainable use of resources and land. Finally, KBC converted its two remaining Belgian pension savings funds into SRI funds, in accordance with the SRI framework developed internally, tested and validated externally.
Regarding our financial results, we generated a net profit of 663 million euros in the last quarter of 2021. Total income benefited from an increase in net interest income, an increase in the result of the non-life insurance and an increase in net fee and commission income, which were partly offset by lower trading results and fair value and lower other net income. Costs, excluding bank taxes, changes in consolidation scope and non-recurring items, ended in line with our forecast for the full year 2021 slightly lower at a 2% increase. Impairments for loan losses contributed positively to the result, as impairment charges previously recorded for the coronavirus crisis were partly reversed. Adding the result of this quarter to that of the first nine months of the year brings our net profit for the whole of 2021 to 2,614 million euros.
For the year 2021, our Board of Directors has decided to propose to the General Meeting of Shareholders in May this year a gross dividend balance of 7.6 euros per share, bringing the total gross dividend to 10.6 euros per share. This includes a dividend of 2.0 euros per share relating to the financial year 2020 (already paid in November 2021), an ordinary dividend of 4.0 euros per share relating to the financial year 2021 (including an interim dividend of 1.0 euro per share has already been paid in November 2021 and the remaining 3.0 euro per share must be paid in May 2022) and an extraordinary dividend of 4.6 euro per share (to be paid in May 2022). If approved, it will lead to a common equity ratio (after capital distribution) of 15.5%, in line with our announced capital deployment plan for the year 2021. The payout ratio (including the coupon AT1) amounts to approximately 66%. % based on the proposed ordinary dividend of 4 euros per share related to the financial year 2021 and 139% based on the proposed total dividend of 8.6 euros per share (ordinary plus extraordinary dividend).
From the year 2022, the payout ratio of at least 50% of consolidated profit will be maintained and capital above 15.0% of common equity ratio will be considered for distribution to shareholders, at the discretion of the Board Directors when the annual results are announced (the 2022 annual results will be announced on February 9, 2023).
Finally, we have also updated our three-year financial forecasts. Between 2021 and 2024, we are targeting a compound annual growth rate of around 4.5% for total revenues and around 1.5% for operating expenses (excluding bank taxes). Furthermore, we also want to achieve a combined ratio of 92% or less.
In closing, I take this opportunity to explicitly thank all the stakeholders who have continued to place their trust in us. I would also like to express my greatest gratitude to all of our staff, who have continued to serve our customers and support the smooth running of the group in these difficult times.
Chief executive officer
Full press release attached